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Unit 8: Life Insurance

2. Money back with increased cover: In this case, the survival benefits are as above. But the Notes
death benefits will be increased Sum Assured depending on the duration of the policy.

8.3.2 Children Policies

With growing cost of education and social responsibilities, it is but proper that we provide
funds for the needs of children. The following are some of the policies available:
1. Children Deferred Assurance: This plan can be given right from age 0. The risk commences
at age 18 or 21. The period from date of commencement to start of risk is called deferment
period. The policy automatically vests with the child on age 18 or 21. The proposer has a
choice of taking away the cash option on the deferred date. The proposer can also avail
premium waiver benefit, whereby the future premiums up to the deferred date are waived
in case of the death of the proposer before deferred dated.

2. Children Policy - Risk Bearing Type: Here the risk on the life of child starts at age 7 or two
years from the date of commencement of the policy whichever is later. The sum assured is
paid on maturity or on death of the assured.
3. Children Money Back Policy: In this policy, the risk on the life of the child starts at age 7
or 2 years from the date of commencement. On life assured surviving 18 & 20 years of age
20% of SA is paid and 30% of SA is paid on attaining 22 & 24 and on attaining 26 years of age
bonus for the entire duration of contract is paid. Full SA is paid on death at any time,
irrespective of survival benefits paid.
4. Exclusive policy for girl child: In this policy also, the risk starts from age 7 or 2 years from
date of commencement. On attaining 20 years of age, full Sum Assured is paid. But the
contract does not come to end. If the girl marries, risk on the life of husband will start
without proof of insurability and payment of any premium, and such risk extends up to
the lady reaching age of 50. In case of husband’s death, full Sum Assured is paid to the
assured. If both of them survive to age 50 of the lady, bonus for entire duration of contract
is paid.

8.3.3 Postal Life Insurance

You will be surprised to know that postal life insurance was started in 1884 as a welfare measure
for the employees of post and telegraphs department. The scheme became popular soon and the
scheme was extended to the employees of central and State governments also. Later, it was
extended to the employees of the banking industry, public sector undertakings, financial
institutions, local bodies, municipalities, educational institutions funded by the Government,
etc. The postal life insurance was extended to cover the rural people from 24th March 1995. The
administration of the scheme is controlled by the Director of the postal department at New
Delhi and the accounts are maintained at Kolkata. Postal Life Insurance is easy to explain. The
number of schemes is also very small compared to the schemes introduced by the insurance
companies.

8.3.4 Retirement Provision

You need to know that one of the risks associated with human being is the risk of living too
long. With break of joint family systems, each one of us has to start providing for the days after
we cease earning. The added problem of the increased longevity has multiplied the need to
provide for retirement. Life insurer is an organization, which can organize schemes to meet this
need. The following are some of them:

LOVELY PROFESSIONAL UNIVERSITY 131