Types of life insurance policies you should invest in

In today's day and age buying a life insurance policy is essential. It is important that you invest in a life insurance policy as it helps you build a strong financial corpus and also protects your family in the event of your uncertain death or disability. There are different types of life insurance policies that you should be aware of to ensure you invest in the right plan as per your requirement and budget.

Term insurance policy

This type of life insurance plan is a pure protection plan that provides you financial protection only for a specific period of years. On your death anytime during the term of the policy, your family is paid the sum assured. This is the most affordable type of life insurance policy as it offers you high coverage at a low premium rate.

Endowment policy

Unlike a term insurance plan, an endowment policy pays out to the policyholder under both circumstances i.e. even on death and survival. One part of the premium paid is allocated towards life cover while another part is invested. If you die during the term of the policy, sum assured i.e. the death benefit is given to the nominee. Also, if you survive the term of the policy, the sum assured along with bonuses, if any. Endowment plans are risk-free and offer guaranteed returns unlike other financial products in the market.

Money back policy

In simple terms, a money back plan offers periodic payments to the investor. The periodic payments made are generally a fixed percentage of the sum assured. On survival till the end of the policy, you are eligible to receive the survival benefit along. And on your death, the nominee is entitled to receive the full sum assured along with the survival benefit.

Whole life insurance policy

As the name suggests, this type of policy provides coverage to the policyholder as long as he survives. The policy is designed to cover individuals up to the age of 100 or whole life even. This type of life insurance policy demands you to pay a high premium till the coverage period. The investments continue to grow with no change in the premium. On your death, the nominee is given the sum assured along with bonuses, any, if applicable. Additionally, this type of life insurance policy also gives you tax benefits, loan facility and is considered a good tool for building a strong financial corpus.

Unit linked insurance plan

Unit linked insurance plan is one of the popular life insurance plans in India as it offers you a good mix of investment as well as insurance. A part of the premium you pay is invested in the market, while the other part is invested towards providing you life cover. Investing in ULIP gives you a chance to choose the funds you want to invest in. This plan provides you with tax benefits under section 80C and also comes with a lock-in period of five years.

Child plan

A child plan is a type of life insurance plan that helps you build a strong financial future for your child. Investing in this plan helps you fund your child's education or marriage. It also protects your child in case of your unfortunate demise.