25-06-2012, 12:33 PM
Life Insurance
Life_Insurance_Handbook.pdf (Size: 843.27 KB / Downloads: 50)
Life Insurance is a financial cover for a contingency
linked with human life, like death, disability,
accident, retirement etc. Human life is subject to
risks of death and disability due to natural and
accidental causes. When human life is lost or a
person is disabled permanently or temporarily, there
is loss of income to the household.
• Though human life cannot be valued, a monetary
sum could be determined based on the loss of
income in future years. Hence, in life insurance, the
Sum Assured ( or the amount guaranteed to be paid
in the event of a loss) is by way of a ‘benefit’. Life
Insurance products provide a definite amount of
money in case the life insured dies during the term of
the policy or becomes disabled on account of an
accident.
Deferred Annuity
Under deferred Annuity policy, the person pays
regular contributions to the Insurance Company, till
the vesting age/vesting date. He has the option to
pay as single premium also. The fund will
accumulate with interest and fund will be available
on the vesting date. The insurance company will
take care of the investment of funds and the
policyholder has the option to encash 1/3rd of this
corpus fund on the vesting age / vesting date tax
free. The balance amount of 2/3rd of the fund will be
utilized for purchase of Annuity (pension) to the
Annuitant.
Kinds of Life Insurance Policies:
Term Insurance
You can choose to have protection for a set period of
time with Term Insurance. In the event of death or
Total and Permanent Disability if the benefit is
offered), your dependants will be paid a benefit. In
Term Insurance, no benefit is normally payable if the
life assured survives the term.
Whole Life Insurance
With whole life insurance, you are guaranteed
lifelong protection. Whole life insurance pays out a
death benefit so you can be assured that your family
is protected against financial loss that can happen
after your death. It is also an ideal way of creating an
estate for your heirs as an inheritance.
Surrender Charges
A surrender charge may be deducted for premature
partial or full encashment of units wherever
applicable, as mentioned in the policy conditions.
Fund Switching Charge
Generally a limited number of fund switches may be
allowed each year without charge, with subsequent
switches, subject to a charge.
Service Tax Deductions
Before allotment of the units the applicable service
tax is deducted from the risk portion of the
premium.
Investors may note, that the portion of the
premium after deducting for all charges and
premium for risk cover is utilized for purchasing
units