Amity Business School

Life Insurance – Concepts and

Beyond
MBA Class of 2011, Semester III
Introduction to Sales management
Module 2
Nidhi Vishnoi Sharma
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Meaning of Life Insurance

• The life branch of insurance includes
insurance that pays benefits on a
person’s:
- Death
- Living a certain length of time
- incapacity
- injury or incurring a disease
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Basic elements of a life insurance

product

• Risk Cover – benefit payable in the event

of death.
• Saving – benefit payable in the event of
survival.
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Types of Life Insurance Products

• Term Life Insurance
• Endowment Insurance
• Whole Life Insurance
• Combination of whole life and Endowment
• Children’s Assurance Plans
• Annuity and Pension Plans
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Term Life Insurance Plans

• It furnishes protection for a limited number of
years at the end of which the policy expires,
meaning it terminates with no maturity value.
• The face value of the policy is payable only if the
insured’s death occurs during the policy period.
• Such policies can be issued for as less as 1
year, but conventionally are being issued for at
least a set no. of years.
• Initial premium rates/mille of coverage are lower
than other life products issued on the same
basis, it may, although escalate rapidly as the
period of coverage lengthens.
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Characteristics of Term Plans

• Term Plan prices are more easily
comparable than prices of other products
• Highly price sensitive.
• Lapse rates are much higher.
• Option of renewability upto a certain age
and for a certain additional premium.
• Convertability into cash-value policy is an
option.
• Re-entry feature may also be included.
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Types of Term Plans

Types of Term Plans

Level Face Amount Non-Level Face Amount

Increasing Premium Level Premium

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Endowment Insurance plans

• These policies promise to pay, face value,
the insured not only in the event of death
but also on expiry of the policy term, if the
insured survives the term.
• There are two ways to look at Endowment
Plans : Mathematical view and Economic
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Mathematical view
• Two Types from : Pure Endowment and
Mixed bag policies.
• Pure Endowment only pays if the insured
survived the entire policy tenure and not
otherwise.
• Most policies, thus, include endowment as
a benefit with other policies.
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Economic view
• Two Types : Decreasing term insurance
and increasing savings.
• Savings part is available to the insurer
through surrender of the policy.
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Examples of Term policies

• ICICI Pure Protect
• Bajaj Allianz Life – New Risk Care
• LIC – Amulya Jeevan
• SBI Life – Shield
• Metlife – Suraksha
• Max New York – Level Term policy
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Examples of Endowment Plans

• Children’s Plans
• Pension Plans
• ULIP
• Assure return plans
• Money Back plans
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Whole Life Insurance

• The risk is covered for the entire life, no
policy term is specified.
• Face value and payable premium remains
same throughout the policy duration.
• The money is payable to the nominee
only.
• There is no survival benefit.
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Combination of whole life and

endowment
• When money is needed before the expiry
of policy, such plans are advisable.
• Particularly so, when loans are taken
against policy.
• Part of sum assured is paid regularly
during policy term.
• However, the sum assured at risk ( of
death ) continues to be same till the end of
policy term.
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Types of Whole life Insurance

• Ordinary/straight life/continuous premium
whole life Insurance.
• Limited-payment whole life insurance
• Variable life insurance or ULIP ( combo
policy )
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Children’s assurance plans

• Insurance covering the risk of child’s life.
• Premium payment begins at the time of
taking the policy.
• Risk coverage is deferred.
• Third party policies.
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Annuities and pension plans

• A contract providing for regular periodic
payments during a specified period is an
annuity contract, if this annuity relates to
life, it is called a Life annuity.
• It can be understood as reverse of
conventional life insurance.
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• Case Study discussion