Types of Life Insurance Policies

There are a huge number of schemes that Life Insurance companies have these days when a person wants to take up a policy. It might all sound very different and also could be very confusing for a lay person. However, the truth is that the various schemes are just derivatives of the 5 basic schemes that are given below

Money Back Policy
In this type of policy, the policy holder will get back fixed amounts at certain intervals during the life of the policy and also a lump sum at the end of the tenure. In case the policy holder dies in between, the dependent will get the total sum assured and also there is no need to pay the future premiums.

Endowment Policy
In this type of policy, the policy holder will get a lump sum at the end of the tenure if one survives. In most, the returns are similar to the fixed deposit returns of government securities. In case the policy holder dies in between, the dependent will get the total sum assured and also there is no need to pay the future premiums.

Term Policy
In this type of policy, there are no survival benefits for the policy holder. In case the policy holder dies in between, the dependent will get the total sum assured and also there is no need to pay the future premiums. This is the cheapest form of risk cover as there are no returns in the future in case of survival.

Whole Life Policy
In this type of policy, premiums are typically paid through the life of the policy holder and one can get a life cover even after the age of 60 which other schemes may not provide. Also, this is more like an investment on an ongoing basis. Typically schemes come with options of profits and without profits.

Unit Linked Investment Plan
In this type of policy, part of the premium that one pays goes towards investment in equity or debt related instruments like a mutual fund. There are significant advantages in such schemes as it does not have entry and exit load. In case the policy holder dies in between, the dependent will get the total sum assured or the investment value which ever is higher and also there is no need to pay the future premiums.