Term life insurance plans are considered a vital addition to your financial portfolio. They have low premium rates in comparison to other types of life insurance policies, which inevitably enable you to afford considerable coverage. While there are certain benefits of having a term insurance policy, there are also other life insurance alternatives that you can pick from to best suit your needs. Here, we list down the different types of life insurance policies along with how they can affect your financial health.

Why should you buy a term insurance policy?

When you purchase a term life insurance plan, you are essentially investing in the financial security of your family in your absence. These plans are widely recognised as the simplest forms of life insurance policies that offer a variety of benefits, which range from affordable term insurance premiums to riders for additional covers. The death benefit offered by a term life insurance policy can be substantial and therefore, enable the insured’s family to manage certain expenses as well as achieve their financial goals.

However, with the increase in costs of education, inflation affecting the prices of fundamental products in the market and a rise in medical expenditure, the financial reimbursement received from the term policy might still not be enough to replace the stream of income required for sustenance. For this purpose, you might require more than just a term insurance.

Listed below are the different types of life insurance policies that you can consider as a potential back-up for a term insurance plan.

• Unit Linked Insurance Plan (ULIP): ULIPs offer the dual advantage of life cover along with investment opportunities. With valuable investment flexibility, ULIPs have a lock-in period, making them long-term investment instruments that come with risk protection. ULIPs additionally allow you to balance your funds as per market dynamics.
• Money back plans: A money back policy offers the insured a percentage of the total sum assured at periodic intervals in the form of survival benefits. This is regarded as one form of life insurance for those who would prefer their investment to be accompanied by an element of liquidity.
• Endowment Life Insurance: An Endowment policy offers the combination of a life coverage plan along with a savings plan. This plan aims to provide maturity benefits to the life insured, in the form of a lump sum payment at the end of the policy tenure, even if a claim hasn’t been made.
• Retirement plans: A Retirement Plan provides financial security for you and your family with the help of wealth creation after your retirement. Retirement plans also come with death benefits and vesting benefits. In case of the insured’s untimely demise during the policy term, the nominee will receive the death benefits.
• Child Plans: A child plan, as the name suggests, is an insurance and investment plan designed to generate funds for the policyholder’s child. With a child plan, the insured can help create wealth for his/her child’s future needs. The funds can be used for educational purposes and hence, build a strong foundation for the insured’s child.
• Whole Life Insurance: A Whole Life Insurance plan provides insurance coverage to the insured for the entire life, up to 100 years of age. The sum assured is calculated when the plan is purchased and is payable to the nominee upon the untimely death of the insured. The policyholder is also eligible to receive a maturity benefit under a whole life insurance policy if they cross 100 years of age.

In conclusion, life insurance is a critical part of a holistic financial plan. However, not all can afford the high premium costs of some life insurance plans. Hence, you can use a term insurance premium calculator to help evaluate the approximate monthly premium that needs to be paid towards a particular policy.