The insurance sector offers different categories of life insurance policies to children, youngsters, and old aged1. Those policies are the following as:
a. Whole Life Policies: It is the most permanent life insurance policy with a fixed premium. It has a savings element which earns cash value, but at the same time, the policy holders have not controlled the investment. It covers against death irrespective of when it happens. The policy holder has to pay premiums regularly till his/ her death, following that the money is given to his/ her family.
b. Endowment Life Insurance Policy: The endowment policy provides benefits to the policy holders during their lifetime. The life protection is the secondary importance of this policy. This endowment policy covers risks only for particular period. After a specific period of time, the maturity amount will be given to the policy holders along with interest and bonus. The endowment policies are the most popular policies in the insurance world which combines both savings and risks. The sum assured is payable even if the insured survives the policy term. If the insured dies during the tenure of the policy, the insurance company has to pay the sum assured just as any other pure risk cover. The insurers offer additional benefits namely double endowment and education/ marriage endowment plans.
c. Term Insurance Policy: Term life insurance policy protects the policy holder against the risk for the selected terms of period. This is aimed to meet the financial need of the people who cannot pay big amount of premium initially for their endowment or whole life life insurance policies. The premium amount has to be paid within grace period, otherwise, the policy goes to an end.
d. Joint Life Policy: Joint life insurance policy provides maturity benefits apart from the risk coverage. The most important feature of the policy is covering the life of two persons. Those two persons may be couple or partners of the company. The sum assured is payable on the death of one or two persons. But the remaining benefits will be continued to another person who is alive. If the two persons are still alive at the maturity period the assured amount and bonus will be divided in two parts and then issued to respective persons. The premium amount paid up to the first person on death or maturity period, whichever is earlier. In joint plans the insurer agrees to ensure more than two lives at a time.
e. Annuity: The insurer accepts to pay the insured a fixed sum of money periodically. The aim of an annuity is to protect against risk and give money in the form of pension at regular intervals.
f. Children’s Endowment Policy: The Children’s Endowment Policy is the best policy for planning the financial needs for children in future education and marriage. It has two types namely Endowment to 18 or Endowment to 24.
g. Convertible Whole Life Policy: Convertible plans of insurance that describes in their term and conditions, which they may be changed to other plans after or within a specific period of time after commencing. A whole life policy with no profit is offered with premiums payable till the age of 70. At the end of five years from the commencement of the policy, the policy holder has the option of converting it into an endowment policy, either on a with no profits or with profits, without having to undergo a fresh medical examination, subject, however, to payment of a suitably increased premium applicable on an endowment policy from the date of its conversion.
h. Money Back Policy: The money back policy offers periodic payments of limited endurance benefits during the policy period. Another important feature of this policy is the assured amount that has to be given to the policy holder or nominee of policy holder without any deduction with bonus and interest. These policies are planned to provide sums needed as anticipated expenses over a specific period of time. The full sum assured is payable to the insured in case of death.
i. Pension Plan: The pension plan is not providing any life insurance coverage benefits, but gives distinct returns for whole life or curtained period of life. The premium amount has to pay in single lump sum payment or installments paid up to some specific period. The return is received in the form of income every month, every half-year and every year either for a certain period of time or for whole life. The premium paid for this plan is eligible for tax benefits under section 80ccc of the Income Tax Act 1999.
j. Group Insurance: Group insurance gives policies to groups namely professional groups, members of co-operative societies, employers-employees group, members of cooperative banks and welfare funds. Generally, the policy is offered at low premium amount. Therefore, it provides an opportunity to poor people to get the insurance policy. In some cases, the employers pay the premium amount on behalf of its employees.
k. Unit Linked Plans: Unit linked plan is life insurance solution rather that gives the benefits of safeguard and elasticity in investments. The investments are pointed out as units and represent the value that it is realizes known as Net Assets Value (NAV). The policy value differs at any time as per the value of the basic assets. The unit linked plan gives various benefits such as investment and saving, investment options, flexibility, life protection, adjustable life coverage, disability, transparency, surgeries, critical illness and liquid tax planning.
For citing this article use:
- Kolla, V. R. S. K. (2017). A study on customer perceptions and purchase Intentions towards life insurance products and Services of both public and private companies.
- Narayanan, H., (2005), “Insurance A Profile”, JAICO Publications, New Delhi, pp.15-19.