Types of Life Insurance Policies | Different Life Insurance Types Explained | Aviva Life Insurance

Types of Life Insurance

Life Insurance Policies

What is Life Insurance?

A life insurance policy is a long-term contract with an insurance company that allows you to provide an adequate level of security for your family in case something untoward was to happen to you. Although no amount of money can ever compensate for the loss of an individual, life insurance provides you with the peace of mind, knowing that your family will be taken care of financially. Having a life insurance policy in place thereby ensures that your family will be able to pay off any mortgage, liabilities, medical expenses or outstanding loans and continue living in case of your absence. Besides this, the policyholder also is provided with the option to add on several riders on the holder’s requirement.

Different Types of Life Insurance Policies in India

Let’s explore how to choose the right type of life insurance policy in India.

Types of InsuranceFeatures
Term Insurance1. Term insurance  is the simplest and cheapest type of life insurance policy that offers financial coverage to the policyholder’s family for a set period of time. 
2. In case of an unfortunate event during the policy term, beneficiary of the policy holder gets a lump sum amount i.e. sum assured to lead a financially stable life. 
3. Term insurance plans are designed purely to protect financial future of family of policy holder .
Endowment Plans1. Endowment plans differ from term plans and come with a specified maturity benefit, as decided by the insurer. 
2. In case of an untoward incident which leads to the demise or in the event of a permanent disability, during the tenure of the policy; the sum assured will be payable to the said beneficiaries to the policy. 
3. However, if the policyholder survives the term of the policy, the agreed maturity benefits become payable.
Whole Life Policy1. Whole life policies tend to offer the policyholder lifelong protection. 
2. The policyholder pays regular premiums unless he meets an untimely demise, upon which the corpus is paid out to his family or beneficiary. 
3. As there is no pre-defined policy tenure, the policy expires in case of an eventuality. 
4. It combines permanent protection with a savings component and is ideal for individuals looking to create an inheritance or estate for their children.
Unit Linked Insurance Plans1. ULIP or Unit Linked Insurance Plans is a combination of insurance and investment as they provide risk cover for the policyholder along with investment options. 
2. ULIPs offer the insured, the opportunity for wealth creation while providing the security of a Life Cover. In ULIPs, a portion of the premium goes towards providing the life cover, while the remaining portion is invested in equities or debts (or a combination of both) which is also subject to market volatility. 
3. ULIPs pay out the sum assured (or the investment portfolio) whichever is higher, on death/maturity.
Money Back Policy1. Money Back plans pay the sum assured to the insured party on maturity while also providing certain amounts called survival benefits. These survival benefits are made on a periodical basis. 
2. When the term expires, the policyholder gets the balance sum assured. 
3. Additionally, in case of the policyholder meets with an untimely demise during the policy term, the beneficiary gets the full sum assured. 
4. The policyholder might also be eligible to receive a bonus from the insurance company based on its performance.

The Bottom Line

You have always been there for your loved ones, are it financially or emotionally, but have you ever taken into consideration, how they would cope if you’re no longer around to support them? Understanding life insurance types is essential, as life insurance is one of the pillars of personal finance and should be considered by every household. Opt for the right life insurance product for your family today and stay protected at all times!

Related Blog- What is Life Insurance? Meaning, Definition & Complete Guide

AN Jan 58/17

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The name of the Aviva Product/Plan does not in any way indicate the quality of the insurance contract, its future prospects or returns. For more details on risk factors, terms and conditions please read sales brochure carefully before concluding a sale. Riders are not mandatory and are available for a nominal extra cost. Please read respective rider brochure before taking a decision.

*Guaranteed benefits are available only if all due premiums are paid.

Unit Linked Life Insurance products are different from traditional insurance products and are subject to market risks. Please know the associated risks and the applicable charges from your sales representative or the intermediary or policy document issued by the insurance company. The premium paid in Unit Linked life insurance policies are subject to investment risks associated with capital markets and the NAVs of the units may go up or down based on the performance of the fund and factors influencing the capital market and the insured is responsible for his/ her decisions.

The various funds offered under Unit Linked Insurance contract are the names of the funds and do not in any way indicate the quality of these plans, their future prospects and returns. Unit Linked Funds are subject to market risks and there is no assurance or guarantee that the objective of the investment fund will be achieved. Past performance of the investment funds do not indicate the future performance of the same.

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