There are mainly two types of life insurance plans. There is a pure protection plan. Others offer a mix of both insurance and investment. In this way, their focus is also on wealth creation.
In the case of a pure protection plan, the benefit is available on the death of the insured. At the same time, in other types of policies, the sum assured is paid even if the insured is alive. There are many variants in each category. Depending on the payment, they serve different purposes in life.
This is the simplest basic protection plan that covers the risk of death. In case of untimely death of the insured, a lump sum sum assured is paid to the family or the nominee. These plans are usually till the age of 85 years.
is paid on the death of the insured in this type of plan. If the insured survives during the term of the plan, then they do not get any maturity benefit. However, there is a return of premium on maturity in one variant due to the demand for life plans that offer returns.
term plans have the lowest premiums. In this, a very large cover is available at a low premium. Premium can be fixed during the term of the policy.
Types of Term Plan
1. Regular Plan
This is a pure protection plan. In this, the sum assured is paid on the death of the insured.
Annual premium for a term plan of Rs 1 crore for a person of 30 years for 40 years: Rs 11,210
2. Return of premium
Like the regular plan, the benefit is paid on the death of the policyholder during the policy term. However, in this, the premiums paid are paid if the policyholder survives during the policy term. This period can be 10-40 years.
Annual premium for a term plan of Rs 1 crore for 40 years for a person of 30 years: Rs 17,969
3. Staggered Payment
In this type of plan, a part of the death benefit is given to the nominee on the death of the policyholder. The rest of the amount is given gradually over 10-20 years. Rs 10 lakh for a term of 15 years and Rs 50,000 for a 30 year old premium
: Rs 15,725
4. Single Premium
Can pay full premium. The term of this type of plan is usually 85 years.
Annual premium for a term plan of Rs 1 crore for 20 years for a person of 30 years: Rs 1.8 lakh
5. Increasing/Decreasing Premium
As the name suggests, the Sum Assured may increase or decrease. However, the premium does not change. This is usually more than the regular plan.
Annual premium on increasing term plan of Rs 1 crore for 30 years old: Rs 22,801
Who should buy?
If there is an earning person in the family on whom people are dependent or that person has the responsibility of loan etc., then he must buy the policy. If a person is not earning or has retired and there is no dependent on him then he can ignore it.
Whole life insurance
It is also called as permanent plan. This is different from the basic term plan. It offers cover for whole life or 10 years. There are two types of this plan.
Death / Maturity Benefit
On the death of the life assured, the nominee gets a lump sum amount. If he lives for 100 years, then he is given the maturity amount.
remains the same throughout the term of the policy. In other variants of the whole life plan, you can pay premium for a shorter tenure like 15 years.
Annual premium for whole life plan for 30 years old: Rs 15,167
Who should buy?
If there is nothing to be left for the children in inheritance, then it should be avoided.
Traditional insurance plan
This type of life insurance plan is a combination of insurance and investment. But, mainly they are used to increase money. There is very little protection in them. On the basis of the period of payment, they are divided into two categories.
1. Endowment Plan
These plans pay the Sum Assured along with bonus to the nominee on the death of the policyholder. On survival of the policyholder during the term of the policy, they are paid along with Guaranteed Bonus on Maturity. The premium is very high as compared to
premium term plans.
This has to be given for a specified number of years.
Annual premium for a 30 year old plan of Rs 10 lakh for 20 years: Rs 1.04 lakh
2. Moneyback plan
The key difference here is that the payment is gradual at regular intervals. Bonus on maturity is also given on the survival of the policyholder.
endowment plans, premiums are higher as compared to term plans. This premium is divided into insurance and investment.
Who should buy?
You should buy only if you do not have the discipline to invest. Since they have low cover and low returns. Therefore, they can be avoided. Don’t forget to consider them as a tax saving instrument.