Insurance: Traditional Products Versus New ULIP Products

Topics: Life insurance, Insurance, Term life insurance Pages: 48 (9736 words) Published: June 15, 2010



Life is a roller coaster ride and is full of twists and turns. You cannot take anything for granted in life. Insurance policies are a safeguard against the uncertainties of life.

Insurance is system by which the losses suffered by a few are spread over many, exposed to similar risks. Insurance is a protection against financial loss arising on the happening of an unexpected event. Insurance policy helps in not only mitigating risks but also provides a financial cushion against adverse financial burdens suffered.

Insurance policies cover the risk of life as well as other assets and valuables such as home, automobiles, jewelry etc... On the basis of the risk they cover, insurance policies can be classified into two categories.

Life Insurance
General Insurance

Life Insurance

Life insurance is a written contract between the insured and the insurer, which provides for the payment of the insured sum on the date of the maturity of the contract or on the unfortunate death of the insured, whichever occurs earlier.

Types of Insurance policies

Endowment Policy
Whole Life Policy
Term Life Policy
Money-back Policy
Joint Life Policy
Group Insurance Policy
Loan Cover Term Assurance Policy
Pension Plan or Annuities
Unit Linked Insurance Plan

Endowment Policy, India

An endowment policy covers risk for a specified period, at the end of which the sum assured is paid back to the policyholder, along with the bonus accumulated during the term of the policy. An endowment life insurance policy is designed primarily to provide a living benefit and only secondarily to provide life insurance protection. Therefore, it is more of an investment than a whole life policy.

Whole Life Insurance Policy, India

Whole life policy runs as long as the policyholder is alive. As risk is covered for the entire life of the policyholder, therefore, such policies are known as whole life policies. A simple whole life policy requires the insurer to pay regular premiums throughout the life. In a whole life policy, the insured amount and the bonus is payable only to the nominee of the beneficiary upon the death of the policyholder. There is no survival benefit as the policyholder is not entitled to any money during his / her own lifetime.

Term Life Insurance Policy, India

Term life insurance policy covers risk only during the selected term period. If the policyholder survives the term, the risk cover comes to an end. Term life policies are primarily designed to meet the needs of those people who are initially unable to pay the larger premium required for a whole life or an endowment assurance policy.

Money Back Policy, India

Money back policy provides for periodic payments of partial survival benefits during the term of the policy, as long as the policyholder is alive. They differ from endowment policy in the sense that in endowment policy survival benefits are payable only at the end of the endowment period.

Joint Life Insurance Policy, India

Joint life insurance policies are similar to endowment policies as they too offer maturity benefits to the policyholders, apart from covering risks like all life insurance policies. But joint life policies are categorized separately as they cover two lives simultaneously, thus offering a unique advantage in some cases, notably, for a married couple or for partners in a business firm.

Group Insurance, India

Group insurance offers life insurance protection under group policies to various groups such as employers-employees, professionals, co-operatives, weaker sections of society, etc. It also provides insurance coverage for people in certain approved occupations at the lowest possible premium cost.

Loan Cover Term Assurance Policy, India

Loan cover term assurance policy is an insurance policy, which covers a home loan. Such a policy covers the individual's home loan...
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