Popular Life Insurance Plans are given below :
1.Term Assurance Plans
This is the cheapest form of life insurance. The sum assured is payable only on death during the policy term. No death then no payment. Available variants of term insurance plans are given below :
• Short term policies – normally with 2 year term single premium payment.
• Long term policies – a term insurance policy can be for a long period ranging from five years to whole life of the Life assured.
a) A whole life policy is technically a term assurance plan with an indefinite term. However, under an ordinary term assurance policy term assured may not become payable if no death within the term, but the sum assured under whole life policy is definitely paid on death of the life assured
b) Decreasing or increasing sum assured policies – sum assured is made to decrease or increase every year or specified periodical intervals during the term.
c) Decreasing term insurance policy are suitable to cover outstanding loan and interest in mortgage transactions.
a. In a limited payment policy premium payment ceases at a specified age or after a specified period from date of commencement, before the end of the policy term.
Ordinary endowment plans
• The sum assured is payable either on death or on maturity of the policy whichever is earlier. The place thus carries two elements – death risk coverage and the survival benefit, hence costlier as compared to the term assurance.
• Premium payment may be until death of it occurs during policy term or through out the policy term, or even up to a specified limit period of the term.
Money Back Endowment Plan
• Under money back endowment plan, a specified percentage of the basic sum assured is paid as survival benefit at end of specified number of years.
• On maturity, sum assured along with bonuses etc. is paid after deducting the periodical payment already made.
• On death before maturity, full sum assured along with bonuses, if any, is paid without deducting the part payments made as survival benefits.
Joint Life Endowment Plan
• It is an endowment plan covering death risk of two or more persons under one policy. If one of the life assured dies within the policy term, claim amount is payable to the survivor. If both or all of them dies simultaneously, claim amount is payable to the nominee, if any, or the legal heirs.
• These plan of life insurance carry the provisions of conversion into other plan. Conversion become effective when the policy holder exercises the option otherwise the insurance continues under the original plan. No medical examination or evidence of good health is required at the time of conversion irrespective of the state of health of the life assured.
Examples of such plans are given below :
a) Convertible term assurance – can be converted into a whole life or an endowment plan.
Conversion has to be exercised within the specified period, which is normally 2years before the expiry of the original term.
b) Convertible whole life plan can be converted into endowment plan.
3.With Profit Without Profit Plans
- A life insurance policy may be ‘with profit’ or ‘without profit’. With profit policy is called participating and without profit is called non participating.
- Under a participating, which is with profit policy, premium is slightly higher than the premium under a non participating which is without profit policy.
- In these plans, life to be assured is a minor. Proposal is made by the parent or guardian.
- Risk cover start when the minor attains the age specified in the policy. Risk starting date is called the Deferred date. It is the policy anniversary date falling immediately after the minor attains the specified age. The time gap between the date of commencement and the deferred date is called the deferment period.
- In case the minor assured dies between the deferment period, the premium is refunded.
- The ownership of the policy automatically passes on to the minor insured on the policy anniversary falling immediately after he attains age of majority. Such a pass on of ownership is called vesting. The relevant policy anniversary date is called vesting date.
5.Variable Insurance Plans
• A variable insurance plan combines an insurance plan with an investment plan. It does not guarantee any return or yield.
• A variable insurance plan is good when investment conditions are favourable and stock market is booming.
6.Industrial Assurance Plans
• Such plans are designed not for the Industrial workers alone as the name suggests – these are meant for workers with very low incomes.
• Sum assured is very small.
• Agents visit the place of work or the house of the life assured to collect weekly premiums.
Salary Savings Scheme Policies
7.Salary Savings Scheme
- It is intended to facilitate premium payment by working class. The prospect authorizes his employer to deduct premium every month from his salary for remittance to the insurer. The premium is one twelfth of annul premium and is paid on monthly basis.
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