Life Insurance provides a financial security (in the form of sum assured) to the family of insured in case of his/her untimely demise or other miss-happenings covered in the insurance contract. It is the fastest growing finance segment in India.
- Although many of us are aware of the importance of Life Insurance, not everyone knows that there are multiple types’ offerings.
- Types of Life Insurance Policies
Term Plan : Pure risk cover
Life cover with no savings / profits component. Most affordable form of life insurance as premiums are cheaper. A fixed sum of money – the sum assured – is paid to the beneficiaries if the policyholder expires over the policy term. If the policyholder survives, there is no pay out.
However, these days there are companies offering Term Plans with Return of Premiums (TROPS), where insurance companies payback all the paid premium amount in case the life assured outlives the term period. But, such plans are costlier than the vanilla term insurance plan.
Unit linked insurance plan (ULIP) : Insurance + Investment opportunity
A premium is to be paid on a monthly or annual basis. A portion of the premium goes towards life insurance whereas rest of the amount is invested in stock/debt market like mutual funds.
Unit Linked Insurance Plan (ULIP) is linked to markets and thus, it is a form of the traditional endowment plan in which the sum assured is paid on death/maturity.
LIC Nivesh Plus (Plan No. 849) – Single Premium ULIP
LIC is launching a new plan from 2nd March 2020. This LIC Nivesh Plus (Plan No.849) is a ULIP Single Premium Plan.
LIC SIIP (Plan No. 852)
LIC is launching a ULIP product LIC SIIP (Plan No.852) from 2nd March 2020.
Endowment Plan : Insurance + Savings
- Unlike a term plan, an endowment plan pays out the sum assured along with profits in case of an eventuality during the policy term as well as on survival of insured.
- It is a life insurance plan which not just covers the life of the insured, but also helps them save regularly for a specific time period so that they can get a lump sum amount on the maturity of the policy in case they survive the policy term.
- Another difference is, endowment plans come with higher fees and premiums for paying out sum assured with profits in both scenarios – death or maturity.
Money Back : Periodic returns with insurance cover
- This policy too is a form of the endowment plan, however, it gives periodic payments to the beneficiary over the policy term instead of providing a lump sum amount at the policy’s maturity.
- In case of policyholder’s death over the term of the policy, the full sum assured is given to the beneficiary. If the policyholders survive the policy term, they receive the balance sum assured.
Whole Life Insurance : Life coverage to the life assured for whole life
- A whole life insurance policy covers the life assured for whole life, or in some cases, up to the age of 100 years. Unlike, term plans, which are for a specified term. However, if the life assured outlives the age of 100 years, the insurance company pays the matured endowment coverage to the life insured.
- Whole life insurance plans also offer partial withdrawals after completion of premium payment term.
SectionChild’s Plan : For fulfilling your child’s life goals like education, marriage, etc
- Child plan helps to build corpus for child’s future growth. Child plans help to build funds for child’s education and marriage. Most of the Child Plan provides annual instalments or one time payout after the age of 18 years.
Retirement Plan : Plan your retirement and retire gracefully
- Post-retirement, the regular income source ceases to exist for an individual (mainly for private job holders) and it doesn’t take long to exhaust benefits like gratuity or provident funds. Retirement plan provides regular income in the form of pension to the policyholder for safeguarding his/ her retirement.
Pradhan Mantri Vaya Vandana Yojana
The Indian Government launched a pension scheme and it can be taken from 4 May 2017 to 31 March 2020. In the 2018-2019 Budget Speech, the Government of India increased the maximum limit to Rs.15 lakh under the Pradhan Mantri Vaya Vandana Yojana scheme. The scheme can be bought via online and offline modes from Life Insurance Corporation (LIC) of India. The main aim of the scheme is to provide senior citizens with a regular pension during the time when there is a fall in interest rates
Eligibility of PMVVY
Given below are the eligibility criteria that individuals must meet in order to be eligible for the PMVVY scheme:
- Minimum age of entry:The individual must be 60 years or higher.
- Maximum age of entry: There is no limit.
- Duration of the policy:The tenure of the policy is 10 years.
- Minimum pension that is earned:The minimum pension for a month, quarter, half-yearly, and yearly are Rs.1,000, Rs.3,000, Rs.6,000, and Rs.12,000, respectively.
- Maximum pension that can be earned:10,000, Rs.30,000, Rs.60,000, and Rs.1,20,000 is the maximum pension that can be earned for a month, quarter, half-yearly, and yearly, respectively.
Purchase Price payment
Individuals can buy the scheme by paying the purchase price in a lump sum. The pensioner can either choose the purchase price amount or the pension amount he/she will receive. Under the different modes, the minimum and maximum pension prices are mentioned in the table below:
| Pension mode | Minimum Purchase Price (Rs.) | Maximum Purchase Price (Rs.) |
| Monthly | 1,50,000 | 15,00,000 |
| Quarterly | 1,49,068 | 14,90,683 |
| Half-yearly | 1,47,601 | 14,76,015 |
| Yearly | 1,44,578 | 14,45,783 |
The Purchase Price will be rounded to the nearest rupee when it is being charged.
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