Final Endowment and Money Back Policy

CORPORATE GOVERNANCE
ACKNOWLEDGEMENT
At the outset, I am thankful to my college SANPADA COLLEGE OF COMMERCE AND TECHNOLOGY, and the authorities, for providing me an opportunity to undertake my Bachelor Degree in Banking And Insurance (BBI), and also for sponsoring me to undertake project. I am thankful to the management for giving me an opportunity to undertake my project ( A Study on) under the guidance of Prof. SHREKESH POOJARI as my mentor.
I would like to thank our Faculty guide, Prof. SHREKESH POOJARI for providing valuable suggestions and guidance during the project. His perspective has encouraged me to incorporate a different dimension to the project.
I am grateful to my colleagues for being a wonderful support a through at the same time I am thankful to all my friends of Sanpada College of Commerce & Technology for being with me at different junctures of need. I thank
I also acknowledge great sense of gratitude to all those who have enriched and improved my thinking, through their conversations, thoughts, experience and guided me to complete this report.
ORIENTAL COLLEGE OF COMMERCE & TECHNOLOGY
RESEARCH DESIGN
Purpose of the study:

The main purpose of selecting the project on endowment and money back policy is to know about, how a person gets overall benefits from this policy and in case of emergency or death or accident of an insured person then, how all benefits are transferred to his family or relatives.
Objectives of the study:

The main objectives are: y To study the basic concepts of endowment and money back policy. y To study the features and benefits of endowment and money back policy. y To study the types of endowment and money back policy. y To study the risk involved in endowment policy. y To study the difference between endowment and money back policy.
DATA COLLECTION
The data collection is from various sources. The data collection is done keeping in mind object and purpose of the project. The method used is descriptive method of data collection.
PRIMARY DATA:
Survey for testing awareness and popularity of endowment policy and money back policy was conducted.
SAMPLE SIZE= 20
SECONDARY DATA:
Secondary data consists of information that already exists somewhere, having been collected for another purpose. The Data is collected and piled up for the project is been collected from various sources such as y Various internet websites
y Numerous books y Magazines etc.
SUMMARY
An endowment policy is a combination of insurance and investment: The life of the individual taking the policy is insured for a certain amount. This life cover is referred to as the sum assured. An endowment policy may declare a bonus every year: The money that is invested generates a certain return every year. This return may be declared as a bonus. The bonus is typically generated as a certain proportion of sum assured or life cover as it is popularly known. So if an individual taking the policy has a policy of sum assured Rs 10lakhs (Rs 1 million) and the company declares a bonus of Rs 50 per thousand of sum assured, then the bonus works out to be Rs 50,000. Basically there are four types of endowment policies like traditional with profit endowment, unit-linked endowment, full endowment and low cost endowment and modified endowment. . The policy amount is paid on the day of its maturity or in the event of death, whichever is earlier. In case of an endowment policy, the premium rate is higher and the bonus rate lower as compared to a whole life policy. The endowment policy gives proper security to the policy holder. You can select the endowment policy based on the coverage you require for the time period as decided by the family members or individual. You can get the tax deduction against the investing in the endowment policy. There are many cheaper endowment policies available in the market.
The money-back plan provides life insurance cover for a specific period. During the term of the policy, the insured receives tax-free, fixed proportions of the sum assured at regular intervals. On maturity i.e. on surviving the entire term of the policy, the insured receives the balance portion of the sum assured, if any, plus the bonus/participating profit/ guaranteed addition for the term of the policy, if any, or the value of the investments. Money back policy provides for periodic payments of partial survival benefits during the term of the policy, as long as the policyholder is alive. An important feature of money back policies is that in the event of death at any time within the policy term, the death claim comprises full sum assured without deducting any of the survival benefit amounts, which may have already been paid as money-back components. The bonus is also calculated on the full sum assured. A policy where lump sum amounts are paid to the life assured at periodic intervals on survival. In case of death of the life assured within the term, the total sum insured is paid to the nominee, irrespective of earlier survival benefits. Bonus is payable under this scheme. Premiums are to be paid regularly to get survival benefits. Premiums cease at death or on expiry of term whichever is earlier.
INDEX
Chapter NO. 1
PARTICULARS Endowment policy Introduction Features Benefits of endowment policy
PG NO.
2 3 4
Types of endowment policy Risk involved in endowment policy Money back policy Introduction Features
5 6 7
Benefits of money back policy Endowment versus money back policy Endowment plan of Bajaj Allianz and Reliance Money back plan of LIC and SBI
Observation & Analysis Conclusion Recommendations Bibliography
CHAPTER 1
Introduction of endowment policy Features of endowment policy Benefits of endowment policy

