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Plans of Insurance
• Objectives
– Provision in case of death
– Provision in case of old age
• Term Assurance
– Level Face Amount Policy
• Increasing Premium
• Level Premium
– Non Level face Amount Policy
• Pure Endowment
• Double Endowment
• New Jana Raksha Plan : for agriculturists, lower income groups
• Special Endowment plans: for film artists, professionals.
• Individual and Group policies
• With Profit and Without Profit Policies.
Different Types of Insurance
Products
• Whole Life Products
• Convertible Term Insurance Plan
• Interest Sensitive Products
• Combination Plans
– Money Back Policy
• Annuities
• Insurance Products for Females, Children etc.
• Options, Guarantees and Riders
Computation of Premiums
• Step 1: Find out tabular premium i.e premium
quoted in published premium rates for a Sum Assured Rebate as
given age nearer birthday for the relevant reduction
plan. This premium is per thousand sum from T.P
assured.
• Step 2: Deduct adjustment for large sum per
assured and mode of payment. in monthly thousand
mode 5% extra will be increased in tabular S.A
rate except salary saving scheme (SSS)
policies.
• Step 3: Find out balance premium
• Step 4: Multiply this balance by sum assured. Rs. 25,000 -49000 Rs.1
• Step 5: Add (a) Accident extra if allowed
a) Health Extra, if charged Rs. 50,000-99999 Rs.1.5
b) Occupation extra, if charged Rs. 100, 000 plus Rs.2
c) any other extras, such as premium waiver
• Step 6: Get Annual Premium Mode of Payment Rebate
• Step 7: Divide by 2 or 4 or 12 to get yearly,
half-yearly or quarterly premium respectively.
Yearly 3%
Half Yearly 1.5%
Paid-Up, Surrender & Loans
• Life Insurance is a contract.
• Purpose- Security against economic loss of death.
• Consideration- payment of premiums.
• Policy lapses- money is forfeited.
• Non-forfeiture clause applies, if three years premiums are paid.
• Policy acquires paid up value after three years
• Paid up formula = sum assured upon term X no. of premiums paid.
• Entitlement of bonus after 5 years on paid-up policy.
• Policy can be surrendered for cash value.
• Surrender value is discounted value.
• Surrender value goes on increasing.
• Loans granted on surrender value.
• Loans may be repaid or not.
• Interest is payable at stipulated rate becomes compounding after 6 months.
• Non payment of loans and interest attracts foreclosure.
Some relevant points
• A policy acquires paid up value, surrender
value and loan value after 3 years
premiums have been paid.
• If the policy is not run for three years,
money paid is forfeited.
• When the loan and/ or interest is not paid
back, the accumulated liability exceeds
surrender value. Hence foreclosure.
Formulae for Calculating Paid-up
value/ S.V/ Loan Etc.
• Paid Up Value = S.A X no. of years premiums paid Bonus
per’000
No. of years Premiums Payable + if any
• Surrender value = Paid- up value X S.V Factor
100
• Loan = S.V x 90 if policy is in force
100
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