Types of Life Insurance Plans

Life insurance has always been considered an integral part of financial planning. It provides the must-have financial protection for your loved ones in your absence. Some policies, like term insurance, provide you with life coverage and immense peace of mind, while others also help build a good amount of money (financial corpus) to achieve their goals. 

Choosing the right life insurance is crucial, as different insurance policies are available. With diverse features and functionalities, these policies provide unique advantages. A comprehensive understanding of these options empowers you to make informed decisions, ensuring the best protection for your loved ones. 

Here are some of the most popular types of Life insurance in India.

Term insurance is a pure life coverage plan that provides financial protection for a specific term or duration. If the policyholder demises during the policy term, the beneficiary gets the sum assured, also known as the death benefit. The amount received from the insurance company can cover expenses such as outstanding debts, children’s education, or other daily expenses. Term insurance is one of the most straightforward and affordable options.

Let's say you purchase a term life insurance policy with coverage of 50 lakh rupees, and the term is 20 years. If you unfortunately pass away during those 20 years, your beneficiaries will receive 50 lakh rupees from the insurance company. But if you survive this period, there's no payout. 

Term insurance plans have several benefits, especially for primary breadwinners. They ensure your family's financial security even in your absence. Let’s take a look at some of the benefits. 

Tax Benefits: The premiums are free from tax deductions under section 80C of the Income Tax Act up to a maximum of INR 1.5 lakh per annum.

The ACKO Life Flexi Term Plan is a unique term plan with unmatched flexibility. In a nutshell, here's what you get:

Life is full of changes. Your job, your savings, your family—you name it! The Flexi Benefit lets you adapt your plan accordingly. You can change:

You can make your plan even better by adding some helpful extras:

Endowment plans offer both protection and savings. They cover you for a specific term; if you outlive it, you get a lump-sum payment called the maturity benefit. On the other hand, if you are no longer available to support your family due to an unfortunate event within the coverage period, the sum assured goes to the person you have designated as your beneficiary.

Let’s say every month, you pay 5,000 rupees for 15 years into an endowment plan. This means you make 180 payments (5,000 rupees x 12 months x 15 years). You'll receive a lump sum at the end of the 15 years. This amount will include your total contributions plus the accumulated interest. On the other hand, if you unfortunately pass away during those 15 years, your beneficiaries will receive the coverage amount from the insurance company.

ULIPs combine life insurance with investment. A portion of your premium goes towards providing insurance coverage, and the rest is invested in various funds like equity, debt, or balanced funds, based on your risk appetite.

You pay ₹50,000 a year into a ULIP plan for 15 years. Your ₹20,000 goes to insurance coverage, and ₹30,000 is invested. After 15 years, you get the insurance premium plus the value of the accumulated funds. On the other hand, if you unfortunately die within those 15 years, your beneficiaries will receive the sum assured.

Money back plans provide periodic payouts during the policy term in addition to the maturity benefit. If the policyholder survives the policy term, they receive a percentage of the sum assured at regular intervals. In case of demise during the term, the full sum assured is paid to the nominee.

Let's say you buy a money back policy with a sum assured of INR 2 lakh. Your policy term is 20 years; the survival benefit will be paid every 5 years. It means you'll receive 15% (survival benefit is not fixed and varies between policies) of the sum assured every 5 years. After 20 years, you'll receive the remaining sum insured, including any accumulated bonus. 

If you die during the policy term, the entire sum assured, i.e., INR 2 lakh, will be paid to your nominee, regardless of any survival benefits already released.

A whole life insurance policy guarantees coverage for your entire life until age 99. It provides a death benefit to the beneficiary and savings or investment component. It means a part of your premium is used to gradually accumulate a cash value that can be accessed or used as a loan in the future.

Let’s say you buy a whole life insurance policy in India, and the sum assured is INR 50 lakh. You pay regular premiums to keep the policy active. If you pass away, your nominees will get a death benefit of INR 50 lakh. If you lived beyond the maturity age, i.e. 100 years, you would get the endowment coverage (a lump sum payout). It also accumulates cash value (savings that grow over time), which you can use for credit or if needed during your lifetime.

A whole life insurance policy combines financial protection and a savings plan, providing a well-rounded option for individuals who value comprehensive coverage and long-term financial growth.

Retirement insurance plans, also known as pension plans or annuity plans, help you build a corpus for your retirement. You contribute regular amounts while working and get regular payments or a single lump sum when you retire. This helps ensure you have financial security during your retirement years.

Retirement Plans are highly effective for maintaining a comfortable lifestyle when you no longer have a regular income. Let’s look at some of the benefits.

In addition to the policies mentioned above, Universal life insurance is also considered among the most reliable and adaptable forms of life insurance today. This unique option offers lifelong coverage, death benefit protection, and cash value accumulation, making it an attractive choice for individuals and families looking to secure their futures.

Life insurance comes with several tax benefits in India, per the Income Tax Act of 1961. The Income Tax Act is a legal framework that governs how individuals, companies, and other organisations are taxed. It establishes guidelines for filing tax returns, paying taxes, and claiming tax deductions and exemptions. 

Under Section 80D of The Income Tax Act, 1961, an individual and Hindu Undivided Families (Huf) can claim tax deductions for the following:

Please note: 

Under Section 80C of the Income Tax Act, 1961, you can claim a deduction on your Life insurance premiums paid. The maximum deduction limit is up to INR 1.5 lakh. Other eligible investments and expenses under this section include the following.

Section 10(10D) of the Income Tax, 1961 states that the money sum assured, surrender values, and accrued bonus (if any) received by the designated person (maturity or death benefit) is exempt from income tax

Remember, every individual's situation is unique. Tailor your life insurance policy to your specific circumstances and financial goals. Take your time, do your research, and make an informed decision that will secure your family's future.

Choosing the best life insurance policy in India for adequate coverage often depends on individual needs, preferences, and financial situations. However, let us provide some insights into why the ACKO Flexi Life Insurance Plan can be a great choice for many.

The ACKO Flexi Life Insurance Plan stands out for its flexibility and customization options, allowing you to tailor the policy according to your changing needs. Here's why it's a solid option for adequate coverage:

Flexibility in Coverage: The ACKO Flexi Life Insurance Plan allows you to adjust the sum assured, policy term, payment frequency, and payout options as per your evolving financial circumstances. This ensures that your coverage remains adequate and suits your family's requirements over time.

Will Creation Services: The provision for will creation is a crucial aspect, ensuring that your assets are distributed according to your wishes. This adds an extra layer of protection for your family and provides peace of mind.

Optional Riders: The plan offers optional riders like Critical Illness, Accidental Death Benefit, and Accidental Total Permanent Disability. These riders enhance your coverage, offering financial support in specific circumstances, making your insurance comprehensive.

Financial Security for Family: The death benefit ensures that your family receives a lump sum amount in case of an unfortunate event. This financial cushion helps them maintain their lifestyle, cover expenses, and meet future financial goals.

Waiver of Premium Benefit for Critical Illness or Total Disability: The Critical Illness and Accidental Total Permanent Disability riders come with a benefit that waives off future premium payments, allowing you to focus on recovery without financial strain.

While the ACKO Flexi Life Insurance Plan is indeed a flexible and versatile option, it's essential to carefully review the terms, conditions, and costs associated with any insurance plan. Consider consulting a financial advisor to assess your specific needs and compare different policies to ensure you choose the best life insurance policy in India that offers adequate coverage for you and your family.

Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on industry experience and several secondary sources on the internet, and is subject to changes.