Final Life Insurance

7/29/2019 Final Life Insurance

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Life insurance

nitesh sudan

Pooja shukla

Nidhi

Neha

Deepika

Amit beniwal


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Introduction

Life insurance contract may be defined as a

contract , whereby the insurer in consideration

of a premium undertakes to pay a certain sum of

money either on the death of the insured or on

the expiry of a fixed period.


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Features of life insurance

1) Nature of general contract

According to section 2(h) and section 10

of Indian contract act, the valid contracts must

have the following essentialities:

a)Agreement (offer and acceptance)

b)Competency of parties

c)Free consent of parties

d)Legal consideration

e)Legal objective


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2) Insurable interest

Insurable interest arises out of pecuniary

relationship that exists between the policy

holder and the life assured so that the former

stands to loose by the death of the latter and/orcontinues to gain by his survival. If such

relationship exists than the former has the

insurable interest in the life of latter. Lossshould be monetary or financial.


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Insurable interest

Ownslife Others life

Proof is not required Proof is required

Business relation Family relation


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3) Utmost good faith

Both the parties must make full and true

disclosure of the facts material to the risks.

Material facts Duty of both parties

Full and true disclosure

Legal consequence


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4) Warranties

Warranties are an integral part of the contract.

These are the bases of the contract between theproposer and the insurer and if any statement,whether material or immaterial, is untrue the contractshall be null and void and the premium paid by him

may be forfeited by the insurer.Warranties may be of two types:

Informativethe proposer is expected to disclose allthe material facts to the best of his knowledge andbelief.

Promissory-these are statements about expectationsand intention.


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5) Proximate cause

The effective or efficient cause which causes the loss is called

proximate cause. If the cause of loss is insured the insurer willpay ;otherwise the insurer will not compensate. In lifeinsurance the doctrine of causa proxima (proximate cause) isnot applied because the insurer is bound to pay the amountof insurance whatever may be the reason of death.

But in the following cases the proximate causes are observed inlife insurance

War risk

Suicide

Accident benefit


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6) Return of premium

7)Assignment and nomination


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Other features

Aleatory contract(depends on chance)

Conditional contract

Contract of adhesion(terms of contractcannot be negotiated)

Indemnity contract is not applied.


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Selection of Risk

The function of the selection of risk is to

determine whether the degree of risk

presented by applicant for insurance is

commensurate with the premium established

for persons in his category or some additional

premium should be charged or the applicant

should be rejected the insurance.


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Purpose of selection

Determine whether the proposal should be

accepted or not

Determine the rate of premium to be charged,

which depends on the amount of risk

To avoid any discrimination on the part of the

lives insured

To avoid adverse selection


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Factors affecting risk

Factors affecting risks are usually those factors whichare affecting the mortality; they are also called factorsaffecting the longevity of a person.

1. Age- premium is determined at every year of

completion of age2. Build- it refers to physique of the proposed life and

includes height, weight, chest expansion etc.

3. Physical condition- it includes sight, hearing, heart,lungs, teeth etc.

4. Family history- the certain diseases of the parents willbe relevant factors for determining the degree of riskof the applicant


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5. Personal history- it would reveal the possibility

of death to the life insured. It can be connected

withHealth record(any past operations, recent injuries

and illness)

Past habits(drugs or alcohol addiction)History of occupation(hazardous or unhealthy

occupation)

6. occupation- it is the most important factor whichincludes; hazardous nature of work, chemical effect,

excessive mental and nervous strain


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7. Resident- the risk will be lesser in a goodclimate area and more in a bad climate

8. Race and nationality- in India, persons ofhigh, race or caste are expected to live longerthan the scheduled castes or tribes

9. Economic status- it is important to examine

the family and business circumstances of theapplicant so as to justify the amount ofinsurance applied for

10. Sex- mortality among females sex isgenerally higher than that of male sex, becauseof the physical hazard of maternity in females.


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Sources of risk information

1) The proposal form: it can be divided into two parts

Application form- it includes questions pertaining to home,

address, term of insurance, sum to be assured, mode of

payment, name of the nominee, previous insurance history

etc

Personal statement- it can be filled by (1) either the life to be

assured or (2) the agent, writing at the dictation of the life to

be assured.

This statement mentions name of the life to be assured, family

history, information about serious disease, operations


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2) Medical examiners report: such examiner has to identifythe applicant to avoid case of impersonation. It basically includes

general appearance questions.

