A life insurance contract is a contract where the insurer agrees to pay the premium in lumpsum or in the periodic form to the assured or to another beneficial person at the decided amount either on the death of the insured or on the expiry of a specified period of time.
Different Products Offered by Life Insurers :
The various products by the life insurers are as follows:
Term Insurance:
The term insurance policy is one of the oldest, pure and fundamental types of insurance. In this type of insurance, the whole premium is paid for covering the risk of death during a certain period of time. The payment is p•iven to the insurer only when the assured dies within the specified time period of the policy but if the person survives, the contract will finish at the end of terms.
It is a simple contract and has a low premium as only the risk of death is covered. The premium is paid from the beginning of the term of the policy or till before the death of the assured.
Whole Life Insurance:
The whole life insurance in the long term insurance policy which refers to the policy which provides the protection for the lifetime. It is a common and economical type of contract. The important part of whole life insurance is that it requires payment from the insured without regarding the death of the insured.
The amount is paid only at the death of the insured to the beneficiary. The payment of assured in the whole life insurance is different from the term insurance contract. The time period of the time payment is not certain.
Endowment Insurance :
It is the common type of contract in which the benefit of the policy is given at the time of death of the life assured or at the date of maturity, whichever is earlier. The amount of premium is higher in endowment poli‹nes. It makes sure that the benefit of the policy is received by the insurance. It has the characteristics of both term insurance and pure endowment.
The plan of endowment insurance specifies that the sum assured uJ be paid o hen the person dies within the term insured or survives the term assured. In this case, the death benefit is part of the term assurance and the survival benefit comes under the pure endowment. It is common because it gives the provision for the family of the life assured in the event of this early death and also to the assures at the required age.
Annuity:
An annuity refers to the sequences of regular payments made. In India, annuities and pensions are regarded as the same thing•. It is the type of insurance policy under which the insurer approves paying the purchaser of annuity sequences of regular periodical payment for a certain time period or during the life of the insurer.
Life Insurance and different products offered by life insurers
The periodic payment done in an annuity is in exchange for the purchase money for the remainder of the lifetime of a person or for a specified period. The annuity holder is known as the annuitant. The insurer in an annuity contract does the regular payment of liability of a certain amount of annuity to the annuity holder for a particular life or to a certain age in return for a certain purchase value.
Pension Funds:
Pension funds refer to the type of institutional investor which collects funds from sponsors and invests them for providing future pensions to the beneficiaries. It is required for providing benefits to the individuals for accumulating the saving for financing their consumption requirements after the retirement by the lumpsum way or by the provision of an annuity. It also provides funds to the various end- users like corporations, and other households like securitised loans) or governments for investment or consumption.
Money-Back Policy:
This policy is required for meeting the anticipated expenses like marriage, education, etc for the required period of time. It is a structured type of policy. As there is the presence of inflation the companies are now introducing certain profit-making policies for covering the loss incurred on account of inflation.
The amount sum assured is paid at regular intervals. The sum assured is payable only on survival. The payment of the total assured amount is paid at the time of death. The premium is paid according to the policy of the company in the money-back policies.
The premium can be paid quarterly, half-yearly, or annually. it is paid till the terms of the policy or till the death of the company whichever is earlier. These policies provide regular income along with the risk that it covers. They also provide a high amount of bonus on the sum assured.
Postal Life Insurance:
It is one of the oldest life insurers in the country. On 1“ February 1884, postal life insurance (PLI) was introduced. It came up with the approval of the Secretary of State (for India) to Her Majesty, the Queen Empress of India. This was the scheme of State Insurance introduced by the Director General of Post Offices, Mr.F.R. Hogg in 1881.
It was the welfare scheme required for the benefit of postal employees and in 1888 it was started for the Telegraph Department. Earlier there was no insurance that covers the life of females so the PLI gave protection to the female employees of the P&T Department in 1894.
Mutual Funds and Their Types-click here to know
Unit Linked Insurance Plans (ULIPs ):
In the unit Linked Insurance Policy (ULIP), the customer is given life insurance and the premium is paid is invested in debt or equity products or both. It can also be said that the insurer of the plan gets the protection for the family even after the death of the insurer and along with this they will earn a return on the premium paid. If the insured person dies then the nominee either will get the amount assured or the value of units whichever is higher.
In simple language, ULIP provides the investors both the return on the investment and protection. It provides convenience to the investor’s relief from managing and tracking a portfolio of products. It provides the investors for choosing the product according to their risk requirements.