'Traditional' Life Insurance products are the plain vanilla variety of insurance products where the premium paid over the term of the policy is calculated based on the certain factors.
The factors that help in calculating the cost of covering the risk of loss of life of an individual are, age, gender, occupation, etc.
The 'Premium' paid is a sum of the mortality charges plus administrative cost of administering an insurance policy for an individual.
Sunday, February 17, 2008
What are the types of Life Insurance ?
Life Insurance can be broadly classified into 2 types based on the risks to be covered. The pure risks to life are:
- the risk of living too long
- the risk of dying too early
Insurance products are a mix and match of how they cover the 2 above mentioned risks.
'Pure Endowment' covers the risk for living too long and 'Term Cover' is for insuring against the risk of dying to early.
Other Insurance products like 'Endowment Policies', 'Money Back Policies', etc are a hybrid of the 2 base products and cover both risks.
- the risk of living too long
- the risk of dying too early
Insurance products are a mix and match of how they cover the 2 above mentioned risks.
'Pure Endowment' covers the risk for living too long and 'Term Cover' is for insuring against the risk of dying to early.
Other Insurance products like 'Endowment Policies', 'Money Back Policies', etc are a hybrid of the 2 base products and cover both risks.
Monday, February 11, 2008
What are the types of Insurance ?
Insurance can be classified into 2 broad categories
- 'Life Insurance'
- Non Life Insurance or better known as 'General Insurance'
Life Insurance, as the name suggests, covers the risks arising to due to loss of human life whereas 'General Insurance' is for covering risks of loss to all other non life assets.
Examples of 'General Insurance' will be 'Motor Insurance', 'Home Insurance', 'Health Insurance', etc.
- 'Life Insurance'
- Non Life Insurance or better known as 'General Insurance'
Life Insurance, as the name suggests, covers the risks arising to due to loss of human life whereas 'General Insurance' is for covering risks of loss to all other non life assets.
Examples of 'General Insurance' will be 'Motor Insurance', 'Home Insurance', 'Health Insurance', etc.
What is the meaning of 'Term' in Insurance ?
'Term' in Insurance means the time period for which there's contract of agreement between the 'Insurer' and the 'Insured' for covering a specific risk of loss (e.g. loss due to death, loss due to accidents or robbery, etc) on payment of a certain consideration called 'Premium'.
'Insurer' will be an Insurance Company either public or private company. In India, all Insurance Companies [e.g. Life Insurance Corporation of India (LIC), ICICI Prudential Ltd, TATA AIG, etc] are governed by IRDA.
'Insurer' will be an Insurance Company either public or private company. In India, all Insurance Companies [e.g. Life Insurance Corporation of India (LIC), ICICI Prudential Ltd, TATA AIG, etc] are governed by IRDA.
What is Term Cover ?
'Term Cover' as the name suggests, is the type of Insurance cover an individual would take to cover the risk of loss (namely 'loss of life') for a period of time. This is the cheapest form of Life Insurance for an indivdual as it covers the loss only in event of 'death' during the term of the policy.
There are 2 types of term cover:
Term Cover with 'Return of Premium'
Term Cover without 'Return of Premium'
'Return of Premium' implies that the premium is retuned to the 'Life Assured', at the end of the term, if the 'Life Assured' survives the term.
There are 2 types of term cover:
Term Cover with 'Return of Premium'
Term Cover without 'Return of Premium'
'Return of Premium' implies that the premium is retuned to the 'Life Assured', at the end of the term, if the 'Life Assured' survives the term.
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