Life insurance plans have become a necessity. This is because risks today, have increased and worthy investments like life insurance offer future financial protection for you and your beneficiaries. To help you understand more about life insurance, below are explanations of the different plans in life insurance.

Different Plans and their Uses in Life Insurance

1. Term plan

Term life insurance is a simple, affordable, and easy to comprehend life insurance plan that offers death risk cover for a predetermined period. The death benefit is paid as monthly pay-outs, a lump sum amount, or a combination of the two. Since no pay-outs are made if the insured outlives the policy term, term life insurance plan is considered a pure life risk cover. Nonetheless, it offers high life coverage at low and affordable premiums.

2. Unit-linked insurance plan (ULIP)

The unit linked plan combines investment and life insurance benefits. The premium paid to sustain a unit linked plan is invested in funds and a risk cover. The insured chooses from different funds offered by the insurance provider that cater to different investment risk appetites. Accumulated fund amounts are invested in capital markets like market funds, bonds, debts, and equities where they gain substantial and shareable interest.

3. Endowment plan

Under the endowment plan, the insured party is offered a maturity benefit once they outlive the policy term. As such, it offers insurance and savings benefits. Part of the premium money is saved for life cover while the rest is invested by the insurance provider.

4. Money back

Money back life insurance offers a specified percentage of the sum assured as a survival benefit. Also, the insured receives declared bonuses occasionally. Hence, it acts as a source of finances required to meet short-term investment goals, as well as long-term goals once the policy matures.

5. Whole life insurance

As the name implies, a whole life plan offers entire life cover and, in some cases, up to 100 years. Beneficiaries receive the sum assured upon death of the insured person. If the insured party outlives 100 years, they receive the matured endowment compensation.

6. Child’s plan

Child plans offer a lump sum pay-out or annual instalments after a child turns 18 years. If the insured parent dies before the plan matures, the insurance provider makes an immediate payment and in some cases, the premiums are waived and the life insurance plan continues to maturity.

7. Retirement plan

The retirement life insurance plan is more of an investment that guarantees a financially secure life upon retirement and a substantial death benefit to beneficiaries once the insured dies. Hence, it is classified as a long-term life insurance retirement and savings plan.

Best Plans of Life Insurance in India

It is hard to pick out the best life insurance plan because people buy insurance policies for different reasons. So, one person’s best life insurance plan may not work for another person because people have different investment agenda and dependants to care for. However, websites like Coverfox.com offer comprehensive details about different life insurance plans, their benefits, and expected premium charges for you to peruse and choose from. The best life insurance plan in India should have the following characteristics:

1. Caters to your needs

People invest in life insurance plans for different reasons – to secure their dependants’ future once they are gone and to save money. Hence, the best life insurance plan is the one designed to address your specific insurance needs. For instance, if you want to save money for retirement, the retirement plan would be ideal.

2. Premium

The best life insurance plan charges premium amounts that you can afford to pay without financial strain. Note that the lowest premium levels may not always translate to the best life insurance cover.

3.  Settlement

Opt for a life insurance provider who makes payments towards your claim within the shortest time possible. Additionally, the paperwork should be minimal or limited to the basic document requirements like death certificate, policy document, and proof that the claimant is of legal adult age.

Why Buy Life Insurance Plans

Life insurance plans are offered across a varied range of specifications in a bid to accommodate different client requirements and budgets. The different plans are designed to provide basic and affordable life insurance coverage as well as offer peace of mind from knowing that your dependants’ future is secured should your demise occur before they are fully independent. Additionally, the lump sum payments can be used to settle debts, pay mortgages, or pay college fees for your dependants.

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