3) Agent report: the agent is required to state whether the lifeto be assured , is insurable or not. He has to disclose the

financial and social position of the propose and also all the

unfavorable information of the life proposed

4) The inspection report: the insurers generally verify theinformation obtained by an independent agency. The main

advantage is that the inspector provides fair and frank

information

5) Attending physicians: the attending or the family physiciancan give better records of health, history of the proposed life and

his family. Family physician provide information after charging

some fees.


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6) Neighbors and business associates:

7) Private friends report: in some situations confidentialreports of the friends of the proposer are considered. Since

friends are more close they are in a better position to provide

information.


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Non medical business

Non medical life insurance, sometimes referred to as no exam lifeinsurance

Lives insured without undergoing medical examinations

They can be of two types :-

Non medical general scheme- a special report is formed whichreplaces the medical report.

Classes of lives acceptable: male lives not more than 40 years

Maximum sum assured: 7500

Types of policy: only endowment, double endowment, educational

annuity Maximum age: maximum age at maturity is 60 nearer birthday and

maximum policy term is 25 years


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Non medical special scheme : available to males who are

literate, not more than 45 years and are employed in special

types of employment such as government office, quasi

government offices.

Types of policy: it covers only limited payment life,

endowment, double endowment, money back

Maximum sum : 20000


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Classes of risk

Uninsurable risk: A hazard or condition that haseither a high likelihood of loss, or in which theinsurance would be considered against the law

Condition or situation that fails to meet therequirements of an insurable risk, such as wherea loss is inevitable (as the death of a patientsuffering from a terminal illness) or where the

damage is gradual (as corrosion or rusting ofmetals).


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Factors determining uninsurable risk

A risk is uninsurable when an insurance company cannot

calculate the probability of the risk and therefore cannot work

out a premium that the business must pay

Risk is too widespread, for example, when there is a war in

the country.

When the loss is incurred due to your own deliberate actions,

it cannot be insured.


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Insurable risk: these risk are those which after theselection process can be carried out by an insureralthough there can be different terms andconditions for different policy holders.

Such risk can be divided into:-

Standard risk related to normal life where thereis no much or less risk. It involves majority ofpeople.

Sub- standard- risk which are higher thoughinsurable than the standard risk. They are abovethe standard risk and below the uninsured risk

Super standard- they are present where there islesser risk than the standard risk.


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Methods of risk classification

1) Judgment method

The individual decisions of experienced persons, in medical ,

in actuarial and other departments are combined.

These people are qualified and permitted to take decision

This method is Used:

where a single factor is to be considered or where the

decision for acceptance or rejection is to be taken

Where numerical rating fails to decide


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Disadvantage:

Personal direction may be biased

This method is not very scientific


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2) Numerical rating method

Based upon the principle that a large number

of factors enter into the composition of a riskand that the impact of each of these factorson the longevity of the risk can be determinedby statiscal study of lives possessing that

factor It assumes that a standard risk has a rating of

100

Favorable factors are assigned negative valuescalled credits while unfavorable factors areassigned positive values called debits


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The particular percentages are added ordeducted for each factor

The algebraic summation of the debits andcredits added to the per value of 100represents the numerical value of risk.

The degree of risk on the basis of each factor

is evaluated in terms of percentage. If it ismore than 100, i.e., if the risk is more than thestandard the extra percentage will be debited(+) and if the degree of risk expressed in

percentage is less than the 100, the lesserpercentage will be credited (-) up to thedifference.


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Mortality Table

A table that shows the rate of deaths occurring in a defined

population during a selected time interval, or survival from

birth to any given age.

It records the past mortality and is put in such form as can be

used in estimating the course of future data.


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Features:

observation of generation: persons of a generation are

selected and they are observed upto death.

Start from a point: it starts from a point which depends

on the requirement of the insurer and will continue upto

the point all of them has been dead

Yearly estimation: it records the yearly death or survival

rate

Mortality and survival rates: any table giving mortality

rates only is not mortality table, unless mortality rate of ageneration is calculated every year.


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TREATMENT OF SUB STANDARDRISKS


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TYPES OF SUB STANDARD RISKS

(a) Increasing Extra-Risk:- In this category, the extra mortality

increases as the life assured grows older. For example patients

of diabetes, overweight etc.

(b) Decreasing Extra-Risk:- In this category, the extra hazard

decreases with increase in age. For example, persons of

defective past history.