Introduction of endowment policy
An endowment policy is a life insurance contract designed to pay a lump sum after a specified 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. Policies are typically traditional with-profits or unit-linked (including those with unitized with-profits funds). Endowments can be cashed in early (or surrendered) and the holder then receives the surrender value which is determined by the insurance company depending on how long the policy has been running and how much has been paid in to it.
Till private insurance companies started operating in India .endowment insurance plans were the most popular form of life insurance. After the onslaught of private insurance companies unit linked insurance plans (Ulips) seem to have taken over.
Last year, of the new insurance policies sold by private insurance companies Ulips accounted for around 90% of the policies. This though is not the case with the Life Insurance Corporation of India, endowment policies still form a major part of the insurance policies it sells. Given this, there are certain things that individuals should understand about endowment policies. 1. An endowment policy is a combination of insurance and investment: The life of the individual taking the policy is insured for a certain amount. This life cover is referred to as the sum assured.
ORIENTAL COLLEGE OF COMMERCE & TECHNOLOGY 10
A certain part of the premium gets allocated towards this sum assured. Some portion of the premium is allocated towards the administrative expenses of the insurance company selling the policy. The remaining portion of the premium gets invested. 2. An endowment policy may declare a bonus every year: The money that is invested generates a certain return every year. This return may be declared as a bonus. The bonus is typically generated as a certain proportion of sum assured or life cover as it is popularly known. So if an individual taking the policy has a policy of sum assured Rs 10 lakh (Rs 1 million) and the company declares a bonus of Rs 50 per thousand of sum assured, then the bonus works out to be Rs 50,000. 3. The bonus declared is not payable immediately: Like is the case with a stock dividend or a mutual fund dividend which is payable immediately after it is declared, the bonus declared accumulates and is payable only when the policy matures or in case the policy holder dies. 4. The bonus declared does not compound it, only accumulates: Let us take the case of a 35 year old individual who takes a policy with a sum assured of Rs 10 lakh with a term of 20 years. The premium for this would be around Rs 49,000 per year. At the end of the first year, the insurance company declares a bonus of Rs 50 per thousand of sum assured or 5% of sum assured. This amounts to Rs 50,000. This Rs 50,000 remains Rs 50,000 for the next nineteen years till the end of the policy. The same thing happens to the bonuses declared for the remaining period of the policy as well. 5. Since the bonus declared does not compound returns are low: Extending the example taken above, let us assume that the insurance company declares an
average bonus of 5% every year. What this means is that every year on an average a bonus of Rs 50,000 is declared. So at the end of twenty years, the total accumulated bonus would amount to Rs 10 lakh (Rs 50,000 x 20). Chances of an insurance company declaring an average bonus of more than 5% over a period of twenty years are very less. This is primarily because endowment policies largely invest in government securities and after taking into account the administrative expenses of the insurance companies, a greater bonus is highly unlikely. So at the end of twenty years, the individual gets Rs 10 lakh of accumulated bonus and Rs 10 lakh of sum assured, making a total of Rs 20 lakh (Rs 2 million). On this he has been paying a premium of Rs 49,000 every year. This amounts to a return of 6.39% per annum, which is not great. If the individual expires during the period the policy his nominee gets the Rs 10 lakh of sum assured as well the accumulated bonus till that point of time. 6. Take a term insurance policy and invest in the public provident fund: A better way out for an individual is to take a term insurance policy. A term insurance policy is a pure insurance policy. If the policy holder dies during the period of the policy, his nominee gets the amount of the sum assured. If he survives the period of the policy, he does not get anything. Given this, the premiums on a term insurance policy tend to be the least among all insurance policies and they provide an adequate life cover. A term insurance policy for a period of 20 years, for a 35 year old individual, would cost around Rs 4,600 per annum. So instead of taking an endowment policy it makes more sense to take a term policy of Rs 10 lakh.
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The remaining money i.e. the difference between what needs to be paid on taking an endowment policy of similar sum assured and the premium on the term policy, can be invested in the public provident fund (PPF). The difference in the example taken here works out to Rs 44,400 every year. If this is invested every year into the PPF, at the current interest rate of 8%, the individual is likely to accumulate Rs 21.94 lakh (Rs 2.194 million) at the end of 20 years, which is nearly Rs 2 lakh (Rs 200,000) more than Rs 20 lakh he is likely to accumulate in case of the endowment insurance policy. Also the bonus on the insurance policy is not guaranteed whereas PPF guarantees an interest of 8% every year. The endowment policy offered by most of the companies in USA is the basic type insurance policy which provides security to the individual members as well as family. It will provide the security. Endowment policy gives benefits to
the family members to get the added features based on the design of the policy. It is essential to get the proper coverage of family members as well as under the endowment policy. It is one of the basic policy which gives proper coverage to the individuals as well as family members.
Features of endowment policy

Maturity Benefit:
The higher of the Basic Sum Assured or the Accumulation Account will be paid to you on maturity.
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Death benefit:
In the event of death, the beneficiary would be entitled to the Basic Sum Assured less all the premiums due but not paid (if any) or the Accumulation Account, whichever is higher.
Bonus:
The premiums paid by you, net of charges are deposited in the Accumulation Account and the bonus declared by the company is credited to this account at the end of each financial year. During the term of the endowment insurance plan, returns are earned on a compounding basis, accumulating to create a substantial corpus for you.
Limited Premium Payment Option:

You may choose a term ranging from 10 to 30 years but pay off all your premiums over a limited term of 3,5,7,10 or 15 years with your life cover continuing till maturity. Your Accumulation Account would benefit from the bonuses declared every year, not just during the premium paying period but for the entire policy term.
Automatic Cover Maintenance:

