Having a life insurance will financially cover your family in cases such as death, disability, accident, retirement etc. Life insurance will provide family with a definite amount of money in case the life insured dies during the policy term or becomes disabled on account of an accident.
Life insurance is a must for the bread winner of the family so that in case of any mishap, the family will be financially stable.
There are different types of life insurance available depending on the cover.
1) Term insurance
The objective of insurance is to offer a high coverage in case of death. It is not an investment. Also, note that there is no benefit payable if the life assured survives the policy term.
2) Whole Life Insurance
This insurance will be in force for whole life till the premium are paid on time. In this plan, the premium remains constant throughout the premium payment term. It is one of the ideal ways of creating an estate for your heirs as an inheritance.
3) Endowment Policy
Endowment plans are combination of savings and insurance. In this plan the sum assured is will be returned if the individual survives during the end of the policy. An endowment plan can be used as a security to obtain a loan
4) Money back plans or cash back plans
Under this plan, certain percent of the sum assured is returned to the insured person periodically as survival benefit. On the expiry of the term, the balance amount is paid as maturity value. The life risk may be covered for the full sum assured during the term of the policy irrespective of the survival benefits paid.
5) Children Policies
Children policies will help the parent to get funds when the child attains various stages in life. Some insurers offer waiver of premiums in case of unfortunate death of the parent/proposer during the term of the policy.
6) Pension Plans
Pension is therefore an ideal method of retirement provision because the benefit is in the form of regular income. It is wise to provide for old age, when we have regular income during our earning period to take care of rainy days.
On pension plans, tax benefits are available under 80CCC and the maximum limit is Rs. 1.5 lakh.
Unit Linked Insurance Policies (ULIPs) are combination of investment and protection and allow you the flexibility and choice on how your premiums are invested. Also. One should assess risk appetite and investment horizon before deciding to buy a ULIP policy.