Business aspects of Banking & insurance

Money Back Policy, Annuity & Pension, Unit

Linked policy & Jeevan Sathi

Group Members

Himadri Gwari 11 Rajpreet Kaur 36 Angad Sandhu 39 Harleen Kaur 53 Laveena Surve 55 Pushkar Khot 60

Money Back Plan is a special type of life insurance

policy that falls under Endowment Plans. In Insurance language it is called Anticipated Endowment Plans and commonly known as Money Back Policies.

It simply means that in Money Back Plans, the money comes back to the Life Insured after a specific interval of time as Survival Benefit.

However, if the Life Insured dies during the policy term, then the Death Benefit would be paid to the nominee and the policy would be terminated and no further money would be paid to him on the intervals.

Money Back Policy

 Money Back Insurance Policies should be taken by

someone who might require money at regular and specific intervals, like children’s education, etc.

Also the Death Benefit is guaranteed irrespective of the Survival Benefits already paid. Thus, if the Life Insured dies on the year of the policy maturity even after receiving 4 Survival Benefit, the nominee would get the entire Sum Assured and not a reduced one. You can also save tax as the premiums paid and the money received in installments are tax-free.

Who should buy Money Back Insurance Policies?

Money Back Insurance Policies help us to

plan our finances in a very systematic way by guaranteeing a regular flow of income at fixed stages in our lives.

A Money Back Insurance Policy can be used effectively to plan for your child's higher education or marriage, purchase a car or even to pay the down-payment for your dream house.

Benefits of Money back policies

Annuities are a form of pension in which an insurance

company makes a series of periodic payments to a person (annuitant) or his or her dependents over a number of years (term), in return for the money paid to the insurance company either in a lump sum or in installments.

Annuities start where life insurance ends. It is called the reserve of life insurance.

This policy is also useful to those who prefer regular income in old age.

In these types of life insurance policies, the insurer agrees to pay the insured a stipulated sum of money periodically. The purpose of an annuity is to protect against financial risks as well as provide money in the form of pension at regular intervals.

Annuities and pension

Basically, there are four kind of pension/annuity plans from which a person can choose, which depends upon his personal requirement.

o Guaranteed period annuityo Life annuityo Deferred annuitieso Annuity certain

Employment-based pensions (retirement plans)

A retirement plan is an arrangement to provide people with an income during retirement when they are no longer earning a steady income from employment.

Social and state pensionsMany countries have created funds for their citizens and residents to provide income when they retire (or in some cases become disabled).

Disability pensionsSome pension plans will provide for members in the event they suffer a disability. This may take the form of early entry into a retirement plan for a disabled member below the normal retirement age.

Types of pension plans

All of us are worried about our income when we

retire. Pension Plans, also called Retirement Plans are one of the safest and surest ways of a trouble-free retirement life.

Pension Plans are flexible and can be used effectively if planned out well. On attaining the retirement age, the policy holder can withdraw 33% of the maturity amount for some immediate financial needs.

Pension Plans come in 2 variants - Traditional plans in which the amount of payout is guaranteed and ULIPs in which part of the amount paid as premiums every year is invested in financial instruments which are known to appreciate greatly over a long period of time.

Benefits of Pension Plans

A unit-linked insurance plan (ULIP) is a type of life

insurance where the cash value of a policy varies according to the current net asset value of the underlying investment assets. It allows protection and flexibility in investment, which are not present in other types of life insurance such as whole life policies. The premium paid is used to purchase units in investment assets chosen by the policyholder.

In India investments in ULIP are covered under Section 80C of IT Act. The overall limit of permissible deductions under Section 80C is Rs. 1 Lac. However, the concept of having an insurance is governed by the Insurance Regulatory and Development Authority

What is unit linked policy?

A unit linked policy is a life insurance policy in which the

beneits depend on the performance of a portfolio of shares. Each premium paid by the insured person is split. A part is used to provide life insurance cover, while the

balance is used to buy units in a unit of Mutual Fund after deduction of cost, expenses etc.

In this way, a small investor can benefit from investment in a managed fund without making a large financial commitment.

The unit linked policies can go up or down in value as they are linked to the value of shares.

UNIT LINKED POLICIES

Depending on the objective, ULIP are divided into the following categories:

Wealth Plan: These plans are usually of shorter time frame around 10-15 years and focus on getting higher returns to create a good maturity amount.

Child Plan: These plans are for securing child’s financial future. The money is invested to ensure that the child’s future financial goals like education are secured. Along with it, death benefit in most child plan is very comprehensive so that child’s future is not compromised.

Pension Plan: These plans focus on creating a corpus amount so that life insured gets regular pension after retirement.

Categories of ULIP

If you are comfortable with the notion of

taking risks on the equity, debt market etc. Ulip’s are transparent and flexible.

If you are willing to regularly monitor the fund.

If you are willing to take market associated risk.

Who should buy ULIP Policies?

Unit linked Insurance Plan, better known

as ULIP is a type of life insurance plan that pro vides benefits of protection against risks and flexibility to manage the investments of pre miums.

ULIPs work best when invested for a longer period of time with multiple investment options.

ULIPs are very flexible.

Benefits of unit linked policy

Investment Option Charges Loyalty Additions Features Riders

Things to consider before buying an ULIP

Before 5 years: There is lock in period of 5 years

in a ULIP. That is if you cancel ULIP, the amount will be provided to you only after 5 years from date of commencement of life insurance policy. If you cancel ULIP within 5 years, then the fund value will be shifted to discontinued fund which will grow at 3.5% compounded annually. After 5 years, the fund value will be provided to you.

After 5 years: You can withdraw complete amount after 5 policy years.

How to discontinue the ULIP?

A double cover joint life plan, Jeevan Sathi is an endowment assurance policy, but with dual benefits.

Unlike many other joint life plans that terminate upon the death of any one partner, Jeevan Sathi not only provides financial security against the death of either partner, but also ensures a lump-sum maturity amount on survival of either or both the partners at the end of the policy term.

This policy was started issuing with effect from July 1985 and can be obtained in the joint lives of husband and wife.

If the lives (husband and wife) survive till maturity, the sum assured together with bonus declared by the LIC from time to time is also paid.

Jeevan sathi

Unique Joint Life Insurance Policy from India’s

No.1 Insurance company Tax benefit You can pay monthly, quarterly, half yearly or

yearly premiums. Maturity Benefits: Sum assured plus Bonus are given, if husband

and wife are alive upto maturity period.

Key features

Conditions and Requirement:Min. age at entry 20

Max. age at entry 50

Max. Maturity age 70

Min. Term 15

Max. Term 30

Accident benefits per 1000 SA

Rs. 2 extra

Min. S.A. Rs 50000

Max. S.A. No Limit

Modes allowed all

SA in multiples Rs 5000

Revival yes

Surrender of Policy yes

Housing Loan yes

Future premiums are waived and survivor gets

Sum Assured immediately on the death of Husband/wife.

He/She gets Sum Assured again with full bonus, if the survivor (husband/wife) survives till maturity.

Sum Assured plus Bonus is paid till that time to the nominee, if the survivor also dies before maturity.

Death Benefits

Maturity Benefit

If one or both the lives survive till the end of the policy term, Sum Assured along with all bonuses declared up to maturity date is payable in a lump sum.

Supplementary/Extra Benefits These are the optional benefits that can be added to your basic plan for extra protection/option. An additional premium is required to be paid for these benefits.

Survival benefitsIf one or both the lives survive to the maturity date, the sum assured, along with the accumulated bonus, is payable.

Other benefits