In case you miss some premium payment, the Automatic Cover Maintenance facility ensures the policy remains in force. This facility is available after the first three policy years.
Rider Benefits:
You can choose from any of the following riders:
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Term / Preferred Term Benefit (KTB UIN No: 107C003V02, KPTB UIN No: 107C013V01)
y y y y y
Accidental Death Benefit (ADB UIN No: 107C001V01) Permanent Disability Benefit (PDB UIN No: 107C002V01) Critical Illness Benefit (CIB UIN No: 107C004V02) Life Guardian Benefit (LGB UIN No: 107C012V01) Accidental Disability Guardian Benefit (ADGB UIN No: 107C011V01) Tax Benefits Section 80C, 10(10D) of Income Tax Act, 1961 would apply. Premiums paid for Critical Illness Benefit qualify for a deduction under Section 80D. Tax benefits are subject to change in tax laws. You are advised to consult your tax advisor for details.
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Benefits of endowment policy-
1. Endowment policy provides benefits to the policy holder based on the types of policy selected by the individual members. On the death of the individual members, the endowment policy provides compensation and other benefits. 2. The endowment policy gives proper security to the policy holder. 3. You can select the endowment policy based on the coverage you require for the time period as decided by the family members or individual. 4. You can get the tax deduction against the investing in the endowment policy. 5. There are many cheaper endowment policies available in the market. Endowment policy is one of the best policies for the individual and family members to get the enough protection against the possible threats. You need to purchase the policy based on your requirement to get the proper investment option.
Chapter 2
TYPES OF ENDOWMENT POLICY
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TYPES OF ENDOWMENT POLICY.

