Define Life Insurance and Schemes

Life Insurance

Life insurance is a contract for payment of a sum of money to the person assured (or to the person entitled to receive the same) on the happening of event insured against. Usually the contract provides for the payment of an amount on the date of maturity or at specified dates at periodic intervals or if unfortunate death occurs. Among other things, the contracts also provide for the payment of premium periodically to the corporation by the policy holders. Life insurance eliminates risk.

The major advantages of life insurance are given below:

Protection Saving through life insurance guarantees full protection against risk of death of the saver. The full assured sum is paid, whereas in other schemes only the amount saved is paid.

Easy Payments Fohalarieeople thalaravingschemes are introdd.

Further, there is an easy instalment facility method of payment through monthly, quarterly, half yearly or yearly mode.

Liquidity Loans can be raised on the security of the policy.

Tax Relief Tax relief in Income Tax and Wealth Tax is available for amounts paid by way of premium for life insurance subject to the tax rates in force.

Schemes of LIC

LIC offers a wide range of schemes to suit the needs of the individual investor.

Basic Life Insurance Plans

Whole Life Assurance Plan it is a low cost insurance plan where the sum assured is payable on the death of the life assured and premiums are payable throughout life.

Endowment Assurance Plan Under this plan, the sum assured is payable on the date of maturity or on the death of the life assured, if earlier.

Both these plans are available with the facility of paying the premiums for a limited period.

Term Assurance Plans

Two-Year Temporary Assurance PLAN Under this plan, term assurance for two years is available. The sum assured is payable only on the death of the life assured during the term.

Convertible Term Assurance Plan It provides term assurance for 5 to 7 years with an option to purchase a new, Limited Payment whole life Policy or an Endowment Assurance Policy at the end of the selected term; provided the policy is in full force.

Bimasandesh This is basically a Term Assurance Plan with the provision for return of premium paid, on the life assured surviving the term.

Bimakiran This plan is an improved version of BimaSandesh with an added attraction of loyalty addition, in-built accident cover and Free Term Cover after maturity, provided the policy is then in full force.

Plans For Children Variouhien’eferressnce Planrvailable v

Jeevan Balya, and Jeevan Kishore. JeevanSubanya is a plan specially designed for girlhien’oneacssnce Plapeciallnerov

fohien’her educationaenses with addetttionf guaranteed additions, loyalty additions and optional family benefit.

Pension Plans These plans provide for either immediate or deferred pension for life. The pension payment are made till the death of the annuitant (unless the policy has provision of guaranteed period). Both the Deferred Annuity and Immediate Annuity plans are available with the return of the GIVE amount on death after vesting under the JeevanDhara Plan and return of Purchase Price on death under the JeevanAkshay Plan.

Jeevansarita This is a Joint-life-last survivor-annuity-cum-assurance plan (for husband and wife) where the claim amount is payable partly in lumpsum and partly in the form of an annuity. Balance sum is assured on the death of the survivor.

Mutual Funds

Investment companies or investment trusts obtain funds from large number of investors through sale of units. The funds collected from the investors are placed under professional management for the benefit of the investors. The mutual funds are broadly classified into open-ended scheme and close-ended scheme.

Open-Ended Schemes

The open-ended scheme offers its units on a continuous basis and accepts funds from investors continuously. Repurchase is carried out on a continuing basis thus, helping the investors to withdraw their money at any time. In other words, there is an uninterrupted entry and exit into the funds. The open-end scheme has no maturity period and they are not listed into stock exchanges. Investor can deal directly with the mutual fund for investment as well as redemption. The open-ended fund provides liquidity to the investors since the repurchase facility is available. Repurchase price is fixed on the basis of net asset value of the unit. In 1998 the open-ended schemes have crossed 80 in number.

Closed – Ended Funds

The close-ended funds have a fixed maturity period. The first time investments are made when the close end scheme is kept open for a limited period. Once closed, the units are listed on a stock exchange. Investors can buy and sell their units only through stock exchanges. Thannuppltorlce thrices ohts. The investor’s expectation also affects the unit prices. The market price may not be the same as the net asset value.

Sometimes mutual funds with the features of close-ended and open-ended schemes are launched, known as interval funds. They can be listed in the stock exchange or may be available for repurchase during specific periods at net asset value or related prices.