Types of Life Insurance Policies in India

The life insurance sector is one of the fastest growing finance related segments in India. There are many different products, each with a variety of offerings. Right from fueling investment needs to meeting different financial goals, they come with many objectives for the investor. Here are a few common types of covers, including whole life and term insurance policy.
1.Endowment Policy
There is a savings quotient linked to such policies. They come with a specified maturity period, as decided by the insurer. On the occurrence of any unforeseen event of the death or permanent disability, during the tenure of the policy; the sum assured will be received by the said beneficiaries to the policy. If the insured survives the term of the policy, the agreed maturity benefits become payable.

2.Term Insurance
Term insurance policy offers coverage only for a set period of time. On the occurrence of death or permanent disability during the tenure of the plan, the beneficiaries will be paid benefits to cover income loss or unpaid debt. Disability can be both partial and total, depending on the type of plan. However, if the insured survives the term of the plan, no such benefits are paid.

3.Money or Cash Plans
In these types of plans, a portion of the agreed and payable sum assured is returned to the insured person by the insurance company. This payment is made on a periodical basis, in the form of a survival benefit. When the term expires, the outstanding sum assured is paid as a maturity benefit. However, life risk is covered for the entire amount of the agreed sum assured, even if a portion of the benefits has already been paid.

4.Whole Life Insurance
Unlike a term insurance policy, whole life plans strive to give you lifelong protection. Such cover comes with death benefits, meaning your family can continue to be financially stable after your death. It also comes with maturity benefits, after the expiry of the term. Most people use this type of policy to create an inheritance or estate for their children.

5.Children’s Policies
These plans can be taken in the name of the child or the parent. However, it is only for the benefit of the child. This helps parents mobilize finances when the child reaches a particular age or stage of life.

6.Annuity Plans
Just like a term insurance policy, this type of insurance aims at covering income loss. After retirement, an individual is cut-off from a regular source of income, and any benefits, like gratuity or provident funds, run the risk of getting exhausted quickly. Pension is a model provision for safe-guarding retirement, as the benefit is like a regular income. So, it is best to get pension plans in order to ensure financial independence after retirement.