Different Types of Life Insurance Policies Available in India

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payment of the sum assured plus bonus in the event of the death of the policyholder. The premiums of whole life insurance are costlier than term plans. The policyholder pays premium for whole life or till some age (say 80 years) or for some period of 35-40 years based on the terms and conditions of the policy. The premium paid on whole-life insurance policies is eligible for tax exemption under section 80C of Income Tax Act in India. Endowment insurance policy: It is a savings linked insurance policy that provides cover for a specified period of time. The policy holder receives sum assured along with bonus or profits at the end of the policy in case of his survival. This policy is best for those people who do not have a savings or investing habit on a regular basis. In case of the death of the policy holder before the maturity of the policy, the beneficiary of the policy receives only the sum assured amount. The premiums of the endowment policies in India are costlier than term life and whole life insurance premiums. Also, the premiums paid on endowment insurance policies are eligible for tax exemption under section 80C of Indian Income Tax Act. Unit linked insurance policy (ULIP): It is a special kind of investment tool combined with life insurance and serves as investment-linked insurance policy. In this policy, some part of the premiums goes into life cover and some part of the premium goes into investment. The policy consists of investment mix where some percentage of the premium can go into 100% equity funds or 100% debt funds or a mixture of both. Here, the policyholder has an option of choosing funds or he can select the strategy of investing. The policyholder can also has the choice of switching from one fund to other fund. The returns from ULIPS are based only on the performance of the funds. The main drawback of ULIPs is that, it contains high charges (commissions) for managing funds. In India, Ulip Policy you to claim tax benefits against the premium payment by two ways - deduction and exemption. You can deduct up to Rs.1 lakh of your taxable income by investing in ULIPs under section 80C of Indian Income Tax Act. You can exempt from gross income under section 10 (10)D for any sum received from insurance. Insurance policies have a great role to play in assuring tax savings. As per the policy in India, all regularpremium life insurance policies (except pension plans) in India issued after April 2012, should offer protection cover of at least 10 times the annual income to be eligible for tax benefits under section 80C and 10 (10)D. Choose and get a best life insurance policy to protect your family's financial condition in your absence.
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Different Types of Life Insurance Policies Available in India

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