Understanding Life Insurance Plans and their Features

Life insurance is one of the most prominent blessings of the modern age. You can cover the financial wellness of your loved ones well in advance and ensure you have made all the arrangements to safeguard them against any economic challenge that can come up if you suddenly die. There are different types of life insurance plans, each catering to a different need. You must be aware of the different life insurance plans and their features to understand which one suits you and your family the best. Read on to know more.

1. Endowment plans – features and benefits

To begin with, we have the ever-popular endowment life insurance plans. Endowment insurance is one of the most commonly purchased forms of life insurance in India. This is because an endowment policy, also known as a savings plan, allows you to combine insurance with investment, albeit in a safe and risk-free manner. 

Features and Benefits – You pay a regular premium for the entire duration of the policy period. In return, the insurance provider promises to pay a sum assured to your family if you die. This is one of the most common features of life insurance. Additionally, the premium amount also gets invested in safe tools in the money markets and earns dividends. You get the premium, along with the dividend earned, back if you outlive the policy period.

2. Term plans – features and benefits

Next, we have term insurance. Here, the insurance provider offers coverage for a fixed number of years. You get a pure life cover without a return component. If you outlive the policy period, you don’t get your premium back, but if you die within the term, your family gets the sum assured.

Features and Benefits – One of the most striking features of term insurance is its ability to offer a huge coverage amount at a very affordable cost. You can conveniently meet your insurance requirements and this proves to be highly beneficial for young, salaried people who have families to support.

3. ULIP – features and benefits

Unit Linked Insurance Plans (ULIP) are excellent for those who are serious investors but also want to keep their lives covered simultaneously. This is a very good product where you get to invest your money in the stock markets. There are different funds you can opt for, based on your risk appetite. The money grows, while your life stays covered. 

Features and Benefits – The most striking feature of a ULIP is its ability to earn returns at a quicker pace, as compared to an endowment plan. It is extremely flexible and proves to be beneficial as you can safely and very conveniently combine insurance with investment. It adds value to your financial portfolio and allows you to manage your investments smoothly and efficiently.

4. Annuity plans – features and benefits

An annuity plan is designed to give you a comfortable retirement. You can invest in an annuity plan and be guaranteed to receive regular payouts after you retire and your regular income stops. This happens while your life stays covered. You can choose a deferred annuity plan and invest in it for a period of 10, 20 or even 30 years. You can also choose an immediate annuity plan and invest a lump sum amount of money in it just before or after you retire. The pension payout starts once you retire. 

Features and Benefits – It is highly beneficial to have an annuity life insurance plan as it allows you to save regularly and build up a corpus for your twilight years. You can do so while your life is insured and this gives you assurance and mental peace. There are the usual life insurance benefits such as tax benefits available with the annuity plans, so you must look to invest in them.

5. Money back plans – features and benefits 

Money-back plans are a type of life insurance where you get a fixed sum of money at regular and pre-decided intervals. It allows you to meet the various milestones of your life. This happens along with life insurance, so you get insurance and financial security, all at once.

Features and Benefits – Money-back life insurance is beneficial for those who like having a fixed financial plan, knowing they will get funds as and when required. The plans are flexible and help you to meet the financial challenges as your life progresses.

Conclusion 

As you can clearly see from the points mentioned above, different types of life insurance policies offer different benefits. Do your research and look for the best life insurance and most appropriate coverage that will benefit you and your loved ones while helping you meet your investment goals as well. There are many different plans from many insurance providers in India, so analyse your needs, make a budget and start looking for the best life insurance policy to cover yourself.