Life Insurance Policies are of various types and a good understanding of their features is a must before you can figure out which product makes most sense for your specific need.

One way of classifying Life Insurance policies is based on how the premium is invested and (sum assured) returned back:

- Term Insurance
Term Insurance is a simple insurance plan that covers the life for a specific "term". Death benefit is paid only if the person dies within this covered period. Since its a no-frills product, it is also the cheapest amongst the Life Insurance Products.

- Unit linked Policy
ULIPs are probably the most sold amongst all Life Insurance variants. They provide the applicant with not only life cover but an effective investment tool also. A part of the premium paid is invested in the market and can earn decent returns (based on the performance of markets). Similar to Mutual Funds, the applicants can also choose their investment mix i.e. the ratio of debt & equity in the invested instruments.

- Endowment Policy
Endowment Policies also cover the individual/risk for a specified period (like Term Insurance) but here all the premium deposited is returned back , along with the bonus accumulated at the end of the period. It is hence used as a collateral for education loans etc by the loan provider.

- Money Back Policy
Money back policies are basically like endowment policies where part of the survival benefits are earned during the life of the policy.

- Whole Life Policy
As the name suggests, a Whole Life Policy continues for the complete life of the policy holder, post which the beneficiary of the policy gets the covered amount.