Traditional With Profits Endowments:
There is an amount guaranteed to be paid out called the sum assured and this can be increased on the basis of investment performance through the addition of periodic (for example annual) bonuses. Regular bonuses (sometimes referred to as reversionary bonuses) are guaranteed at maturity and a further non-guaranteed bonus may be paid at the end known as a terminal bonus. During adverse investment conditions, the encashment value or surrender value may be reduced by a 'Market Value Reduction' or MVR (It is sometime referred to as a market value adjustment but this is a term in decline through pressure from the Financial Services Authority to use clearer terms). The idea of such a measure is to protect the investors who remain in the fund from others withdrawing funds with notional values that are, or risk being, in excess of the value of underlying assets at a time when stock markets are low. If an MVA applies an early surrender would be reduced according to the policies adopted by the funds managers at the time.
Unit-linked endowment:
Unit-linked endowments are investments where the premium is invested in units of a unitized insurance fund. Units are encased to cover the cost of the life assurance. Policyholders can often choose which funds their premiums are invested in and in
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what proportion. Unit prices are published on a regular basis and the encashment value of the policy is the current value of the units. This is the simplest definition.
Full endowments:
A full endowment is a with-profits endowment where the basic sum assured is equal to the death benefit at start of policy and, assuming growth, the final payout would be much higher than the sum assured.
Low cost endowment (LCE):
A low cost endowment is a combination of: an endowment where an estimated future growth rate will meet a target amount and a decreasing life insurance element to ensure that the target amount will be paid out as a minimum if death occurs (or a critical illness is diagnosed if included).The main purpose of a low cost endowment has been for endowment mortgages to pay off interest only mortgage at maturity or earlier death in favor of full endowment with the required premium would be much higher.
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Traded endowments Endowment selling: Traded endowment policies (TEPs) or second hand endowment policies (SHEPs) are traditional with-profits endowments that have been sold to a new owner part way through their term. The TEP market enables buyers (investors) to buy unwanted endowment policies for more than the surrender value offered by the insurance company. Investors will pay more than the surrender value because the policy has greater value if it is kept in force than if it is terminated early. When a policy is sold, all beneficial rights on the policy are transferred to the new owner. The new owner takes on responsibility for future premium payments and collects the maturity value when the policy matures or the death benefit when the original life assured dies. Policyholders who sell their policies, no longer benefit from the life cover and should consider whether to take out alternative cover. The TEP market deals exclusively with Traditional With Profits policies. The easiest way of determining whether an endowment policy is in this category is to check to see whether your policy document mentions units, indicating it is a Unitized With Profits or Unit Linked policy, if bonuses are in sterling and there is no mention of units then it is probably a traditional With Profits. The other types of policies Unit Linked and Unitized With Profits have a performance factor which is dependent directly on current investment market conditions. These are not tradable as the guarantees on the policy are much lower and there is no gap between the surrender value and the market value..
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Modified endowments (U.S.):
Modified endowments were created in the Technical Corrections Act of 1988 in response to single-premium life (endowments) being used as tax shelters. They are contracts with fewer than 7-level annual premiums, and are subject to more stringent tax regulations (tax code 7702, 7702A). They are also subject to IRA-like annuity rules (such as penalties for pre-death proceeds before age 59). If a life insurance policy is changed and then fits the seven-pay rules, it may then be redefined.
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Chapter 3
RISK INVOLVED IN ENDOWMENT POLICY
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RISK INVOLVED IN ENDOWMENT POLICY-
Endowment policies are a popular insurance option. They cater to the savings aspect in a life insurance policy. They cover risk for a specific period of time. At the end of this period, the sum assured is paid back to the insured policyholder, along with the accumulated bonus during the term. The policy amount is paid on the day of its maturity or in the event of death, whichever is earlier. In case of an endowment policy, the premium rate is higher and the bonus rate lower as compared to a whole life policy. Generally, the cost of an endowment policy is typically double that of a whole life one. The amount received on expiry of term of an endowment policy can either be used for buying an annuity policy to generate a monthly pension for a lifetime, or put in any other suitable investment. One may either opt for the endowment assurance policy or the limited payment endowment policy. Endowment assurance policy is a pure and simple endowment plan. In case of limited payment endowment policy, the payment of the premium can be limited either to a single payment or to a term shorter than the term of the policy. However, the endowment is payable only at the end of the policy term, or on death of the policyholder, whichever is earlier. The premiums are usually payable for the selected term of years or until death if it occurs during the term period. In case the amount assured is not paid earlier, it will be payable at the end of the endowment term where it can be invested in an annuity provision for the rest of the policyholder's life or in any other way he may think suitable.
The policyholder can opt for a disability benefit - i.e., in case the policyholder becomes totally and permanently disabled due to an accident before reaching a certain age and the policy is in full force, he will not be required to pay any further premiums. In addition to these benefits, bonus is also payable besides assured amount at the time of claim settlement. Bonus is payable only if it is a 'with profits' policy. Every year insurance companies distribute surpluses among policyholders holding 'with profits' polices in the form of bonuses. Cumulatively, these may turn out to be a substantial amount. In addition, to the disability benefit, a policyholder can also opt for an accident benefit. By paying a nominal extra premium, the insured or his family are entitled to the benefits on death or permanent disability caused by accident. In case of survival of the policyholder over the policy term, the policyholder is entitled to payment of full sum assured, vested bonus, and final additional bonus, if any. In case of death of the policyholder during the policy term, the death benefits are payable to the nominees which includes payment of full sum assured in addition to the vested bonus. If payment of premiums ceases after at least certain minimum years' premiums have been paid, a free paid-up policy for a reduced sum assured can be secured subject to certain conditions. The reduced sum assured will become payable as stipulated in the policy. Endowment policies are the most suitable of all insurance plans for covering risks. They provide financial risk cover for the family, in case the policyholder expires prematurely.
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The insurance amount is also repaid once this risk is over. The endowment amount can be used for meeting major expenditures such as children's education and marriage etc. They are suitable for people of all ages who wish to protect their families from a financial setback that may occur owing to their untimely demise. The main attraction of these policies is that the premiums are moderate. Also, these policies are highly liquid. Moreover, these policies are savings-oriented and inculcate a habit of savings in the investors.
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Chapter 4
Introduction of money back policy Features of money back policy Benefits of money back policy
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Introduction of money back policy
The money-back plan provides life insurance cover for a specific period. During the term of the policy, the insured receives tax-free, fixed proportions of the sum assured at regular intervals. On maturity i.e. on surviving the entire term of the policy, the insured receives the balance portion of the sum assured, if any, plus the bonus/participating profit/ guaranteed addition for the term of the policy, if any, or the value of the investments. In the event of death of the insured during the term of the policy, the nominee still receives the entire sum assured (even if the insured had received fixed portions of the sum assured), plus the bonus/participating profit/guaranteed addition, if any. The premium for money back policies is higher in comparison to endowment and term plans. If one purchases money back plans with guaranteed addition, the premium is even higher. Some companies offer an option in choosing the premium paying term. Money back policies are advisable if the insured wants a product that provides both - insurance cover and savings. Many people prefer to buy such policies to utilize the tax-free sum of money receivable to go on a holiday, re-furnish their homes or even re-invest the same amount. However, there are other ways to utilize this income. A substantial part of the premium paid for money back plans is used by the insurance company to generate the bonus or profit paid to the insured or the nominee. If one chooses to impose self-discipline and invest regularly, other saving/investment avenues, such as mutual funds, offer higher returns. Click here to learn why your insurance plan is not a good investment avenue as well.
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plan is an excellent plan with good return on reinvestment, best suited for businessmen and professionals. Money is available at regular intervals in future to meet the specific expenses such as children's education or marriage. At the same time, the policy provides insurance protection for the family as well as old age provision.
Money back policy provides for periodic payments of partial survival benefits during the term of the policy, as long as the policyholder is alive. An important feature of money back policies is that in the event of death at any time within the policy term, the death claim comprises full sum assured without deducting any of the survival benefit amounts, which may have already been paid as money-back components. The bonus is also calculated on the full sum assured.
Money back life insurance policies are very popular among traditional investors who seek financial instruments that provide insurance and investment, with a low risk element and guaranteed returns. This type of policy is perfect for individuals who are in their late 30s or early 40s and are looking at significant payouts after 10-15 years to fund their children's higher education, marriage and other expenses. Money back policies create a long-term savings opportunity with a reasonable rate of return, especially since the payout is considered exempt from tax except under specified situations. One negative aspect of money back policies is that they have higher premium as compared to other insurance polices.
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Things to Consider Before Buying Money Back Policy
Before buying a money back plan, it is advisable to read the terms and conditions thoroughly. You should carefully check out the actual amount allocated towards the premium, how much of it is going to be accumulated and how much is the insurance company's charges.
Make sure that the periodic payouts are sound enough to meet your anticipated needs. You can analyze the past performance in terms of declared bonuses. Though the past is not necessarily an indication of future performance, it gives a fair idea of the insurance company's commitment to its policy holders.
Features of money back policy A policy where lump sum amounts are paid to the life assured at periodic intervals on survival. In case of death of the life assured within the term, the total sum insured is paid to the nominee, irrespective of earlier survival benefits. Bonus is payable under this scheme. Premiums are to be paid regularly to get survival benefits. Premiums cease at death or on expiry of term whichever is earlier. This plan can be availed of for terms 20 or 25 years.
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Benefits of money back policy

