Learning Objective

LIFE
INSURANCE
PRODUCTS
 Products
• Term Plans
• Whole Life Plans
• Endowment plans
• Money back plans
• Annuity plans
• Juvenile plans
• ULIP
 Term plans
• Protection for a limited period
• If not renewed protection expires.
• These policies have no cash value
or saving element neither any
loans.
• Nothing is paid in case of survival
 Term plans
• Issued for 10,15 or 20 years
• Most affordable –initially premiums
are low but at later age tend to
shoot up.It is cost of pure
protection.
• Single premium products also
available.
 Term plans
• Decreasing Temporary Assurance policy is
used in housing loans,also called Mortgage
redemption Assurance policy.
• Here,SA is is equal to the outstanding loan
at any point of time,which becomes payable
if death occurs during the currency of loan.
 Term plans
• Many people do not find them attractive
and hence companies have come out with
additional benefits like riders,ELC with 50
% of SA and also return of premiums if the
assure survives the policy term.
 Whole life plans
• Provides Sum assured in the event of
death,whenever that may occur.
• Companies limit the age to 100 or less or
the premium paying term is limited,say 40
years-Limited payment policies.
• Policies can be with or without profits
• Single payment also available.
 Whole life plans
• Can be available with option to convert say
endowment plan with in specified period
mentioned in plan(not later than 2 yrs
before expiry)..Term plans also give this
option.
• Advantage is in conversion proof of good
health not required.
 Whole life plans
• Companies have started giving option of
collecting SA and bonuses at the specified
term or when the premium paying term
stops, whichever is later.
• Cash values are available on surrendering
the policies and loans are also available.
 Endowment plans
• Pure endowment plans are exactly opposite
of term plans,where in benefits are paid to
policy holder only on survival.This is
merely a financial provision and the
insurance aspect is absent.
• Endowment plans provide for SA to be paid
in the case of death during the term and if
insured survives,survival benefits are paid.
 Endowment plans
• Premiums can be single as well as less than
the term of the plan
• Endowment is nothing but mix of pure
endowment & term plan.
 Money Back policies
• Unlike endowment plans here the survival
benefits are paid in the form of partial &
periodic payments,of course so long as the
policy holder is alive.
• For example,for a 20 years money back
policy 20 % of the sum assured becomes
payable each at 5,10 & 15 years and 40 %
plus bonus payable at the 20 th year.
 Money Back plan
• Most important feature of this plan is that in
the event of death,at any point of time
during the term of policy if death occurs,
full value of the sum assured is paid with
out deducting the survival benefits already
paid.
• These are more of investment plans than
insurance
 Annuity Plans
• Annuity is a periodic payment during a
fixed period.
• The purpose of annuity is to protect against
a risk of outliving.This is quiet opposite to
life insurance which is protection against
loss of income due to premature death.
• Person receiving annuity is called annuitant
 Annuity Plans
• Basically annuity plans provide for pension
• Two types of annuity plans are available.
• Immediate annuity-here the annuity starts
immediately after one payment interval
from the purchase.This is done by single
premium
 Annuity Plans
• Deferred Annuity-here the annuity starts after
more than one payment interval.The annuity is
being deferred and hence the name.
• It can be purchased either by single premium or
periodic premium.
• Premium paying phase is called accumulation
phase.The age when annuity or pension starts is
called vesting age.
 Annuity plans
• Policyholder has the option to choose from
5 different annuity options-
• Life Annuity
• Life Annuity with RPP
• Life Annuity guaranteed for 5/10/15 years
& life thereafter
• Joint life survivor with RPP
• Joint life survivor w/o RPP
 Juvenile Plans
• Insurance can be taken on the life of
children, who are not majors.The proposal
to be made by parent or guardian.
• The risk of life of child is covered only at
specified age ( diff for diff plans/insurers)
and below that age period is called
deferment period.Only a % of death benefit
could be given in this period.
 Juvenile plans
• The title would automatically pass on to the
insured child ,on his attaining the
majority.This process is called vesting.
• Other children’s plan are in the form of
endowment or money back plans with
parent being sum insured.
 ULIP’S
• ULIP’S plans are very transparent and flexible at
the same time.
• Insured can get all the details of charges and also
decide upon the investment options.
• This is more of investment product than
insurance.Because major portion of premium goes
for investments.
• PREMIUMS=CHARGES(PAC+PMC+FMC+MC
)+UNITS ALLLOTED.
 ULIP’S
• Min SA= Premium * Term / 2
• Person can opt for more as flexibility to choose is
there,further one can choose 0 death benefit in
pension plan.
• Units are offered on NAV calculated daily.Few
companies allot at Bid-offer spread.
• Choice of investment in to different funds
depending on insured’s risk profile.
 ULIP’S
• Funds are Aggressive,balanced or
conservative.
• Aggressive with max exposure to Equity &
min to debt
• Conservative-More of debt & less of equity
• Balanced….is on balance as name suggests.
• Switches are allowed –free & charges.
 ULIP”S
• One has complete flexibilty to put all funds
in one fund or or in a mix ( in any ratio) of
funds.
• Cover continuous option
• Bonus,partial withdrawl,surrender and
riders available.
• Plans for maturity benefits,pension(annuity)
and children are available.
 Joint Life Plans
• Two or more lives can be covered under
one plan,generally for married couples or
partners.
• The SA is paid on the death of any one
insured or end of term.Some plans provide
SA on death of one insured and continue to
cover 2nd insured with out payment of future
premiums.
 Joint Life Plans
• A joint life declaration is necessary to
create joint life interest in the policy.
• In partnership insurance deed would be
examined to ascertain nature of interest.
• Each life would be underwritten separately
• Bonus accrue on basic single SA.