Do you know how many types of life insurance are there? It doesn’t matter if you don’t know. Let us know the Types of Life Insurance. You must have heard about life insurance at some point or the other and you must know how important it is in today’s time. If you don’t know, I’ll tell you in brief.
In life insurance policy, you pay some amount every month or in three months or years to the insurance company. In return, if you die by accident, then your nominee gets a fixed amount, so that after you there is no problem in your family’s living, children’s education, their marriage, etc. Whether you are from middle class or upper class, you will definitely need life insurance.
But the most troubling question is, which one should be insured. You must have heard about your endowment policy in TV, your friends would be recommending you a term plan. Hearing about such types of insurance policies and types of life insurance, your mind gets confused and you take the wrong policy, due to which you do not get the full benefit of it, as much as you wanted.
To clear this confusion, in this post, I will tell you the types of life insurance, so that you will be able to choose the right insurance policy for yourself and take full advantage of it. But let us first understand Life Insurance (Types of Life Insurance) policy in a little detail.
What is Life Insurance?
A life insurance policy is a contract between the policyholder and the insurance company. The policyholder pays a fixed premium to the insurance company for a fixed number of years, in return for which the insurance company claims that it will pay a fixed sum assured money to the policyholder’s nominee, if the death of the policyholder occurs within the time period of this policy. Inside, then.
In some policies, the policyholder also gets maturity benefits, if he/she survives this period.
Types of Life Insurance
- Term Plan
- Whole Life Insurance
- Endowment Policy
- Money Back Policy
- Unit Linked Insurance Plans
Let us now understand all these 5 insurance policies in details and take complete information about Types of Life Insurance.
1. Term Plan
Term insurance policy is very easy to understand. In this, you pay premium to the insurance company for a fixed number of years. In return, if your death does not happen naturally, then the insurance company gives the sum assured amount to your nominee. You do not get any maturity benefits in this policy. Term Insurance First Types of Life Insurance I have told you here.
Benefits of term life insurance
- In this plan, you have to pay less premium and you get more cover, as compared to other policies.
Disadvantages of term life insurance
- On maturity, you only get the sum of the total premiums, there is no interest on it.
2. Whole Life Insurance Policy
In whole life insurance policy, you get life cover. If you keep paying premiums regularly, then on your death, the sum assured is given by the insurance company to the nominee. You can also do this policy as a savings plan.
Benefits of Whole Life Insurance Policy
- And unlike policies, it does not have pre-defined terms and conditions. He gets the sum assured amount, which is completely dependent on the policyholder.
- Apart from the sum assured, it also has a saving part. You can also reinvest this assured amount and let your money grow as you live. You can also withdraw some money and take a loan against this policy.
3. Endowment Policy
Endowment policy is also in a way a mix product of both savings and protection. In this policy also, if the policyholder pays his premium regularly for some fixed years and his death is not natural, then the nominee of the policy holder will get the sum assured amount. Also, if the policyholder survives till the policy term, he/she gets a total amount along with maturity benefits.
What are the benefits of this Endowment Policy of Types of Life Insurance, let’s know
Benefits of Endowment Policy
You can also create a savings plan in this policy. You can also do your goal based savings and can also take a loan against this policy.
4. Money Back Policy
Types of Life Insurance: Money back policy is also a type of both type of savings and protection policy. But a big advantage is that some portion of your assured amount is available at regular intervals. So you do not have to wait for years to get the full amount. And the remaining amount you get on maturity along with bonus.
If the policyholder dies in the middle of the policy interval, the sum assured amount is paid by the insurance company to the nominee of the policy holder. Such benefits are not available in any other policy.
Benefits of Money Back Policy
The biggest advantage of this policy is that you get some percentage amount at regular intervals even before maturity.
5. Unit Linked Insurance Plans
Unit Linked Insurance (Types of Life Insurance) plans are also known as ULIPs. It is a type of policy scheme like investment and protection combination. This one is slightly different from other insurance policies. In this, the insurance company assigns the fund manager. Which invests the money of the policyholder, whether in equity or debt.
The policyholder has to choose which proportion he wants to invest his money in, out of equity and debt. However, it does not guarantee returns. In this, the insurance company provides a lumpsum amount to the policy holder on maturity of the policy.
Benefits of Unit Linked Insurance Plans
Although there is no guarantee of returns, yet the insurance company gives you good returns in comparison to other policies.
Final Words
Before taking any policy, you should prepare your goals as to why you want to take the policy. Accordingly, you will be able to make the right choice. Everyone can have different reasons. For example, in a money back policy, you keep getting some amount in the form of savings even before maturity, then some can go for it if savings are their priority.
Some people may opt for a unit linked policy for higher returns. Use your discretion before taking any policy. Take a policy after thinking carefully, and not in the words of insurance agents.
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