What are Different Types Of Life Insurance Policies In India

Types of Life Insurance Policies in India

Explore various types of life insurance in India: Term, ULIP, Whole Life & more. Learn their tax benefits & features, and how to choose the right plan

Written by : Knowledge Centre Team

2026-01-05

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9 minutes read

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Choosing the right type of life insurance policy is one of the most important requirements for a comfortable and hassle-free life. A life insurance policy not only ensures that your loved ones are financially secure in your absence but also helps you build a strong corpus to achieve future financial goals.

If you ask, “how many types of life insurance are there?” The answer is pretty complex,  as there are many different types of life insurance policies in India. One can choose a life insurance plan tailored to their unique individual needs. Read this article to learn about the types of life insurance plans and their benefits.

Key Takeaways

  • Life insurance is the best gift for ensuring the financial stability and security of those who depend on the policyholder 

  • There are various types of life insurance policies, such as Term Life Insurance, Whole Life Insurance, ULIPs, Endowment Plans, and many more 

  • Term insurance has variants, such as TROP, that offer risk-free savings options that are beneficial for those looking for financial discipline 

  • ULIPs, Endowment Plans, and Savings and Investment Plans are best suited for those seeking life coverage and ways to grow their wealth

  • Section 80D, Section 80C, and Section 10(10D) of the Income Tax Act offer tax deductions for those who hold life insurance, on meeting certain conditions

What is Life Insurance?

Consider a safety net that protects one’s dependents from financial difficulties. Life insurance acts as a contract between the insurer and the policyholder. It ensures the policyholder's family receives a death benefit (lump sum or instalments) upon the policyholder's death. One pays a fixed premium, and in return, the beneficiaries receive a lump sum after their demise.

This coverage enables beneficiaries to manage their loan expenses, education costs, daily expenditures, and other related expenses. Life insurance provides the assurance that dependents remain financially protected in the policyholder’s absence.

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Different Types of Life Insurance Products in India

Below is the list, of various types of life insurance available to the public, with the key features and benefits of each:

Types of PlanFeatures and Benefits
Term Life Insurance or Term PlanA pure protection plan that offers a death benefit to the policyholder’s loved ones in case of an unforeseen event
Whole Life InsuranceProvides life cover for the entire life or till 99 years of age
Unit Linked Insurance Plan (ULIP)Invests in a mix of diversified equity and debt funds with just a 5-year lock-in for partial withdrawals
Endowment PlanGuarantees a lump-sum payout at maturity if you survive the term
Money Back PlanPays guaranteed periodic survival benefits during the term and a lump sum at maturity, while providing a full death benefit throughout
Retirement PlanBuilds a retirement corpus or a pension for your golden years
Child Insurance PlanInvests in a child’s higher education and marriage goals under the safety of life cover
Group Insurance PlanUseful for corporates and other organisations to cover their employees and customers against unforeseen hazards
Savings & Investment PlansChannelises your savings towards a future goal

Life Insurance Types Explained in Detail

Now that you've seen the overview of life insurance types, let's dive deeper into each one with detailed explanations of its features, benefits, and ideal use cases.

  • Term Life Insurance: Many consider it the most popular and affordable type of life insurance. It is widely considered to be the simplest and purest form of life insurance. It offers a death benefit to the policyholder's beneficiaries if the policyholder passes away during the policy term.

    The most distinctive feature of a term insurance plan is that a high amount of coverage is offered at extremely nominal premium rates, making it cheaper than any other type of life insurance policy.

    In general, term life insurance does not offer maturity benefits. One can also increase the types of life insurance coverage offered by a term plan by opting for additional riders, such as Accidental Death Benefit, Critical Illness Child Term riders etc.
  • Term Insurance with Return of Premium: TROP is one of the most unique types of life insurance policies with dual benefits. It is a protection plan with a premium refund feature. Just like standard term insurance, it provides financial security to one’s beneficiaries in case of the policyholder's untimely demise within the policy term. However, upon survival, the policyholder receives all premiums paid during the term, making it a risk-free investment plan.

    Term Insurance with Return of Premium provides life coverage, also serving as a savings tool. It is ideal for those seeking life coverage with maturity benefits. 
  • Whole Life Insurance Plan: This classification of life insurance policy provides coverage throughout the policyholder's life. In this policy, you can opt for either a participating or non-participating policy, per your financial needs and risk appetite. Although premiums for participating whole life insurance are higher, dividends are paid to policyholders at regular intervals. The premium rates for a non-participating policy are lower, but policyholders generally cannot take advantage of the benefits of regular dividends.
  • Unit Linked Insurance Plan: A ULIP is a type of life insurance product that offers dual benefits: investment and life insurance. Among the various types of life insurance policies available, ULIPs are highly popular due to their versatility. A portion of the premiums paid is directed towards ensuring insurance coverage. In contrast, the remainder of the premium is invested in a variety of investment instruments, including market-backed equity funds, debt funds, and other securities.

