Life Risk

Life insurance offers you the security and protection of your loved ones. It serves as a safety net, providing financial assistance during the policyholder’s death. The death benefit can help maintain your family’s financial stability even if you are not present by replacing lost income, paying for daily living expenses, paying off debts like mortgages or loans, and funding your children’s education It would help if you were well-versed in the various types of life insurance and the things you should consider before purchasing one to select the best policy for you and your family. 

Different Types of Life Insurances

Term Life Insurance –  One of the most common types of life insurance available is term life insurance. It’s frequently regarded as the most straightforward and basic life insurance. With term life insurance, the beneficiaries receive a death benefit if the policyholder dies during the policy term. One benefit of term insurance is that it typically costs less than other types of life insurance policies. For comparatively low premiums, you get a lot of coverage. By choosing extra riders, such as accidental death benefits and disability riders you can also increase the coverage a term plan provides. These add-ons extend the coverage and modify the policy to meet your requirements. 

Whole Life Insurance –   A whole life insurance policy, as the name suggests, insures your entire life. The policy starts from the date of its commencement and ges till 99 years. It comes with fixed premiums and a guaranteed death benefit. A whole life insurance policy builds a ‘Cash Value’ component which increases overtime which can be used to pay out our loans or borrow a loan against it. 

Money Back Policy —  Money Back Policy is a gift that keeps giving! Unlike other types of life insurance products, in this type of policy, you are entitled to survival benefits at regular intervals during the policy’s term. After the maturity of the policy, you will receive the remaining corpus along with any bonus that you may be entitled to. So, these policies come with regular guaranteed returns that come that pre set intervals and a maturity benefit. You will be paid a percentage of the sum assured at regular intervals during the policy term. If you outlive the insurance policy’s term, you will receive the remaining corpus balance and any accrued bonus after the policy’s term. 

Endowment Insurance Plan —  An endowment plan is the most beneficial among different types of life insurance policies that provides not one but two incredible benefits: life insurance and wealth creation. These plans are ideal for those of us who want the security of guaranteed returns while taking advantage of life insurance protection. These policies are created to offer the policyholder maturity benefits and bonuses in addition to the policy’s life insurance coverage, so even if you haven’t filed a claim, you’ll still receive a lump sum payment at the end of the policy’s term. It’s like a tiny pot of gold is at the finish line, just waiting for you! You have choices regarding endowment plans. They are broadly classified into two types: with profit and without profit. Depending on your risk tolerance level and objectives, you can choose between the two. 

Unit Linked Insurance Plans — ULIP plans offer life insurance, which ensures financial security for your family members. At the same time, they allow you to accumulate wealth through market-linked returns from systematic investments. These plans allow you to select from various fund options based on your risk tolerance. You can put your money into hybrid funds, equities, bonds, and other investments. Furthermore, these plans have a 5-year lock-in period, which helps you stay committed to your investment journey. One of the best among different types of life insurance policies, ULIP plans also allow you to switch funds, which allows you to reallocate your premiums based on market conditions or your changing investment strategy. It’s like being free to tailor your investment strategy to your needs. Additionally, you can make partial withdrawals, allowing you to access money when required. ULIP plans also include loyalty and wealthy boosters. These are somewhat like bonuses that eventually lead to increased wealth. ULIPs are fantastic when it comes to tax advantages. Their profits are exempt from LTCG (Long Term Capital Gains), giving you an advantage over other market instruments in terms of tax efficiency.