Term Life Insurance Final
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Term Life Insurance
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Class:MBA IV A
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Term life insurance
Term life insurance or term assurance is life insurance which provides coverage at a fixed rate of payments for a limited period of time, the relevant term. After that period expires coverage at the previous rate of premiums is no longer guaranteed and the client must either forgo coverage or potentially obtain further coverage with different payments and/or conditions. If the insured dies during the term, the death benefit will be paid to the beneficiary. Term insurance is the least expensive way to purchase a substantial death benefit on a coverage amount per premium dollar basis over a specific period of time. Some term policies are renewable, which means that the policy can be renewed at the end of the term for a similar period without the insured having to show evidence of insurability. Evidence of insurability generally consists of a medical exam or doctor¶s statement regarding the insured¶s satisfactory health status (in other words, no physical examination is required). The premium of the renewal is based on the insured¶s age at the time of the renewal. Term policies may also be convertible; convertibility allows the policy owner to convert the temporary protection of a term policy to permanent protection without evidence of insurability. Term policies are defined by the way their face values change during the life of the policy. A level term policy¶s face value and premium remain the same throughout the policy¶s term. Considering a 5-year term policy for $50,000, for example, both the face value and the premium remain constant during the entire 5-year period. The face value of a decreasing term policy decreases throughout the life of the policy down to zero at the date of policy expiration. The premium remains the same. Decreasing term is commonly used to cover a home mortgage. The value decreases at the same rate as the loan balance; thus, if the insured were to die, the mortgage would be paid off. Increasing term insurance is the opposite of decreasing term: the face value increases over the life of the policy, while the premium remains the same. This type of term insurance is not used nearly as often as level- or decreasing term. Because term insurance is temporary protection, it¶s often used to cover temporary needs, such as debts. Other advantages are its initial low cost, making it suitable for people with a large need for insurance but with limited financial resources. Term insurance can also be flexible; it can be used to provide additional protection for the insured. Needs and responsibilities change throughout a person¶s life; term polices can be used to cover those needs when they are at hand.
Features of Term Life Insurance
Term life insurance is the simplest form of life insurance. Some of its basic features are:
y y y
Low premiums: The premium associated with this policy is the lowest, and hence most affordable, as compared to other life insurance policies. Policy can be renewed: After the end of the term of this policy, a policyholder may opt to renew it for a specific period. Premiums are not fixed: Every time a term life policy is renewed, the insurance company is sure to raise the premium of the policy. Moreover, a company can revise the premiums of this policy, based on certain factors.
Types of Term Insurance
y Straight Term /Temporary
It is type of term insurance in which which is for the period of two years from the date of commencement of the policy Premium is to be paid once at the outset Medical examination fees is to be paid by the proposer
y
Renewable Term Policy Type of term insurance which has to be renewd after the expiry of the specified period for an additional period without undergoing the medical tests again Premium will be altered according to the age of the insured personality
y Convertible Term Policy
It is type of insurance which is converted into whole life insurance o endowment plan after certain period of the term defined in the policy
TERM INSURANCE PLANS
Company Plan Overview
SBI LIFE INSURANCE SwaDhan SBI Swa Dhan is non participative term insurance plan which aims at the customer satisfaction along with the fulfillment of risk of the death cover.
Min. Entry 18 years Age Max. Entry 65 years Age 5-10 years Term 1). Premium of Rs 6,098PA. 2). You get a cover ranging from Rs 3 lakhs to Rs one crore in the nominations of Rs 10000. 3). Provides you high life cover at low risk. Features 4). In case of death of the life assured during the policy term, the nominee receives the sum assured under the policy. 5)get a 2% rebate on yearly payments and 1% of premium rates on half yearly 6)additional of 5% rebate in case of woman Tax Benefits Tax benefits are available as per prevailing tax laws.
Company Plan Overview
Life Insurance Corporation of India Amulya Jeevan LIC¶s Amulya Jeevan is pure Term Plan. In case of unfortunate death of the Life Assured during the term of the policy, Sum Assured is payable, provided the policy is kept in force.
