Page 70 - IC23 life insurance application

There can be whole range of insurance products designed to serve different

purposes. Here however, we shall discuss certain basic products only.

WHOLE LIFE POLICIES:

Whole life policies are normally those where the claim is paid on death or at age 100

by grace. It can be a with profit policy or a without profit policy. The premium paying

period can be for the entire period or limited to lesser number of years. It is called a

limited whole life plan. In fact the premium paying period can be anything from 5

years to 50 years or even longer. For the same sum assured and at the same age,

the longer the duration of premium paying period, the smaller is the quantum of

premium. The final claim can be paid in single instalment or as a pension payable in

several instalments.

Since in the whole life policies, the claim is payable on death only, the insurance

companies can invest this money in long-term projects and thus earn higher

dividend. Therefore, the bonus rate in whole life policies is more compared to

endowment policies.

WHOLE LIFE POLICIES ARE CHEAPEST POLICIES

Another variant of the whole life policy is a convertible whole life policy. A young

man, who has a need for high insurance but can not pay high premium, can take this

policy. This policy can be converted into an endowment policy after a specified

period when the instalment premium increases. Thus the insured gets time to decide

the duration of the policy and can plan better.

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