Types of Life Insurance Plans. A Simple Guide

1. Term Insurance. Pure Protection

What it is: You pay a small premium, and if you pass away during the policy term, your family gets a large sum. If you survive, you get nothing back.

Think of it like: Car insurance. You pay for protection, not investment. If nothing happens, you don't get money back. but you were protected the whole time.

Best for: Anyone with dependents who wants maximum coverage at the lowest cost. A 30-year-old can get ₹1 crore coverage for just ₹8,000-12,000 per year.

LIC plans: New Tech Term (954), New Jeevan Amar (955), Yuva Term (975), Digi Term (976)

2. Endowment Plans. Protection + Savings

What it is: You pay premiums for a fixed term. If you pass away, family gets the sum assured + bonuses. If you survive, YOU get the sum assured + bonuses. Win-win.

Think of it like: A recurring deposit that also gives your family protection. You're forced to save, and LIC adds bonuses on top.

Best for: People who want both protection and guaranteed savings. Good for those who find it hard to save on their own.

LIC plans: New Jeevan Anand (915), Jeevan Labh (936), Dhan Sanchay (967), Bima Jyoti (960)

3. Money Back Plans. Get Money at Regular Intervals

What it is: Like an endowment, but you get a portion of the sum assured back every few years (typically every 5 years). Plus remaining amount + bonuses at maturity.

Think of it like: An RD that pays you out periodically AND protects your family. Great for funding milestones like a child's education or marriage.

Best for: People who want periodic cash flows during the policy term, not just at the end.

LIC plans: New Money Back 20yr (720), New Money Back 25yr (721), Bima Shree (948)

4. Whole Life Plans. Coverage for Your Entire Life

What it is: Coverage that lasts until age 99-100. You pay premiums for a limited period, then enjoy life cover + often yearly income for the rest of your life.

Think of it like: A lifelong salary from LIC. Pay for 15-20 years, then receive income every year for life.

Best for: Those who want permanent protection and a steady income stream after the premium paying period.

LIC plans: Jeevan Umang (945), Jeevan Utsav (971), Jeevan Azad (968)

5. ULIP. Insurance + Market Investment

What it is: Part of your premium buys life cover, the rest is invested in equity/debt funds (like mutual funds). Returns depend on market performance.

Think of it like: A mutual fund SIP that also gives you life insurance. Higher potential returns but also higher risk.

Best for: People comfortable with market risk who want insurance + investment in one product. 5-year lock-in period.

LIC plans: SIIP (952), Nivesh Plus (949), Index Plus (973), Protection Plus (986)

6. Pension Plans. Income After Retirement

What it is: You invest a lump sum (or pay regular premiums), and after retirement, you receive a guaranteed monthly/yearly pension for life.

Think of it like: Creating your own salary that continues after you stop working. LIC guarantees the pension amount.

Best for: Anyone planning for retirement who wants guaranteed income without market risk.

LIC plans: Jeevan Shanti (858), Jeevan Akshay VII (857), Saral Pension (962), Smart Pension (979)

Which Type Should You Choose?

Quick guide based on your situation:

• •Young, single, starting career → Term insurance (maximum cover, minimum premium)
• •Married with kids, want savings → Endowment or Money Back plan
• •Want income for life → Whole Life plan (Jeevan Umang is very popular)
• •Comfortable with market risk → ULIP for wealth creation
• •Planning retirement → Pension/Annuity plan
• •Low budget → Micro insurance (Aadhaar Shila/Stambh)
• •Not sure → Use our recommendation tool at /recommend