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What are 3 different types of life insurances? Know differences to choose the best suited

by BankingTricks Desk

By paying a little premium, life insurance offers protection against unforeseen and unfortunate events like death. Despite the fact that there are numerous types of insurance policies on the market, many people frequently struggle to identify the ones that are most suited to their needs.

Term insurance, term insurance with return of premium, unit-linked insurance plans, endowment plans, money-back plans, whole life insurance, child insurance plans, and retirement plans are among the several types of life insurance policies offered in India. The three main categories of life insurance in India will be explained in this article.

 Term Life insurance:

The most basic type of insurance protection plan is term insurance, which pays benefits to the nominee in the event that the policyholder passes away.

Having said that, remember that the policyholder won’t receive any maturity benefits if they live past the policy’s term. Many life insurers in the nation have launched plans with survivor or money-back benefits, which typically come at some additional expenses, to address this problem.

For those who desire high levels of protection at reasonable prices, term life insurance policies are the best option. Everybody with dependents and a tight budget should, in theory, purchase term insurance to provide financial security for their loved ones.

Endowed Insurance:

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Life insurance is a tool that can be used for more than just death protection. It can also be a tool for achieving a variety of financial objectives, such as saving for retirement, planning for children’s education and/or marriage, or purchasing real estate. That is exactly what an endowment insurance policy does. Apart from life insurance cover, these policies offer a good return on maturity.

An endowment life insurance policy allows the policyholder save regularly over a certain length of time in order to build up a lump sum corpus that will be payable upon maturity in addition to protecting the policyholder’s life.

Endowment life insurance policies, in the opinion of experts, are the best option for people who struggle to routinely save money. It offers security against unfavourable occurrences like the death of the family’s breadwinner and aids in the development of disciplined investing.

Whole Life Insurance:

By paying a specific premium for a set amount of time, a whole life insurance policy provides the insured with lifetime coverage or coverage for 100 years. For as long as the policyholder is alive, the majority of whole life insurance plans offer a survival benefit at the conclusion of the premium payment term, either in a lump sum or on an annual basis. Additionally, if you live beyond 100 years, you’ll receive a maturity benefit.

Because it allows one to use life insurance to establish a virtual estate, whole life insurance can also be a useful tool in estate planning. For instance, a 25-year-old who pays a monthly premium of about Rs 12,000 for a Rs 20 lakh sum insured insurance can start with a fortune of Rs 20 lakhs. Due to the bonus given to the insurance, a monetary value is also added with each passing year of the policy.

Which one you should buy?

There are advantages and disadvantages to each kind of life insurance coverage. A person should carefully select the kind of life insurance coverage based on their needs and budget. Do not be afraid to ask a professional or insurance advisor for assistance if necessary.

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