Choosing the right life insurance policy isn’t just about protecting your loved ones; it’s also about choosing a plan that matches your financial goals. When the coverage amount is substantial, like a sum assured of ₹2 crore, you need to be even more thoughtful. Not every plan is built for such a high level of coverage, and the way each policy works can make a difference in how well it supports your family if something happens to you.
India offers several options when it comes to life insurance. From basic term plans to market-linked insurance and lifetime cover, understanding these types of life insurance policy options can help you select what’s appropriate for your needs, especially when you’re aiming for a larger cover.
In this post, we'll break down the most common types available and assess which ones make sense for someone aiming for a ₹2 crore life cover.
Different Types of Life Insurance Plans in India
Term Insurance Plans
If your goal is maximum coverage for the lowest premium, a term insurance plan is the most straightforward option. This is a pure protection plan. It’s designed to provide financial security to your family in case of your untimely death within the policy term. There is no maturity value, which is why term plans remain affordable, even for a high sum assured like ₹2 crore.
What makes it appealing is the flexibility. You can choose coverage duration, pay annually or monthly, and even add riders like critical illness or accidental death. With some of the Axis Max Life term insurance plans, it’s easier than ever to compare and customise.
Return of Premium Term Plans (TROP)
A common concern with traditional term plans is: What happens if you survive the term? That’s where the return of premium plans comes in. They function much like a regular term plan, but if you live through the policy duration, you get all your premiums back, excluding GST and rider charges.
This might appeal to someone who wants the safety net of a term plan but isn’t comfortable with the idea of the premiums "going to waste." It does come at a cost, though, as these plans are significantly more expensive than standard term insurance.
For individuals who want the security of a best term insurance plan for ₹2 crore with the potential to recoup premium outflows, this hybrid approach could strike a balance.
Unit Linked Insurance Plans (ULIPs)
ULIPs offer something that term plans don’t, and that is market participation. Part of your premium goes toward a life cover, while the rest is invested in equity or debt funds based on your chosen risk level.
If you're financially savvy and have a long-term horizon (think 10 years or more), ULIPs can help build wealth alongside insurance. Tax benefits under Section 80C (only under the old tax regime) apply, and if conditions are met, the maturity proceeds may be exempt under Section 10(10D).
Premium insurance providers offer ULIP plans with flexible switching between funds, allowing you to adapt to market conditions without extra tax liability. For someone targeting a ₹2 crore life cover but also looking to grow wealth over time, ULIPs offer an integrated solution.
Endowment Plans
These plans bring together the benefits of life insurance with a savings component. You pay regular premiums, and you receive a lump sum payout at maturity (if you outlive the policy term). If you pass away during the policy term, your nominee gets the sum assured.
These policies are less volatile compared to ULIPs and may offer bonuses from time to time. However, to get a sum assured of ₹2 crore, you’ll likely pay higher premiums since these plans are partly focused on savings, not just protection.
Endowment policies suit people who prefer predictability and aren’t actively seeking market exposure but still want their money to work over time.
Moneyback Policies
Unlike other plans that pay only at the end, moneyback policies return a portion of the sum assured at regular intervals during the policy term. The remaining payout is made at maturity or upon death.
While it may sound convenient, these plans aren’t the best route for high coverage. To secure INR 2 crore under a moneyback plan, your premiums would be considerably high, and the returns modest. These plans are more appropriate for those looking for periodic cash flows and modest coverage, not large financial shields.
Whole Life Plans
Whole life insurance covers you for as long as you live, typically up to age 99 or 100. This makes it ideal if you want lifelong protection for your family or plan to leave behind a legacy.
These policies often combine a savings element with life cover. While the premiums are higher than term insurance, some plans allow limited premium payment terms (e.g., 15 years) after which the cover continues.
If your goal is wealth transfer or long-term financial continuity for your heirs, whole life insurance can support a ₹2 crore coverage, though it’s less commonly chosen due to cost.
Conclusion
So, what’s the right policy for a ₹2 crore cover? Well, there is no single best answer, but it depends on your common goals, risk appetite, and time frame. If your only goal is protection, a term plan is ideal. But if you want protection plus investment, ULIPs offer long-term growth. If you prefer guaranteed savings, endowment and moneyback plans work, but the cost for a ₹2 crore cover is high. When you are thinking about legacy or estate transfer, whole life insurance can be explored. If you’re still unsure, use tools like online calculators to run scenarios and compare options.
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Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on several secondary sources on the internet and is subject to change. Please consult an expert before making any related decisions.
Tax benefit is subject to change as per the prevailing tax laws.