6 min read
Updated on Aug 09, 2023
Term/Life insurance can be broadly categorized into 2 types:
However, it is difficult to choose from among the plans unless you know about the different plans.
Below are the names of different types of life insurance policies available in India:
Let’s get detailed knowledge on the types of life insurance in India.
This is the most common and reasonable life insurance cover that can be afforded by most people easily. Term insurances are used as protection against death, and they are offered for a particular period. In the event of the death of the insured during the period of the term policy, the insurance company compensates the beneficiary of the insured with death benefit. Term plan is a risk cover that offers life coverage at a minimum premium rate.
This plan also has the option of adding riders to enhance coverage. Moreover, here the nominee can receive the compensation in three different ways:
In term plans if the insured outlives throughout the period of the policy, then no money is paid and hence it is called a pure risk plan.
But, with TROPS, that is, Term Insurance Plans with Return of Premiums, many insurance companies are now-a-days providing reimbursement of the premium option paid if the insured outlives the plan. However, these are high-end plans with bulky insurance premium rates.
Here is an example:
|Age of insured||Term period||Amount Assured||Range of Annual Premium|
|25 yrs||40 yrs||1Crore rupees||Rs.6,800 – Rs.10,500|
In the above case, for Rs.1Crore term plan cover, a non-smoker might have to pay between Rs.6, 800 to Rs.10, 500 annual premium approx.
Unit Linked Insurance Plan is an inclusive combination plan offering the opportunity of investment along with insurance. This is a long-term plan that presents the flexibility of investment because partial payment of premiums of such plans are used for investment and the rest is used as insurance. The insurance providers offer opportunities to the insured to invest in different funds like bonds, equities etc.
||20,000 rupees||Mostly depends on the worth of the fund at maturity.|
This plan is a good combination of savings and insurance. Here, a particular amount is used for life insurance, and the remaining is used by the insurance company for investment purposes. Also, in this plan the insured receives benefits of maturity as offered by the company. This plan also provides periodic bonuses and other benefits.
|Term period||Assured Sum||Premium Annual||Value of Fund|
|30 yrs||Rs.10 lakh||20,000 to 25,000 Rupees||Mostly depends on the additional benefit as a bonus at maturity.|
This is an exclusive life insurance plan. Here the insured receives a fraction of the assured sum as survival benefit on sporadic intervals. These plans qualify to earn bonuses in between as affirmed by the insurance company to help meet the short period financial goals of the policy owner.
|Term Period||Assured Sum||Premium Annual||Returns ( Periodic)||Benefit of Maturity|
|20 yrs||5 lakh Rupees||20,000 to 25,000 rupees||Fraction of assured sum received in intervals||Insurance cover plus accrued bonuses plus confirm money back|
As the name suggests, this plan covers the insured person for their entire life (up to 100 years in some cases). The assured sum in this case is awarded to the applicant while claiming for the death together with the bonuses (if there is any). And if the insured outlives the policy beyond 100 years, he/she receives coverage of matured endowment paid by the insurance provider. The rate of premium in this type of life insurance is high and the plan offers the option of partial withdrawals once the premium payment time is over.
|Premium Term||Assured Sum||Premium Annual||Benefit of Maturity|
|20 yrs||3 lakh rupees||10,000 to 15,000 rupees||Confirmed Sum Assured plus bonus (if there is any) plus bonus terminal (if there is any)|
This plan is used by parents to ensure a bright future for the child. The fund invested in this policy helps in education and other costs of the children. These plans mostly offer payout once the child turns 18 years.
Here, if the insured (here parent) dies during the term of the policy, the insurance provider makes the immediate payment. In some cases, future premium gets waived (if insured dies), while the policy lasts till it matures.
|Term period||Assured Sum||Premium Annual||Returns (Periodic)||Benefit of Maturity|
|20 yrs||18 lakh rupees||1 lakh rupees||Lump sum pay at normal interval||benefit of maturity plus confirmed returns plus confirmed accrued bonus (if there is any)|
This plan creates an amount to help you after retirement and give you financial security. Even in this case, one-time payment is received after you turn 60 years. If the insured dies during the policy period, the nominee receives the immediate payment given by the policy provider. Here, the death benefit is higher than the coverage or the sum insured.
The Term plan offers cover against pure risk, while the ULIP provides insurance coverage as well as offer investment prospects. Endowment Plan is again an insurance plus savings plan, while the Money Back plan presents periodic returns together with offering insurance coverage. Whole Life Insurance is a life coverage plan for your entire life, while a Child Plan is used to fulfill the requirements of your child. On the other hand, Retirement Plan offers security against your retired life.
Now that you know about the types of life insurance policies in India, you can use this knowledge to buy the best plan to cover your family.
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Life Insurance can be defined as a contract between an insurance policy holder and an insurance company, where the insurer promises to pay a sum of money in exchange for a premium, upon the death of an insured person or after a set period.
Life insurance benefits can help replace your income if you pass away. This means your beneficiaries could use the money to help cover essential expenses, such as paying a mortgage or college tuition for your children. It can also be used to pay off debt, such as credit card bills or an outstanding car loan.
Why is life insurance important? Buying life insurance protects your spouse and children from the potentially devastating financial losses that could result if something happened to you. It provides financial security, helps to pay off debts, helps to pay living expenses, and helps to pay any medical or final expenses.
People with children are strongly recommended to have life insurance so that the needs of the child and remaining living spouse can be taken care of. Business owners and those who want to pass down a financial legacy are also advised to purchase life insurance.
PayBima is an Indian insurance aggregator on a mission to make insurance simple for people. PayBima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 17 years of experience. PayBima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.
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