(c) Constant Extra-Risks:- In this category, the extra hazard

remains at the same level throughout the life-time of the

assured. For example, blindness, or loss of limb, deafness, etc.


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Treatment of Sub-standard risks

Increase in premium,

Decrease in death, benefits

Change in class and period of assurance,

Any combination of the above-mentioned

methods, and

Postponement of risk.


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A. INCREASE IN PREMIUM

Rating up of age:-Under this method, thelife assured is assumed to be a number of years

older than his real age. The premium rate iscalculated according to the assumed higher age.The extra no. of years to be added isdetermined according to the extra risk involvedwith the life assured.

Premium once decided cannot be changed sothis method is not suitable to decreasing risk.


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Flat Extra Premium:-Under this method a flat annual extra premiumof so many rupees per thousand sum assured per year is charged. Thus, a

Constant additional premium is added to standard premium. Extra

premium is also charged for certain defects and deformity like imputed

arms and legs, partial or total blindness, deafness, etc., or in the case of

standard imprepairments.

This extra rating mostly vary from Rs.2/- to Rs6/- per thousand of sum

assured per annum.

Extra Percentage Plan:- There are certain classes of sub-standard

risks which are determined by numerical rating system. For each class ofextra risk, a certain percentage of the standard premium is charged. This

extra percentage is added to the standard premium and is charged along

with the standard premium.


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B. Decrease in Death Benefits:

The death benefits may be reduced in two

ways:-

Lien Method; and

Restrictive Clause.


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Lien Method:- The amount payable under this methodwould be the sum assured less the outstanding lien at theparticular time of the policy. The lien is for a fixed numberof years. If the life assured dies within this period, theamount of lien is deducted from the policy amount and restis paid to the beneficiary but if the life assured survives the

period of lien, the whole of the policy amount is paid at theclaim.

For example, a reducing lien of Rs. 500 per Rs. 1,000 sumassured for 10 years would mean that the sum payablewould be reduced by Rs. 500 if death occurs in the first

year, by Rs. 450 if in the second year, and Rs. 400 if in thethird year and so on, so that the full sum assured will hepaid if death occurs only after the expiry of 10 years.


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Restrictive Clause:-

Under this clause, the extra hazard is accepted with

a restrictive clause which limits death benefit under

certain circumstances. Such a clause usually statesthat the amount payable under this policy will be on

a reduced basis which any be surrender value or

return of premiums paid, in case death occurs due to

the specified extra hazard. For example firstpregnancy clause or aviation clause.


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C. Change in the Class and Period of

Assurance

The life assured is not given all types of insurance and for a

longer period. There is neither a lien on the policy nor any

extra premium by way of flat nor rating up to ages. The policy

is given at standard premium but all types of policies are notissued.

The types of policies to which the choice is restricted are

those which carry a higher rate of premium such as ordinary

endowment policy.


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D. Any Combination of the above-mentioned

Methods

E. Postponement:

Consideration of proposal is postponed for a period, when the

initial risk is so heavy that there is little hope of offering

insurance immediately and the proposal is postponed.

Postponements in different type of risk are different. It has

been observed that the postponement vary from 3 months to3 years.


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THE RESERVE

Reserves is a liability which is to be met by the insurer at and

when it arises. It must be adequately met.

Prospective definition:-The reserve is that fund, which,

together with future premiums and interest, will be sufficient

to pay the future claims

Retrospective definition:-The reserve is considered as the

accumulation at interest of the difference between the net

premiums received in the past and the claims paid out.


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Origin of reserve

The reserve in any group of policies originates

in the excess of premium receipts over

payment of claims . The premium receipts are

more than the payments in the beginning andless after a point . The excess receipts are

accumulated at the assumed rate of interest

and build up the 'Reserve.


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Need for reserves

I. To Meet the Amount of Claims:- The reserve isrequired to meet the amount of claim whenever thegiven event takes place. The insurer must havesufficient amount to meet the claims. Therefore, the

reserve is essential to meet these claims.II. To Build up Funds:-the 'reserve' is also useful to build

up funds that can be invested for long period to earn atleast assumed rate of return. The invested funds help

not only to the insurer to obtain a required amount ofreturn but are also helpful for the economicdevelopment of the country.


