Download Simple Investment Yearbook PDF

TitleSimple Investment Yearbook
TagsBanking Interest Banks Service Industries Interest Rates
File Size2.3 MB
Total Pages180
Document Text Contents
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Page 90

Life Insurance

Savings & Investment Yearbook84

Policy type Salient features

Term plan This is a no-frills policy in which the nominee gets the sum
assured if the policyholder dies during the tenure of the policy.
Nothing accrues if you outlive the policy term, though there are
some costly policies that pay premiums back.

Life Insurance Policy Variants

Endowment
plan

If you die during the policy term, your nominee gets the
sum assured plus some returns depending on the policy
performance.
If you survive the policy term, you still get back the sum
assured and returns earned by the policy.

Child plan

Money-
back plan

In this variant of the endowment plan, a part of the sum
assured is returned to the policyholder at periodic intervals
throughout the policy tenure. The balance, along with profits
earned, is returned at the end of the tenure.

Whole-life
plan

A variant of the endowment plan, it provides cover to the policy-
holder throughout his lifetime and not just over a fixed term.

Pension
plan

Annuity In an annuity, the insurer agrees to pay the insured a
stipulated sum of money periodically.
The purpose of an annuity is to protect against risks as well
as provide money in the form of pension at regular intervals.

ULIP
(Unit-
linked
insurance
plan)

Similar to an endowment plan, it is a savings-oriented plan that
is used to create savings for child’s education or marriage.

ULIPs combine insurance and investments.
They are expected to deliver inflation-beating returns in the
long term, irrespective of short-term market
fluctuations.
ULIPs offer several fund-investment options with insurance
and leave the asset-allocation decision in the hands of
investors.

The policy works in two ways. One, it is an accumulation tool
that collects premiums and earns a return. Two, on attaining
the vesting age (the year the payout happens), the accumulat-
ed fund is paid back as an annuity. Pension plans also offer
insurance.

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Page 91

Life Insurance

Savings & Investment Yearbook 85

port in the event of medical
emergencies. Specified surgi-
cal procedures are covered
under this rider, with clearly
stated exclusions.
Disability or dismember-
ment benefit: This rider pro-
vides for an additional cover
equal to the sum assured on
the base policy in the event
of a disability as a result of
an accident. If the accident
results in total and perma-
nent disability, the rider pro-
vides for other benefits: a
proportion of the benefits
will be paid to the insured
person every year until he
recovers. Some insurers pro-
vide the ‘waiver of premium’
benefit as well in the event
of a disability.
Waiver of premium: This
rider gets activated in the
event of a person (who has
taken a life-insurance policy)
becoming ‘completely dis-
abled’ (or loses his ability to
earn a living due to the disability) owing to an injury. Even
though the premium is not paid during this period, the pol-
icy cover is not terminated; it continues as if the premiums
were being paid. In other words, this rider acts as ‘disabil-
ity insurance’ against your life-insurance policy.

GOING ONLINE
Online insurance buying is
very helpful. Life insurance
can be bought online
through the websites of
insurers, brokers or third-
party aggregators. However,
in some cases the process is
not completely online and
there are certain obligations
that require physical inter-
ventions such as signatures
on forms and health check-
ups.

You can access third-
party websites that fea-
ture policies from several
insurers to compare
product features and pre-
miums before deciding
on the insurance cover
best suited to your needs.
Certain policies are dif-
ferently priced for online
sales and available at a
significant discount as
compared to other sales
channels.

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Page 180

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