Page 147 - DMGT515_PERSONAL_FINANCIAL_PLANNING

Personal Financial Planning

Notes Policy can be assigned or mortgaged.
Policyholders can seek loans against the policy.
Certain policies cover up for treatment to serious ailments.

Ministry of Finance extends income-tax benefits on the amount of premiums paid.
Money can be set aside for children’s marriage and education.
Provision for old age.

Classification of Life Insurance Policies

The Life Insurance Policies can be divided on the basis of:
1. Duration of Policy
2. Methods of Premium Payments

3. Participation in Profit
4. Number of Lives Covered
5. Method of Payment of Sum Assured
The following figure explains the different types of life insurance policies.

Figure 8.3: Classification of Insurance Policies

On the basis of On the basis of On the basis of On the basis of On the basis of
Duration of Policy Methods of Partici-pation Number of Lives Sum Assured
Premium Payments Profits Covered

Single
Level
Premium Premium With Profit Without Single Life Multiple Installments or Lump-Sum
Policy
Policies
Policies
Life
Profit
Annuity
Policy Policy Policy Policies Policies

Joint Life Policies Last Survivorship Policies

Methods of Duration Methods of Term Insurance Methods of Endowment

Whole Life Limited Convertible Temporary Renewable Convertible
Policy Payment Whole Life Assurance Term Policies Term Policies
Whole Life Policy Policies
Policy

Pure Ordinary Joint Double Fixed Term Educational Triple Anticipated Multi Children’s
Deferred
Endow-
Endow- Endow- Endow- Endow- ment Policy Annuity Benefit Endow- ment Purpose Endow-ment
Endow-
Policy
Policy
Policy
ment
ment
ment
ment
Policy Policy Policy Policy ment Policy
Policy
Schemes of Life Insurance
Life Insurance Corporation (LIC) was the exclusive agency in the field of life insurance sector till
November 2000. The new insurance companies have been permitted by IRDA (Insurance
Regulatory and Development Authority) under the IRDA Act. The policies in the give figure are
some of the prominent policies issued by the LIC.
142 LOVELY PROFESSIONAL UNIVERSITY