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Sources of reserves

PREMIUNo Assessment Premium PLAN- members of a group

contributes to a fund which can be utilised to settle theclaim at the time of death of any assured.In this casethere is no need to accumulate the amount for payment

of the claim.o Natural Premium Plan -rate of premium increases as the

insured grows older.

o Level Premium Plan - in the initial years thepremium paid is more than the actual cost which

result in accumulation of reserves which makes updeficiency out of lower premium in later years.

INTEREST


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Methods of calculating reserves:-

Reserves

retrospective

method

Prospective

Method

Group Individual Group Individual


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INVESTMENT OF FUNDS

While calculating premium it has been

assumed that the accumulated premiums are

invested. The funds are invested to earn at

least assumed rate of interest. The needs ofinvestment of funds are given here in brief.

Payment of claims

To avoid financial deficit

National interest


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Sources of funds

Premiums Interest

Capital gains

Savings in expenses

Non payment of claims


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Problems of investment

1) To preserve the interest of policy holders : to maintain thetrusteeship ,it is essential that the fund must be investedin safe and secured securities.

2) Payment of the claimed amount : the insurer must havesufficient funds to pay the claims.

3) The asset should be protected from any element offluctuation : insurer must earn sufficient amount to pay

the expenses and the earning should be constant alongthe market price of the security.

4) There should be complete good faith of public in theinsurers management of funds.


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Principles of investment

Safety (no speculative investments)

Profitability(highest return along with safety)

Liquidity

Diversification

Increasing of life business(life funds should be

invested in sectors which are going to benefit

the business in the return. for eg. financing

housing, sanitation ,medical and education.)


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Surrender Value

Meaning:

When the insured wishes to surrender his policy or fails to pay his premium,

reserve(premiums received by the insure; are accumulated with a certain

rate of interest) is no longer accumulated and the insured, generally, is given

a surrender value.

The surrender value will not be equal to the accumulated reserve because

certain expenses or losses are involved in payment of surrender values.

No surrender value is paid if the policy lapses within two or three years of its

issue .

There are two bases of calculating surrender values:-

I. Accumulation Approach

II. Saving Approach.


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I. The Accumulation Approach:

surrender value is the accumulation of overcharges in the net premium,

which upon the surrender of the policy is no longer required to pay theamount of claims.

very scientific because it allows surrender values to all types of policies,whereas, in practice surrender values on the term policies and pureendowment policies are not allowed .

regards reserve for policy as the basis of distribution of surrender values.

The reserve is calculated in this case on gross premium. So the expensesare also deducted from the premium received.

Thus, the reserve would be equal to all the premiums paid and interestearned thereon minus shares of death claims and of over all expenses ofthe insurer.

The full amount of reserve to a particular policy cannot be given as a

surrender value because there are certain expenses and loss because ofsurrendering the policies. Thus,

Surrender Value = Full Reserve-Surrender Charges

d h


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Surrender Charges:

The surrender charges are those expenses and losses which occurred on

account of a surrender or causation of policy. The surrender charges are

discussed below:

(i) Initial Expenses :

In the beginning of the contract, certain expenses are involved for processing

the proposals, payment of commission to agents and medical officer,

correspondence and issuing of policy.

(ii) Adverse Financial Selection:

During the period of business depression, the surrendering of policies weaken

the financial standing of the insurer .

In such cases the policyholders should not be allowed to receive surrendervalues more than the realized values of the invested funds.

(iii) d li S l i


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(iii) Adverse Mortality Selection:

the persons in extremely poor health are not likely to surrender their policies.

Those who do surrender are expecting longer lives than those who do not

surrender. Consequently at every surrender, the average or actual mortality tends

to increase more than the assumed mortality.

(iv)Contribution to Contingency Reserve:

While calculating gross premium a small amount for contribution to contingency

reserve is charged from the policyholders to meet the sudden and accidental rise in

claims due to wars and epidemics. If the policy is surrendered in the beginning, thecontribution is left unrealised.

(v)Contribution to Profits:

The policy is expected to contribute a fund towards the profit. If the policy

surrendered, the expectation is lost. So this contribution should also be treated as

surrender charges while permitting surrender of policy.

(vi)Cost of Surrender:

The insurer will incur a certain amount of expenses in processing the surrender of

policies. Sometimes, the cost of surrender is like other expenses, spread over the

premium paying period.


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II. Saving Approach:

An insurer is responsible for payment of claims whenever it may arise; but if a

policy is surrendered, the insurer is relieved of its obligation for payment of

the assured sum.

Thus, where the insurer is relieved of the responsibility of payment of claims,

he is in a position to return some amounts to the insured.

