Financial Daily from THE HINDU group of publications
Sunday, May 18, 2003
Financial Daily from THE HINDU group of publications Sunday, May 18, 2003 |
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Investment World
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Life Insurance Money & Banking - Life Insurance Industry & Economy - Investments ICICI Pru LifeGuard Nath Balakrishnan
LAST week, we looked at a variant of a term plan that returns the premiums if the policyholder survives the policy duration. This week, we will examine a simple term plan from ICICI Prudential.
How the plan works
Term plans are the most basic of all insurance plans and provide for basic life cover. Such plans are also affordable as they permit the policyholder to obtain a cover for a large sum assured for a relatively lower premium payout. Under the plan, premiums have to be paid over the entire plan duration. Should the policyholder die when the policy is in currency, the sum assured under the plan will be immediately paid out and the policy will terminate. If the policyholder survives the plan term, he will not receive any maturity benefits. Also, all the premiums will have to be foregone.
Riders
The Accident and Disability rider can be attached. If the policyholder dies in an accident, the sum assured under the rider will be paid out immediately. If death occurs due to an accident while travelling by mass surface transport, twice the sum assured under the rider will be paid. Should the policyholder become permanently disabled in an accident, 10 per cent of the sum assured under the rider will be paid out over 10 years. Premiums to the extent of the cover under the rider would also be waived. The payouts under the rider will be over and above the payout under the basic sum assured, should death occur.
Entry criteria
The plan is open to those in the 18-50 age group. The minimum and maximum terms are five and 25 years respectively, with the maximum age at maturity being 65. The minimum premium payable under the plan is Rs 2,400 annually.
Loans
No loans are sanctioned under this plan
Suitability
By providing for basic life cover, which is the very essence of insurance, a pure term plan should find a place in every person's portfolio. It ensures that the financial security of the policyholder's family is not jeopardised if he dies. As there is no savings component in such plans, the only parameter that one will look at is the premium that one will need to pay for a given amount of cover. Hence, lower the premium, the more competitive the plan.
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