Different types of Life Insurance policies | Death Benefit | Saving Scheme | Investment Option | Planning for Life Stages | Emergency Funds | Income benefit | Critical Illness Cover | Tax benefits
There are different types of life insurance products available in the Insurance Industry market. All the Insurance policy products are meant for providing financial security to the insurer at the time of emergency and to protect the family of the insurer at unforeseen condition or at the time of the insurer’ death.
Types of Life Insurance Plan
The term insurance plan–
This type of policy is simple and clear form of life insurance, it offers protection until the policy tenure. If the insurer dies during the tenure, the nominee will get the death benefit. These plans always offer high coverage at a very low premium and the sad part is there are no maturity benefits.
The whole life insurance plan-
This plan provides coverage to the insurer till the death of the insure in other words full life coverage with the maturity benefits.
Unit-linked insurance plan –
This plan have both insurance and investment combination in a single policy. A part of the premium paid by the insurer is used for insurance coverage and the rest part is used to invest in market-linked mutual funds. This plan also provide tax benefits to the insurer.
The endowment plan–
An endowment plan is life insurance policy with a maturity benefits. This plan is suitable for the person who is looking for insurance his life for protecting his family coverage in his absence and with a purpose of saving component for his old age.
Goal-based life insurance plans–
In addition to the above categories, there are also particular goal-based life insurance plans such as child insurance, retirement policy, and money-back plans to meet the expanses of specific goals.
Different Ways in which Life Insurance Comes Handy in our life
Death Benefit –
It is the main purpose of any life insurance policy. Death benefit provides financial security and protection to the family after policyholder death.
Saving Scheme –
If someone purchases an endowment plan or life insurance with maturity benefit, people can save for their future goals along with insurance protection. Such plans help build up over a long period that comes in handy to meet expenses for the future goals.
Investment Option –
Certain life insurance plans such like unit linked insurance plans or ULIP which acts as investment scheme also. Invest a part of the premium into market-linked mutual funds based on your risk appetite. It also gives you an option to choose from a wide range of funds, including equity and debt funds.
Planning For Life Stages –
Life insurance helps you plan and save for your various future life stages such as planning a childbirth, education of children, daughter’s marriage of and retirement security for yourself. On maturity, the policyholder receives the total sum premium paid with interest and bonuses on maturity.
Emergency Fund –
Life insurance policy comes within handy for emergency requirements of the insurer. A policyholder can easily take loans against the active policy at a very low-interest rate. Which can be easily repaid in instalments. Plans like money back policy and whole life insurance accumulate the cash value amount which can be easily borrowed during the emergency period.
Income benefit –
Life insurance offers a regular payment as an income for the deceased insurer’s family. This offers guaranteed long-term income for the family or spouse for rest of their life.
Critical Illness Coverage –
Life insurance policy has a rider for critical illness coverage, which is meant to cover medical expenses if the policyholder is diagnosed with a critical illness.
Tax benefits –
A policyholder gets the tax benefit on premiums paid to life insurance under section 80 C of the Income Tax act. The sum assured that is received on maturity is also tax-free if the sum assured is minimum 10 times of the premium paid.
Conclusion
As I have discussed a lot of benefits of life insurance policies, this is important to consider some points before choosing a policy. The most important factor is the total sum assured, which you receive on the maturity or the death claim of the insurer. Keeping in mind your future expenditure, liabilities of the life and cost of living before deciding for any coverage amount. Other factors including policy term, additional benefits, flexibility, claim settlement and premium you will pay throughout the policy tenure. Life insurance policies are necessity in present times. They not only manage to minimizes risk but also helps in managing important events of life
FAQ
Question – what are the different type of categories are there in which insurance plans in are divided into?
Answer – the insurance plans are divided in 5 main categories.
Question – names of different categories of insurance plans?
Answer – the names of different categories of insurance plans are
following-
The whole life insurance plan
Unit-linked insurance plan
The endowment plan
Goal-based life insurance plans
The term insurance plan
Question – how many ways dose the insurance policy have us?
Answer – there are several ways in which insurance plan helps us, some of the are stated below-
Death Benefit
Saving Scheme
Investment Option
Planning for Life Stages
Emergency Fund
Income benefit
Critical Illness Coverage
Tax benefits
