1. Term Insurance – It is the simplest and cheapest form of insurance that is designed to offer financial protection for a specified tenure, say 15 or 20 years. Term insurance ensures that your family gets a large lump sum amount, i.e; sum assured after your death to lead a financially stable life. However, if you survive the term, the insurer pays nothing. The best thing about a term insurance policy is that the premium is quite low for the insurance cover it provides.
2. Endowment Policy:- It offers the dual benefit of insurance and investment. A certain part of the premium is allocated towards the sum assured, while the remaining portion of the premium gets invested in asset markets— equities and debt. It pays a lump sum amount after the specified duration or on the death of the policyholder, whichever is earlier. An endowment policy may declare bonus periodically, which is paid, either on maturity or on the death of the insured.
3. Unit Linked Insurance Plans (ULIPs):- In ULIP, a portion of the premium goes towards providing the life cover, while the residual portion is invested in equities and debts. The investment portion in ULIP is subject to market volatility. Investing in ULIP inculcates regular saving habit in a person, which is imperative for the creation of wealth.
4. Money Back Life Insurance:- It offers periodical payment of partial survival benefits during the tenure of the policy as long as the policyholder is alive. In the event of death of the insured, the insurance company pays the full sum assured along with survival benefits.
5. Whole Life Insurance:-Offering the dual benefit of insurance and investment, whole life insurance plans offer insurance cover for the whole life of the person or up to 100 years whichever is earlier. Also the life insurance company calculates bonus on the sum assured, which is paid to the nominee after the death of the policyholder.
6. Child Insurance:- The increasing education cost is causing uneasiness among parents. Therefore, it is best to invest in a good child insurance plan to give secured life to your child even in your absence. A child life insurance plan offers a lump-sum amount to the beneficiary (i.e. child) on the death of the policyholder. Here, the policy doesn’t end. In this case, Life Insurance Company exempts all future premiums and pays the money to the child at specified intervals as planned out by the policyholder.
7. Pension Plans:-Also called pension plans, these are offered by life insurance companies to help an individual build a retirement corpus. This money helps a person to lead a financially secured life even after retirement. In case of an unfortunate death of the policyholder, the nominee can either take a lump sum or receive a regular pension for the rest of the policy tenure. These life insurance plans are great to build up a retirement corpus, Most life insurance companies in India provide a wide array of plans for people to save for their retirement.