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Term Assurance

Whole of Life Assurance

Endowment Assu rance

Annuities
- Fixed Annuities
- Variable Annuities

Non Traditional Covers

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ased on the benefit patterns the traditional Life Insuranc e products can be categorised into the following types:

Term Insuranc e

Whole Life Insuranc e

Endowment Insurance

Annuities
Term Insuranc e provides for life insuranc e protec tion for the selec ted term (period of years) only. In case the person (who se life is insured) dies du ring the term, the benefits are payable under the polic y and in case of his survival till the end of the selec ted term the policy normally expires without any benefit becoming payable. Term insurance may be regarded as temporary insurance and is more
nearly comparable with "Property & Casualty insurance" contracts than the other forms of Life insurance c ontracts.

 

 

As the name suggests, the whole life insurance policies are intended to provide Life
Insurance protection over one's lifetime. The essence of whole life insurance is that it
provides for payment of the assured amount upon the insured's death regardless of when it
occurs. Under these policies, the payment of the assured sum is a certainty in contrast to
the term insurance contracts. Only the time of payment of the assured sum is an
uncertainty.
Whole life policies can be either participating type or non-participating type. Participating
type policies are those which are entitled to a share in the distributable surplus (profits) of
the Life Insurance company, whereby the cash value of the policy can go up, with the
announcement of bonus / dividend. Non-participating policies have the same benefit
throughout the life of the policy.
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1. Ordinary Whole Life Insurance
2. Limited Payment Whole Life Insurance
3. Convertible Whole Life Insurance

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These are the most commonly sold policies. These policies assure that the benefits under
the policy will be paid on the death of the life insured during the selected term or on his
survival to the end of the term. Hence the assured benefits are payable either on the date of
maturity or on death of the life insured, if earlier.

Endowment policies assist in providing for the payment of a lump sum amount for a
specific purpose, say, provision for retirement, meeting the needs of the child etc. The
money required for the purpose will be built up whether the person is alive till that date or
not. Like whole life insurance policies, endowment policies can also be of participating and
non-participating types.

 


An annuity is a series of periodic payments. An annuity contract is an insurance policy,

under which the annuity provider (insurer) agrees to pay the purchaser of annuity
 (annuitant)a series of regular periodical payments for a fixed period or during someone's
life time.

 

 
 




 

The number of lives c overed

Single

Joint

The beginning of the payment of annuity

Immediate annuity

Deferred annuity

Method of premium payment

Single premium

Regular instalment

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Universal Life Insurance (ULI) is another non-traditional type of Life Insurance introduced
in the United States in the year 1979, which had an adjustable face value (insurance
coverage), floating interest rates based on market conditions and unbundling of savings and
protection elements of Life Insurance. After paying an initial minimum premium, policy
owners may thereafter pay whatever amount and at whatever times they wish, or even skip
premium payments, provided the cash value will cover policy charges. Similarly they had
the option to raise or reduce the face value of the Insurance policy. For increasing the
insurance coverage proof of continued insurability was insisted.

Under this type of policy (ULI), the policyholder pays an initial premium, which should
not be less than a minimum for the given face value and the attained age of the Life to be
Insured. From this premium payment, the mortality charge for the first period and the
expenses charges will be deducted and the balance will be the policy's cash value. To this
cash value a certain interest (depending upon the rate of interest prevailing in the market)
will be credited at the end of the period.