You have always been supporting your family, emotionally, financially. But have you ever thought about how they will deal with the situation if you are no longer around to support them?

Here, life insurance can be the best solution to protect your family.

A life insurance policy is basically a long-term contract with an insurance firm by which you ensure the financial security of your family in case something untoward happens to you. According to the contract, you have to pay a fixed premium annually and the insurance company will provide life cover in return.

In case, something unexpected happens and the policyholder dies, the policy will compensate the nominees. It is a fact that money cannot compensate for the loss of loved ones, life insurance gives you peace of mind when you are sure that your family will be taken care of financially. So they can live their life without any financial stress.

There are different types of life insurance policies to choose from. Hence, you need to be aware of different types of life insurance plans and should select the plan that best suits your needs perfectly.

Here is the list of different types of life insurance policies:

Term Insurance (Pure Risk Cover)

 The most basic and least expensive, term insurance is mainly recommended for the individual under 50. This term policy is written for a specific period, generally 1-10 year and maybe renewable at the end of each term. A level term policy locks in the annual premium for periods of up to 40 years according to the insured's age.

Whole Life Insurance: This is a unique insurance plan that provides you coverage throughout your lifetime provided the policy is in force. This form of insurance plan contains a cash value component that goes high over time. Under this plan, you are free to withdraw your cash value or can take a loan against it according to your convenience. Besides, in case of your unfortunate demise, before you pay back the loan, the death benefit paid to your beneficiaries will be reduced.

Universal Life Insurance: The modern variation of the whole life insurance, Universal life insurance provides you with the flexibility to change your premium payments after the policy matures. A plan comes up with investment features that generally earn money on your investment as per the money market rate.

Unit Linked Plans (ULPs) (Insurance + Investment Opportunity)

A comprehensive combination of insurance and investment, a unit-linked plan provides you with the triple benefit of insurance, wealth creation as well as tax-saving investment. Under this plan, the money you pay as a premium is partly invested in funds and on risk cover. You can choose the funds to invest according to your risk appetite and investment horizon.

Endowment Policy (Insurance + Savings)

 Defined as a type of life insurance policy, an Endowment policy is payable to insured if he or she is still living on the policy's maturity date or to a beneficiary otherwise. 

What is unique about the Endowment plans is that they provide you with a dual combination of protection and saving. Under this insurance policy, the nominee gets the sum assured and bonus or participating profit or guaranteed additions. Here, the bonus or profit is based on the number of years that the insured survives in the policy term.

Money Back Policy (Periodic Return with Insurance Cover)

 This is also a unique life insurance, wherein a percentage of the sum assured is paid back to the insured in some intervals during the policy term as well as sum assured amount on death on maturity. Moreover, investors get accrued bonuses on maturity.

Child Plan (To fulfil Your Child's Life Goals)

 A child insurance plan is designed to help build a corpus for a child's future growth. It helps you make funds for child's special events like education and marriage. Most of the Child plan offers annual instalments or one-time payout after 18 years of age. 

In case, the parent passes away during the policy term, the payment is made to the child of the family. Many insurance companies waive off the premium if the policyholder dies and make the payment after the maturity period.

Retirement Plan (Plan Your Retirement & Retire Gracefully)

 With the retirement insurance plan, you can build a substantial amount of capital to live a worry-free retirement life. In case of the death of the insured, immediate payment is payable to the nominee by the insurance company.

Importance of Life Insurance

Everyone has different needs but there is something that no one can predict and that is the future. While it can bring a lot of positive and good things, there is always uncertainty regarding life itself. With a small premium amount, you can get coverage against the worst situation.

It may not be helpful for you but it will provide financial support to your loved ones even in your absence. Life insurance helps you to ensure that your loved ones will lead the same lifestyle when you will not be there for you as their helping hand. So buying life insurance that suits your needs and leads a happy and healthy life.

Bottom Line 

These are several types of life insurance in India and each type is focused on meeting some life cover and investment goals. While buying life insurance, don't get fascinated by advertisements or what your colleagues are buying as your profile and needs might be different from them. Do proper research and talk to experts before you take any decision. If you ask me, I always go with trusted companies like ICICI prudential.

This is simplified guidance to different types of life insurance policies. If you are looking for a suitable life insurance policy, get an expert's advice. Life insurance is a major factor in financial planning. Purchasing insurance involves asking for different lifestyle and financial questions. A qualified and insurance expert can efficiently help you sort through these issues and help you find the most appropriate policy for you.