Life insurance is an agreement or contract made between the insurance company and the policyholder. The insurer will pay a lump-sum amount upon the demise of the insured or after a particular time period in return for premium payments. You can select life insurance based on your personal requirements. The premiums paid against life insurance are eligible for tax rebates and the benefits are usually free from tax implications.
Types of Life Insurance Policies in India
Term Insurance Plans: Term Insurance plans are those where coverage is offered for a specific time or duration like 10-20 years. The term of coverage is limited here and if the insured happens to die during the policy tenure, the company will pay a lump sum amount to his / her family as per the policy contract. The premium amount under a term insurance is fixed throughout the entire tenor. Term insurance plans are usually the cheapest form of insurance providing high cover at a lower premium, but there are no returns in a tem policy if the policyholder survives the policy tenure.
Whole Life Policy: Whole life insurance is a variation of term life insurance, designed to provide lifelong coverage.
Whole life insurance usually has higher premium payments than term life insurance, but fixed, like term insurance. Most whole life policies come with a cash value, which functions as a savings component. This type of policy enables the insured to build up wealth while getting protection for his entire life.
Endowment Policy: Endowment policies not only cover the insured person’s life but also help him/her build up savings over a period of time. This helps the policyholder get substantial returns for the premium paid. Under endowment policy, the insured / his family will get the maturity amount / sum assured irrespective of the survival or death of the policyholder. In case of death of the policy holder, the sum assured will be paid to his / her family immediately.
Money Back Policy: A money back policy comes under the aegis of an endowment plan. This is often called anticipated endowment plan, as the money will flow back to the insured person at regular intervals. In other words, the company will pay a bonus, at regular intervals during the policy tenure, and a lump sum amount at the time of maturity of the policy. This is known as the Survival Benefit. However, in case the person dies during the policy tenor, the death benefits will be paid out to the nominee and the policy will conclude.
Unit Linked Insurance Plans(ULIP): Unit Linked Insurance Plans (ULIP) are market linked life insurance cum investment schemes which offers coverage for the policyholder by investing the premiums across bonds, mutual funds or stocks. ULIPs come with high returns in the long term, however there are some risks involved in it as with any other market linked investment instruments. The protection and investment parts here can be tailored as per individual goals and preferences. This suits young investors who wish to park their money for long term, track their investments and deploy funds flexibly.
Annuity/Pension Plans: Pension plans are meant for generating a steady income for a retired person when he is not working or active in his profession. They are excellent tools for enjoying financial stability in the old age, besides coverage. In case of the demise of the policyholder during the policy or payment term, the family members will get the sum assured. Most pension plans are for limited term, but there are lifelong pension plans also.
There are two types of annuity insurance plans available in market. These are:
- Immediate annuity, here the payment starts immediately by the insurance company and the premium is mostly paid as lump sum in one installment.
- Deferred annuity scheme is like a recurring deposit where the policyholders keep on paying the premium to the insurance company till it reaches it vesting age. The premium accumulated with interest is considered as the main fund.
Child plans: Child plans are meant for giving financial protection for children for their future. These policies are taken in order to preplan some of the important financial requirement of the child like education expenses, marriage, etc. The child will get lump sum pay outs at regular intervals for important events in his / her life. In case of some unfortunate happenings to the parents, the insurance company will continue paying the premiums for providing the promised benefits, or release the sum assured in favour of the child / nominee.
Best Life Insurance Plans in India
Life Insurance Plans |
Entry Age(Min/Max) |
Policy Term-Min/Max |
Inbuilt Riders |
Claim settlement ratio (2015-16) |
Max life online term plan plus |
18-65 years |
10-40 years |
None |
96.95% |
Aegon I Term |
18-65 years |
5- 80 years |
Terminal illness |
95.31% |
Aviva I Life |
18-65 years |
10-57 years |
Terminal illness |
81.97% |
SBI Life E shield |
18-65 years |
5-30 years |
None |
93.39% |
HDFC 3D plus |
18-65 years |
5-40 years |
Waiver of premium, Terminal illness |
95.02% |
ICICI I protect smart |
18-60 years |
5-40 years |
Critical illness cover, Accidental death |
96.20% |
PNB MetlifeMera term plan |
18-65 years |
10-40 years |
None |
85.36% |
BhartiAxa Flexi Iterm |
18-65 years |
10-25 years |
None |
80.02% |
Edelweiss my life plus |
18-60 years |
10-40 years |
None |
85.11%
|
Birla Sunlife Protect@ease |
18-55 years |
5-40 years |
None |
88.45% |
Future Generali Flexi online term |
18-55 years |
10-75 years |
None |
90.26% |
Canara HSBC I Select |
18-70 years |
5-40 years |
Terminal illness cover |
92.99% |
Bajaj Allianz E touch online term |
18-65 years |
10-40 years |
Accidental death, Accidental disability, Waiver of Premium |
91.30% |
IDBI Federal isurance Flexi term |
18-62 years |
10-62 years |
cover for Cancer, Heart attack and Stroke |
84.79% |
LIC e-term plan |
18-60 years |
10-35 years |
None |
98.33% |
Aegon Life iTerm Forever |
18-65 years |
Whole of Life |
None |
95.31% |
HDFC Click to protect plus |
18-65 years |
10-40 years |
Waiver of premium, Terminal illness |
95.02% |