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Types of Life Insurance Plans

Types Of Insurance Plans

The Three Types Of Plans Popular in India are:

 Term Plan  Endowment Plan  Annuities

in Term plans claim is payable only on death. only Death Claims . Claim is payable if death occurs during the term of the policy • In simple Maturity Claims.Term Plan • In Term Plan.

whichever comes first • In simple words.Endowment Plan • In Endowment Plans. in Endowment plans either Maturity OR Death claim is payable . Claim is payable on death or at maturity.

Annuities Contract under which insurer makes series of periodic payments in exchange for annuity consideration Annuity Contract Premiums Insured Annuity Benefit Payments Insurer Periodic Payments .

Annuities Tax Benefits Under 80ccc Vesting Age Accumulation Period Annuity Period Corpus Taxable Purchase Price 2/3 Of Corpus Commuted Value 1/3 Of Corpus Tax Free .

Deferred Annuity Premiums/Consideration Builds Up Phase Vesting Age Annuity payments Purchase Date Withdrawal Phase Deferrment period Period between purchase and beginning of benefit payments Payout Period Period during which insurer makes benefit payments .

Immediate Annuity Purchase price in Lump sum Immediate Annuity Benefit payments begin one annuity period after purchase Purchase Date 2001 2002 Payments Begin .

Riders are of Two Types: – Accelerated Riders – Standalone Riders .Riders Riders are extra benefit available at very low cost.

Constituents of Premium • Premium: M + I + C + E • Where • • • M I = Mortality = Investment ( Interest or Saving) C = Contingency • E = Expenses .

Mortality Depends upon:  Age  Gender  Health  Family History  Living conditions  Habits & hobbies .Mortality • • Mortality is the possibility of Death.

and fund management cost Charges will NOT be known in case of traditional policies.Not transparent ULIP policies are transparent.Charges are made known .Expenses Or Charges • • • • • Charges are the expenses that a company deduct from the premium for the issuance of the policy Charges vary from policy to policy Charges include distribution cost. servicing cost.

• Administration Charges: Expenses deducted for policy servicing . Basically covers the distribution cost of the product. • Fund Management Charge: Charge levied to compensate the expenses involved in managing the funds including fund managers fees.Various Charges in ULIP • Allocation Charge: Charges deducted at the issuance of the policy. • Mortality Charge: Expense deducted towards cost of insurance.

Investment Investment = Premium – charges • Investment is made in various funds which a company offers • • Funds is a combination of Debt and equities Different products have different fund options where the proportion of debt and equity varies .

Contingency • • A very small portion of the premium goes towards contingency fund This is to meet any unforeseen expenses or any extraordinary situations .

A complaint can be made within 1 year after the insurer has rejected the representation Ombudsman is expected to make a recommendation within one month from the receipt of the complaint If the complainant accepts this recommendation.20 lakh SA. the insurer has to comply within 15 days and inform the Ombudsman accordingly An Ombudsman has to pass an award within 3 months .Ombudsman • • • • • • • Ombudsman are arbitrators appointed to resolve complaints in respect of disputes between policy holders and Insurers It is not a judicial authority An ombudsman can arbitrate cases up to Rs.

an Appointee is essential to discharge the claim .Nomination Nomination is the easy way to ensure payment of death claim Section 39 of Insurance Act 1938 states that a policy holder can nominate a person or persons to whom the money secured by the policy shall be paid in the event of death A nomination only gives the nominee a right to receive the death claim on behalf of all the heirs of the deceased In case of a minor Nominee.

title and interest would be transferred back to the original holder of the policy .Assignment Assignment is governed by Section 38 of insurance Act of1938 Assignment is process by which the policy holder can transfer the rights.title and interest of a policy to another individual subject to condition Assignment is an endorsement on the policy or can be effected through a separate deed The policy may be reassigned by the assignee at a later date whereby the rights.

-Out of financial consideration with any one. .Assignment Assignment can be made on account of: -Love and affection amongst family members.

Assignment Assignment are of two type: -Absolute assignment . (eg: Assignment to cover loan amount) . Absolute Assignment: Under this assignment the policy once assigned cannot be reverted back.Conditional Assignment. Conditional Assignment:Under this assignment the policy once assigned reverts back once the condition gets fulfilled.

Thank You .