Types of Life Insurance & Benefits

Purchasing a life insurance policy is the most secure and safest way to protect your family and make them sound financially at the time of emergency. We can term life insurance as an agreement between the insurance company and the insured whereby the insurer agrees to pay the sum assured to the nominee of the insured party on the death of the policy holder. In return, under the term of the policy the insured agrees to pay a predefined amount of money as premium either on lump-sum basis or on a regular basis. Premiums can be explained as the amount paid by the insured to the insurance company to keep the policy alive. On the basis of chosen sum assured the premium is decided if you have a higher sum assured the premium will also be higher. As there are number of life insurance policy available in the market choosing the most suitable policy that covers all your need is a task. One can check online and compare the different life insurance plan and select the plan that offer benefits.

Different types of life insurance policies in India
Term insurance plan-Term insurance plan is the basic and the most traditional insurance policy available in the market. The policy is also known as pure insurance or pure protection plan. In term insurance plan the insured is covered for a particular period of term. In case of the demise of the policy holder during the policy tenure then the chosen sum assured is paid out to the nominee. Nevertheless, the policy does not offer any maturity benefit i.e. if the insured survives till the completion of the policy tenure then he/she will not receive any payout.

The term insurance plan also have a variant that is known as Term Return of Premium Plan. The plan is similar to the term insurance plansexcept that the nominee stands to receive both the maturity and death benefit. As term plan provide highest coverage at lowest premium the plan is considered as best life insurance plans in term of financial protection.

Endowment Policy- endowment plans are the investment and protection life insurance plan. This plan offers maturity as well as death benefits. The premium paid under this plan are allotted towards the sum assured as well as invested for returns. The death and maturity benefits of the endowment policy is not limited to the sum assured as the policy offers some additional benefits too. In case of death of the policy holder or in case of the maturity of the policy the profit made out of investment amount is also paid to the beneficiary. The profit under endowment policies are paid as bonus at a regular interval during the policy tenure. The most common form of bonus are reversionary bonus and terminal bonus.

Unit Linked Insurance Plan (ULIP)- Unit linked plans are participating, unit-linked, investment and life insurance policy. One can invest a part of premium in utilized funds for returns. Under unit linked insurance plan the returns are dependent on investment performance. The unit-linked insurance plans are generally more expensive than term or endowment plan and only the portion of premium are assigned towards the life coverage. This plan works on principal of both protection as well as investment instruments and offers tax advantage to the policy holder.

Money back policy- Money back plans are saving, protection cum participating plan. Under this insurance plan the insured receive the regular payout as well as the survival benefits both during the policy tenure and at maturity too. The money back plan differ from endowment plan in this add on benefits are only offered at the maturity of the policy. Another important features of this policy is that the death benefits offered during the period of the policy tenure is not affected by amount already paid out. This plan also offers bonus to the insured. The money back policy provides financial protection to the insured as well as offers return to keep their policy active.

Whole life policy- This is a participating policy as well as protection cum saving plan. The whole life insurance plansoffer insurance coverage for the whole life of the person up to 100 years whichever is earlier. Also the bonus is added on the sum assured which is paid to the beneficiary after the death of the policy holder.

Annuity/Pension Plan- In order the help the insured to build a retirement corpus pension plan is offered by the insurance company. This plan help to secure the person financially even after retirement. In case of sudden death of the insured the nominee can either avail the lump-sum amount or can receive a regular pension for the rest of the policy term. There are many insurance companies in India that provide a wide array of plans for the individual so that they can save an ample amount after the retirement.

Child Insurance- With the significant growth in the education cost has brought a sense of worry for parents. Therefore having a child insurance plan secures the life of the children even if you are not alive. Under the child insurance plan a lump-sum amount is paid to the nominee i.e. the child in sudden demise of the policy holder. At the time of purchase, the policy holder is provided the option to choose the payment intervals to be made to the surviving child in case of policyholder's demise.

Benefits of life insurance policy
Along with the financial security and protection there are numerous benefits of availing life insurance policy.

Life Risk Cover- In case of any emergency or unforeseen situation having a life insurance policy protect the individual and the family financial and provide you with high risk life cover.

Death Benefits- Investing in life insurance secure you and your family financially. But in case of sudden death or accident of the policy holder, the insurance company pays the entire sum assured amount along with the bonus to the nominee of the policy. Among the various policies offered online you can choose the policy that will suit according to your own suitability. Life insurance also cover the interest of people who are on the age of retirement and those who are already retired.

Return on investment- As compared to the other investment plans life insurance plan yield better returns. Unlike other investment schemes the life insurance policies offers bonuses along with the risk coverage. The money invested in life insurance are safe and provide full returns either on the demise of the insured or after the completion of the policy term. Either way the money invested by the insured and the returns are safely paid back.

Tax Benefits- According to section 80C of income tax act purchasing a life insurance is an effective way for an employed person to reduce tax liability. According to section 80C investment made in specific insurance are subject to rebate. A rebate of Rs100,000 is available under income tax act which can be invested in sections like employee provident fund, life insurance premiums, national saving certificates, equity linked mutual fund scheme, public provident fund (maximum Rs70,000) and pension superannuation fund. The amount spent in these investment sections are eligible for rebate from the gross income tax table.

Loan Option- In case of desperate need of money the life insurance policy provide you the benefit of taking policy loan. Depend on the policy provision the loan amount can be taken either sum assured under the policy on percentage of the cash value.

Life stage Planning- the life insurance policy help you to plan the financial goal of your life according to your own convenience. Having a life insurance plan not only support an individual financially at the time of sudden death but also act as a long term investment. According to the life stage plan you can fulfill all your aims whether it is your children education, constructing home, marriage or planning a relaxed life after retirement.

Assured income benefit- Assured income benefits is offered on regular interval to the family so that they can stay secure. In case of sudden demise of the policy holder the policy provide assured income benefits that pays for all rents, loans and other expenses like children education, telephone bill and electricity bill. This income compensation is given in place of demise of the breadwinner of the family.

Riders- Riders are the add-on benefits that can be bought along with the basic insurance policy. Riders allows you to increase your insurance coverage and cover the risk that are beyond the coverage of main life insurance policy. Adding riders to your basic policy make your policy more comprehensive. Some of the covers offered by riders are personal accident, critical illness, waiver of premium benefits and family income benefits. This riders come on action mainly when the basic life insurance policy does not come on play. The different types of rider not only provide tax benefits but also make you eligible for deduction in health and life coverage.

There is no doubt about this that life insurance policy is an absolute necessity for every individual. This is a protection cum risk minimized tool that should be purchased without giving any second thought. While understanding the significant of life insurance plan one should surely have a life insurance plan. As provide total financial security to the individual and its family member. Moreover, as in today's time there are number of insurance company that offers life insurance you can compare and check life plans online and choose the most suitable policy according to your own comfortability.