Page 148 - DMGT515_PERSONAL_FINANCIAL_PLANNING

Unit 8: Insurance Planning

Some of the important policies are discussed below: Notes
1. Endowment Assurance Policy: This is the most popular and sought after plan. The premiums
under the plan are to be paid for a fixed term. In case death takes place during the term, the
sum assured along with accumulated bonus is paid to the nominee. If the policyholder
survives the term of the policy, he gets the sum assured himself.

The importance of this plan is that it offers the advantage of making a provision for the
family of the life assured in case of his early death and also assures a lumpsum amount at
any desired age.
The plan is available with-profit and without-profit. The with-profit policy carries bonus
with it, no bonus is attached to without profit policies. Premium under the with-profit
policies is obviously higher than the without-profit policies.
Loans may be given for some specified purposes on specified terms.
Benefits associated to the plan are:

(i) On Maturity Sum Assured + Bonus for Full Term.
(ii) On Natural Death Sum Assured + Bonus Accrued.
(iii) Accidental Death Double the amount of sum assured +
Bonus Accrued.
(iv) Permanent Disability amounting to Treated as death and claim accordingly.
incapacitating the insured

2. Whole-Life Policy (with profits): This is a policy offered at lower rates of premium. The
premiums are payable throughout the lifetime of the assured and the sum assured becomes
payable on the death of the life assured or attaining of 85 years (or as specified by insurer)
of age whichever is earlier. Rate of bonus addition is at a higher rate as compared to
endowment policies.
Benefits associated to the plan are:
(i) On Maturity: Sum Assured + Bonus Payable.
(ii) Natural Death: Sum Assured + Bonus Accrued.

(iii) Accidental Death: Double the amount of sum Assured + Bonus Accrued.
(iv) Permanent Disability: Treated as death and claim given accordingly.
3. Whole Life Limited Payment Plan: The plan is suitable for persons who are in employment.
It enables the assured to pay the premiums during the productive years of his life. The
premium is moderate in comparison to the endowment plan.
The plan is available both with and without profits. The plan with profit continues to
participate in profits even after the completion of the premium paying term, until the
death of the life assured.

Benefits:
(i) On Maturity : Sum assured + bonus payable on attainment of 85(as said
by insurer) years of age or on completion of 40 years
from the date of commencement, whichever later.
(ii) Natural Death : Sum Assured + Bonus Accrued.
(iii) Accidental Death : Double of sum assured + Bonus accrued.
(iv) Permanent Disability : Treated as death and claim accordingly.

LOVELY PROFESSIONAL UNIVERSITY 143