my notes3

1.
Term Plan – pure risk cover

2. Unit linked insurance plan (ULIP) – Insurance + Investment opportunity
3. Endowment Plan – Insurance + Savings
4. Money Back – Periodic returns with insurance cover
5. Whole Life Insurance – Life coverage to the life assured for whole life
6. Child’s Plan – For fulfilling your child’s life goals like education, marriage, etc.
7. Retirement Plan - Plan your retirement and retire gracefully
Let’s dive deeper to know each plan in detail.
1. Term Life Insurance
Term insurance is the simplest form of life insurance plan. Easy to understand and affordable to buy.
A term plan provides death risk cover for a specified period. In case the life assured passes away
during the
policy period, the life insurance company pays the death benefit to the nominee. It is a pure risk cover
plan
that offers high coverage at low premiums.
There’s an option to add riders to widen up the coverage.
The death benefit is payable as lump sum, monthly payouts, or a combination of both.
There’s no payout if the life assured outlives the policy term. However, these days there are
companies
offering Term Plans with Return of Premiums (TROPS), where insurance companies payback all the
paid
premium amount in case the life assured outlives the term period. But, such plans are costlier than
the vanilla
term insurance plan.
Example:
An individual non-smoker male who is looking for a term life plan of Rs.1 crore cover, will cost him
approximately Rs.6, 800 to Rs.10, 500 per year.
AGE TERM SUM ASSURED ANNUAL PREMIUM RANGE
25 years 40 years Rs.1Crore Rs.6,800 – Rs.10,500
➢ Best known for: High sum assured (coverage) at a low premium.
➢ Benefit of Term Plan: In case of an untimely death of the breadwinner, family is supported with an
enormous
amount of money – sum assured, which helps them to replace the loss of the income caused due to
the
breadwinner’s death. Moreover, the money could be utilized to pay off loan, monthly household
expenses, child’s
education, child’s marriage, etc.
2. Unit Linked Plans (ULIPs)
A unit linked plan is a comprehensive combination of insurance and investment. The premium paid
towards ULIP is
partly used as a risk cover (insurance) and partly is invested in funds. One can invest in different funds
offered by the
insurance company depending on his risk appetite. The insurance company then invests the
accumulated amountin the
capital marketi.e.in bonds, equities, debts,marketfunds, or a hybrid funds...
Example:
TERM SUM ASSURED ANNUAL PREMIUM FUND VALUE
20 years Rs.2 lakh Rs.20,000 Depending on the fund value at the time of
maturity.
Insurance Capsule for NIACL AO Exam 2024
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➢ Best known for: Long-term investment option with much more flexibility to invest.
➢ Benefit of ULIP: Invest money as per your risk appetite. You have the option to invest either in
equity, debt or in
hybrid funds through the life insurance company with complete transparency.
3. EndowmentPlans
Endowment plan is another type of life insurance plan, which is a combination of insurance and
saving.
A certain amount is kept for life cover – insurance, while the rest is invested by the life insurance
company. In an
endowment plan, if the life assured outlives the policy term, the insurance company offers him the
maturity benefit.
Moreover, Endowment Plans may offer bonuses periodically, which are paid either on maturity or to
the nominee under
death claim. On death, the death benefit is payable to the nominee.
Endowment plans are also commonly known as traditional life insurance, although, there is an
investment component
but the risk is lower than the other investment products and so are the returns.
Example:
TERM SUM ASSURED ANNUAL PREMIUM
RANGE BONUS
30 years Rs.10 lakh Rs.20,000 – Rs.25,000 Depending on the Bonus at the time of
maturity.
➢ Best known for: Long-term saving option for people with much lower risk appetite for investment.
➢ Benefit of Endowment Plan: Long-term financial planning and an opportunity to earn returns on
maturity.
4. Money Back Life Insurance
Money back plan is a unique type of life insurance policy, wherein a percentage of the sum assured is
paid
back to the insured on periodic intervals as survival benefit.
Money back plans are also eligible to receive the bonuses declared by the company from time to time.
This
way, policyholder can meet short-term financial goals.
Example:
TERM SUM
ASSURED
ANNUAL
PREMIUM RANGE PERIODIC RETURNS

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Term Plan – pure risk cover

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