Six Most Common Types of Life Insurance Policies

If you have decided to buy an insurance plan, then one of the first choices you are faced with is the type of HDFC Life Insurance Plan you want. Now, there are multiple kinds of plans, each with its features and benefits. So, keeping your predicament in mind, here’s outlining the basic features of the most common types of insurance plans.

#1 Whole Life Plan

One of the most common types of insurance policies, a ‘whole life plan’ covers the entire life of the policyholder. The beneficiary gets a lump-sum amount after the demise of the insured. Since the risk factor for these policies is high for the insurer, the premium is usually on the higher side. Since it offers coverage for the whole life, a claim must be made to get the amount.

#2 Term Plan

Term plans are preferred mainly because of their affordability. It is the easiest policy to understand as well. You get a fixed sum insured and pay the premium on time every month. These plans come with both death benefit and maturity benefit. Also, you can add riders to these plans, such as accidental death rider, accelerated death rider, and so on.

#3 Unit Linked Insurance Plan

A Unit-Linked Investment Plan (ULIP) is a type of insurance plan that has two components –

• The insurance component that comes with a life cover and death benefits.
• The market component that offers the benefits of investment to reach your long-term goals.

As a policyholder, you are allowed to choose your fund allocation and strategy. You can also invest more in the plan if you want to.

#4 Money Back Policy

This is another policy that usually has a higher premium. In this case, you are basically making arrangements for your family to have a steady source of income. So, apart from the death benefit, your family will also get a specific amount given to them at regular intervals of five to ten years.

#5 Endowment Plan

An endowment plan is a policy that offers lifetime coverage with the prospect of regular savings. Thus, you get a lump-sum amount when the policy matures. There is also a death benefit aspect to these plans. Similar to ULIPs, endowment plans are customizable as well. You can pay your premium as per the time frame and method you choose for it.

#6 Retirement Plan

As you can guess from the name, the primary aim of these plans is to offer you financial support in case of retirement. When your steady income decreases drastically after retirement, this policy can come in handy to ensure that you don’t have to compromise on your living standards. A good idea is to start saving in a retirement plan as soon as you start earning.

The endnote

Lastly, remember that insurance premiums vary from one individual to another. So, even for the same policy, you might need to pay a higher premium than your friend. It depends on a lot of individual factors, such as health, age, smoking habits, etc.