Types of Insurance Policies
Endowment Policies.
These are the policies wherein you can choose a specific term from 5 years to say 40 years or more depending on the age. The premium for a 30-year-old male for a policy of 1 lac comes to around 5000 yearly if you choose a 20 year term. You will have to pay the premium for 20 years and on maturity you will get around 2, 50,000 as per the prevailing bonus rates. Incase of anything of unfortunate demise the nominee gets 1 lac guaranteed plus the accumulated bonus. The rate of return comes to around 6%

Money Back Policies
In this type of policy you get periodical returns say after 4 or 5 years. It is mostly the percentage of the sum assured. For example if you have taken a policy of 1lac then you’ll get a certain percentage of 1 lac say around 20% which you will get every 5 years. On maturity, you will get the maturity amount less money backs, which have already been paid.
Mr.X takes out a policy of 1, 00,000 for 20 years. He will have to pay the premium of around 6,000 yearly. He will get 20,000 (20% of 1 lac) in 5th, 10th and 15th year. On maturity he will get the balance 40,000 (100,000-60,000) plus accumulated bonus of around 1 lac. The net yield in this policy comes to around 5% because the premium rates are slightly higher in money back policies.

Term Plan
A term Plan is a pure insurance cover plan. This kind of policy is suitable to those who want only insurance cover. In this type of plan you get high insurance cover at a very low premium. On survival till maturity the insured person will not be paid anything. But in case of death during the term he will be paid the insurance amount.
Example. Mr. X Age 30 year’s takes out a policy of 5lacs for a 20 year term then his annual premium will be just around 1600 yearly. On surviving the term Mr. X won’t get anything but incase of his demise during the term the nominee will get 5 lacs.

Whole Life Policies
As the name suggests in this policy the premium has to be paid till one survives. This is also a low premium and high risk cover policy. For 1 lac sum assured the premium comes to around 3,500 which the insured person has to pay throughout his life. The sum assured goes on increasing year after year. This type of policy is also for those who require only insurance cover.Example Mr.X takes a whole life policy for 1 lac. He will receive sum assured of 1 lac+bonus on attainment of age 80 or 40 years form the date of commencement of the policy whichever is later. If Mr. X dies in during the term then his nominee will get sum assured of 1 lac+accumulated bonus.

Unit Linked Plans
These policies are linked to share market. A part of your investment goes into the share market. For example if you pay an annual premium of 20,000 then around 6,000 will be deducted for insurance charges, policy document charges etc and the rest will be invested in the share market. Those who do not require any insurance should avoid this product. There is a great debate going on regarding the charges levied by insurance companies. Many argue that a large portion of the investments say around 30-40% is deducted for various expenses and only the remaining portion is invested in the share market thus lowering the returns. It depends from person to person whether or not investments should be made in unit-linked policies.