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Types of Life Insurance policies

masala — Thu, 14 Dec 2006 17:52:40 +0000

The Document containing the written contract between the insurer and the insured along with the terms and conditions of insurance is called the Policy. After the proposal from the filed by the insured and the insurer accepts the from and the premium, a policy is issued to the insurer.
People have different requirements and therefore they would like a policy to fulfill all their needs. The needs of people for life insurance can be family needs, children needs, old age and special needs. To meet the needs of people the insurance nave developed different types of products such as Whole Life Assurance, Endowment type plans, combination of whole life and endowment type plans, Children’s assurance plans and Annuity plans.
Some of these are explained below;

(i) WHOLE LIFE POLICY:

In this kind of policy, the amount payable to the jnsured will not be paid before the death of the assured. The sum then becomes payable only to the beneficiaries or heir of the deceased. The premium will be payable for a fixed period (20-30 years) or for the whole life of the assured. If the premium is payable for a fixed period, the policy will continue till the death of the assured.

(ii) Endowment life Assurance policy:

The insurer (insurance company) undertakes to pay a specified sum when the insured attains a particular age or on his death whichever is earlier. The sum is payable to his legal heir/s or nominee named their in case of death of the assured. Otherwise, the sum will be paid to the assured after a fixed period i.e., till he/she attains a particular age. Thus the endowment policy matures after a limited number of years.

(iii) Joint Life Policy:

This policy is taken up by two or more persons. The premium is paid jointly or by either of them in, instalments or in lumpsum. The assured sum or policy money is payable upon the death of any person to the other survivors or survivor. Usually this policy is taken up by husband and wife jointly or by two partners in a partnership firm where the amount is payable to the survivors on the death of either of the two.

(Iv) Annuity Policy:

Under this policy the assured sum or policy money is payable after the assured a certain age in monthly, quarterly, half yearly or annual instalments. The premium is paid in instalments over a certain period or single premium may be paid by the assured.

(v) Childrenâ€™s Endowment Policy:

This policy is taken up by a person for his/her children to meet the expenses of their education or marriage. The agreement states that a certain sum will be paid by the insurer when the children attain a particular age. However no premium will be paid if he dies before the maturity of the policy.

Life Insurance

masala — Thu, 14 Dec 2006 17:46:43 +0000

Since life is uncertain, all individuals try to assure themselves of certain sum of money in the future to take care of unforeseen events or happenings. Individuals in the course of their life rae always exposed to some kind of risks. The risk may be of an event which is certain that is death.

In that case whta will happen to the other members of the family hwo are depndent on a particular individual’s income. The other risk may be of living too long in which an individual may become too old to earn i.e., retirement.

In this case also, the earnings will declline or end. Other such circumstances, individuals seek protection against these risks and life insurance companies offer protection against such risks.
A life insurance policy was introduced as a rpotection against the certainty of life. But gradually its scope has widened and there are various types of insurance policies available to suit the requirements of an individual.

This agreement or contract which contains all the terms and conditions is put in writing and such document is called policy. The person whose life is insured is called the assured. The insurance company is the insurer and the consideration paid by the assured is the premium. Life insurance also encourages savingsas the amount is to be paid regularly.
The general principles discussed in one of my articles apply to life insurance also with a few exceptions. The main elements of life insurancecontract are:

(i) The life insurance contract must have all the essentials of a valid contract. Certain elements like offer and acceptance, free consent, capacityto enter into a contract, lawful object must be present for the contract
to be valid.
(ii) The contract of life insurance is a contrcat of utmost good faith. The assured should be honest and truthful in giving information to the insurance company. He must disclose all material facts about his health to the insurer. It is his duty to disclose aacurately all the material facts known to him even if the insurer does not ask him.
(iii) In life insurance, the insured must have insurable interest in the life of the assured. Without interest the cotract of insurance is void. In case of life insurance, insurable interst must be present at the time the policy is affected. It is not necessary that the assured shoould have insurable intersrt at the time of maturity also.
(iv) Life insurance contract is not a contract of indemnity. The life of a human being can not be compensated and only a specified sum of money is paid. That is why the amount payable in life insurance on the ahppening of an event is fixed in advance. The sum of money payable is fixed, at the time of entering into contract.