Introduction: Insurance Regulatory & Development Authority (IRDA) requires all life insurance companies operating in India to provide official illustrations to their customers. The illustrations are based on the investment rates of return set by the Life Insurance Council (constituted under Section 64C(a) of the Insurance Act 1938) and is not intended to reflect the actual investment returns achieved or may be achieved in future by Life Insurance Corporation of India (LICI).
For the year 2004-05 the two rates of investment return declared by the Life Insurance Council are 6% and 10% per annum. Product summary : These are Money Back type Assurance plans that provide financial protection against death throughout the term of plan along with the periodic payments on survival at specified durations during the term. Premiums : Premiums are payable yearly, half-yearly, quarterly, monthly or through salary deductions as opted by you throughout the term of the policy, or till the earlier death. Bonuses : This is a with-profit plan and participate in the profits of the Corporations life insurance business. It gets a share of the profits in the form of bonuses. Simple Reversionary Bonuses are declared per thousand Sum Assured annually at the end of each financial year. Once declared, they form part of the guaranteed benefits of
the plan. Final (Additional) Bonus may also be payable provided policy has run for certain minimum period. Death Benefit: The Sum Assured plus all bonuses to date is payable in a lump sum upon the death of the life assured during the policy term irrespective of the Survival benefit /benefits paid earlier. Survival benefits: The percentage of sum assured below will be paid on survival of end of specific duration
% of Sum Assured paid at the end of specified duration Plan Duration 75 5 10 15 20 25 20% 20% 20% 40% 93 15% 15% 15% 15% 40%
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All bonuses declared up to the maturity date will also be paid along with the final survival benefit.
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.
Surrender Value: Buying a life insurance contract is a long-term commitment. However, surrender values are available under the plan on earlier termination of the contract.
Guaranteed Surrender Value: The policy may be surrendered after it has been in force for 3 years or more. The guaranteed surrender value is 30% of the basic premiums paid excluding the first years premium and all survival benefits paid earlier.
Corporations policy on surrenders: In practice, the Corporation will pay a Special Surrender Value which is either equal to or more than the Guaranteed Surrender Value. The benefit payable on surrender is the discounted value of the reduced claim amount that would be payable on death or at maturity. This value will depend on the duration for which premiums have been paid and the policy duration at the date of surrender. In some circumstances, in case of early termination of the policy, the surrender value payable may be less than the total premiums paid.
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The Corporation reviews the surrender value payable under its plans from time to time depending on the economic environment, experience and other factors.
Plan/ Term At the end of 5 years At the end of 10 years At the end of 15 years At the end of 20 years At the end of 25 years
75/ 20 Years 20% 20% 20% balance 40% + bonus NIL
93/ 25 Years 15% 15% 15% 15% balance 40% + bonus
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Chapter 5
ENDOWMENT VERSUS MONEY BACK
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Endowment versus money back
Selecting insurance products can be confusing. There are products like unit-linked insurance plan (ULIP) where the policyholder can choose to invest in different securities and get market-related returns. Then, there are plans that promise to return a fixed sum. However, there have been two kinds of plans that have been popular with every person seeking insurance endowment and money back plans. And there is a confusion that exists on the difference between the two. Heres a primer: Plans that return money during the policy tenure are money-back policies. These plans, usually, give a fixed percentage of the sum assured periodically. In a 15-year policy and sum assured of Rs 10 lakh cover, these plans could give 10 per cent of the sum assured on completion of three years, 15 per cent after six years and so on. Endowment plans, on the other hand, pays the entire money only when the policy matures. This includes products that offer the entire premium back and policies that have part assured returns with bonus on policy maturity. In insurance parlance, both of these products are part of an insurers traditional plans product portfolio. The oldest insurer, Life Insurance Corporation (LIC) of India, has around seven endowment products, depending on the sum assured. The public sector insurer also has six money back plans varying on the tenure and returns. All other insurance companies have at least one plan in each category.
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Endowment Sum Assured (Rs/lakh) Term (yrs) Annual Premium (Rs) Returns at the end of 10 years (Rs) 10 10 32195 321950
Term Plan 10 10 2751 -
PPF NIL 10 29444* 460666
*Difference between the Premium paid in endowment plan and term plan
Endowment plans suits younger people who cannot spare much money for investments as they have other priorities. The sum assured for these plans are lower than money back as the insurer needs to pay the entire on maturity, said an official with Bajaj Allianz Life Insurance Company. He added that these policies can be mortgaged, which increases their appeal. Homemakers usually prefer money back policies even though it has higher premiums. Getting back an assured sum is a comforting factor. What the insured does not realise is that companies give this money, only after deducting all their charges. These include the agents commission, policy administration and so on. Insurers collect the premium and invest it in securities. The investments are mostly made in debt instruments. Almost 85 per cent of the investment is made in debt instrument (50 per cent in government of India securities) and the rest can be put in equities.
However, there are cheaper plans than endowment and money back policies term insurance plans. If a person buys a term plan, and invests the rest of the amount in a public provident fund (PPF), he can make more money than what the insurance companies offer. PPF will also give them tax advantage. Take an example of ICICI Prudentials Life Guard policy. The policy has three options a person can take a term plan and pay one time premium or pay regular premiums over the policy term or can even get the premium back when it matures. If a 30-year old is seeking Rs 10 lakh cover for 10 years, the regular premium for term plan is Rs 2,751. For the cash-back, the person would need to shell out Rs 32,195 a year. If this person buys a term plan and invests the differential amount (Rs 32,195 Rs 2,751 = Rs 29,444) in a PPF, he will end up with more money than what the company offers.
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CHAPTER 6
DIFFERENCE BETWEEN BAJAJ ALLIANCE INVEST GAIN PLAN AND RELIANCE ENDOWMENT PLAN
Bajaj Allianz Invest Gain Plan Review-
Bajaj Allianz Invest Gain Plan is an Endowment Plan. This is a non unit-linked insurance traditional participating plan. There are 4 variants in this plan, where 4 times the basic Sum Assured can be opted for as Life Coverage. Thus if the Life Insured dies within the policy tenure, then the nominee would receive the full Life Coverage according to the policy variant opted for, up to 4 times the Sum Assured + accrued Bonus and the policy would be terminated. However, if the Life Insured survives then he would receive the basic Sum Assured + accrued Bonus only, irrespective of the policy variant opted for.
Key Features of Bajaj Allianz Invest Gain Plan:

