What are the different types of life insurance and which one is best for you?
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Author Image LKP Wealth Advisory
Insurance | June 18
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What are the different types of life insurance and which one is best for you?

We all are aware of the unexpected nature of human life. While we cannot control our fate, we can surely try to safeguard our near and dear ones in case of life’s unexpectedness with an efficient life insurance policy. If you have got a family and want to make sure they are financially stable even in your absence, you should take life insurance. In simple terms, it is a non-taxable sum of money that is given to your immediate family after you pass on. 

According to the ‘Sabse Pehle Life Insurance’ awareness programme, backed by all life insurance companies of India, some of the reasons why you must buy life insurance is as follows.

  • To make sure your family is supported after your demise.

  • To finance your children’s education and their other needs after your demise.

  • To have a source of income even after retirement.

Different types of life insurance

There are several different types of life insurance that you can get, depending on your needs and lifestyles. Here are the different types of life insurance and how to choose the best suit.

Term Insurance Plan

The most simple and pure type of life insurance is the Term Insurance plan. Out of all the types, this one is the most cost-effective plan which you can get at affordable rates. With a term plan, you can get a large benefit at a lower premium rate. This amount is paid to the nominee in the case of the insured person’s death. One of the main reasons you should go for a term insurance plan is the high life insurance your family is assured of at a low rate. You can have critical illnesses insured and it assures a larger payout if the insured person faces an untimely demise. Hence this is certainly one of the best types of life insurance.

Endowment Policy

Another type of life insurance is the endowment policy. It is basically a combination where you get an insurance cover as well as a savings plan. If you decide to go ahead with this policy, you will be able to save on a regular basis so that you get a lump sum at the time of maturity, that is, if the policyholder survives the period. In case of death of the policyholder, even before the fixed date of maturity, the nominee will receive the total sum. Due to its dual benefits, it tops the list of types of life insurance policy.

Unit Linked Insurance Plan

Much like an endowment policy, a Unit Linked Insurance Plan (ULIP) is a combination of insurance and investment. The premium that is paid is divided into two parts. One part goes into the pot where the life insurance sum is accumulating, while the other is invested in the markets with the motive to build wealth. You will be fully in control of your funds and how they are invested in the capital markets, as the risk involved is borne by you. This plan also allows you some freedom in terms of withdrawing money in times of need. Hence amongst all the types of life insurance, this policy benefits in two ways. It imbibes the habit of saving in the policyholder and also ensures the security of the insured person’s family.

Money Back Policy

A traditional life insurance policy would provide the sum at the end of the time period, but one’s finances are always swimming in unpredictability. You might be in dire need of funds but a life insurance plan will not provide the required money. The money-back policy is different in that aspect from other life insurance policies. Under this policy, a percentage of the assured sum is paid back to the holder at regular intervals. At maturity, the remainder of the sum assured is paid, but if something untoward were to happen, the full sum is paid, irrespective of the amounts paid back. This is what makes it unique and one of the best life insurance policy.

Whole Life policy

As the name suggests, this policy is maintained throughout the holder’s lifetime, unlike a term plan which comes with a specific tenure. Like others, the sum is paid to the beneficiaries on the insured person’s demise, provided all the premium payments were followed and paid accordingly. While this policy provides death benefits, it also has the option of a savings component that can be used to invest. This type has some of the benefits of other kinds of insurance, which adds to its own! Hence, it exemplifies the motto Sabse Pehle life insurance.

Annuity or Pension Plan

Due to the change in lifestyles and costs of living, it is imperative to have a plan in place for your retirement years. An annuity or pension plan provides a regular payment for life after you make a lump sum payment. The general insurance company invests the total sum and pays back the income generated from the investment to you after retirement. To guarantee a steady flow of income while you spend time on a hobby, this plan is most suitable.

Non-life Insurance

Along with our lives, some materialistic objects need insurance. This type is known as non life insurance. Car insurance, insurance in the event of any cybersecurity breach and property insurance are just some of the examples of this kind of insurance. It is wise to get your valuables insured, as it will save you from expenses incurred from unfortunate events.

How to choose the best life insurance

Now out of all the different types of life insurance, despite their pros and cons, it is up to you to decide which one is the best for you. Many factors come into play, like policy premium, sum insured, policy term, claim settlement ratio, claim process and customer support of the insurance company. You should surely take them into consideration before selecting the best one for you. A general insurance company will give you a generalised idea about the different types and their rates. 

But an institution like LKP Securities will certainly make your decision much easier. They boast of several ties with life and non life insurance companies like ICICI and HDFC. With the help of their trained professionals, you will be able to avail their premium health insurance policy. Some of the other types of insurance products they offer include motor insurance, travel insurance, and asset insurance. Therefore choose LKP as your guide to help you choose the best insurance plan!

We see how important buying a life insurance plan is. If you want to secure a future for your family and make sure your children have everything they need, there are a lot of options you can select from. So, without wasting any more time, scope the market and get that perfect plan for your loved ones.

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