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Selecting the right life insurance policy is necessary for a life of comfort and convenience. A life insurance policy ensures that one's dependents will be adequately cared for in their absence but also helps create a significant corpus to meet their future financial objectives. In India, various life insurance policies allow individuals to tailor their choices based on their needs. Here is a list of different types of life insurance policy available in India 2024 and their benefits in detail.
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Life insurance plans protect your family members from the uncertainties of life, like accidents, illnesses, or worse, death. Therefore, you must buy the right plan for yourself and your loved ones.
Life insurance can be broadly categorized under the following two types:
Term Insurance: Term Insurance Plan, also known as a pure protection plan, offers a lump sum death benefit to the family or loved ones in the event of the policyholder's unfortunate death, providing financial security for their future.
Savings Plan: A Savings Plan offers life coverage benefits and helps you plan for long-term goals, like buying a home or funding your child’s higher education. It also ensures future returns if you outlive the plan. The different types of life insurance saving plans include endowment plans, ULIP, retirement plans, child insurance plans, money-back plans, etc.
Term Plans
Here is a list of the different types of life insurance products that are offered by the top life insurance companies in India in 2024:
| Types of Life Insurance Policies | Overview |
| Term Life Insurance/ Term insurance plan | Long-term financial protection for your family members |
| Term Insurance with Return of Premium | Returns all the premiums paid at the end of the policy term on survival of the policy |
| Whole Life Insurance | Provides life insurance coverage for the entire life until 99 or 100 years. |
| Endowment Plan | Guarantee of receiving the intended amount at maturity |
| Money Back Policy | Provides periodic payouts during the policy term, with a portion of the sum assured returned at specific intervals |
| Retirement/Pension Plans | Help to create a retirement corpus so that you can live a stress-free post-retirement life |
| Unit Linked Insurance Plans (ULIP) | Investing in a combination of diversified equity and debt funds with 5 years of lock-in time for partial withdrawals. |
| Child Insurance Policy | Helps secure the future of your child such as higher education and marriage in case of your untimely death |
| Group Life Insurance plan | Offer life insurance coverage to a group under a single plan, particularly to company employees. |
Let’s discuss the insurance products in detail:
Term life insurance is the most convenient and affordable form of life insurance. It provides death benefits to the nominee if the policyholder dies during the term. No benefits are paid if the policyholder survives the term. But certain variants of term plans also offer payouts on maturity, like TROP (Term plan with return of premium) and 100% refund of premiums at no cost term insurance if the policyholder survives the policy term.
These types of life insurance policies also give you the option of adding riders with the base plan, such as accidental death benefit or critical illness. These important term insurance riders provide you and your loved ones additional protection at a nominal premium paid along with the regular premiums.
Let’s understand this with the help of an example:
Raj, a 35-year-old software engineer, purchases a 20-year term life insurance plan with Rs. 1 Crore term insurance cover. If Raj passes away during the term, his family receives the Rs. 1 Crore death benefit. However, no benefits are paid in regular term insurance if he survives the term.
Term return of premium plans is the term plan variant that offers a benefit amount to the nominee in case of the policyholder’s untimely death or provides the entire premiums paid at the end of the policy term as a maturity benefit.
Under this type of term insurance plan, you can receive the entire premium amount you paid on outliving the policy term. Moreover, you can calculate the premiums easily for term insurance using an online term plan calculator.
For example: Meera, a 30-year-old teacher, opts for a 15-year term insurance with a return of premium plan. She pays Rs. 20,000 annually excluding taxes. If she survives the 15-year term, she gets back all the premiums paid, totaling Rs. 3 lakhs (excluding taxes). If she passes away during the term, her beneficiaries receive the death benefit.
Whole life insurance plan is one of the types of life insurance policy that provides you coverage for 99 or 100 years. In comparison to a short tenure of 10 to 30 years, the long coverage time of these plans ensures family protection for an extended time.
This plan is ideal for those individuals who have financial dependents in old age also. One of the main benefits of this plan is that it provides lifetime protection to the policyholder and leaves a legacy for their kids.
These plans offer financial stability. After the payment of premiums of 5 years, you receive a guaranteed income at maturity. In addition to this, the income received from this plan is free of taxes, subjected u/s 10(10D) of the total premium amount paid.
For example: Sanjay, a 40-year-old business owner, buys a whole life insurance policy with a Rs. 1 Crore death benefit. This policy covers him for his entire life, and upon his death, his beneficiaries receive the 1 Crore cover amount, regardless of when he passes away.
An endowment plan is a life insurance plan that offers dual benefits of life cover and wealth creation. With this plan, you can receive a lump sum payout on the plan's maturity. In case of the policyholder’s death during the plan term, the beneficiary/nominee receives a death payout.
Endowment plans are suitable for individuals who want guaranteed returns with the protection of life insurance. These plans also give you the option to benefit from bonuses, which are payable additionally over and above the policy’s life cover.
For example: Priya, a 28-year-old nurse, invests in a 20-year endowment plan with a sum assured of Rs. 25 lakhs. If Priya survives the policy term, she receives the Rs. 25 lakhs along with any bonuses. If she suffers an unfortunate death during the term, her family receives the death benefit.
Money back policies are the types of life insurance policy where the policyholder receives a percentage of life cover at regular intervals. Simply put, the money back plan is an endowment policy with increased liquidity benefits and systematic payments.
These plans are specifically designed to meet the short-term financial goals. This policy provides survival benefits during the policy tenure. It gives you a percentage of the sum assured at regular intervals during your policy term. If you live beyond the term of these types of life insurance policy, you will receive the remaining portion of the corpus and the accrued bonus also at the end of the policy term.