    ULIPs are extremely flexible since investors can easily switch or redirect their premiums between the available funds. They are also touted as having an edge over other market instruments in terms of tax-saving benefits under Section 10(10D) of the Income-Tax Act, and maturity/death benefits from life insurance policies are tax-exempt, subject to conditions. Tax exemption lapses if annual premiums >10% of sum assured (policies post-April 1, 2012) or >₹2.5 lakh for ULIPs (issued post-Feb 1, 2021),
  • Endowment Policy: This is a type of life insurance policy that serves as a combination of insurance and savings. These plans aim to provide maturity benefits to the life insured in the form of a lump sum payment at the end of the policy tenure, even if a claim hasn’t been made.

    It is the most suitable type of life insurance for people seeking maximum coverage and having a sizable savings component. They help the policyholder develop the habit of saving, while also providing financial security to their family. Endowment plans can broadly be classified into two types: with profit and without profit. Policyholders can choose from these two types based on their risk appetite.
  • Money Back Policy: One of the best types of life insurance policies is a money-back plan, which offers policyholders a percentage of the total sum assured at periodic intervals in the form of survival benefits. Once the policy reaches maturity, the remaining sum assured amount is paid to the policyholder. However, if the policyholder dies while the term is in effect, their dependents are entitled to the entire Sum Assured without any deductions. 

Read more about - Money Back Plans.

  • Retirement Plan: A type of life insurance that provides policyholders with financial stability and security post-retirement. After retirement, people lose their regular income from employment. Investing in retirement plans can help them create a stable, regular income stream. If they continue to invest until retirement, the plan will provide for their expenses after retirement. It requires the policyholder to invest some of their income regularly while working. At retirement, the amount they have created over the years will be converted into a regular income stream.

    Retirement plans also involve death benefits. So if the policyholder passes away during the policy term, their beneficiaries will be provided with an assured sum.
  • Child Insurance Plan: A savings cum investment plan that provides financial protection for the child’s future upon the unfortunate demise of the policyholder is called a child insurance plan. It is ideal for ensuring the child's future needs are well taken care of, even in the event of the life insured's absence.

    Parents can invest in the best child insurance plans to meet the financial requirements for their child’s education and marriage, or to fulfil many other financial goals their child might have.
  • Group Insurance Plan: A group insurance policy is a type of life insurance that covers a group of people under a single insurance policy. Unlike individual life insurance policies, which cover one person for a period, this plan covers a minimum of 10 members.

    Employers, banks, corporations, and other homogeneous groups can buy group life Insurance policies for their employees and customers. While employers would want to offer financial protection to their employees' families, banks and lending institutions aim to keep the debt off the borrowers’ families after their death.
    1. The plan under which the group is covered is referred to as the Master Plan.
    2. The policy is issued to the group manager (master) but will remain in the group's name only.

For example, Ram is the manager of a firm. To protect his employees, he has taken a group insurance policy. Now, the policy will be issued in the firm's name to Ram.

One of the distinct features of these group life insurance policies is that you get insurance until you are part of the group. If you leave the group, your cover ceases to exist.

  • Savings and Investment Plan: These plans channel your regular savings into long-term investment goals. It is a life insurance cum savings plan that offers a life cover along with guaranteed maturity benefits. With a savings and investment plan, you can plan your investments to achieve your life goals smoothly.

    You can also protect your financial goal with a premium protection option. This option allows the planned investments to continue even after your demise.
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Did You Know?

From September 22, 2025, individual life insurance premiums have been exempt from GST, making policies more affordable for Indian families


Source: IndiaToday

Young Term Plan - 1.5 Crore

How to Choose the Right Life Insurance Policy in India?

The right policy may differ from person to person. What is a good option for someone else may not be as attractive to you. Therefore, selecting the policy that best suits you becomes crucial.

Here is how you can choose the best policy for life insurance:

  • Choose According to Your Goal: Different life insurance policies can help fulfil various goals. You should be clear about the goal that you want to achieve with your life insurance policy.
  • Consider the Sum Assured: Determine your family members' needs and wants, as well as your daily expenses, and select a cover that can fulfil all these. The general rule is to select a sum assured that is at least 10 times your annual income.
  • Policy Term: While some policies are made to achieve long-term goals and have a longer time frame, some have shorter terms as well. Select a policy with multiple time frames.
  • Riders: They can enhance your sum assured and cover occurrences that the basic policy doesn’t. Choose a policy with riders.
  • Check the Company's Information: Apart from the policy, research the company that provided the policy as well. Check out the following:
    1. Claim Settlement Ratio
    2. Solvency Ratio
    3. Exclusions

Tax Benefits on Different Types of Life Insurance Policies in India 

Under the Income Tax Act 1961, the Government of India offers tax benefits for various life insurance policies. It helps policyholders save their income tax liabilities while providing them and their families with financial security.

