Page 72 - IC23 life insurance application

paid to the nominee, in addition to the death benefit. To that extent therefore, the

death benefit stands increased.

The unit linked plans described above are examples of interest linked plans. Some

insurance companies offer go a step further and even offer the policy holder an

option to choose the type of investment portfolio depending upon his risk appetite.

These investment portfolios are of three varieties :

1.The debt oriented investments offers low returns with low risk

2.The equity oriented investment offers high potentiality of return, but come with high

risk also

3.The balanced funds are money market investments with the investments fairly

distributed between debt oriented funds and equity oriented funds.

LIC's Bima plus is an example of such interest sensitive plans. Many of the private

insurance companies are offering these plans, e.g. Birla Sun life, Om Kotak and ING

Vysya. These companies publicise their plans on the ground that the investment

portion of the premium is not mixed up with the risk premium and the policy holder is

entitled to take it out any time as it stands. Thus there is no great loss in case of

surrender of the policy.

However, the critics of these interest sensitive plans point out that these plans are

not for every body. Only highly market knowledgeable policy holders can wisely

choose the best portfolios in the market. The liquidity available by easing the terms

of surrender, may result in frequent withdrawal and therefore sufficient money may

not left on the maturity date. These plans normally offer automatic premium loan

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