For example, in Term Insurance and Pure Endowment policies.

the surrender value is paid in lieu of the claim amount. Here it is to be

understood that the amount of saving in non-payment of claim can be

calculated only after considering various transactions from the inception of

the policy up to its surrender and from the date of surrender up to thematurity or deaths.


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Had, instead of surrendering the policy, the insurance continued, theinsurer would have received the level premiums on the policy and haveearned interest on invested amounts and would have occupied certainexpenses.

Thus, at the surrender of the policy, the insurer does not get certain incomeand has not to occur future expenses in relation to the policy. The incomesor expenses will continue up to the policy life.

Therefore, the life expectancy is to be known while determining the savingin expenses or loss of income. So, at the time of surrender of the policy, it isexpected that the policy would have continued up to the maturity or till theend of mortality table. The surrender value on a policy can be calculated asbelow:

Surrender Value = (Sum assured + Accumulated value of future expenses +Future reversion ally bonus, if participating policy) - (Accumulated value ofall future premiums + expenses incurred in processing the surrendervalue).


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Forms of Payment of Surrender Values

The policy holder can get the surrender values in any of the following forms:

1.Cash Surrender Value

The policyholder can get the value of surrender in cash. When the policyholder

gets the cash, the contract comes to an end and the insurer has no further

obligation to pay on that particular policy

2.Reduced Paid up Insurance

In this case, the surrender value is not paid immediately, but the original amount

of policy is reduced in certain proportion and the reduced amount is paidaccording to the term of Policy.

.

non-forfeiture condition would apply to proposals completed on and after 1 -1


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non forfeiture condition would apply to proposals completed on and after 1 1

-1976:

If the premiums under the policies have been paid for a period of five years

or 1 /4 of the original premium paying period of the policy whichever is lessbut subject to the condition that minimum 3 years' premiums are paid.

The paid up value under the policy is not less than Rs. 250 excluding of

attached bonuses for policies where under original sum assured is Rs. 1,000

or more and Rs. 100 exclusive of attached bonus where the original sum

assured is less than Rs. 1,000.

3. Extended Term Insurance:

The net cash value arisen at the time of surrender of a policy can be used forpayment of as single premium for purchase of term insurance, where the sum

assured will be paid only when death of the life assured occurs within the term

of the policy.


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4. Automatic Premium Loan:

the surrender value is used for payment of future premium.

The premiums continue to be paid until the surrender value is completely

exhausted. The advantage of this scheme is that if the policyholder dies after

surrender but before expiry of the surrender value, full policy amount

minus the loan and interest thereon is paid.

5. Purchase of Annuity:

The policyholder, with the surrender value, can purchase an annuity. Thus

instead of taking surrender value in cash, the annuity is purchased from the

available surrender value.

The amount of annuity depends upon the amount of net cash value, the

attained age of the policyholders and the type of annuity required.


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Valuation

VALUATION is a process :

1. To determine the total net liabilities of the insurer &

2. Compare his liabilities with the available funds.

Objectives of the Valuation(i) To determine the Solvency:

The life insurer must find out whether he has sufficient funds to meet thecurrent obligations or not.

(ii) To determine the divisible Surplus:

The excess of receipts over expenditures of a period cannot be regarded asprofit of the year.

C l l i P


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Calculation Process

The valuation involves calculation of :

I. Calculation of Net Liabilities:

The Net liabilities may be calculated with prospective method or retrospective

method. Whatsoever method may be applied, the result will be the same provided

the past assumptions are also applicable to future estimations.

Bases of Valuation of Net Liabilities:

(i) The Mortality Rate:

The morality rate is assumed that which is likely to be experienced in future during

the policy. The past mortality which is revealed recently is modified in the light of

present conditions and future prospects of the mortality rates.


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(ii) Rate of Interest:

not depending upon the past assumed rate;

base our valuation on such rates which may reasonably be anticipated.

(iii) Rate of Expenses:

expenses should be assumed.

past expenditure ratios may not be the correct figure of valuation.

the future expense may be unduly heavy, if businesses are expanding or vice

versa.

(iv) Bonus Rate:

Premiums on the participating policies are loaded with bonus extras.

In exchange of the bonus loading, the participating policyholders are getting

bonus.


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2.Calculation of Life Insurance Fund:

is obtained from the revenue account of the insurer.

The previous fund is shown in the credit side of the revenue account in respect

of life insurance.

