Term Insurance Plans: Term Insurance policies as the name suggests, offer coverage of insurance for a defined term or time period and cover only the risk of mortality or the risk of dying too young for a customer. These products primarily cater to the protection of income need of the customer and in case of death during the term of the policy contract; the specified sum insured/death benefit is paid to the nominee specified in the policy. In the event of insured surviving the policy term, there is no payment on maturity of the policy, as the term insurance is intend to cover only the risk of death during the term of policy. Premiums are generally very low for such plans as such plans cover only the risk of death and have very negligible investment element in the premiums. тАЛ
Whole Life Insurance Plans: These plans cater to the need for life protection throughout the whole life of the insured hence called whole life plans. The premiums are paid either for whole life or for limited premium payment period. Whole Life Plans cater to the protection need of the individual for whole life time, generally only the risk of death is covered by such plans, though whole life products can also be a combination with endowment products, hence maturity benefits are also part of some whole life plans. Whole Life Policies are more expensive compared to term plans as the period of coverage is throughout the life of the person insured and also due to the savings or investment element which may be part of such offering.
Endowment Assurance Plans: These are life insurance plans which provide coverage for the risk of death during the policy term and provide the survival benefit on maturity as well. Accordingly such products cater to the saving and accumulation cornerstone of financial security and provide a base life insurance cover as well. Endowment life insurance products hence provide life protection throughout the term of the policy contract , that is to say in the event of eventuality the defined sum assured/death benefit is payable to the nominee and in case of survival, maturity proceeds are payable as survival benefit.
Money Back Insurance Plans: These plans are an offshoot of endowment products. Instead of survival benefit being paid on maturity or at the end of the policy term, in case of money back plans survival benefits are paid periodically at defined intervals of time through the policy term, thereby enhancing the liquidity for the customer.тАЛ
Participating and Non-participating insurance plans: Whole Life, Endowment and Money Back plans cater to the savings and accumulation need of customers as there is an element of investment or returns built in the product construct. These products are traditional plans and can be participating or non- participating in nature.
Participating Plans as the name suggests, participate in the future profits of the company and hence are eligible for bonus, subject to declaration by the life insurance company. Bonus is the share of profits of a life insurance company which is shared with the policy holders.
Non- participating plans on the other hand, do not participate in the future profits of the life insurance company, hence do not qualify for bonus. Though, in such plans guaranteed returns may be inbuilt as part of product construct. .