Min. Entry Minimum- 18 years Age Max. Entry Maximum- 60 years Age 5 - 35 years Term 1). Minimum Sum assured is 25 Lacs for the policy. 2). The plan pays a sum assured to your nominee in case of your unfortunate demise. Features 3). Premiums can be paid Yearly, Half-yearly or by Single Premium mode. 4). Lapsed policy can be revived within a period of 5 years from the date of first unpaid premium but before the date of maturity Tax Tax benefit available under section 80C of the Income Tax act. Benefits
Company Plan
ICICI Prudential Life Insurance
IProtect ICICI Prudential Life Insurance has launched ICICI Pru iProtect - a term insurance plan that you can buy online at your convenience. You can now secure your family¶s Overview future at the click of a button and can even customize this term plan according to your insurance needs. Min. Entry Minimum- 20 years Age Max. Maximum- 65 years Entry Age 10 - 30 years Term 1). The Plan is available to purchase online only. 2). Life Insurance cover at extremely affordable premiums. Features 3). Special Premium rates for Non-Tobacco users. 4). No Maturity Benefit. 5). No Loan available against this policy. Tax Tax benefit available under section 80C of the Income Tax act, 1961. Benefits
Company Plan Overview
Birla Sunlife Insurance Term Plan BSLI's Term Plan is a low premium, pure risk coverage plan, which takes care of your financial commitments and secures your family's future should anything unfortunate happen to you.
Min. Entry 18 years Age Max. Entry 55 years Age 5 - 25 years Term 1). You can invest minimum Rs2,007 p.a 2). Accidental Death and Dismemberment Rider and Critical Illness Rider, Waiver of Premium Riders available, but only at the time of purchase of policy. 3). In case of the unfortunate death of the life insured during the term of the plan, an amount equal to the Sum assured is paid to the beneficiary. Features 4). The plan offers attractive rebate for face value amounts equal to or greater than Rs. 5 Lakh for regular pay. In case of single pay, this rebate is available for amount greater than or equal to Rs. 7 Lakh. 5). Premium payment can be done Annual, Semi-annual, Quarterly, Monthly, and Single. Tax Tax benefit available u/s 80C & 10(10D) of Income Tax Act. Benefits
ADVANTAGES
y
Cost
The obvious advantage of taking a term life insurance policy over a whole life insurance policy is the cost. Often a term life insurance policy will cost you hundreds of dollars a year but a similar whole life insurance policy can cost as much as thousands. In fact, there are some term life insurance policies that will cover you to the value of $100,000 over a ten year term that cost less than ten dollars a month. Obviously, similar factors are taking into consideration when applying for term life insurance as they are when applying for whole life insurance; factors such as health, family history, lifestyle and age.
y
Flexibility
Term life insurance offers you a greater level of flexibility over it's whole life insurance counterpart. For less money you are able to take out short 10, 20 or 30 year plans and you are able to determine the exact level of cover that this offers. You may have a 4-year-old son and a partner who has opted to stay at home and look after him. Right now he is dependant on your earning money to feed, clothe and care for him but in twenty years he will have finished school, finished college and hopefully got himself a job. This means he is no longer your dependant and you may not need to make financial allowances for him in your life insurance. Alternatively, your mortgage may expire in ten years. You won't need to pay to cover your mortgage once it has been fully paid up.
y
Investment
A term life insurance policy costs you hundreds, even thousands, of dollars a year less than a whole life insurance policy. This means that you can invest your money yourself instead of relying on the insurance company to do so. Insurers are typically very conservative when investing your money, so by taking a term life insurance policy you are able to be a little less strict over the type of investment you choose affording you a greater potential to make more money.
DISADVANTAGES
y
Return on investment:
Most term policies will only pay if the holder dies while the policy is ongoing. An individual can make all of their premium payments for the designated number of years and see no return if they survive their insurance. The exception here is return of premium insurance where they will, at least, get their premium payments refunded when their coverage ends but this may come at a higher cost.
y
Re-insuring difficulties:
Some people get to the end of a term policy and find that they do wish/need to carry on insurance coverage. If they don't have the option to renew then they may need to buy a new policy which can be difficult and more expensive as they get older.
