As per current tax laws, you get tax relief* on the investment made as well as on the benefits received from life insurance plans. No wonder then, life insurance plans are sought after in the last quarter – January to March, of the financial year. However, Covid times brought forth the realization of the importance of financial security for an individual’s loved ones. And life insurance plans finally found their due importance for their core value of ensuring financial stability for the family in case something untoward were to happen to the bread winner
However, people are still oblivious to the fact that life insurance plans are efficient investment tools to help achieve long-term goals. There are a variety of plans that offer you the advantage and flexibility to invest as per purpose, capacity, risk appetite and personal goals. A knowledge of the different types of life insurance plan available helps in finding a solution that best suits your needs and preferences, and also enables you to derive the most out of it towards your financial well-being.
Types of Life Insurance plans | Function | Key benefits |
Term Life plan | Pure risk cover plans | Provides sizable life cover at affordable premiums. |
Whole Life plan | Life cover for entire life | Provides life cover till 100 years of age of the policyholder, Provides survival benefit in case the policyholder crosses 100 years of life. |
Endowment plan | Protection plus Savings with guaranteed returns | A lump sum amount paid to the nominee in case of death of the life insured ; Provides guaranteed returns on investment. |
Money Back plan | A type of endowment plan in which a specified amount is paid at intervals during the policy term, to the life insured. | Offers liquidity benefit with periodic payout of funds; A final payout complete with accrued bonus, if any, paid on maturity |
Unit Linked Insurance plan (ULIP) | Protection plus Investment; Investments are made market linked instruments | A lump sum amount paid to the nominee in case of death of the life insured ; Helps reap higher return on investment through market linked instruments; Offers a range of equity and debt funds; Provides flexibility to invest in a mix of funds as per personal risk appetite. Allows changing the fund mix at any time to suit changing needs. |
Child plan | Protection plus Investment | A lump sum amount paid to the nominee in case of death of the insured parent; Waiver of Premium – most child plans offer this facility wherein in case of the insured parent’s death, all future premiums due are waived off and the policy continues with all benefits as and when due; Helps save regularly and build a corpus to fund important events in the child’s life like higher education and marriage. |
Retirement plan | Protection plus Investment | A lump sum amount paid to the nominee in case of death of the life insured ; Helps build a corpus towards a comfortable retired life; Maturity benefit can be taken as a lump sum or be used to purchase annuity to have a regular income through life. |
Investing in life insurance plans early in life is advisable as this helps one to:
- Save on premiums;
- Get into the practice of saving regularly;
- Align savings towards important life goals;
- Reap optimum benefits over the long term;
- Save on taxes and,
- Live #FutureFearless with the assurance that you and your loved ones will be financial secure always.
* Income Tax laws are subject to change. You are advised to consult a tax advisor for more details.
