Life Insurance

LIFE INSURANCE
BY
R.R.JOSHI
LIFE INSURANCE PRODUCTS
• TERM ASSURANCE PLANS
• WHOLE LIFE PLANS
• ENDOWMENT TYPE PLANS
• COMBINATIONS OF WHOLE LIFE AND
ENDOWMENT TYPE PLANS
• CHILDREN ASSURANCE PLANS
• ANNUITIES AND PENSIONS
• GROUP SCHEMES—GRATUITY/LEAVE
ENCASHMENT/TERM LIFE/ PENSION
TERM ASSURANCE PLANS
• TERM ASSURANCE PLANS OFFER PURE RISK COVER
WITHOUT ANY ELEMENT OF SAVING, HENCE THEY ARE
VERY CHEAP.THEY PROVIDE DEATH COVER FOR A GIVEN
PERIOD WITHOUT REFUND OF PREMIUM.THEY ARE USEFUL
UNDER CERTAIN SITUATIONS AS COLLATERAL SECURITY
AGAINST LONG TERM LOANS,MORTGAGE etc.
• Examples of TERM ASSURANCE PLANS—
• LEVEL TERM –LONGTERM PLANS SUBJECT TO LEVEL
PREMIUMS eg. BIMA SANDESH(ALSO REFUNDS ALL
PREMIUMS ON SURVIVAL OF LIFE ASSURED.
• CONVERTIBLE TERM —INSURED HAS OPTION TO
CONVERT POLICY INTO EITHER LIMITED PAYMENT OR
ENDOWMENT
• MORTGAGE REDEMPTION PLAN --ENSURES THAT
OUTSTANDING LOAN IS AUTOMATICALLY SETTLED IN THE
EVENT OF DEATH OF THE BORROWER.
WHOLE LIFE PLANS
• THIS IS THE CHEAPEST FORM OF LIFE INSURANCE.
THE PLANS PROVIDE MAXIMUM DEATH COVER TO
THE DEPENDENTS FOR THE PREMIUM PAID.THE
PREMIUM IS PAYABLE FOR THE LIFE-TIME OF THE
ASSURED OR A LIMITED PERIOD AND THE SUM
ASSURED IS PAYABLE ONLY ON THE DEATH OF
THE LIFE ASSURED.
• EXAMPLES OF WHOLE LIFE PLANS—
• Whole Life Plan—with and without profit
• Convertible Whole Life Plan—after 5yrs.assured
can convert it into endowment plan
ENDOWMENT TYPE PLANS
• THESE ARE VERY POPULAR AS THEY NOT ONLY MAKE
PROVISION FOR THE FAMILY OF THE LIFE ASSURED IN THE
EVENT OF HIS EARLY DEATH BUT ASSURE A LUMPSUM AT
ANY DESIRED AGE.AMOUNT ASSURED BECOMES PAYABLE
AT THE END OF THE ENDOWMENT TERM IF IT HAS NOT
ALREADY BEEN PAID BY REASON OF HIS EARLIER
DEATH.PREMIUMS ARE PAYABLE FOR A PERIOD EQUAL TO
THE ENDOWMENT TERM OR UNTIL DEATH,IF EARLIER.
• Examples of Endowment plans—
• Double Endowment Plan—S/A is payable if death occurs before
selected term and double the S/A is payable if life assured
survives the period
• Jan Raksha Plan
• Special Endowment Plan—for artists/professionals
• Marriage Endowment/Education Annuity Plan
• Jeevan Saathi—Double Cover Joint Life Plan
• Jeevan Shree—guaranteed addition to the S/A +loyalty addition
• Jeevan Mitra—Double Cover Endowment Plan
COMBINATIONS OF WHOLE LIFE
AND ENDOWMENT TYPE PLANS
• COMBINATIONS PROVIDE FOR PERIODIC
PAYMENTS AS WELL AS HIGHER S/A BENEFITS IN
CASE OF DEATH DURING POLICY PERIOD
• Examples of Combination plans—
• Money Back Policy—policy is issued for a
selected term of say 20 yrs.1/5th of S/A is
payable on surviving 5 yrs., further 1/5th on
surviving 10 yrs. ,further 1/5th on surviving 15
yrs. and balance 2/5 on surviving the term. Full
S/A is payable without any adjustment of
survival benefits in case of death during policy
term.
• Modified Plans—Jeevan Sanchay,Jeevan Sneha,
