What is Traditional Life Insurance?
While Term Insurance offers only death benefits, Traditional Life Insurance and ULIPs offer both a death benefit (if the policyholder dies) AND a maturity benefit (if they survive the policy term). A portion of your premium goes toward securing life cover, while the rest is invested to generate returns.
Common Life Insurance Policies
- Endowment Policy: Offers guaranteed returns and bonuses declared by the insurer. Returns are entirely safe and immune to market crashes.
- ULIPs (Unit Linked Insurance Plans): The investment portion is put into equity/debt mutual funds. They offer high returns over 10-15 years but carry market risk. Excellent tax tool since equity switches are tax-free!
- Retirement Plans: Helps you build a massive corpus which is then converted into a steady annuity (monthly pension) post-retirement.