There are different types of life insurance plans available in India. The Indian life insurance sector is booming, and as a result, customers have a wide choice of ideal policies. Insurance has several purposes, the life cover being one of them. When you buy a life insurance policy, you look to safeguard the financial needs of your loved ones in case something happens to you. To ensure this happens effectively, you need to get the most suitable and the best life insurance plan. How is the selection done, and what tools are to be used? Read on to know more.
Choosing the best life insurance plan
There are many ways in which you can choose the best life insurance for your family. However, first, you need to understand how each type of life insurance works and what specific features they have. Once that is done, you can go ahead and choose the one that matches your requirements. Here’s a detailed lowdown:
- Savings plans
Savings plans, commonly known as endowment plans, are one of the most common types of life insurance plans in India. They are excellent products that combine the components of insurance and investment. Hence, you do not need to include different proceeds in your financial portfolio. An endowment plan keeps your life covered while also investing your money in a risk-free manner. You earn dividends, and your corpus grows. An endowment plan is very well suited for middle-class Indian families who have a primary breadwinner and several dependent family members. These plans are affordable and offer many benefits, including tax savings. Every life insurance company in India offers endowment life insurance plans, so do your research, compare the plans and get the one that suits you the best.
- Term plans
Term life insurance plans are also very common and popular in India. You can get a large sum assured for a small premium amount. This is very well suited for young families where the breadwinner is still in his early career days. Term insurance does not have a return component but promises a large payout if the policyholder does. Hence, the premium is low compared to other types of life insurance. This is suitable coverage for those who do not have a high budget for their life insurance plan but want to provide adequately for their families. It is beneficial to get a term plan at a young age when you are young and fit, as the plan starts to get more expensive as you age. It is not suitable for people who are older or about to retire, as it mainly covers the life of the policyholder without offering a return component.
- ULIPs
ULIP stands for unit-linked insurance plans and is another popular form of life insurance in India. It is a handy investment tool where a part of your premium money is invested in stocks and bonds and grows handsomely. If you need a plan that works to help your corpus grow while keeping your life safely covered, you can opt for a ULIP. This is also one of the best life insurance plans for NRIs, as they can invest in the Indian markets and keep their lives covered to safeguard their family members (such as parents) who continue to live in the country.
- Whole life plans
Whole life insurance plans are insurance policies that cover your life till the very end. This type of life insurance is suitable for those who have many financial responsibilities, even in their advanced years. If you marry late and have young children, or you have an estate to look after, you will benefit greatly from a whole life insurance plan. A whole life insurance plan is more expensive than a standard term plan or endowment plan, but it gives you and your family a larger and more effective assurance that no matter when you die, your nominee will get the financial support needed.
- Annuity plans
The annuity life insurance plans are very useful types of life insurance. They are also known as pension plans and are available in two varieties – immediate annuity and deferred annuity. In the deferred annuity plans, you pay a premium for a period of time and build up a retirement corpus. After you retire, you get a steady payout that helps you to meet your family’s financial goals. If you die within the policy period, your family gets a sum assured. In an immediate annuity plan, you invest a lump sum amount of money when you retire, and the regular payout commences immediately.
Conclusion
Keep the most important features of life insurance plans in mind when choosing the life insurance cover and make a suitable selection. Thus, it is important to know and understand the various types of plans available in India so that you can choose the one that suits your needs.