References
Ghosh P.K., Insurance & Risk Management www.policybazaar.com www.aegonreligare.com/ www.lifeinsurancewiz.com
SUBMITTED BY:
Class:MBA IV A
SUBMITTED TO:
Term life insurance
Term life insurance or term assurance is life insurance which provides coverage at a fixed rate of payments for a limited period of time, the relevant term. After that period expires coverage at the previous rate of premiums is no longer guaranteed and the client must either forgo coverage or potentially obtain further coverage with different payments and/or conditions. If the insured dies during the term, the death benefit will be paid to the beneficiary. Term insurance is the least expensive way to purchase a substantial death benefit on a coverage amount per premium dollar basis over a specific period of time. Some term policies are renewable, which means that the policy can be renewed at the end of the term for a similar period without the insured having to show evidence of insurability. Evidence of insurability generally consists of a medical exam or doctor¶s statement regarding the insured¶s satisfactory health status (in other words, no physical examination is required). The premium of the renewal is based on the insured¶s age at the time of the renewal. Term policies may also be convertible; convertibility allows the policy owner to convert the temporary protection of a term policy to permanent protection without evidence of insurability. Term policies are defined by the way their face values change during the life of the policy. A level term policy¶s face value and premium remain the same throughout the policy¶s term. Considering a 5-year term policy for $50,000, for example, both the face value and the premium remain constant during the entire 5-year period. The face value of a decreasing term policy decreases throughout the life of the policy down to zero at the date of policy expiration. The premium remains the same. Decreasing term is commonly used to cover a home mortgage. The value decreases at the same rate as the loan balance; thus, if the insured were to die, the mortgage would be paid off. Increasing term insurance is the opposite of decreasing term: the face value increases over the life of the policy, while the premium remains the same. This type of term insurance is not used nearly as often as level- or decreasing term. Because term insurance is temporary protection, it¶s often used to cover temporary needs, such as debts. Other advantages are its initial low cost, making it suitable for people with a large need for insurance but with limited financial resources. Term insurance can also be flexible; it can be used to provide additional protection for the insured. Needs and responsibilities change throughout a person¶s life; term polices can be used to cover those needs when they are at hand.
Features of Term Life Insurance
Term life insurance is the simplest form of life insurance. Some of its basic features are:
y y y
Low premiums: The premium associated with this policy is the lowest, and hence most affordable, as compared to other life insurance policies. Policy can be renewed: After the end of the term of this policy, a policyholder may opt to renew it for a specific period. Premiums are not fixed: Every time a term life policy is renewed, the insurance company is sure to raise the premium of the policy. Moreover, a company can revise the premiums of this policy, based on certain factors.
Types of Term Insurance
y Straight Term /Temporary
It is type of term insurance in which which is for the period of two years from the date of commencement of the policy Premium is to be paid once at the outset Medical examination fees is to be paid by the proposer
y
Renewable Term Policy Type of term insurance which has to be renewd after the expiry of the specified period for an additional period without undergoing the medical tests again Premium will be altered according to the age of the insured personality
y Convertible Term Policy
It is type of insurance which is converted into whole life insurance o endowment plan after certain period of the term defined in the policy
TERM INSURANCE PLANS
Company Plan Overview
SBI LIFE INSURANCE SwaDhan SBI Swa Dhan is non participative term insurance plan which aims at the customer satisfaction along with the fulfillment of risk of the death cover.
Min. Entry 18 years Age Max. Entry 65 years Age 5-10 years Term 1). Premium of Rs 6,098PA. 2). You get a cover ranging from Rs 3 lakhs to Rs one crore in the nominations of Rs 10000. 3). Provides you high life cover at low risk. Features 4). In case of death of the life assured during the policy term, the nominee receives the sum assured under the policy. 5)get a 2% rebate on yearly payments and 1% of premium rates on half yearly 6)additional of 5% rebate in case of woman Tax Benefits Tax benefits are available as per prevailing tax laws.
Company Plan Overview
Life Insurance Corporation of India Amulya Jeevan LIC¶s Amulya Jeevan is pure Term Plan. In case of unfortunate death of the Life Assured during the term of the policy, Sum Assured is payable, provided the policy is kept in force.
