Life Insurance is one of the most effective forms of the investment cycle and it significantlyhelps is maintaining the economy, let us discuss the types of term insurance in India. We should always know what the different plans of life insurance are and what type of return can we derive from them. We should alsounderstand how the premiums are paid in different types of insurance policies.
Types of best life insurance plans primarily are:
- Term Insurance
- Endowment Plan
- ULIP Unit Linked Insurance Plans
- Money Back Policy
- Term insurance Plan-
Life insurance term plan is basic and cheaper than other life insurance plans, in which only life insurance cover is given and no part of premium or premium paid is invested. In Term Insurance, a fixed sum insured (the sum assured) is given to the beneficiary in the event of the death of the insured, and nothing is paid in respect of the survival of the policyholder upon the expiry of the policy term.
In the term insurance plan, if the policyholder dies during the insurance period then the death benefit is given to the nominee. Premiums for term insurance policies are the lowest in all types of life insurance policies. Premiums are less in this policy because there is no investment component in it and the entire premium goes up to cover the risk.
Benefits of Term Plan
In case of an untimely death of the breadwinner, the family is supported by an enormous amount of money – sum assured, which helps them to replace the loss of the income. Moreover, the money could be utilized to pay off the loan, monthly household expenses, children’s education, children’s marriage, etc.
- Endowment Plan –
The biggest difference between term plans and endowment plans is the maturity benefit. This means that when the policy is maturing at the expiry of the term of the policy, the insured gets added bonus along with the sum insured. A bonus is declared annually in the policy term if the scheme benefits. The remaining amount is invested by deducting the expenses from the premium given by you. A bonus is declared on profit from the same. The endowment plan premium is higher in comparison to the term plan.
Benefits of Endowment Plan
Endowment plan provides a disciplined way of saving money for future financial needs. It provides life risk cover which would be very helpful for the family if something unpleasant happens to the head of the family. Returns in this scheme can be reduced but a guaranteed maturity is fixed, which is usually free of risk. In this scheme, income tax is also available on investment.
- ULIP Unit Linked Insurance Plans –
ULIP caters to both the insurance and investment needs. In ULIP, the remaining money is invested by deducting the expenses and charge of insurance and management from the premium paid by you. You determine how much to invest in the fund and you can invest in both debt and equity funds, or by looking at your risk. Like the mutual fund, the investment in ULIP is based on the unit’s NAV. You can also check your investment according to its performance during the policy period and transfer it to another fund.
Benefits of ULIP
Invest money as per your risk appetite. You have the option to invest either in equity, debt or in hybrid funds.
- Money Back Policy
In fact, Money Back Policy is also a form of endowment plan, in which a fixed portion of the sum insured is paid to the insured during a certain period of time during the insurance period. At the end of the period, the remaining sum assured is paid along with the bonus.
Benefits of Money Back Plan:
Short-term financial planning & an opportunity to earn returns on maturity.
At Edelweiss Tokio Term Life Insurance,uniqueness in the plans is offered to the customers so as to enable them to choose a plan according to their choice and possibility.
Over the period of time, there are several steps taken towards improving the existing policies and introducing the new ones to increase the outreach of the insurance and bring in a majority of people under the insurance umbrella. With the advent of technology and expansion of the internet, this sector is immensely benefitted and one may easily buy the best life insurance policies and the process is completely hassle-free.