LIFE INSURANCE PRODUCTS – I
What is a product?
- From a marketing standpoint, a product is a bundle of attributes.
- The difference between a product (as used in a marketing sense) and a commodity is that a product can be differentiated. A commodity cannot.
Products may be
Life insurance is a product that is intangible.
Traditional Life Insurance Products
- Term Insurance Plans
- Whole Life Insurance Plans
- Endowment Insurance Plans
Variants of Term Assurance
- Decreasing term assurance
- Increasing term assurance
- Term assurance with return of premiums
Whole Life Insurance
- There is no fixed term of cover but the insurer offers to pay the agreed upon, death benefit when the insured dies, no matter whenever the death might occur.
Term insurance policy
- A term insurance policy comes handy as an income replacement plan.
Endowment Assurance: Combination of 2 plans:
A term assurance plan
Pays the full sum assured in case of a death of the insured during the term
A pure endowment plan
Pays this amount if the insured survives at the end of the term
Money back plan
It is typically an endowment plan with the provision for return of a part of the sum assured in periodic installments during the term and balance of sum assured at the end of the term .The unique selling proposition (USP) of term assurance is its low price, enabling one to buy relatively large amounts of life insurance on a limited budget.
Decreasing term assurance
These plans provide a death benefit that decreases in amount with term of coverage e.q. a 10 years decreasing term policy may offer a benefit of Rs. 1, 00,000 for death in first year with amount decreasing by Rs. 10,000 on each policy anniversary, top finally come to zero at the end of the ten years
Plan is of decreasing term insurance designed to provide death amount that related to the decreasing amount owned on mortgage loan in such loans, each equated monthly Installment (EMI) payment leads to a reduction of outstanding principal amount.
IRDA’s new guidelines for traditional products.
New traditional products will give a higher death cover.
- For single premium policies it will be 125% or the single premium for those below 45 Years and 110% of single premium for those above 45 years.
- For regular premium policies, the cover will be 10 times the annualized premium paid for those below 45 and seven times for others.
A rider is a provision typically added through an endorsement, which then becomes a part of the contract.