Conventional plans are mostly savings products and give guarantee of sum assured and also an annual bonus depending on the profitability of the company. The investment options are with the insurer and they take a call where to invest on the plans available in the market.
Unit-linked insurance plans (ULIP)
ULIPs are market-related and the risk of investment is borne by the policyholders. Policyholders have the right to choose the investment options. They may invest 100 per cent in debt or 100 per cent in equity. ULIPs are considered to be quite complex and need expert advice before investment.
Term insurance is the oldest form of insurance and is the least expensive plan to cover the risk of death. Term plan is a no-return plan just like your medi-claim or car insurance cover. If claim is made within the insured period, the nominee will get the full sum assured; otherwise there is no maturity value or cash value for this plan. It provides coverage for a specific period or term, say 10 to 30 years. Term insurance plan is a must for a person who has dependents or a family in which he is the sole earner.