However, in case of an unfortunate event before the full term of the insurance policy is over, the beneficiaries are entitled to receive the entire sum assured regardless of the number of installments paid out, and without any deductions.
Money-back policies also have a maturity benefit. So, you receive a lump sum payment at maturity that can be used to protect your future or help fulfill the dreams of your family in case you outlive the policy term.
For example: Anil, a 32-year-old architect, buys a 20-year money back policy with a sum assured of Rs. 20 lakhs. Every five years, he receives 20% of the sum assured. If Anil survives the term, he also gets the remaining sum assured and bonuses. If he dies during the term, his family receives the full sum assured.
Retirement plans are types of life insurance policy that are specifically designed to build a large corpus for your after-retirement days that help you financially in your non-working years. These plans allow saving and then investing for a long tenure, thus providing the potential to collect a handsome amount.
Retirement plans provide insurance benefits with which you can ensure financial protection for your family members by investing in retirement plans. These plans offer a number of options to withdraw your money like lump sum payment, regular income, or a combination of lump sum and regular.
For example: Ramesh, a 45-year-old engineer, invests in a retirement plan that starts paying him a monthly pension from the age of 60. This ensures Ramesh has a steady income during his retirement years, providing financial security.
ULIP plans provide the dual benefits of investment and insurance. It provides a life cover that offers financial security for your family members, as well as builds wealth through market-linked returns from systematic investments. With this, you get the opportunity to invest your amount in different options of funds depending on your risk appetite.
These types of life insurance policies come with a lock-in time of 5 years, and the amount can be invested in hybrid funds, equities, bonds, etc. They offer the option of fund-switching and partial withdrawals. They also provide wealthy boosters and loyalty additions that help generate more wealth.
For example: Kavita, a 29-year-old earning female, purchases a ULIP that combines life insurance with investment. Part of her premium goes towards a life cover, while the rest is invested in equity and debt funds. She can track her investment performance and make adjustments as needed.
*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply
A child insurance policy is a saving cum investment plan that is designed to meet your child’s future financial needs. In case of an unforeseen death where the life assured’s parent passes away during the policy tenure, child insurance plans can provide instant payout to cover the expenses of a child.
Child Insurance Policies allow your kids to live their dreams and gives you the advantage to start investing in the children’s plan right from the time the child is born and provisions to withdraw the savings once the child reaches adulthood. Some child insurance policies do allow intermediate withdrawals at certain intervals.
For example: Sunil, a 35-year-old banker, buys a child insurance policy for his 5-year-old daughter. This policy ensures that if Sunil passes away, the sum assured is paid out, and the policy continues with future premiums waived. Upon maturity, his daughter receives a lump sum for her education or marriage.
Group Life Insurance Policy is one of the types of life insurance policy that is provided to a group of individuals, generally as an employment benefit. The main purpose of group life insurance plans is to offer financial freedom, support, and protection to the family of the concerned employee in case of any eventualities.
In case of the employee’s death, when employed with the company, the corresponding group insurance plan would offer the much-required financial guarantee to the inconsolable family. This policy is not only limited to an employer-employee group but also extended to other organizations like bank customers, non-banking financial organizations, NGOs, microfinance institutions, and professional groups.
Some of these types of life insurance policies also offer coverage for outstanding loans to a group of debtors, while some come up with disability and critical illness benefits.
For example: A large corporation offers a group life insurance plan to its employees, including Ritu, a 30-year-old accountant. This plan provides life coverage to all employees, ensuring their families receive financial support if an employee passes away while still employed.
Here is how you can select the suitable types of life insurance policy for yourself:
Choose as per your goals: Different life insurance plans can help achieve different goals. You should always be clear about the goal that you want to fulfill with your life insurance which can help you choose the suitable types of life insurance policy.
Consider the Life Cover (Sum Assured): Determine the needs of your loved ones as well as your daily expenses before selecting a cover that helps fulfill all of your and your family’s needs. The general thumb’s rule is that you should always choose a sum assured that is at least 10 to 15 times your yearly income. You can also use a human life value calculator to see the life cover amount you can purchase.
Policy Term: There are various types of life insurance policies available in India with different policy terms. You should select a plan with a suitable policy term that will help you achieve your desired goals in life.
Available Riders: Most types of life insurance policies offer the option of adding riders to the base plan. These riders can enhance your sum assured and cover eventualities such as:
Check Insurer’s Details: Before selecting the ideal type of life insurance policy, check the company's claim settlement and solvency ratio along with the plan's exclusions.
Consultation: Consult a financial advisor for additional information and advice on what are the best types of life insurance policy for you and your family if you have any doubts.
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Below are some of the key points to keep in mind before you buy life insurance plan:
Remember your responsibilities and future life goals before choosing a life cover.
Check the claim settlement ratio (CSR) for 5 consecutive years of the insurer from which you want to buy life insurance plan.
Keep in mind the premium amount, due date of premium payment and all the necessary information regarding the plan that will help you in the long run.
Ensure you ask about the additional benefits/riders before buying the life insurance plan.
For ease in the life insurance claim process, ensure your nominees know the location of the insurance documents and other credentials.
You can buy the best type of life insurance policy in India online from the comfort of your home using the following steps:
Step 1: Go to the Policybazaar’s homepage and visit Life Insurance
Step 2:Select the type of life insurance at the top (Term/Investment Plan)
Step 3: Enter your name, contact information, gender, and date of birth
Step 4: Fill in your occupation type, annual income, educational background, and smoking habits
Step 5: Select the best life insurance plan for yourself and proceed to pay
†Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
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