This is an Endowment Plan with both Death and Survival Benefits. There are 4 variants of this plan
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Bajaj Allianz Invest Gain Economy: The basic package with Death Benefit = Sum Assured only
y y
Bajaj Allianz Invest Gain Gold: With double protection with Death Benefit = 2 times Sum Assured o Bajaj Allianz Invest Gain Diamond: With triple protection with Death Benefit = 3 times Sum Assured o Bajaj Allianz Invest Gain Platinum: With quadruple protection with Death Benefit = 4 times Sum Assured There is Large Sum Assured Rebate in this policy There is an option to increase coverage up to 50% of the basic Sum Assured on each of the following happy moments in your life like marriage and child birth
Benefits you get from Bajaj Allianz Invest Gain Plan:

Death Benefit In case of death of the Life Insured, the nominee receives the full Life Coverage + accrued Bonus In Bajaj Allianz Invest Gain Economy, Death Benefit = Sum Assured only In Bajaj Allianz Invest Gain Gold, Death Benefit = 2 times Sum Assured Maturity Benefit At the maturity of the policy, the insured will get the basic
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Sum Assured, irrespective of the policy variant chosen along with accrued Bonus
Income Tax Benefit Premiums paid under life insurance policy are exempted from tax under Section 80 C and maturity proceeds are exempted from tax under Section 10 (10D)
Sample illustration of premium of Bajaj Allianz Invest Gain Plan

The below illustration is for a healthy Male (non-tobacco user) opting for a Age = 30 years, 35 years and 40 years Sum Assured = Rs 5,00,000 in Economy Package Policy Term = 25 years, regular premium Maturity Benefit = Sum Assured + Accrued Compounded Bonus = Rs 5,00,000 + Bonus @ 3.25, i.e. Rs. 6,12,299 = Rs. 11,12,299
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Problems occurring while not paying the premiums

If you stop paying the premiums after 3 policy years, the policy acquires a Paid Up Value for a Reduced Sum Assured but the policy would be eligible for any future regular additions. There is a Guaranteed Surrender Value in this plan but depends on the Premium paying Term. For Premium Paying Term = 2-3 years, Guaranteed Surrender Value is payable after 1 year from policy Commencement up to 60% of the Basic premiums paid. For Premium Paying Term = 5-6 years, Guaranteed Surrender Value is payable after 2 years from policy Commencement up to 30% of the Basic premiums paid. For Premium Paying Term = 7 years and more, Guaranteed Surrender Value is payable after 3 years from policy Commencement up to 30% of the Basic
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premiums paid.
Reliance Endowment Plan Review
Reliance Endowment Plan is a simple Endowment Plan from which is a non unit-linked insurance traditional plan with Bonus facility. In this policy, the premium is paid till the end of the Policy Tenure. If the Life Insured survives till the end of the Policy Term, then he would receive the Sum Assured along with accrued Bonus. However, if the Life Insured dies within the policy tenure, then the nominee would receive the full Sum Assured along with accrued Bonus. Key Features of Reliance Endowment Plan This is a simple Endowment Plan with both Death and Maturity Benefit. Sum Assured along with accrued bonuses is paid on Maturity or on earlier Death. This plan has 4 additional riders and 1 in-built rider.
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There is Large Sum Assured Rebate in this policy.
Benefits you get from Reliance Endowment Plan

Death Benefit In case of death of the Life Insured, the nominee receives the Sum Assured + accrued Bonus Maturity Benefit At the maturity of the policy, the insured will get the Sum Assured + accrued Bonus Income Tax Benefit Premiums paid under life insurance policy are exempted from tax under Section 80 C and the amount for Critical Illness rider is deducted under Section 80D. The maturity proceeds are exempted from tax under Section 10 (10D) Sample illustration of premium of Reliance Endowment Plan The below illustration is for a healthy Male (non-tobacco user) opting for Age = 30 years, 35 years and 40 years Sum Assured = Rs 1,00,000 and Rs 5 lakhs. Policy Term = 25 years.
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Problems occurring while not paying the premiums

