Types of Life Insurance policies available in India and how to choose

A Life Insurance is a type of insurance that the person insured gets to protect the interest of the family in case of his sudden death. There are many types of Life Insurance policies available in India today and for a person looking into these options for the very first time, things may get a bit too overwhelming. Leading life insurance firms today are offering a wide range of options and any one of them can be the right choice for your family, depending on the ultimate coverage needs, financial goals and premium paying ability.

Here is a brief overview of some of them:

1. Pure Term Insurance Policy: This is the most basic and cheapest plan out there. These policies do not have any kind of cash value attached to them and one can avail a benefit only on the death of the life insured. A life cover at an affordable cost is available from most insurance companies.
2. Whole Life Policy: This policy provides a life cover for the entire lifetime of the policyholder and a particular and fixed premium is charged for the policy tenure. A range of benefits can be availed and this includes accumulating a cash value as well. Those who want a life cover for a longer period of time can look into this kind of policy.
3. Endowment Policy: Endowment plans provide a savings option to policy buyers and also provide a risk cover at the same time. These are in addition to the risk cover and hence these policies provide a good survival benefit as well, paid at the end of the policy tenure. Hence, the premiums paid will not go to waste if the policyholder is alive and is a great option for those who are looking for protection and savings at the same time.
4. Money Back Policy: Those who want regular payouts out of their term insurance can try this option. The payouts are given to the policyholder by the way of survival benefit, on a yearly basis mostly. Those who are looking for the liquidity of their money in order to achieve key milestones in their life from the returns from the money can look into this option.
5. Unit Linked Insurance Plan or ULIP: ULIPs are meant to provide risk cover against death to the policyholder, and it also allows the policyholder to invest in certain types of other funds that can avail the return. This is ideal for policyholders who are not afraid to take market risks and receive high profits when they succeed.
6. Pension Plans: Pension plans are schemes that are also known by the name of Annuity Plans or Retirement Plans and provide financial security to policyholders after they have retired. Payments are made by regular annuity payments and are ideal for those looking for a particular way of income even after retirement.
7. Group Plans: These plans provide life cover to a large number of people under one master policy and such a scheme can be purchased by a group of people looking for the same kind of benefits. Employees in an organization often enroll in such group policies or large families can take advantage of them as well.