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Nath Balakrishnan

TERM plans are the most basic of insurance plans, as they, unlike endowment or money-back versions, provide for pure life cover without any savings component built into them.

The life insured pays premiums over the entire tenure of the policy. Should he die during the policy term, the beneficiaries would receive the sum assured under the policy. On survival till the end of the policy term, no benefits would be payable and the premiums paid will have to be forgone.

With the launch of LifeShield about a week ago, Aviva joins the band of insurers offering a pure term assurance product. Aviva had earlier launched a term assurance plan that returned premiums in case the life insured survives the term of the plan.

Policy feature

Under this plan, the sum assured can be increased once by 50 per cent (subject to a ceiling of Rs 10 lakh) either within three months of the marriage of the life assured or within three months of the birth of the insuree's child.

However, this enhancement can be done only if the outstanding term of the policy is at least five years.

Discounts

An additional feature of this policy is the benefit it offers to customers of its pension product, PensionPlus.

Such customers can supplement their pension product with a pure term plan at a discount of 7.5 per cent on the premium to be paid by a non-PensionPlus customer.

Additionally, for a sum assured of Rs 10 lakh and above, a further discount of Re 0.50 per thousand sum assured is also extended to the policyholder.

Riders

No riders can be attached to this policy. Usually, most insurance policies provide for lower premium rates for women on account of higher life expectancy.

However, under this plan, premium rates for men and women are the same.

Suitability

A term plan should figure in every person's insurance portfolio, as it provides for a large cover for a relatively small premium outgo.

For the purpose of evaluation across plans, the lesser the premium for a given sum assured, the more competitive the plan.

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