During the period, all incomes including premiums, interest, rents, etc., are

credited to the revenue account and all payments, like policy claims, annuities,

management expenses etc., are debited to the account.

The difference of the two sides will disclose the Life Insurance Funds available

to insurer at the end of the period.

The excess of the incomes over the expenditures during the year will disclose

the life insurance fund of the year.

Life Insurance Fund is different from Life Insurance Reserve.


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3.Comparison of Net Liabilities with Life Insurance Fund:

The insurance Act has provided that the valuation should be done once in a

period of 3 years.

However, the Life Insurance Corporation of India has taken a liberal attitudeThe comparison of net liabilities with Life Insurance Fund will disclose surplus

or deficiency.

a. Treatment of Deficiency:

When deficiency arises, the insurer has to apply some drastic actions such asthe expenses are curtailed, profitable investments are sought and bonus is

not declared. The premium rates are increased , which causes reduction in

business.

b. Treatment of Surplus:

distributed among the policyholders and shareholders only after certain

provisions(General Contingency Fund, Dividend Equalisation Fund, Bonus

Equalisation Fund, and Taxation Fund).


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Sources of Surplus

1. Excess Interest:

The excess of actual interest over the assumed one gives rise to surplus.

Sale of securities at more than the book value also contributes the surplus.

2.Savings from Mortality:

The savings from mortality act in three ways to induce surplus.

Firstly, lesser death causes higher amount of premium which shall be received

from the persons more than the expected one.

Secondly, lesser payment of claims on account of lesser death causes Surplus toa great extent.

Thirdly, the extra-premium will not be required due to death less than the

expected ones of actual interest over the assumed one gives rise to surplus


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Methods of Distribution of Surplus


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Methods of Distribution of Surplus

Uniform Bonus Plan : a uniform bonus rate is given to all policyholders of a

particular type. The bonus rate is based on the policy amount.The bonus rate is determined simply by calculating the total amount of divisible

profit and multiplying it with the amount of insurance of Rs. 1,000 and again

dividing the whole sum by the amount of insurance under participating policies, at

the time of valuation.

Contribution Method : divisible surplus allotted to the various policies inproportion to the individual contribution of each policy to the surplus . Since there

are several sources of surplus, contribution of each source should be analysed. For

this purpose two things have to be taken into account.

1. The contribution of a particular type of policy to the total surplus.

2. Contribution of each source of surplus of a particular policy to the total surplus isto be determined. Then, on the basis of the contribution of each policy, the surplus

is allocated.

'Three Factor Contribution Plan(The calculation has been made simple by taking

only three sources of surplus viz. Mortality, Interest arid Expenses savings.)

Classification of Bonus


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Classification of Bonus

1. Bonus on the Basis of Calculation:

There are two methods of calculation of bonus.

uniform bonus :where the rate of bonus varies according to the policy amount.

contributory bonus: where the contribution method is applied.

2. Bonus on the Basis of Vesting: Immediate bonus :when the bonus may vest as soon it is declared or after a

period when the declared bonus is payable soon as it is declared

Bonus is payable : when the bonus does not become a liability of the insurer as

soon as it is declared, (only when particular conditions are fulfilled).

3. Bonus on the Basis of Results:

bonus is determined on the basis of actual results or fixed on an abhor basis. When

the actual valuation has taken place, the bonus declared is known Final Bonus, and

the bonus declared before the actuarial valuation is known as Interim Bonus.

Bonus Options (Insurance)


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Bonus Options (Insurance)

1. Cash Bonus:

Under this plan, the bonus when declared is paid to the assured in cash and the

original sum assured alone is payable at claim and can be converted into otheroptions of bonus.

2. Reversionary Bonus:

Simple Reversionary Bonus

Compound Reversionary Bonus

3. Reduction in Premium Bonus:

When the bonus is not added to the assured sum but is utilised for permanent

reduction in the future premium payable, it is called 'Reduction in Premium Bonus.

4. Accumulation at Interest Bonus:

The bonus on the policy is kept in deposit with the insurer. The insurer gives a fixed

rate of interest on the deposited amount and the insured at any time can withdraw

the accumulated bonus or can use it for payment of future premiums.


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5. Endowment Option:

Under this option, the bonus is accumulated with a certain rate of interest and

when the accumulated value of the policy becomes equal to the policy amount,

the policy amount is paid in full before maturity.

Documents

Final Life Insurance