Download Insurance PDF

TagsLife Annuity Annuity (American) Insurance Life Insurance Financial Risk
File Size172.7 KB
Total Pages21
Table of Contents
                            Fixed and variable annuities
Guaranteed annuities
Joint annuities
Impaired life annuities
Why health insurance is essential?
Document Text Contents
Page 1








Life insurance is a contract between the policy holder and the insurer, where the

insurer promises to pay a designated beneficiary a sum of money (the "benefits")

upon the death of the insured person. Depending on the contract, other events such

as terminal illness or critical illness may also trigger payment. In return, the policy

holder agrees to pay a stipulated amount (the "premium") at regular intervals or in

lump sums. In some countries, death expenses such as funerals are included in the

premium; however, in the United States the predominant form simply specifies a

lump sum to be paid on the insured's demise.The value for the policy owner is the

'peace of mind' in knowing that the death of the insured person will not result in

financial hardship.Life policies are legal contracts and the terms of the contract

describe the limitations of the insured events. Specific exclusions are often written

into the contract to limit the liability of the insurer. The beneficiary receives policy

proceeds upon the insured's death. The owner designates the beneficiary, but the

beneficiary is not a party to the policy. The owner can change the beneficiary unless

the policy has an irrevocable beneficiary designation. With an irrevocable





Page 2

beneficiary, that beneficiary must agree to any beneficiary changes, policy

assignments, or cash value borrowing.


As the name suggests, whole life insurance is for the whole life and not just for a

specified period, as in term insurance.As there is no fixed end date for the policy,

only the death benefit exists and is paid to the named beneficiary. The policyholder

is not entitled to any money during his or her own lifetime, i.e. there is no survival


Under the whole life insurance policy the premium paying term is 35 years or till the
age of 80 years whichever is more. The sum assured becomes payable only on
death of life assured. The plan provides maximum death cover to the dependents
for the premium paid. This is cheapest plan of insurance. Whole-life insurance
guarantees a death benefit cover throughout the course of life, as against the term
assurance that covers only for a certain years. Whole life policies are paid out on
death of the assured or at the time of maturity i.e. 80 years whichever occurs first.
Premium are to be paid throughout the life or till death, or lesser limited period,
though the policy is for whole life, premiums are to be paid for limited period only.
The policy continues for whole life. There are two types of policies i.e. with profits
and limited payment with profit policy.

On the death of the insured, the nominee usually receives the sum assured plus the
bonus or the profit, if any. With some policies, the nominee might receive just the
sum assured.
In case of a unit-linked whole life plan, the nominee receives the value of the
investments or the sum assured, whichever is higher. Although they typically offer
no survival benefits, the insured can make withdrawals or take loans against the
cash value of the policy. The cash value is the profit or bonus earned on the
premiums paid. Some policies provide survival benefits if the insured lives up to the
age of 80. On maturity, the insured receives the sum assured plus the bonus for the
term of the policy. The premium for a Whole Life policy is usually paid for a longer
duration of time (since the insurance coverage term is longer). However, some
companies offer the insured with a portfolio choice of selecting the premium paying
terms.The practical utility of whole life plans is that they can be used to leave
behind an estate for one's heir(s). Certain whole life policies also offer the flexibility
of regular withdrawals after a certain age.

Products of whole life insurance are:-

1) The Whole Life Policy-Life Insurance Corporation Of India(LIC)
2) The Whole Life Policy(limited payment)-LIC
3) The Whole Life Policy(single premium)-LIC

Page 10


Products of ULIP’s are :-

1) Money Plus-LIC

2) Endowment Plus-LIC

3) Fortune Plus-LIC


A life annuity is a financial contract in the form of an insurance product according to

which a seller (issuer) — typically a financial institution such as a life insurance

company — makes a series of future payments to a buyer (annuitant) in exchange

for the immediate payment of a lump sum (single-payment annuity) or a series of

regular payments (regular-payment annuity), prior to the onset of the annuity.

The payment stream from the issuer to the annuitant has an unknown duration

based principally upon the date of death of the annuitant. At this point the contract

will terminate and the remainder of the fund accumulated is forfeited unless there

are other annuitants or beneficiaries in the contract. Thus a life annuity is a form

of longevity insurance, where the uncertainty of an individual's lifespan is

transferred from the individual to the insurer, which reduces its own uncertainty by

pooling many clients. Annuities can be purchased to provide an income during

retirement, or originate from a structured settlement of a personal injurylawsuit.


Fixed and variable annuities

Annuities that make payments in fixed amounts or in amounts that increase by a

fixed percentage are called fixed annuities. Variable annuities, by contrast, pay

amounts that vary according to the investment performance of a specified set of

investments, typically bond and equity mutual funds.

Variable annuities are used for many different objectives. One common objective is

deferral of the recognition of taxable gains. Money deposited in a variable annuity

grows on a tax-deferred basis, so that taxes on investment gains are not due until a

withdrawal is made. Variable annuities offer a variety of funds ("subaccounts") from

various money managers. This gives investors the ability to move between

subaccounts without incurring additional fees or sales charges.

Page 20

indemnify or guarantee another against loss by a specified contingency or peril". This means
that an individual enters into an agreement with an insurance company that will pay a set
amount of money in case of a loss in a specified area. There are a number of inclusions and
exclusions involved in each insurance policy with all kinds of variables that must be taken into
consideration before purchasing the policy.

One of the most important things to remember is that an insurance policy is a contract between
the insurance company and their customer. The insurance company agrees to pay certain
amounts of money in case of loss and the customer agrees to pay the insurance premiums that
are required to keep the policy in place. If the customer fails to pay the premiums due, the
insurance may be revoked, leaving the customer vulnerable.

The contract specifically makes the insurance company liable to pay for any loss that is
specifically stated in the insurance policy. Most policies will accurately describe the types of
losses covered and the amount of money that the company will pay for those losses.

With the increase in public awareness and the consequent thrust of the Insurance Industry in
the areas of Health Insurance, Liability Insurance and other personal lines of insurances, the
miscellaneous portfolio of Insurance is poised to be a sunrise portfolio of General Insurance.

 Glass Insurance  Personal Accident Insurance
 Money Insurance  Golfer Insurance

 Burglary Insurance
 General Public Legal Liability

 Electronic Equipment

 Contract Works Insurance

 Workmen Compensation

 Fidelity Guarantee Insurance

 Machinery Insurance  Aviation Insurance
 Travel Accident Insurance  All Risks Insurance
 Boat Insurance

Thus miscellaneous insurance is an addition to your existing insurance giving you an extra



Social insurance is any government-sponsored program with the following four


 the benefits, eligibility requirements and other aspects of the program are

defined by statute;

 explicit provision is made to account for the income and expenses (often

through a trust fund);

Similer Documents