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Data Processing and Analysis Guide

This document discusses various types of life insurance policies like term insurance, whole life insurance, money back plans, endowment plans, unit-linked insurance plans, and riders. It provides details on the key features of each type of policy, such as what benefits they provide, how premiums work, investment options, and risks involved. Term insurance offers basic life cover for a limited time period, while whole life policies provide lifelong coverage but with higher premiums. Money back plans provide life insurance with regular cash returns. Endowment plans offer a lump sum payout at maturity along with life cover. Unit-linked plans allow investors to choose where their premiums are invested from options like equity and debt funds. Riders provide additional benefits for

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14 views2 pages

Data Processing and Analysis Guide

This document discusses various types of life insurance policies like term insurance, whole life insurance, money back plans, endowment plans, unit-linked insurance plans, and riders. It provides details on the key features of each type of policy, such as what benefits they provide, how premiums work, investment options, and risks involved. Term insurance offers basic life cover for a limited time period, while whole life policies provide lifelong coverage but with higher premiums. Money back plans provide life insurance with regular cash returns. Endowment plans offer a lump sum payout at maturity along with life cover. Unit-linked plans allow investors to choose where their premiums are invested from options like equity and debt funds. Riders provide additional benefits for

Uploaded by

sobhenc
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

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Term insurance covers you for a term of one or more years. It pays a death benefit only if the
policy holder dies during the period the insurance is in force. Term insurance generally offers the
cheapest form of life insurance. You can renew most term insurance policies for one or more
terms even if your health condition has changed.
c owever, each time you renew the policy for a new term, premiums may climb higher, just like a
rent agreement every time you renew the lease. This policy is particularly useful to cover any
outstanding debt in the form of a mortgage, home loan, etc.

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uome whole life policies let you pay premiums for a shorter period such as 15, 20 or 25 years. Premiums
for these policies are higher since the premium payments are made during a shorter period. There are
options in the market to have a return of premium option in a whole life policy. That means after a certain
age of paying premiums, the life insurance company will pay back the premium to the life assured but the
coverage will continue.

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The money back plan not only covers your life, it also assures you the return of a certain per cent of the
sum assured as cash payment at regular intervals. It is a savings plan with the added advantage of life
cover and regular cash inflow. This plan is ideal for planning special moments like a wedding, your
child's education or purchase of an asset, etc. Money back plan have "participating" and "non
participating" versions in the market.

   
Endowment insurance is a level premium plan with a savings feature. At maturity, a lump sum is paid out
equal to the sum assured (plus dividends in a par policy). If death occurs during the term of the policy
then the total amount of insurance and any dividends (par policy) are paid out.

There are a number of products in the market that offer flexibility in choosing the term of the policy
namely you can choose the term from five to 30 years. There are products in the market that offer non
participating (no profits) version, the premiums for which are cheaper
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This is a flexible life insurance policy and is also market sensitive. You decide on the several investment
options on how your net premium are to be invested. While the mony invested has the potential for
significant growth, such funds are subject to market risks including the loss of the principal.

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Market-linked plans or unit-linked insurance plans (ULIP) are similar to traditional insurance policies
with the exception that your premium amount is invested by the insurance company in the stock market.

Market-linked insurance plans (MLP) mimic mutual funds and invest in a basket of securities, allowing
you to choose between investment options predominantly in equity, debt or a mix of both (called balanced
option).

The major advantage market-linked plans offer is that they leave the asset allocation decision in the hands
of investors themselves. You are in control of how you want to distribute your money among the broad
class of instruments and when you want to do it or pull out. Any of the products mentioned above except
term products could be unit-linked.

 
Riders are additional add-on benefits that you could opt to include in your policy over and above what the
policy may provide. owever, these additions come at an extra premium charge depending of the rider
you opt for. These riders cannot be bought separately and independently. The extra premium, nature and
characteristics of the riders are based on the base policy that is offerred.

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1. Accident Death Benefit: Provides a additional amount in case death occurs as a result of an accident.
2. Term Rider: It allows the payment of an additional amount should death of the insured happens.
3. Waiver of Premium: In case of total and permanent disability of life insured due to accident or any
other means this rider allows premiums on base policy or riders to be waived.
4. Critical Illness: It provides payment of an additional amount on the diagnosis of some critical illness.

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