Term Insurance
It is a type of life insurance policy that provides coverage for a certain period of time, or a specified “term” of years. If the insured dies during the time period specified in the policy and the policy is active – or in force – then a death benefit will be paid. If the policyholder survives the term, the risk cover comes to an end.
Term insurance is less expensive when compared to other life insurance policies. No surrender, loan or paid-up values are granted under these policies because reserves are not accumulated.
Money Back Plans
Money back plans offer dual benefits of insurance and redemption of money at regular intervals. These policies rank high on the popularity chart.
They fit perfectly in the scheme of things of traditional investors who seek financial instruments that provide insurance and investment, with a low risk element and guaranteed returns.
In short money back plans are meant for individuals who require money at certain intervals in teir lifetime to meet fixed long and short-term financial needs (buying a house or car, vacations abroad).
Pension Plans
A pension is an arrangement to provide people with an income when they are no longer earning a regular income from employment. These plans provide financial stability during your old age.
Pension plans are most suited for senior citizens planning for a financially secure future. They enable you to lead a similar lifestyle as led during your employment days.
Endownment Plans
Endownment policies cover the risk for a specified period of time at the end of which, the sum assured is paid back to the policyholder along with the entire bonus accumulated during the term of the policy.
These policies offer you an endownment – representing a return on your premium payments payable to you in your own lifetime when the policy comes to an end.
Premium on endownment policies are usually payable for the full term of the endownment policy unless, of course, death were to take place earlier.
Saving Linked Plans
The people working in the metropolitan cities, occupied as they are in their day-to-day activities where inflation is inevitable, find difficult to provide adequate security for their families, Individual insurance with high premium in fact does not provide adequate insurance protection. Their need for insurance protection during service coupled with adequate savings for carefree retired life remains unfulfilled. Keeping this in mind, insurance companies have come out with attractive insurance schemes viz. Group Saving Linked Insurance scheme at a very low cost. Central Government has a similar scheme with minor modification, Semi-Government Organization, Public Sector Organizations and also Large private business houses and industrial enterprises have introduced this scheme, the salient features of which are as under:
Objectives:
- Protection at low cost without individual evidence of heath.
- Attractive returns on savings to meet post retirement needs.
- Simple procedures for granting life cover to large groups under one umbrella.
Introduction:
- The Scheme can be introduced by employers provided certain percentage of employees is willing to join the scheme.
- For the new entrants to the Company, the membership of the Scheme is compulsory.
Premium:
It is decided on the basis of Group size and the occupation of the group. Premium has two components i.e. Risk Premium and Savings premiums, Premium risk Premium is utilized to offer life cover and Savings Premium is accumulated in members account.
Accident Benefit:
Double accident benefit can be allowed to the extent of the Sum assured for extra Premium.
Interest:
The present rate of interest allowed on saving portion of premium is 8% compounding yearly.
Eligibility:
Any employee irrespective of his present state of health is eligible to join the scheme subject to certain conditions. The only insurability condition is that the employee should not be absent on medical ground on the date of commencement of the scheme. All employees who have not crossed the retirement age are eligible to join the scheme. All future employees have to join the scheme compulsorily.
Tax Benefits:
Employees’ total contribution, savings as well as risk premium is entitled for income-tax rebate under Sec SoC of the Income Tax Act. The entire claim amount including interest earned payable on retirement or leaving service or on death is free from income-tax. The premium paid by the employer towards insurance cover is treated a s business expenses.
