Explain Top 3 Types of Life Insurance Plans

In today’s uncertainties of life, having a life insurance plan has become a necessity for every individual. Life insurance is the safest and the most secure way to provide financial security to your family and loved ones against any types of unforeseen circumstances. Nowadays, to fulfill the requirements of the customers, many insurance companies have launched highly comprehensive plans that provide life protection along with many additional benefits.

According to the suitability and requirements of the customers, there are different types of life insurance plans provided by the insurance companies. To help you know more about these plans, here we have briefly discussed the top three types of life insurance plans.

1.    Term Insurance Plans-

Term Insurance plans are the cheapest and the simplest form of life insurance plans that provide full financial protection for a particular period of time. Under term insurance plan a death benefit is payable to the nominee in case of uncertain demise of the policy holder. As compared to the other cash value insurance plans, term insurance plans are more affordable and provide full life coverage to the insured. Some of the benefits offered by term insurance plans are:

 

1.    The plan provides a death benefit to the nominee in case of uncertain demise of the policy holder. The beneficiary of the policy is paid a lump-sum amount in the event of a sudden death of the policy holder.

2.    The term insurance plans help you to pay off your loans and liabilities.

3.    The term insurance plans also take care of the family in case of disability or critical illness of the policy holder.

4.    In the case of loss of income due to any illness or accidental disability, the plan also provides supplementary income in that case.

5.    If the insured person is diagnosed with a critical illness, then a lump sum amount is paid to the insured by the insurer.

6.    In minimum premium amount the plan offers maximum coverage to the insured.

2.    Endowment plans-

Endowment plan provides life coverage to the insured for a particular period of time. As per the requirements of the customers, endowment policies are broadly classified into two types i.e. endowment without profit and endowment with profit plan. 

The endowment without profit plan which is also known as term plan offers a sum assured amount to the beneficiary only upon the death of the insured. Whereas, in the endowment with profit plan the beneficiary receives the sum assured amount plus bonus during the entire tenure of the policy in case of demise of the policy holder. Moreover, the insured also receives a maturity benefit as sum assured plus bonus amount in case if the insured survives during the entire tenure of the policy. Some of the benefits offered by endowment policies are:

1.    Since the maturity benefits are guaranteed, the endowment plans are low-risk plans to invest in.

2.    These plans provide financial security to the family members and loved ones of the insured.

3.    The endowment plan also provides tax benefit to the buyers.

3.    Unit Linked Insurance Plan

Unit Linked Insurance Plans are market linked product that provides buyers the benefit of both investments cum insurance plans. Unit Linked Insurance plans are linked to capital market and provide flexibility to invest in equity or depth as per the risk appetite. Due to the dual benefits provided by the plans, this is one of the most attractive term insurance plan offered by the insurance company. On the basis of the different purpose, they serve to the buyers ULIP plans are categorized as

•    ULIP for Retirement

•    ULIP for Wealth Collection

•    ULIP for Children Education

•    ULIP for Health Benefit

Some of the benefits offered by ULIP Plans are

1.    ULIP plans have transparent features and affordable charges.

2.    These plans provide flexibility to switch between funds.

3.    The plan has different premium paying frequency.

4.    ULIP plans provide rider option as add-on coverage

5.    The buyers can also avail the benefits of tax deduction.

These top three types of life insurance plan not only provide financial protection to the insured and their loved ones but also provides many add-on benefits to fulfill the requirements of their day today life.