Life insurance is a pact signed between an insurance provider and the proposer who wishes to get insured. The insurance company provides a guarantee of paying a sum of amount to the nominee in case of death of the policyholder for which the beneficiary has to pay a premium. Death is inevitable, but something that is not inevitable is securing your family’s future when you’re not there. Along with securing your future, it is also very necessary to save money at present time as well. Therefore, unlike before, finding affordable life insurance has become very easy today. While researching for any such plans, please make sure that you do not compromise on the main purpose of getting life insurance. Let us know what you should look for, in a good life insurance plan.

Components of Good Life Insurance Plans:

To give you a gist before investing in a life insurance, you should understand the components of a good life insurance policy. Firstly, it gives your family financial freedom when you’re not there. The policyholder pays the premium until the policy matures, or if the policyholder dies untimely. Secondly, the premium that needs to be paid should be optimum and it shouldn’t a burden or create a financial hassle for the policyholder. The life insurance plans should cover you entirely, however, some plans have the flexibility of letting the policyholder withdraw money at any given point in time either partially or fully.

Which Life Insurance plans are best?

  1. Term Insurance Plan

Term life insurance plan is a pure protection plan. It covers the untimely death of the life insured and the lump sum amount is given to the nominee. This life insurance plan is also one of the cheapest plans that you can have for yourself. One of the most common types of term life insurance plans is the Level Term PlanThe sum assured in this plan remains fixed throughout the term. Which means the amount that you have opted for will be paid out to the nominee after the death of the policyholder.

  1. Whole Life Insurance Plan

As the name suggests, whole life insurance plans cover the policyholder for the entire life. The terms and conditions remain entirely same if the premiums are paid properly. The nominee gets the amount after the death of the policyholder. However, there is a flexibility for the beneficiary to take out money at any given time. You can also borrow a loan against this policy. As this policy is a great instrument for money saving, it also provides a benefit of tax under Sections 80C and 10 (10D) of the Income Tax Act, 1961.

  1. ULIPs or Unit Linked Insurance Plans

ULIPs are great instruments for investment along with getting a secured life cover. The premium paid by the policyholder is allocated towards life insurance and investments in capital markets simultaneously. Like any other life insurance, the nominee gets the amount after the death of the policyholder. The premium invested provide market linked returns. The main kind of funds where the investments can be done are Equity Funds, Debt funds and Balanced funds which is the combination of both Equity and Debt funds. It allows the policyholder to withdraw a part of the money from their investment pool at any given point in time after the lock-in period ends. This indeed makes one financially independent at times when there is an emergency. It benefits the policyholder from the tax deduction under Sections 80C and 10 (10D) of the Income Tax Act, 1961.

  1. Endowment Life Insurance Plan

Like all the other life insurance plans, the nominee gets the payout after the death of the policyholder. However, one also gets the lumpsum amount at maturity if the policyholder survives the entire term along with bonuses, if any. As this is also a money saving instrument there is a tax benefit under Section 80C and 10 (10D) of the Income Tax Act, 1961.

  1. Money Back Policy

Money back policy as the name suggests is an instrument which provides benefits at regular interval for the entire term of the life insurance. The policyholder gets periodic payouts on surviving the defined term. The nominee gets the lump sum amount after the death of the policyholder. It again gives tax saving benefits to the policyholder.

  1. Pension Life Insurance Plans

As the name suggests, the pension plan is opted by working professionals. The policyholder has to pay the premium through the entire working tenure and then gets the benefit of pension plan life insurance on a monthly/ quarterly or as a lump sum payout as and when opted while starting the policy. Annuities provide you a benefit to pay a lump sum amount and start getting the monetary payout immediately or after a certain period. It makes sure that the policyholder never runs out of money.

Life insurance is a great instrument for providing a financial security to the policyholder’s family. It acts as a money-saving platform and an investment platform. With many Life insurance providing companies, it has become easier to get an affordable life insurance nowadays. However, it is also necessary to choose the right plan for yourself that goes along with your requirements. It is recommended to choose to invest wisely while saving money.