Page 43 - IC23 life insurance application

These plans are the cheapest plans, but are available only for a short period. The

young people at the threshold of a bright career can select such a plan keeping the

final decision to a later date.

It is also possible to consider the cost of the plan on the basis whether it is a plan

with a guaranteed addition (in lieu of bonus) or a with profit plan where the rate of

bonus depends upon the annual valuation. Compare for example the premium etc.

under money back for 20 years (Table 75 with profit) with that under 20 years

Jeevan Sanchay plan without profit but with guaranteed addition of 70% (Plan

no.125). A person aged 30, term 20, shall pay Rs.66.80 pa. per thousand under plan

no. 75, but Rs.74.70 under plan no.125. The excess of Rs.8/- per annum per

thousand is the price paid for the guarantee of paying the bonus at a prefixed rate.

The present rate of bonus in a money back policy with 20 years term is Rs.67/- per

thousand and no body believes that this rate will ever go down in days to come. But

guarantee comes at a price and it is a price for the insurance of the bonus.

Once you keep these general principles in mind, you can easily select the plans

according to the cost also. While cost of insurance is an important factor to decide

whether a plan is affordable, the prospect will be willing to sacrifice a bit more

provided he is convinced of the relative merit of a costlier plan. It is a cost and

benefit exercise which an agent must do sincerely to select the best plan or

combination of plans. It is his capacity to analyse the needs of the prospect

combined with his detailed knowledge of the products available which differentiates a

professional agent from an ordinary agent.

Now that you are reading this book, you are on your way towards professionalism.

Copyright Dr Rakesh Agarwal Sashi Publications Private Limited

Sashi Publications Pvt Ltd Call 8443808873/ 8232083010