Page 60 - Office Practice and Accounting 10

These policies are usually for 5, 10, 15, 20 or 30 years. Term life insurance is the
most popular in advanced countries but not so popular in developing countries
like Nepal. However, after the entry of the private operators and aggressive
marketing by few players this kind of policies are becoming popular. The
premium on such type of policies is comparatively quite low when compared
with other types of life insurance policies, mainly due to the fact that these
policies do not carry cash value.
ii. Endowment Policy : An endowment policy is a life insurance contract designed
to pay a lump sum after a specific term (on its 'maturity') or on death. Typical
maturities are ten, fifteen or twenty years up to a certain age limit. Some policies
also pay out in the case of critical illness. An Endowment Policy is a savings
linked insurance policy with a specific maturity date. If an unfortunate event
by way of death or disability occurs during the period, the sum assured will be
paid to beneficiaries.
iii. Whole Life Insurance : With whole life insurance, insurers are guaranteed
lifelong protection. Whole life insurance pays out a death benefit so insurers
can be assured that the family is protected against financial loss that can happen
after death. It is also an ideal way of creating an estate for heirs as an inheritance.
iv. Anticipated Endowment Life Insurance : Under this scheme, a definite
fixed amount of money is reimbursed to the insured in the designated period
in between the insurance period. This insurance can be activated only by
participating in the profits accrued. This insurance can be done for periods
of 15, 20 or 25 years and in this scheme, the insurance sum is reimbursed 3
times in installments within the total insurance period. However, for 25 years
of insurance period, the reimbursement is made 4 times. But the bonus amount
can only be paid to the insured upon the maturity of insurance period. In case
the insured expires prior to the maturation of insurance period, whole of the
insurance sum and the earned bonus is awarded.
v. Money Back Plans or Cash Back Plans : These policies provide for periodic
payments of partial survival benefits during the term of the policy itself. A
unique feature associated with this type of policies is that in the event of death
of the insured during the policy term, the designated beneficiary will get the
full sum assured without deducting any of the survival benefit amounts, which
have already been paid as money-back components. Moreover, the bonus on
such policies is also calculated on the full sum assured.
vi. Children Policies : These types of policies are taken on the life of the parent/
children for the benefit of the child. By such policy the parent can plan to get
funds when the child attains various stages in life. Some insurers offer waiver of
premiums in case of unfortunate death of the parent/proposer during the term
of the policy.
vii. Annuity (Pension) Plans : When an employee retires he no longer gets his
salary while his need for a regular income continues. Retirement benefits like
provident fund and gratuity are paid in lump sum which are often spent too

54 Office Practice and Accounting 10