Page 73 - IC23 life insurance application

system and therefore regular payment of premium is not seriously taken. The policy

is therefore likely to lapse leaving no cover.

TERM ASSURANCE:

We have already discussed this concept through out. It is the cheapest insurance

and nothing is payable on the expiry of the term.

There is a variation of this plan, called convertible term insurance. This plan can be

taken initially for a short period say 5 to 7 years and pay premium at a very low rate.

Just before the expiry of the term, this policy can be converted into an endowment

plan of any duration, by payment of an increased premium. No fresh proposal or

medical examination is required.

ENDOWMENT PLANS:

Endowment plans are those where the sum assured is paid either on maturity or

death if earlier. There can be a large varieties of endowment plans to suit different

needs. It takes care of both the risks of dying too early and living too long.

Moneyback plan is one such, which we have discussed.Premium paying period can

be different than the duration of the policy. This is called limited endowment plan.

The amount payable on death can be two or three times more than the amount

payable on survival or vice versa.

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