If you stop paying the premiums after 3 policy years, the policy acquires a Paid Up Value for a Reduced Sum Assured but the policy would be eligible for any future regular additions. However, the policy can be revived. There is a Guaranteed Surrender Value after 3 policy years
Guaranteed Surrender Value = 30% of all premiums paid 1st years premium. You want a loan against your policy Loan facility is available under this policy after completion of 3 policy years. Therefore I can observed that endowment plan it is better to opt for Bajaj alliance plan, since in Bajaj alliance plan there is low amount premium is paid as compared to reliance endowment plan. The plan is for 30years in both the endowment plan.
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For instance, if person is taking any amount loan say 5-6 lakh he has to pay the same amount of premium as mentioned above. He is not liable to pay any extra premium. In case of Bajaj alliance plan, an insurer has to pay the annual premium of amount 15970 for 30 years, in case of reliance endowment plan an insurer has to pay the annual premium of amount 17665 for 30years.
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Chapter 7
DIFFERENCE BETWEEN SBI MONEY BACK PLAN AND LIC MONEY BACK PLAN
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Difference between SBI money back plan and LIC money back planSBI money back plan:
It is a Traditional Saving Plan with added advantage of life cover and guaranteed cash inflow at regular intervals SBI Life - Money Back is a saving plan with added advantage of life cover and cash inflow at regular intervals. This plan is designed for individuals who want to plan for various financial obligations at specified times in life.
Some of the feature is as follows:

The plan has a number of money back options specially suited to your needs. Premium mode can be yearly, half-yearly, quarterly or monthly The cover is available at competitive premium rates. It has guaranteed cash inflows which can meet your various financial obligations In addition to normal death cover, the plan also provides you 4 additional covers. Get the benefit of Sec80C of IT act on premium and save your income tax.
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Guaranteed cash flows:

Cumulative Term the Plan of Guaranteed Survival Benefit payable Guaranteed Benefit Survival
10 Years
The last 3 years on the 110% of Basic Sum term Assured
15 Years
After every 3 years on 115% of Basic Sum the term Assured
20 Years
25 Years
Benefits:
Death Benefit: In the unfortunate event of death during the term of the plan, the nominee will receive Sum Assured + Vested Bonuses, (accrued till the date of death), No deductions are made from the claim amount for the Survival Benefits already paid.
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SBI Life - Accidental Death and Accidental Total Permanent Disability Rider - In case of death due to an accident, the nominee gets the additional rider Sum Assured. - If the policyholder is involved in an accident, resulting in total permanent disability, he/she will get Sum Assured under this rider in 10 equal annual thereafter, but continue to
installments; He/she will exit from all the rider covers
be covered for basic cover on receipt of further premium due, if any.
Tax Benefit: SBI Life - Money Back Plan enjoys Tax benefit u/s 80 C and 10 (10 D) of IT Act* Premiums paid for SBI Life - Critical Illness Benefit qualify for tax exemption under Sec 80D*
Policy term:
What Minimum Years 10 years Maximum Years 25 years is the policy term?
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Who can buy this policy:
Who can buy this product?
Eligibility Criteria
Term Option Term Years 1: Option 10 Term Years 15 2: Option 15 Term Years 15 3: Option 20 Term Years 15 4: 25
Minimum entry Maximum entry
age
at
15
age
at
60
55
50
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What is sum assured:
Minimum Rs. 50,000 (and multiples of Rs. 10,000 thereafter)
Maximum
Rs.5 Crore.
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LIC money back plan:
Unlike ordinary endowment insurance plan where the survival benefits are payable only at the end of the endowment period, this scheme provides periodic payments of partial survival benefits as follows during the term of the policy. Of course so long as the policyholder is alive this plan is best suitable for businessmen and professionals. In case of a 20-year money-back policy 20% of the S. A. become payable each after 5, 10, 15 years, and the balance 40% plus the accrued should have attained majority.
some of the feature is as follows:

An important feature of this type of policies is that in the event of death at any time within the policy term, the death claim comprises full S.A. without deducting any of the survival benefit amounts, which have already been paid. Similarly, the bonus is also calculated on the full S.A.
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Plan parameter and underwriting conditions:

