The provision of life assurance policies is quite a different process from the provision of non-life insurance. In Life Assurance, the event being assured is certain to happen – Death of the Life Assured. There are various types of life assurance policies available in the Insurance market, these are as follows:
Whole Life Assurance
This is one of the most popular types of life policy, the sum insured is payable on the death of the assured whenever it occurs. Premiums are payable throughout the life of the assured person, or until the age of 60 or 65.
Although the premium may cease at the age of 60 the policy is still in force and should the person die at for example the age of 75, the policy would provide the benefits for his representatives.
Although the premium may cease at the age of 60 the policy is still in force and should the person die at for example the age of 75, the policy would provide the benefits for his representatives.
Endowment Assurance
In the case of an Endowment policy, the sum assured is payable in the event of death within a specified period of years, this will usually be 15, 20, 25 or 30 years. If the life assured survives until the end of this period at the maturity of the policy, the sum assured will be paid. Endowment policies are very popular with those buying homes, the assurance policy is taken out of the loan or mortgage and written in such a way that the sum assured is payable to the lender usually a bank or a mortgage institution.
The borrower then pays the interest and the premium. At the end of the term of the loan, the endowment policy matures and repays the amount borrowed which is the capital sum back to the lender. If the borrower dies before the end of the repayment period and has paid the interest to date, the endowment policy will mature and repay the capital sum.
The borrower then pays the interest and the premium. At the end of the term of the loan, the endowment policy matures and repays the amount borrowed which is the capital sum back to the lender. If the borrower dies before the end of the repayment period and has paid the interest to date, the endowment policy will mature and repay the capital sum.
Decreasing Term Assurance
This type of term assurance is designed to cover outstanding balances of loans such as a periodical repayment building society mortgage or bank loan, as the borrower repays the capital sum, the assured sum diminishes yearly.
Term Assurance
In this form of assurance, should death occur within a specified period, there would be payment of the sum insured. However, should the assured survive to the end of the term, the assurance cover ceases and no money is paid. This is a relatively cheap form of life assurance and can be issued for example for a medium wage man who wants to see that a reasonable sum is provided for his wife and children after his death.
Group Life Assurance
Usually employers make arrangement for life assurance cover for their employees. The thinking behind this system of life assurance is that the insured sum is payable in the event of the death of an employee during his term of service with the employer. One policy is issued to the establishment and each employee is required to fill a form or certificate of membership. Membership of the scheme is open to all employees from the inception date.
If the employee leaves the firm, he has the option of continuing in the scheme and converting his certificate into an individual policy but of course at an increased premium.
If the employee leaves the firm, he has the option of continuing in the scheme and converting his certificate into an individual policy but of course at an increased premium.
Insured Pension Schemes
The essence of Insured Pension Schemes is to provide a variety of benefits for the insured party but mainly to ensure that some form of pension is available on retirement. Life assurance underwriters play a major role in running pension schemes. Employers wishing to insure their employees preparing them for retirement find this scheme of immense benefit.
Eligibility and level of benefits for the scheme are usually directly related to the value of the services rendered by each employee and remuneration level. This scheme also makes allowance for the payment of retirement benefits for employees who do not reach retirement age before they die.
Eligibility and level of benefits for the scheme are usually directly related to the value of the services rendered by each employee and remuneration level. This scheme also makes allowance for the payment of retirement benefits for employees who do not reach retirement age before they die.