Here are the types of life insurance policies. Every single life insurance plan and policy is built around these basic insurance policies and permutations and combinations of these.
Term insurance policy
This is now available as E-term life insurance policy is a complete risk cover policy that covers anyone who is insured for a specific time period. In this the sum that is assured is paid off to the beneficiaries or the family members if in case the policy holder dies within the policy term. For example, if in case a person makes a term life insurance policy of Rs 20 lakhs for a period of 10 years and he expires within that period, the money assured i.e. the entire Rs 20 lakhs is given to his family and if he survives, the premium paid isn’t returned. The only advantage is that the premiums paid are tax-free and just because this insurance is meant to provide a 100 percent risk covers the premiums too are very low and these insurance plans don’t have any additional or hidden charges.
Whole life insurance policy
A whole life policy covers the policyholders against death, throughout his/her life term. The validity of this kind of life insurance policy is undefined and therefore the life cover is cherished by the individual through his/her life. In this kind of insurance policy anyone who holds a whole life insurance policy pays the premiums and on his death the entire corpus is paid to the family. Until any untoward event happens in the life of the individual the policy does not expire and what’s more the premiums that are paid towards the policy are exempted from tax.
The most sought after life insurance policies that are available in the market. When a person purchases an endowment life insurance policy, they benefit in two ways. The beneficiary gets the sum assured in case of death of the policyholder during the tenure of the plan and in case the policy holder survives the tenure of the endowment policy plan the premiums that he paid for the policy are given back to him with other investment returns and benefits more like a bonus. Along with the normal endowment policy there are other options like marriage endowment and education endowment plans as well.
Money back policies
This is another favourite life insurance policy for the main reason that this policy gives periodic payments during the term of the policy. Actually, the amounts that are paid during the periodic intervals are the portion of the sum assured. If the policy holder survives the term, he gets the balance sum assured. The beneficiaries receive the entire sum assured in case the policyholder dies during the term. The premiums paid for this money back life insurance too is exempted from tax.