Term Plan
A term plan is the simplest type of insurance in which you buy in an insurance cover for a specific number of years and at a certain premium. This type of insurance plan does have any other investment component. In case, the policyholder dies during the term of the policy, the sum assured is given to the beneficiary.
Term plans serve the real purpose of insurance & offer you the true meaning of the product life insurance tool i.e. Life cover (hedging the risk of your life). It works just like a general insurance, wherein you just need to pay annual premium for your life cover
Say you need life cover of 1 crore, so you need to pay annual premium amount of around 6000. If you die before life term (up to maximum 80 years) your family get 1 crore, otherwise you get nothing.
Whole life insurance plan
A whole life plan covers you for the ‘Whole of your life’ that is as long as you survive. A slight variation of whole life plan could be a whole life endowment plan, which will practically cover your whole life and will have the provision for maturity benefit too after a considerably long interval say at 100 years of age. The premium that you pay for this type of policy remains the same throughout the policy life. In case of the death of the policyholder, the sum assured is given to the nominee.
Endowment Plan
An endowment plan is a life insurance plan designed to pay a lump sum after a specified term (on its ‘maturity’) or on death. Endowments can be cashed in early (or surrendered) and the holder then receives the surrender value which is determined by the insurance company depending on how long the policy has been running and how much has been paid into it.
An endowment policy is a life insurance contract designed to pay a lump sum after a specified term (on its ‘maturity’) or on death. Typical maturities are ten, fifteen or twenty years up to a certain age limit. Some policies also pay out in the case of critical illness.
Endowment policies are typically traditional with-profits in which there is an amount guaranteed to be paid out called the sum assured and this can be increased on the basis of investment performance through the addition of periodic (for example annual) bonuses. Regular bonuses (sometimes referred to as reversionary bonuses) are guaranteed at maturity. a guaranteed bonus addition is declared by the companies depending on profit they have made in each financial year (form of equity) & hence are highly risky as there is uncertainty of companies performance in a financial year.
Money Back Plan
In a moneyback insurance plan, the policyholder gets a percentage of the sum assured at regular intervals, rather than getting the whole amount as lump sum. It is essentially a type of endowment plan with benefits of liquidity. One of the best features of this type of plan is – in the event of death of the policyholder during the policy term, the claim amount comprises the full sum assured. Also, there are no deductions made to the survival benefit amount that has already been paid.
ULIPs
Unit Linked Insurance Plans are investments made with risks associated to the capital markets. As this investment risk is borne by the policy holder, one needs to be discerning enough. Before buying a ULIP, it will be wise to consider your risk appetite and your requirements beforehand. There are several unit liked insurance products that are specially designed to suit your goals – be it for your health, marriage, retirement planning or for your child’s education.
Retirement Plan
The main objective of retirement plan should be to create a corpus sufficiently large enough to take care of the regular stream of income post retirement. It is a type of retirement solution that can help you with regular flow of income to maintain your existing lifestyle.
Pension plans often referred as ‘retirement plans’, offer you to pay guaranteed pensions after having paid certain premiums at regular time intervals.
While planning for a retirement solution, one should take a look into vesting provisions as set out under such plans like – minimum vesting amount, open market option, i.e., flexibility to choose annuity from any of the annuity providers in the market, types of annuity being offered, etc. Browse the site for more information.