CHILDREN ASSURANCE PLANS
• NEW PLANS HAVE BEEN SPECIALLY DESIGNED FOR CHILDREN
WHERE THE RISK MAY START AS EARLY AS 7yrs.
• AS CHILDREN CANNOT ENTER INTO CONTRACTS, POLICIES WILL
BE TAKEN OUT BY ELDERS.WHEN THE CHILD ATTAINS THE AGE OF
MAJORITY,HE MAY ASSUME THE OWNERSHIP OF THE POLICY.THE
POLICY IS THEN SAID TO VEST IN THE CHILD.
• Examples of Children Assurance Plans—
• Children Deferred Endowment Plan (with profit)
• Children Money Back Assurance Plan— specially designed for those
parents who desire to make advance provision for education/
marriage/other contingencies in the life of the child
• Jeevan Sukanya---plan designed exclusively for female child. Plan
provides risk cover not only on the life assured but also extends to the life
of her husband when she gets married.
• Jeevan Kishore--- This is a novel plan which covers the life of the child
from an early age.Both male and female children between the ages of 1
and 12 yrs.are eligible to be proposed for Insurance under this plan.
ANNUITIES AND PENSIONS
• AN ANNUITY CONTRACT PROVIDES FOR REGULAR PERIODIC
PAYMENTS DURING A SPECIFIED PERIOD.ANNUITY MAY BE
IMMEDIATE,LIFE ANNUITY OR CERTAIN FOR A PERIOD AND
THEREAFTER FOR LIFE OR IT MAY BE DEFERRED.
• A PENSION IS ALSO AN ANNUITY.IT IS PROVIDED BY AN
EMPLOYER TO THE EMPLOYEES OR THEIR DEPENDENTS IN
CONSIDERATION OF THE SERVICE RENDERED.
• IMMEDIATE ANNUITY-- IS PURCHASED BY A SINGLE PREMIUM
CALLED CONSIDERATION AND THE ANNUITY MAY BE PAID
YEARLY,HALF-YEARLY,QUARTERLY OR MONTHLY.Eg.Jeevan Akshay
Plan. VARIATIONS AND COMBINATIONS IN PLANS ARE AVAILABLE.
• DEFERRED ANNUITY— ANNUITY PAYMENTS COMMENCE AFTER
THE DEFERMENT PERIOD AND MAY BE PAID YEARLY,HALF-
YEARLY,QUARTERLY OR MONTHLY. Eg.Jeevan Dhara Plan
VARIATIONS AND COMBINATIONS IN PLANS ARE AVAILABLE
GROUP SCHEMES—GRATUITY/LEAVE
ENCASHMENT/TERM LIFE/ PENSION
• GROUP INSURANCE PROVIDES COVER TO A NUMBER OF
PERSONS UNDER A SINGLE POLICY CALLED MASTER POLICY.
• GROUP GRATUITY SCHEME – PAYMENT OF GRATUITY UNDER
PAYMENT OF GRATUITY ACT-1972 IS COMPULSORY.EMPLOYER MAY
PAY GRATUITY OUT OF HIS OWN REVENUES OR FORM A TRUST
AND ADMINISTER THE SCHEME WITH AN INSURANCE
COMPANY,WHICH WILL ALWAYS PROVE MORE BENEFICIAL..
• GROUP PENSION/SUPERANNUATION— OBJECT OF THE SCHEME
IS TO PROVIDE AN EMPLOYEE PENSION ON RETIREMENT.THE
PENSION IS PAYABLE DURING THE LIFETIME OF THE RETIRED
EMPLOYEE AND VARIOUS OPTIONS ARE AVAILABLE.
• GROUP TERM LIFE – IS A TERM ASSURANCE PLAN FOR THE
GROUP AND PROVIDES LIFE COVER WITH OR WITHOUT RIDERS.
• GROUP LEAVE ENCASHMENT –AS PER AMENDMENTS TO THE
COMPANIES ACT,EMPLOYERS HAVE TO FUND LEAVE ENCASHMENT
FACILITY AND THIS CAN ALSO ARRANGED WITH A LIFE INSURER AT
COMPETITIVE PREMIUM RATES.

Life Insurance

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LIFE INSURANCE

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