subject: Types Of Life Insurance Plans [print this page] Having an appropriate life insurance plan is a must in todays times. Lets understand what life insurance is, and the types of life insurance plans.
Life insurance means providing a cover to an individual if an unfortunate event like death occurs. In order to take this life cover, an individual needs to pay a specified premium under the type of plan offered by the insurance company, for a certain period. If he/she passes away during the tenure of the policy, the beneficiaries will receive a lump sum amount, or if the person is still alive, then on the type of policy taken, he/she shall receive the returns that the policy may have earnt.
The major types of life insurance plans are as follows:
Term Plan: A term insurance policy provides the insured person, a risk cover of a certain amount, for a specific period of time. For instance, if a person buys a Rs 5 lakh policy for 10 years, his dependents will receive a sum of Rs 5 Lakh, if he dies within that 15-year period.
Endowment Plan: This plan offers a risk cover along with savings. If the policyholder passes during the tenure of the policy, then the dependents get the sum assured. Else, he gets back the premiums paid during the tenure, along with return on investment and bonuses declared, by the insurance company
Whole Life Plan: A whole life plan provides a risk cover to the policyholder against death, till the time the policyholder continues to live. The policy does not expire unless there is a default in payment of premium.
Money Back Plan: Under this plan, the policyholder continues to receive a component of the sum assured, at regular intervals. In case, if the person continues to survive the policy period, he gets the remaining sum assured.
ULIPS: ULIPs stand for Unit Linked Insurance Plans. There are special ULIP plans offered by insurance companies which combine risk cover and at the same time, give an option of wealth creation. A part of the premium paid is towards the life cover, whereas the other part is invested in equity or debt instruments, to generate a higher return on investment.
Hence, invest in one of the above mentioned plans right away, as your life is precious and securing it against death should be a priority!
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