Term insurance is a life insurance product offered by Life insurance companies which offers financial coverage to the policy holder for a specific time period.

Term plans are the most basic type of life insurance. They provide life cover with no savings / profits component. They are the most affordable form of life insurance as premiums are cheaper compared to other life insurance plans.

Term insurance plans provide pure risk cover, which explains the lower premiums. A fixed sum of money - the sum assured – is paid to the beneficiaries if the policyholder expires over the policy term. If the policyholder survives, there is no pay out.

Endowment plans differ from Term Plans in one critical aspect i.e. maturity benefit. Unlike Term Plans which pay out the sum assured, along with profits, only in case of an eventuality over the policy term, endowment plans pay out the sum assured under both scenarios – death and survival.

However, endowment plans charge higher fees / expenses – reflected in premiums – for paying out sum assured, along with profits, in either scenario – death or maturity. The profits are an outcome of premiums being invested in asset markets – equities and debt.

ULIPs are a variant of the traditional endowment plan. They pay out the sum assured (or the investment portfolio if it is higher) on death/maturity.

ULIPs differ from traditional endowment plans in certain areas. As the name suggests, performance of ULIP is linked to markets. Individuals can choose the allocation for investments in stock/debt markets. The value of the investment portfolio is captured by the NAV (net asset value). To that end, there are many similarities between ULIPs and mutual funds. ULIPs differ in one area, they are a combination of investment and insurance, while mutual funds are a pure investment avenue. ULIPs also enjoy certain tax advantages over mutual funds.

A whole life insurance policy covers a policyholder over his life. The main feature of a whole life policy is that the validity of the policy is not defined so the individual enjoys the life cover throughout his life. The policyholder pays regular premiums until his death, upon which the corpus is paid out to the family. The policy expires only in case of an eventuality as there is no pre-defined policy tenure.

Money back plan is a life insurance product as well as an investment plan which provides life insurance cover against death of the policy holder along with periodic returns as a percentage of sum assured.

A money back policy is a variant of the endowment plan. It gives periodic payments over the policy term. To that end, a portion of the sum assured is paid out at regular intervals. If the policy holder survives the term, he gets the balance sum assured. In case of death over the policy term, the beneficiary gets the full sum assured.

Critical illness insurance, otherwise known as critical illness cover or a dread disease policy, is an insurance product in which the insurer is contracted to typically make a lump sum payment if the policyholder is diagnosed with one of the specific illnesses on a predetermined list as part of an insurance policy.

Critical Illness Insurance Plans provides coverage against specific life threatening diseases. Treating such critical illnesses may require multiple visits to the hospital over a long period of time. What this means is that in addition to the hospitalization cost, there will be other costs like doctor visits, medical expenses, etc. A Critical Illness plan pays a lump sum amount that can be used to cover these high expenses .The good thing is that this lump sum payout is in addition to any mediclaim or health insurance policy that you may already have.