day 2-participating plans
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8/9/2019 Day 2-Participating Plans
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The 2 basic needs of all individuals are;
Risk Coverage
Savings for Future
Basic Elements of Life Insurance
Products
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Risk here means ³Death´
The first basic need is to provide a
lump sum amount to the family in theevent of untimely death of the breadwinner
Here the amount is payable only if
the death of the insured occursduring the selected period
TERM INSURANCE
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The second is accumulation of savings for a specific purpose.
Here the amount is payable only if the insured survives till the end of theselected period
P URE ENDOWMENT
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These 2 concepts ± Basic elements of every Life Ins. Product
Basic Building Blocks in all LifeInsurance Product design
Life Ins. Products are developed bycombining these 2 elements in differentproportions, according to the needs of individuals
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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: Oldest types of plans available
Cater to customers with a low risk
appetite Steady and almost assured returns
over the long term
Premium to Sum Assured ratios are
fixed for each plan and age. Generally withdrawals are not
allowed before maturity
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Conventional Plans-Types Conventional Plans:
a) Participating Plans
a) Non Participating Plans
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Conventional Plans - Typesa) Participating Plans:
Share of profits are distributed to thePolicy holders
Also called µWith Profit Policies¶
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a) Participating Plans:
i. Endowment Plansii. Money Back Plans
iii. Whole life Plans
iv. Children¶s Plans
v. Joint Life Plans
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Many investors use this to fundanticipated financial needs
Premium is comparatively higher
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Risk cover on life continues for the
full Sum Assured
Bonus is also calculated on the full
Sum Assured
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If the policyholder survives till theend of the policy term, the survival
benefits are deducted from thematurity value
Money Back Policies give Money inhand + Insurance cover
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Money back policies are normally fora fixed tenure, normally up to 25
years or so
The policy holder pays a fixedpremium periodically during thepaying period
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iii. Whole Life Policies
Cover extends to the whole life Premiums are paid till death
Premium rates are comparatively
lower
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iv. Children's Plans
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iv. Joint Life Policies
Cover the risk of two or more lives
Under a single policy Usually cover Husband & Wife,
Partners etc
SA becomes payable;
Either at maturity Or during the death of one of the
assureds
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