non participating plans

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Session 3

Module II

LIFE INSURANCE PRODUCTSConventional Plans Non Participating Plans


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Types of Life Insurance Products

Conventional Plans

Unit Linked Plans Annuities & Pensions

Besides there are Group Insurance

Plans & other special plans


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Conventional Plans-Types Conventional Plans:

a) Participating Plans

a) Non Participating Plans


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a) Participating Plans:

i. Endowment Plansii. Money Back Plans

iii. Whole life Plans

iv. Childrens Plansv. Joint Life Plans


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b) Non Participating Plans

i. Pure Endowment Plansii. Term Insurance Plans


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b) Non Participating Plans

Not entitled to share the profits ofthe insurer

The policy holders get only the Sum

Assured, without any bonus Also known as Without Profit

Policies


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Bonus Loading is not charged in

Non Participating policies

The amount of insurance to be paid is

certain in Non Participating policies


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i. Pure Endowment Plans

To Pay the insurance money in theevent of the insured surviving till theend of the endowment term

Provides only Survival Benefits


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Pays the face value of the policy onlyif the insured survives the period of

insurance

In case of death of the insured duringthe period of insurance, nothingbecomes payable


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Pure Endowment is for the benefit ofthe policy holder

Pure Endowment has the element ofinvestment

Pure Endowment grants protectionagainst living long

Pure Endowment provides old ageprotection


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ii. Term Insurance Plans

A contract that furnishes lifeinsurance protection for a limited no.of years


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The face value of the policy becomespayable only if death occurs during

the stipulated term

In case of survival, nothing will bepaid

Provides only death cover


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Advantage Low cost (since only

death is covered)

Suitable where risk coverage is

needed for a restricted period


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Disadvantage The Insurance Moneyis payable only in case of death

If death occurs later, i.e. after theexpiry of the selected term, nothingbecomes payable, irrespective of howlong the original term might havebeen


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Term Insurance Similar to the

General insurance Policies

Provides Risk cover only for the termselected

These plans are not very popular, asthere is no saving content


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Term Insurance is for the benefit ofothers

Term Insurance has the element ofProtection

Term Insurance grants protectionagainst living too short

Term Insurance provides Familyprotection


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Term Insurance Provides protectionagainst death during a specified

period (Unlike Whole life policies,which provide protection againstdeath at any time)


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ii. Term Insurance Plans - Types

Level Term Insurance Decreasing Term Insurance

Increasing Term Insurance

Renewable Term Insurance Convertible Term Insurance


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Level Term Insurance

Uniform premium & benefit through out

the term of the policy

In the event of death anytime during theterm, the SA is payable

Most popular amongst the TermInsurance plans, because of its simplicity


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Decreasing Term Insurance

From an initial amount of insurance,the risk protection decreases yearafter year, becoming zero at the endof the period of insurance

Premium is constant, but the benefitdecreases


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Suited to cases where there is atemporary need


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Increasing Term Insurance

Generally added as rider to another policy

contract

At the option of the insured, the SumAssured increases by fixed percentage orby fixed amount periodically under the

contract

This amount will be available as deathbenefit


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Renewable Term Insurance

Have built in automatic renewal feature

At the end of the fixed period, thepolicy can be renewed automatically bythe policy owner

Without the necessity of medicalexamination / irrespective of the statusof his health


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Premiums will be for a given period,based on the age at beginning of theperiod

At the time of each renewal, premiumwill be the at the rate applicable to the

age attained at the beginning of eachsuch renewal


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Hence, the premium payable will be

increasing with each renewal

At advanced ages, the premium willbe very high


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Convertible Term Insurance

Insured has the option to exchangehis term insurance policy for apermanent type of policy viz, Whole Lifeor Endowment, without having to

produce evidence for continuedinsurability


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Such conversion is allowed during the

period of insurance, and effected forthe AttainedAge or OriginalAge

No further medical examination orunderwriting decisions, when theright of conversion is exercised


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Conversion at the Attained Age:

Premium rate for the new policy will befor the age attained on the date ofconversion


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If the method of Conversion is at the Original Age:

Conversion will take effect from the dateof commencement of the original terminsurance policy

Premium for the converted policy, isrelated to the age at the original date ofcommencement


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Suitable for young people, in theearly stages of their careers

These policies are also useful forpeople who have low income todayand hence cannot afford to pay high

premium in the initial years

non participating plans

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