Types Of Life Insurance Products:Based on the benefit patterns the traditional Life Insurance products can be categorised into the following types:Term Insurance,Whole Life Insurance, Endowment Insurance,Annuities
Whole of Life Assurance:As the name suggests, the whole life insurance policies are intended to provide Life Insurance protection over one's lifetime. The essence of whole life insurance is that it provides for payment of the assured amount upon the insured's death regardless of when it occurs. Under these policies, the payment of the assured sum is a certainty in contrast to the term insurance contracts. Only the time of payment of the assured sum is an uncertainty.
Whole life policies can be either participating type or non-participating type. Participating type policies are those which are entitled to a share in the distributable surplus (profits) of the Life Insurance company, whereby the cash value of the policy can go up, with the announcement of bonus / dividend. Non-participating policies have the same benefit throughout the life of the policy.
Endowment Assurance:These are the most commonly sold policies. These policies assure that the benefits under the policy will be paid on the death of the life insured during the selected term or on his survival to the end of the term. Hence the assured benefits are payable either on the date of maturity or on death of the life insured, if earlier.Endowment policies assist in providing for the payment of a lump sum amount for a specific purpose, say, provision for retirement, meeting the needs of the child etc. The money required for the purpose will be built up whether the person is alive till that date or not. Like whole life insurance policies, endowment policies can also be of participating and non-participating types.
Annuities:An annuity is a series of periodic payments. An annuity contract is an insurance policy, under which the annuity provider (insurer) agrees to pay the purchaser of annuity (annuitant)a series of regular periodical payments for a fixed period or during someone's life time.
Non Traditional Covers:Universal Life Insurance (ULI) is another non-traditional type of Life Insurance introduced in the United States in the year 1979, which had an adjustable face value (insurance coverage), floating interest rates based on market conditions and unbundling of savings and protection elements of Life Insurance. After paying an initial minimum premium, policy owners may thereafter pay whatever amount and at whatever times they wish, or even skip premium payments, provided the cash value will cover policy charges. Similarly they had the option to raise or reduce the face value of the Insurance policy. For increasing the insurance coverage proof of continued insurability was insisted.
Under this type of policy (ULI), the policyholder pays an initial premium, which should not be less than a minimum for the given face value and the attained age of the Life to be Insured. From this premium payment, the mortality charge for the first period and the expenses charges will be deducted and the balance will be the policy's cash value. To this cash value a certain interest (depending upon the rate of interest prevailing in the market) will be credited at the end of the period
Whole of Life Assurance:As the name suggests, the whole life insurance policies are intended to provide Life Insurance protection over one's lifetime. The essence of whole life insurance is that it provides for payment of the assured amount upon the insured's death regardless of when it occurs. Under these policies, the payment of the assured sum is a certainty in contrast to the term insurance contracts. Only the time of payment of the assured sum is an uncertainty.
Whole life policies can be either participating type or non-participating type. Participating type policies are those which are entitled to a share in the distributable surplus (profits) of the Life Insurance company, whereby the cash value of the policy can go up, with the announcement of bonus / dividend. Non-participating policies have the same benefit throughout the life of the policy.
Endowment Assurance:These are the most commonly sold policies. These policies assure that the benefits under the policy will be paid on the death of the life insured during the selected term or on his survival to the end of the term. Hence the assured benefits are payable either on the date of maturity or on death of the life insured, if earlier.Endowment policies assist in providing for the payment of a lump sum amount for a specific purpose, say, provision for retirement, meeting the needs of the child etc. The money required for the purpose will be built up whether the person is alive till that date or not. Like whole life insurance policies, endowment policies can also be of participating and non-participating types.
Annuities:An annuity is a series of periodic payments. An annuity contract is an insurance policy, under which the annuity provider (insurer) agrees to pay the purchaser of annuity (annuitant)a series of regular periodical payments for a fixed period or during someone's life time.
Non Traditional Covers:Universal Life Insurance (ULI) is another non-traditional type of Life Insurance introduced in the United States in the year 1979, which had an adjustable face value (insurance coverage), floating interest rates based on market conditions and unbundling of savings and protection elements of Life Insurance. After paying an initial minimum premium, policy owners may thereafter pay whatever amount and at whatever times they wish, or even skip premium payments, provided the cash value will cover policy charges. Similarly they had the option to raise or reduce the face value of the Insurance policy. For increasing the insurance coverage proof of continued insurability was insisted.
Under this type of policy (ULI), the policyholder pays an initial premium, which should not be less than a minimum for the given face value and the attained age of the Life to be Insured. From this premium payment, the mortality charge for the first period and the expenses charges will be deducted and the balance will be the policy's cash value. To this cash value a certain interest (depending upon the rate of interest prevailing in the market) will be credited at the end of the period
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