Types of life insurance plans

  • Life Insurance Articles

Did you know that there’s more than one kind of life insurance plan you can choose from? Many people often think that all life insurance plans are the same. But the truth is, there are different types of life insurance plans. Not sure what these different types are?

Fortunately, we’re here, and we’ll help you understand the different kinds of life insurance plans you’ll typically come across when you go shopping for insurance. In this article, we will explain the below types of life insurance plans:

  • Term life insurance
  • Savings plans
  • Whole life insurance
  • Retirement plans
  • Unit linked insurance plans
  • Group life insurance plans

 

Term life insurance

A term life insurance plan is the most basic kind of life insurance coverage you can opt for. It is valid for a specific period, giving it the name ‘term’ insurance. In a term insurance plan, the policyholder pays the insurer premiums on a periodic basis. Some term insurance plans also offer the option to pay the premium as a lump sum amount, upfront. In return, the insurer offers the policyholder a life insurance coverage for a specific term.

In case of the policyholder’s death during the term specified, the insurer pays out death benefits to the nominee, as mentioned in the plan. However, upon surviving the policy term, the policyholder does not receive any benefits from the insurer.

A good example of a term life insurance plan is the ABSLI DigiShield Plan.

Savings plans

Savings plans, also known as endowment plans, are just what they sound like. They offer policyholders a life cover for a specified period. And in addition to this, they also possess a savings component. Just like with term plans, the policyholder pays the insurer a premium in return for the benefit of a life cover. And in case the policyholder passes away during the policy term, the insurer pays death benefits. Up until here, things work just like a term plan.

However, in savings plans, when the policyholder survives the policy term, they receive maturity benefits from the insurer. For example, if the life cover is valid till the policyholder attains the age of 75, and if they survive past that age, the insurer pays out maturity benefits at that point. This is the savings component, and it comes in handy for all the long-term life goals that you may want to fulfill.

The ABSLI Guaranteed Milestone Plan is one such savings plan to get you started. It provides a life cover with fully guaranteed1 financial benefits.

Whole life insurance

Whole life insurance, as the name implies, is a type of life insurance plan that offers coverage for the whole life of the policyholder. In other words, the life insurance cover offered by a whole life insurance plan is generally valid till the policyholder attains 99 years of age. Some insurers offer coverage till the policyholder attains 100 years. In case of the policyholder’s demise before this age, the insurance company pays death benefits to the nominee.

However, if the policyholder survives the policy term, it makes them eligible to receive maturity benefits from the insurer. In addition to these basic features, whole life insurance plans are also customizable in other ways. Depending on the insurer you choose, you can opt for limiter premium plans as well as additional riders.

Did you know that there’s more than one kind of life insurance plan you can choose from? Many people often think that all life insurance plans are the same. But the truth is, there are different types of life insurance plans. Not sure what these different types are?

The ABSLI Vision LifeIncome Plan is a whole life insurance plan that gives you the benefit of regular income and financial protection.

Retirement plans

A retirement plan, also known as a pension plan, is a type of life insurance plan that focuses on providing retirement benefits to the policyholder. They help people create a retirement corpus that proves to be useful in the post-retirement phase of life. Some retirement plans provide a lump sum payout when the policyholder reaches the retirement age, which is typically 60 or 65 years. Others offer annuity benefits, which include periodic payouts after the policyholder has reached the age of retirement. Both these options give you a safety net to fall back on when your primary source of income ceases.

In addition to the retirement benefits they offer, retirement plans also offer death benefits, just like all life insurance plans. So, in case of the policyholder’s demise during the term over which the cover is valid, the insurer pays the sum assured to the nominee.

If you’re looking for a retirement plan, you may want to consider the ABSLI Empower Pension Plan

Unit Linked Insurance Plans

A Unit Linked Insurance Plans (ULIPs) is a type of life insurance plan that gives policyholders the advantage of insurance as well as market-linked investments. ULIPs invest in a variety of funds like debt funds, equity funds, or even a mix of both. Policyholders are free to choose the kind of funds they wish to invest in. So, a conservative investor could choose to invest majorly in debt funds, while a more aggressive investor may prefer equity funds.

Fund managers handle and oversee the investments made through ULIPs. If the policyholder passes away during the policy term, their nominee receives death benefits as well as the maturity benefits. In case the policyholder survives, they receive the returns from the investments made through the Unit Linked Insurance Plan.

From our range of products, the ABSLI Wealth Assure Plus is a classic example of a Unit Linked Insurance Plan.

Group life insurance plans

Lastly, group insurance plans offer the benefit of a life cover to a group of people under one master life insurance plan. One of the most common types of life insurance plans for a group of people is the employer-sponsored insurance that some workplaces offer. In these plans, policyholders continue to receive the benefit so long as they are part of the group. So, if a policyholder quits the company that offers them group life insurance, they will no longer be eligible for the benefits under that plan.

Our ABSLI Group Income Replacement Plan is an example of an employer-employee group plan.

How to find out which type of insurance you have?

There are many ways in which you can find out the type of insurance you have.

  • Option 1: Call your insurer’s customer care support and ask them about it.
  • Option 2: Visit your insurer’s website and check the category to which your plan belongs.
  • Option 3: Take a look at the policy document. Look for words like ‘participating’, ‘unit-linked’, ‘term cover’, etc. to give you an idea of the type of policy. 

Last words

See how many different kinds of life insurance plans there are? The options are plenty - right from term plans, which offer the most basic form of a life cover, to ULIPs, which offer policyholders the benefit of market-linked returns over and above life insurance. Depending on your requirements, you can choose the type of life insurance plan that suits you best.

ABSLI DigiShield Plan (UIN 109N108V05) is a non-linked non-participating individual pure risk premium life insurance plan; upon Policyholder’s selection of Plan Option 9 (Level Cover with Survival Benefit) and Plan Option 10 (Return of Premium [ROP]) this product shall be a non-linked non-participating individual life savings insurance plan.

ABSLI Guaranteed Milestone Plan (UIN: 109N106V08) is a non-participating traditional insurance plan.

ABSLI Empower Pension Plan (UIN: 109L078V02) is a non-participating unit linked life insurance pension plan.

ABSLI Wealth Assure Plus Plan (UIN: 109L120V02) is a non-participating unit linked life insurance plan.

ADV/4/21-22/45

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