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Insurance Plans – An overview

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ENDOWMENT INSURANCE PLAN

Endowment insurance plan is a combination of both pure term plan and pure endowment plan. Pure term plan has only Death benefit with no maturity, whereas Pure Endowment Plan has only maturity benefit with no death benefit. EAP has death benefit if the life assured dies within the policy term as well as maturity benefit if he survives till the policy mature. Benefit is paid either on death or maturity whichever occurs first. Hence it is complete win-win solution to the policy holder. There are many types of endowments plan such as marriage endowment plan, Educational Endowment plan… etc.

WHOLE LIFE INSURANCE

Whole Life Insurance is a life insurance contract with level premiums that has both insurance and an investment component. The insurance component pays a stated amount upon death of an insured. Part of the insurance contract stipulates that the policyholder is entitled to a cash value reserve that is part of the policy and guaranteed by the company. This cash value can accessed anytime through policy loan that is received income tax free and paid back according to mutually agreed upon schedules. These policy loans are available until insured’s death. If any loan amount is not yet paid back upon the insured’s death, the insurer subtracts those amounts from the policy face value/death benefit and pays the remaining to the policy’s beneficiary.

GROUP LIFE INSURANCE

A type of insurance coverage offered to a group of people, usually, employees of a company, members of a union or association etc. There are types of group insurances such as group term life insurances and group health insurance plan. This costs each individual member much less than if they had to purchase an individual policy. For this reason, group insurance is key factor in employee benefit package. This is because the risk is spread over the entire group, rather than one person.

MICRO INSURANCE PLAN

Insurance that offer coverage to low income households are micro insurance. This is similar to that of regular insurance except to the fact that it targets low income people. The target population mainly consists of people ignored by mainstream commercial and social insurance scheme. Micro insurance is found in developing countries, where current insurance markets are inefficient. The insured people pay considerably smaller premiums.

JOINT LIFE INSURANCE PLAN

Joint Life insurance policies are designed to cover couples or partnership in the event of either partner’s death. It means the chosen amount of cover is paid out if the first person dies, during the length of the policy, after which the policy would end. A joint life policy pays only once and would leave the surviving person without any life insurances.

SINGLE LIFE INSURANCE PLAN

Single life insurance policy covers one person only and pays out the chosen amount of cover if that person dies, during the length of the policy, after which the policy would end.

TERM INSURANCE PLAN

Term life insurance is a policy that provides the insured person coverage for a certain period of time whereas “whole” or “universal” policy is considered permanent, providing coverage for the entire life of the insured.

CONVERTIBLE INSURANCE PLAN 

It allows insured to convert a term policy to a permanent policy at a later date. This plan is designed to meet the needs of those who are initially unable to play larger premium required for whole life insurance plan.

PURE ENDOWMENT PLAN

It is an endowment policy that is paid when the person in the endowment is still alive. A pure endowment policy runs for a certain number of years that matures and is paid out to person nominated.