Some of the tax benefits include:

  • Section 80D:  Life insurance policies for medical riders, such as critical illness riders, heart, and cancer riders, offer tax benefits under Section 80D of the Income Tax Act 1961. Those under 60 years of age can claim up to ₹25,000 per annum for themselves, their spouse, their children, and their parents, while those above 60 can claim up to ₹50,000 annually.

  • Section 80C: Under this section, policyholders are eligible for a deduction of up to ₹1.5 lakhs on the premium amount paid.

  • Section 10(10D): Under Section 10(10D) of The Income Tax Act, 1961, proceeds received by the policyholder or nominee of an insurance policy, including sum assured, surrender values, and bonuses, are exempt from tax, provided premiums ≤10% of sum assured (policies issued on/after April 1, 2012) and ≤₹2.5 lakh/year for ULIPs (issued on/after Feb 1, 2021).

Wrapping Up

Life insurance policies offer financial security and tax benefits to policyholders and their family members. Choosing the right life insurance policy ensures financial security and peace of mind. Canara HSBC Life Insurance offers comprehensive policies tailored to meet a wide range of financial needs. Whether it's the simplicity and affordability of term insurance, there are numerous options to suit every individual's requirements.

Glossary

  1. Retirement Corpus: The total savings set aside to fund living expenses after you stop earning
  2. Maturity Benefits: Lump-sum or scheduled payouts you receive when the policy term ends or a set age is reached, for staying invested
  3. Accidental Death Benefit: An extra payout to your nominee if you die due to a covered accident, added on top of the base sum assured
  4. Nominee: A person designated to receive policy benefits if the life assured dies during the policy term
  5. Sum Assured: A guaranteed amount paid to the nominee on the life assured’s death; may differ from the total death benefit with riders
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Uncertain About Insurance?

FAQs on Different Types of Life Insurance Policies

The most common types of life insurance in India are given below:

  • Term Life Insurance or Term Plan

  • Whole Life Insurance

  • Unit Linked Insurance Plan (ULIP)

  • Endowment Plan

  • Money Back Plan

  • Retirement Plan

  • Child Insurance Plan

  • Group Insurance Plan

  • Savings & Investment Plans

Term life insurance is the most popular type of life insurance plan in India , providing adequate long-term financial protection for  the family. ULIPs are the most popular option for long-term investment plans. ULIPs are diversified investment options with flexible withdrawal conditions, making them a preferred investment for long-term goals.

Whole-life insurance plans do not have a specific expiration date. However, they will continue until you reach 100 years of age. If you survive to 100 years of age, most whole-of-life plans will return the sum assured to you and expire.

Whole life insurance and term life insurance have two significant differences:

  • Whole life insurance continues until your natural demise or 100 years of age

  • Term life insurance has a definite term, which must end before you reach 100 years of age

  • Whole life insurance also has an investment component. Thus, the policy acquires a cash value over time

  • Term life insurance does not acquire a cash value, as there is no investment component in the policy

Riders are optional add-ons to your basic policy and provide enhanced coverage and protection at an additional cost. These are add-ons on different types of life insurance policies, available at affordable rates. They fortify your policy and extend its scope beyond mere mortality expenses to financial protection.

Most traditional and term plans qualify for Section 80C premium deductions and potential Section 10(10D) exemptions on eligible payouts.

IRDAI classifies as linked (ULIP/index-linked, market returns) and non-linked (participating/non-participating with guaranteed/bonus benefits). Coverage includes life (death-benefit protection), pension/annuity (retirement-income streams), and health (medical-expense riders). Benefits comprise death payouts to nominees, maturity sums on survival, survival benefits (periodic), bonuses (participating plans), and surrender values

Term life offers high coverage at low premiums, but no maturity returns. Whole life and endowment provide lifelong protection plus guaranteed savings. ULIPs combine moderate cover with market-linked investment returns. Money-back plans deliver periodic survival benefits + maturity payout. As savings components increase, pure risk cover typically decreases.

Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.

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Life Insurance - Top Selling Plans

We bring you a collection of popular Canara HSBC life insurance plans. Forget the dusty brochures and endless offline visits! Dive into the features of our top-selling online insurance plans and buy the one that meets your goals and requirements. You and your wallet will be thankful in the future as we brighten up your financial future with these plans.

Family Shield: Enhanced Protection

iSelect Smart360 Term Plan
  • 3 Plan options
  • Life cover till 99 years
  • Steady income benefit
  • Block your premium at inception

Start Young, Pay Less, Stay Secured

Young Term Plan
  • Life cover till 99 years
  • Coverage for spouse
  • Block your premium rate
  • Covers 40 critical illness

Fixed Returns, Zero Risks & Worries

iSelect Guaranteed Future Plus
  • 4 Plan options
  • Life cover + Guaranteed benefits
  • Accidental death benefit
  • Premium protection cover