Types of Life Insurance Policies Available in India and How to Choose

Types of Life Insurance Policies Available in India and How to Choose

Over the years, the insurance companies in India introduced different kinds of life insurance plans to suit the varying needs of the people. Read on to know about the types of life insurance policies available in India.

If you are a working professional, you may have often heard your peers or parents telling you to buy a life insurance policy. The life insurance policy offers financial security (in the form of the death benefit or sum assured) to the family in case of your untimely demise or any other miss-happenings that are covered in the insurance plan. You may be aware of the importance of a life insurance cover, but do you know that there are different kinds of policies available in India and each one comes with different offerings. Let us look at the types of life insurance policies:

Term Insurance

Term insurance provides a death benefit to the appointed nominee only in the event of the policy holder’s demise before the end of the policy term. If the policyholder outlives the coverage period, the coverage ceases, and there is no payout on maturity. It is one of the simplest and a pure protection life insurance plan. It is best suitable for you if you are looking to secure your family’s financial future without paying a high premium. You can invest in a term insurance plan with premium as low as 500 INR per month.

Whole Life Insurance

As the term itself suggests, a whole life insurance policy provides you coverage throughout your life, provided the policy is in force. This type of life insurance plan also has a cash value component, which increases over a period. You can either withdraw the amount or avail a loan against it as per your needs. You can easily buy this type of insurance online with just a few clicks and get coverage for your entire life.

Unit Linked Insurance Plan or ULIP

ULIP is a unique insurance plan that provides the dual benefit of protection as well as returns on investment. It has a cash value, which varies based on the current NAV (net asset value) of the underlying investment assets. In this type of life insurance plan, a portion of the premium you pay is used for protection, and the remaining amount is invested in different funds based on your risk appetite and financial goals. The funds are managed by experts fund managers, and they invest the money in debts or equities as per your choice and ensure that you get valuable returns overtime.

Child Insurance Policy

A child insurance policy is an investment-cum-savings plan that is specially designed to help you meet the financial needs of your child in the future. It allows you to help your child live their dream, and it gives you the advantage of compound interest. You can start investing in the plan as soon as your child is born or even before and allow the funds to accumulate over the years. You can also withdraw the funds at specific intervals to meet expenses like paying for the education fees or marriage.

Tips for choosing the right type of life insurance policy

  • First and foremost, set your financial goals and define your expectations from your investment. Also, you must consider the various expenses that may crop up in the long-run and choose the right type of insurance plan accordingly.
  • Review the different plans offered by the companies and choose the one that best suits your needs.
  • Read the fine print of the policy and know about the inclusions, exclusions, the claim settlement ratio of the insurer and the time taken to disburse the payout.
  • It is advisable that you consult a financial advisor to help you choose the right investment plan based on your requirements.


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