Non-Clinical Support » Personal Finance

Life Insurance

Types

Endowment Policy

An endowment life insurance policy is designed primarily to provide a living benefit and only secondarily to provide life insurance protection. Therefore, it is more of an investment than a whole life policy. Endowment life insurance pays the face value of the policy either at the insured's death or at a certain age or after a number of years of premium payment.

Endowment life insurance is a method of accumulating capital for a specific purpose and protecting this savings program against the saver's premature death. Many investors use endowment life insurance to fund anticipated financial needs, such as college education or retirement.

Premium for an endowment life policy is much higher than those for a whole life policy.

Money Back Policy

This is basically an endowment policy for which a part of the sum assured is paid to the policyholder in the form of survival benefits, at fixed intervals, before the maturity date. The risk cover on the life continues for the full sum assured even after payment of survival benefits and bonus is also calculated on the full sum assured. If the policyholder survives till the end of the policy term, the survival benefits are deducted from the maturity value.

Annuity Scheme

Annuity schemes are those wherein your regular contributions over a period of time (or a one-time contribution) accumulate to form a corpus with the insurer. This corpus is used to yield you a regular income that is paid to you until death starting from your desired retirement age. Some annuity schemes have the option to pay your survivors a lump sum amount upon your death in addition to the regular income you receive while you are alive.

With Profit and Without Profit Plans.

The insurer distributes its profits among it policyholders every year in the form of a bonus/ profit share. An insurance policy can be "with" or "without" profit. In the former, any bonus declared is allotted to the policy and is paid at the time of maturity/ death (with the contracted amount). In a "without" profit plan, the contracted amount is paid without any profit share. The premium rate charged for a "with" profit policy is therefore higher than for a "without" profit policy.

Accident Benefit

• On payment of an additional premium of Re1 per Rs1000 of Sum Assured per year, the assured is entitled to the following benefits:-
  • In case of accidental death, the nominee shall receive double the sum assured,
  • In case of total and permanent disability due to accident, risk coverage continues without further payment of premium. In addition, an amount equal to the sum assured is paid to the assured in monthly installments spread over 10 years.
  • However, subsequent accidental death will not entitle the nominee for double the sum assured.

Disability Benefit

If the assured becomes totally and permanently disabled due to any accident, he need not pay future premiums and his policy shall remain in force for the full Sum Assured.