Page 66 - IC23 life insurance application

Life Insurance Product

THE TRADITIONAL PLANS:

We have discussed in the previous chapter the basic nature of life insurance. We

have talked of pure insurance where nothing is payable to the life assured who

survives the duration of policy. We have talked of savings element. We can think of

a life insurance policy when the sum assured is paid on survival only and nothing is

payable on death. But this is no insurance. It is like a bank deposit and therefore,

by itself can not be considered a life insurance plan. Life Insurance Corporation had

a similar plan, which was later on withdrawn.

However, the savings factor can be added to the pure insurance to form an infinite

varieties of plans to meet different needs.

The pure insurance is called term insurance. It can be for any length of period.

When its duration is whole life, it is called a whole life policy. Premium is payable

through out life and the death claim i.e. sum assured is paid to the widow/widower on

death. However, traditionally the insurance companies do not wait till death to pay

the sum assured. Most companies pay the claim when the life assured attains age

100. It is a matter of grace, homage to the survivor. Payment of premium is also not

insisted upon till death. It is normally waived after the premium has been paid say

for 35 years or age 80 whichever is later.

An endowment plant is a combination of a term assurance plan and a pure savings

plan. The premium amount is enhanced to provide for the return of the sum

assured, if the life assured survives the period.

Copyright Dr Rakesh Agarwal Sashi Publications Private Limited

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