Most of us are only aware of protection and endowment plans when it comes to life insurance. However, life insurance industry has evolved drastically and today, there are various life insurance products to cater to different customer needs. Some life insurance plans serve dual purposes too. Let’s take a look at the different plans
Term insurance is a life insurance product offered by an insurance company which offers financial coverage to the policy holder for a specific time period. Term plans are the most basic and purest type of life insurance. They are the most affordable form of life insurance as premiums are cheaper compared to other life insurance plans. Online term insurance plans provide pure risk cover. A fixed sum assured is paid to the beneficiaries if the policyholder expires during the policy term.
Endowment plans cater to the need for savings. Unlike term plans which pay out the sum assured, only in case of an unfortunate event of the demise of the policyholder over the policy term, endowment plans pay out the sum assured in both scenarios death and maturity. Endowment plans provide upfront guaranteed returns on maturity. They are ideal for the ones who have low risk appetite
Unit linked insurance plans (ULIP)
ULIPs are market linked products. They cater to the need of investment followed by protection.
ULIPs differ from traditional endowment plans in certain areas. Individuals can choose the allocation for investments in equity to debt funds depending on the risk you are willing to take. EEquity funds have high risk involved but they do provide good returns. ULIPs provide triple benefits of tax savings, good returns and protection.
Annuities act as a retirement solution. An annuity is an insurance product that pays out regular income. An annuity is aimed at generating steady income during retirement, where in lump sum payment is made by an individual to obtain certain amounts immediately or at some point of future.