Both private and public life insurance companies offer a variety of life insurance policies that suits person of any age. The categories of life insurance policies that are offered by the companies are as follows:
- Whole life policy: This is the simplest life insurance policy that provides insurance to cover the risk of death in which the policyholder has to pay a fixed amount of premium until his/her death, and the amount insured will be given to the family of the policyholder.
- Endowment life insurance policy: This life insurance policy offers insurance to cover the risk for a particular period of time. If the policyholder stay alive after the maturity of the policy, the amount of insured money and its interest and bonus will be given to the policyholder. On the other hand, if the policyholder dies before the maturity of the policy then the amount insured is given to the family member or the beneficiary of the policyholder. This policy serves as a tool for money saving.
- Term insurance policy: The term life insurance is purely for covering the risk for a particular duration of time. This policy is especially for the individuals who want to secure the future of their family but cannot afford to pay large premium amounts of whole life or endowment life insurance policy, hence the premium amount is lowest in this policy. The insured amount is given to the fluidly only when the policyholder’s death happens within the term of policy. If the policyholder is alive after the maturity of the policy, then insiired amonnt is not given to him/her. It is completely risk cover policy and do not facilitate any type of savings or investment.
- Joint life policy: Joint life insurance policy provides the life risk cover of the two individuals. This life insurance policy is similar to the endowment policy as it covers risk as well as offers benefits after the maturity of the policy. The insured amount is given when one or both the insured person dies or the insured money together with bonus is distributed equally among the two insured persons if both of them stay alive after the maturity of the policy.
- Annuity: Annuity is a life insurance policy that serves as pension plan. It covers risk of life of insured person as well as serve as pension plan after the retirement. The insured person gets certain amount of money at periodic intervals.
- Children’s endowment policy: This policy offers security for the future of children of the insured person. It has two categories namely Endowment to 18 and Endowment to 24. It provides insured amount for the future of children, such as, for their education or wedding purpose.
- Convertible whole life policy: Convertible whole life policy is a type of life insurance policy that provides the insured person freedom to change the policy plan to other plan after a particular duration of time. Under this policy, if the policyholder wants to convert his/her policy to other one, then he/she can choose the maturity date of the policy instead of agreeing to the maturity date fixed by the insurer.
- With profit and without profit policy: This category of life insurance policy offers the insured amount with profit or without profit whichever is the policy portfolio, at fixed time intervals in form of pension. Under this policy the insured person has to pay lump sum amount of policy to the insurer.
- Group insurance: Group insurance provides security to the employees of an organisation. The premium amount to be paid in this policy is very small, so that poor employees can be covered under life insurance. The policy insures the life of group of employees of a certain company or organisation. The employers can also pay the premium amount of his employees.
- Money back policy: This type of life insurance policy offers to pay the insurance amount at fixed time intervals even before the maturity of the policy. The total insurance amount together with interest and bonus is given to the policyholder or to his/her nominee. It is designed to fulfil the expenses that are expected to incur in future like the expense of education.
- Loan cover term policy: This policy provides the insured person to payback his/her amount of loan borrowed for the purchase of house in case of his/her premature death or an unfortunate event like accident. The insurance amount is not given to the policyholder if he/she stay alive after the maturity of the policy but provides security at the event of emergency. It also offers tax advantage under the Income Tax Act 1999.
- Pension plan: This life insurance policy does not cover the risk of death but provides certain amount of money to the policyholder on monthly basis for the whole life of policyholder or for a particular period of time. Hence it acts as pension plan after the retirement of the policyholder and also the critical illness of the policyholder is covered. The premium can be paid as lump sum or in instalments for certain period and the premium amount paid by the policyholder offers tax benefit.
- Unit linked plans: The Unit Linked Plan (ULIP) provides life insurance protection as well as serve the investment purpose. The premium amount paid by the policyholder is divided into two parts, the first smaller part is for life insurance and the other portion of the premium amount is to be invested in mutual funds. ULIP provides a various advantage to the policyholder like life risk cover, saving, investment, critical illness etc. Note that this study is about conducting consumer behaviour towards core life insurance products, hence ULIP is excluded from the study.
For citing this article, use:
- Haider, F. (2019). An Analysis of Consumer Cluster opting core Life insurance Products.
