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T-4a Life Insurance Products

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POOJA GUPTA
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28 views10 pages

T-4a Life Insurance Products

Uploaded by

POOJA GUPTA
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd
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Life insurance Products &

Companies
POOJA GUPTA
Meaning
The insurance act, 1938, defines life insurance business as the
business of effecting contracts of insurance upon human life,
including any contract whereby the payment of money is
assured on death or the happening of any event insured by
the contract.
Life insurance is a type of insurance that provides financial
protection to beneficiaries in the event of the insured
individual's death.
In other words, a life insurance contract is a contract in which
the insurer in consideration of a certain premium either in
lump sum or other periodical payment, agree to pay to the
assured or to the person for whose benefit the policy is taken,
an agreed sum of money on the death of the insured or on
the expiry of a specified period of time whichever is earlier.
Features of life insurance
• Financial Protection: Life insurance provides a death benefit to the
beneficiaries named in the policy upon the insured person's death.
This lump-sum payment can help cover various financial needs,
such as replacing lost income, paying off debts, funding education
expenses, or covering funeral costs.
• Policyholder and Beneficiaries: The policyholder is the person
who owns the life insurance policy and pays the premiums.
Beneficiaries are the individuals or entities designated to receive the
death benefit when the insured person passes away.
• Premiums: Policyholders pay premiums to the insurance company
to maintain coverage. Premium amounts are based on factors such
as the insured person's age, health, lifestyle, coverage amount, and
type of policy. Premiums can be paid as a lump sum or in regular
installments (e.g., monthly, quarterly, annually).
Need/Functions of life insurance
• Financial Protection for Loved Ones: One of the primary reasons for life
insurance is to provide financial security to dependents and beneficiaries in
the event of the insured person's death. The death benefit from a life
insurance policy can help replace lost income, cover living expenses, pay
off debts (e.g., mortgage, loans, credit cards), and maintain the family's
standard of living.
• Business Continuation: Life insurance is essential for business owners to
protect their businesses and provide continuity in the event of a business
partner's death. It can fund buy-sell agreements, facilitate business
succession planning, repay business debts, and provide financial stability
during transitions.
• Education Funding: Life insurance can be used to fund future education
expenses for children or grandchildren. The death benefit can help ensure
that educational goals are met, even if the insured person is no longer there
to provide financial support.
• Debt Repayment: Life insurance proceeds can be used to pay off
outstanding debts, such as a mortgage, car loan, student loan, or
medical bills. This helps prevent financial strain on surviving family
members and ensures that debts are settled without depleting
assets or savings.
• Peace of Mind: Having life insurance provides peace of mind,
knowing that loved ones will be financially protected and cared for in
the event of the insured person's death. It offers reassurance that
financial obligations will be met and that loved ones will have the
resources they need to move forward.
Advantages of life insurance
1) Protection: Saving through life insurance guarantee full
protection against risk of death of the saver.
2)Aids thrift: Life insurance encourages thrift. It allows long-
term savings since payments can be made effortlessly
because of the easy installment facility built into the
scheme (premium payment for insurance is monthly,
quarterly, half yearly or yearly.
3) Enhances creditworthiness: In case of insurance, it is
acquire loans on the sole security of any policy that has
acquired loan value.
4) Tax relief: Life insurance is the best way to have the
benefit of tax deduction on income tax and wealth tax.
5) Provides liquidity: A policy that has a suitable insurance or
a combination of different plan can be effectively used to
meet certain monetary needs that may arises from time to
time.
There are different types of
plans available:

• Terms Life Insurance


• Whole Life Insurance
• Endowment Type Plans
• Combination Of Whole Life And
Endowment Type Plans
• Children’s Assurance Plans
• Annuity And Pension Plans
• Term Life Insurance: Term life insurance provides coverage for a specified
period (e.g., 10, 20, or 30 years) with a fixed premium. If the insured person
dies during the term of the policy, beneficiaries receive the death benefit.
Term life insurance does not accumulate cash value and is typically more
affordable than permanent life insurance.
• Whole Life Insurance: Whole life insurance offers lifetime coverage with a
guaranteed death benefit and fixed premiums. It includes a cash value
component that grows over time at a guaranteed interest rate. Policyholders
can access the cash value through withdrawals or loans, and the death
benefit is paid to beneficiaries tax-free.
• Endowment Type Plans: Endowment plans are a type of life insurance
policy that combines insurance coverage with savings or investment
components. These plans provide both death benefits and maturity benefits,
making them a popular choice for individuals looking to protect their loved
ones financially while also building savings for future needs.
In whole life policy, there is no period of maturity as it is payable on
death, but endowment policy has a maturity period. Rate of premium
is low for whole life policy as compared to endowment policy.
Premium is payable throughout the life for whole life policy while only
for a specified period in endowment policy.
• Universal Life Insurance: Universal life insurance provides flexible
coverage and premium payments. Policyholders can adjust the coverage
amount and premium payments over time to meet changing financial needs.
It includes a cash value component that earns interest based on current
market rates, allowing policyholders to accumulate savings tax-deferred.
• Variable Life Insurance: Variable life insurance allows policyholders to
invest the cash value portion of the policy in investment accounts, such as
stocks, bonds, or mutual funds. The cash value and death benefit may
fluctuate based on the performance of the underlying investments, offering
potential for growth but also exposing policyholders to investment risk.
• Survivorship Life Insurance: Survivorship life insurance, also known as
second-to-die life insurance, covers two insured individuals (typically
spouses) under a single policy. The death benefit is paid out upon the death
of the second insured person, providing financial protection for beneficiaries
and estate planning benefits.
• Indexed Universal Life Insurance: Indexed universal life insurance offers
flexible premiums and death benefits, with cash value growth tied to the
performance of a stock market index, such as the S&P 500. Policyholders
can participate in market gains while being protected from market
downturns through a minimum guaranteed interest rate
• Children’s Assurance Plans
• Children's assurance plans, also known as children's insurance or child
education plans, are specialized life insurance policies designed to provide
financial protection and savings for a child's future needs. These plans are
typically purchased by parents or guardians to secure their child's financial
well-being, including education expenses, in the event of unforeseen
circumstances such as the death or critical illness of the parent or guardian.
• Annuity And Pension Plans: Annuity and pension plans are financial
products designed to provide a steady income stream during retirement or
later stages of life when regular employment income may cease.

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