Min. Entry Minimum- 18 years Age Max. Entry Maximum- 60 years Age 5 - 35 years Term 1). Minimum Sum assured is 25 Lacs for the policy. 2). The plan pays a sum assured to your nominee in case of your unfortunate demise. Features 3). Premiums can be paid Yearly, Half-yearly or by Single Premium mode. 4). Lapsed policy can be revived within a period of 5 years from the date of first unpaid premium but before the date of maturity Tax Tax benefit available under section 80C of the Income Tax act. Benefits
Company Plan
ICICI Prudential Life Insurance
IProtect ICICI Prudential Life Insurance has launched ICICI Pru iProtect - a term insurance plan that you can buy online at your convenience. You can now secure your family¶s Overview future at the click of a button and can even customize this term plan according to your insurance needs. Min. Entry Minimum- 20 years Age Max. Maximum- 65 years Entry Age 10 - 30 years Term 1). The Plan is available to purchase online only. 2). Life Insurance cover at extremely affordable premiums. Features 3). Special Premium rates for Non-Tobacco users. 4). No Maturity Benefit. 5). No Loan available against this policy. Tax Tax benefit available under section 80C of the Income Tax act, 1961. Benefits
Company Plan Overview
Birla Sunlife Insurance Term Plan BSLI's Term Plan is a low premium, pure risk coverage plan, which takes care of your financial commitments and secures your family's future should anything unfortunate happen to you.
Min. Entry 18 years Age Max. Entry 55 years Age 5 - 25 years Term 1). You can invest minimum Rs2,007 p.a 2). Accidental Death and Dismemberment Rider and Critical Illness Rider, Waiver of Premium Riders available, but only at the time of purchase of policy. 3). In case of the unfortunate death of the life insured during the term of the plan, an amount equal to the Sum assured is paid to the beneficiary. Features 4). The plan offers attractive rebate for face value amounts equal to or greater than Rs. 5 Lakh for regular pay. In case of single pay, this rebate is available for amount greater than or equal to Rs. 7 Lakh. 5). Premium payment can be done Annual, Semi-annual, Quarterly, Monthly, and Single. Tax Tax benefit available u/s 80C & 10(10D) of Income Tax Act. Benefits
ADVANTAGES
y
Cost
The obvious advantage of taking a term life insurance policy over a whole life insurance policy is the cost. Often a term life insurance policy will cost you hundreds of dollars a year but a similar whole life insurance policy can cost as much as thousands. In fact, there are some term life insurance policies that will cover you to the value of $100,000 over a ten year term that cost less than ten dollars a month. Obviously, similar factors are taking into consideration when applying for term life insurance as they are when applying for whole life insurance; factors such as health, family history, lifestyle and age.
y
Flexibility
Term life insurance offers you a greater level of flexibility over it's whole life insurance counterpart. For less money you are able to take out short 10, 20 or 30 year plans and you are able to determine the exact level of cover that this offers. You may have a 4-year-old son and a partner who has opted to stay at home and look after him. Right now he is dependant on your earning money to feed, clothe and care for him but in twenty years he will have finished school, finished college and hopefully got himself a job. This means he is no longer your dependant and you may not need to make financial allowances for him in your life insurance. Alternatively, your mortgage may expire in ten years. You won't need to pay to cover your mortgage once it has been fully paid up.
y
Investment
A term life insurance policy costs you hundreds, even thousands, of dollars a year less than a whole life insurance policy. This means that you can invest your money yourself instead of relying on the insurance company to do so. Insurers are typically very conservative when investing your money, so by taking a term life insurance policy you are able to be a little less strict over the type of investment you choose affording you a greater potential to make more money.
DISADVANTAGES
y
Return on investment:
Most term policies will only pay if the holder dies while the policy is ongoing. An individual can make all of their premium payments for the designated number of years and see no return if they survive their insurance. The exception here is return of premium insurance where they will, at least, get their premium payments refunded when their coverage ends but this may come at a higher cost.
y
Re-insuring difficulties:
Some people get to the end of a term policy and find that they do wish/need to carry on insurance coverage. If they don't have the option to renew then they may need to buy a new policy which can be difficult and more expensive as they get older.
References
Ghosh P.K., Insurance & Risk Management www.policybazaar.com www.aegonreligare.com/ www.lifeinsurancewiz.com
