Insurance Policy in India

Can you list me the types of Life Insurance Policies available in India as my Brother wants to take up a policy for him and family, please guide me properly?

[Shaleen]

Life insurance is a secure and protected way to protect loved ones after one’s demise. When one buys a life insurance policy in India, one enters into an agreement with the insurance company that assures to provide a certain sum to one’s family in case of sudden death.

The company offers financial protection to one’s family so that they can continue to lead a stable life even in one’s absence.

Types of Life Insurance Policies

Below are the types of life insurance policies available in the market:-

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 family gets a large lump sum amount, i.e; sum assured after death to lead a financially stable life.
However, if survive the term, the insurer pays nothing.

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 declare bonus periodically, which is paid, either on maturity or on the death of the insured.

3. Unit Linked Insurance Product (ULIPs):-
In it, 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 it is subject to market volatility.
Investing in it 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 child even in 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 it, the Company exempts all future premiums and pays the money to the child at specified intervals as planned out by the policyholder.

7. Retirement Insurance Policies:-
It is 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.