Increasing cover plan
The life cover increases with time to hedge against inflation. One also doesn’t need to buy more insurance later in life as responsibilities grow. However, the increase in cover may not always be enough to account for the higher expenses later in life. In many cases, an additional cover may be required.
Single premium plan
These plans require a one-time lump sum payment. They suit people who don’t want to make a multi-year commitment, have a lumpy cash flow or tend to be careless about payments. Though costlier than regular premium policies, the buyer doesn’t need to worry about lapsation due to non-payment of premium.
Limited payment term
These are a variation of single premium plans. Instead of one lump sum payment at the beginning of the term, the premium payment is staggered over 5-10 years. The cover continues even after the premium paying term is over. The premium is higher than that of a regular plan, these plans suit people with higher investible surplus in initial years.
Return of premium
For people who think that buying a term plan is a waste of money, insurers have designed policies that return the entire premium at the end of the term. But this feature pushes up the premium of the policy considerably. The
inflation adjusted value of what you get at the end of the term is virtually nothing. It’s better to pay the lower premium of a regular plan.
Staggered payouts
These plans stagger the payment over 10-15 years. The family of the policyholder gets a monthly payment for 10-15 years. Some plans even increase the payment by 10% every year to account for inflation. This is a very useful feature given the low level of financial literacy. A family may not be able to handle the lump sum amount received on death.