According to the plan parameter and underwriting conditions The age limit for this plan is of 13 yrs LBD, Max. 50 yrs (T- 75) Max. 45 yrs (T93) ,Term: Min. 20 yrs, Max. 20yrs (T-75) Max. 25yrs (T-93), Mode of Payment: YLY/HLY/QLY/SSS/MLY, Accident Benefit: Re.1 Extra per(Max. 50 Lac inclusive 1000 S.A. All plan) , Policy loan: yes,@ 10.5%, Housing loan: yes
Non-medical (Gen): allowed, Non-medical (pro): allowed, Non-medical (special): allowed, Actual sum assured: basic SA, Rusk coverage: SA + bonus. Dating back@ 8%: Allowed
Benefits:
Death benefits: payment of full S.A. + bonus on full S.A. + FAB. If any is paid to the nominee The survival benefit already paid, if any is not deducted. Maturity benefit: balance survival benefit + bonus on full S.A. + FAB, if any Example: Ms. Sania Mirza, aged 25 invests Rs.2lac in a money back policy (T.No-75) paying an annual premium of Rs.12,546/- for 20 years period. she receives Rs.40,000 at the end of each 5th, 10th, 15th year. On maturity balance Rs.80,000+ Rs.1,64,000/- (as per bonus rate of 2005 i.e. Rs.41per thousand p.a.)+Rs.4000/- FAB if Ms. Sania dies after 8 year, his nominee will receive S.A. +Bonus without deducting the survival benefit survival benefit already paid to Ms. Sania
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OBSERVATIONS AND ANALYSIS
Survey for testing awareness and popularity of endowment policy and money back policy was conducted .salaried person belonging to different industries were considered as samples and sample size was 20.observation from this survey are as follows After observing and conducting survey, we can say that 60% of people are mostly interested in buying money back policy rather than having endowment policy because they get regular amount of income. Today with the newly modern policies, people are wishing keep their policy with LIC and maximum preferring LIC as key policy. It not only provides good services, they even provide good bonus facility. In both the policies people are paying their premiums in monthly basis and maturity amount of money back and endowment policy is also higher. i.e. 2-5 lakh. In both the policies maturity period is for 20 years. Their satisfaction seems on money back policy rather than having endowment policy.
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CONCLUSION
Till private insurance companies started operating in India .endowment insurance plans were the most popular form of life insurance. After the onslaught of private insurance companies unit linked insurance plans (ULIPS) seem to have taken over. Last year, of the new insurance policies sold by private insurance companies ULIPS accounted for around 90% of the policies. This though is not the case with the Life Insurance Corporation of India, endowment policies still form a major part of the insurance policies it sells. It will provide the security. Endowment policy gives benefits to the family members to get the added features based on the design of the policy. It is essential to get the proper coverage of family members as well as under the endowment policy. It is one of the basic policy which gives proper coverage to the individuals as well as family members. The policy hold its maturity for 25 to 30 years. After the maturity periods, the insured gets the principle amount as well as bonus amount. Money back policies are advisable if the insured wants a product that provides both - insurance cover and savings. Many people prefer to buy such policies to utilize the tax-free sum of money receivable to go on a holiday, refurnish their homes or even re-invest the same amount. Money back policy provides for periodic payments of partial survival benefits during the term of the policy, as long as the policyholder is alive. An important feature of money back policies is that in the event of death at any time within the policy term, the death claim comprises full sum assured without deducting any of the survival benefit amounts, which may have already been paid as money-back components.
RECOMMENDATION
According to me the endowment policy is very important to those people who are still unaware about these policy. Place like urban area, maximum people are aware of endowment policy, but in case of rural area most of the people are illiterate due to which they suffer from having less information about this policy and they do not get any benefits from this policy. so I suggest that these should be aware of this policy so that they can secure as well as insure their own life and family members life. After the maturity of the endowment policy the insured amount will directly get to the insured person, so that they can make their future better after their retirement. Similarly money back policy also play vital role along with the endowment policy where a person get his sum portion of insured amount after a regular interval, so that he can met with his finance regularly and also has an opportunity to invest his own money in money back plan. As compared to endowment policy the amount of premium is higher in this policy. apart from these policy the insured person also get offer of tax benefits, where he can raise his income.
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BIBLIOGRAPHY
SEARCH ENGINE
WEBSITESy WWW.MANAGEMENT.COM y WWW.SCRIBD.COM y WWW.WIKIPEDIA.COM
BOOKS AND REFERENCESDIFFERENT POLICIES IN INDIA LIC IN INDIA BY MISHRA PURI BY - GORDAN NATRAJAN
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Final Endowment and Money Back Policy

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Final Endowment and Money Back Policy

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CORPORATE GOVERNANCE

ORIENTAL COLLEGE OF COMMERCE & TECHNOLOGY

Purpose of the study:

Objectives of the study:

ORIENTAL COLLEGE OF COMMERCE & TECHNOLOGY

ORIENTAL COLLEGE OF COMMERCE & TECHNOLOGY

y Numerous books y Magazines etc.

ORIENTAL COLLEGE OF COMMERCE & TECHNOLOGY

ORIENTAL COLLEGE OF COMMERCE & TECHNOLOGY

ORIENTAL COLLEGE OF COMMERCE & TECHNOLOGY

PARTICULARS Endowment policy  Introduction  Features  Benefits of endowment policy

ORIENTAL COLLEGE OF COMMERCE & TECHNOLOGY

Observation & Analysis Conclusion Recommendations Bibliography

ORIENTAL COLLEGE OF COMMERCE & TECHNOLOGY

 Introduction of endowment policy Features of endowment policy  Benefits of endowment policy

ORIENTAL COLLEGE OF COMMERCE & TECHNOLOGY

 Introduction of endowment policy

ORIENTAL COLLEGE OF COMMERCE & TECHNOLOGY

 Features of endowment policy

ORIENTAL COLLEGE OF COMMERCE & TECHNOLOGY

Limited Premium Payment Option:

Automatic Cover Maintenance:

ORIENTAL COLLEGE OF COMMERCE & TECHNOLOGY

ORIENTAL COLLEGE OF COMMERCE & TECHNOLOGY

 Benefits of endowment policy-

 TYPES OF ENDOWMENT POLICY

ORIENTAL COLLEGE OF COMMERCE & TECHNOLOGY

 TYPES OF ENDOWMENT POLICY.

ORIENTAL COLLEGE OF COMMERCE & TECHNOLOGY

Low cost endowment (LCE):

ORIENTAL COLLEGE OF COMMERCE & TECHNOLOGY

ORIENTAL COLLEGE OF COMMERCE & TECHNOLOGY

 Modified endowments (U.S.):

ORIENTAL COLLEGE OF COMMERCE & TECHNOLOGY

 RISK INVOLVED IN ENDOWMENT POLICY

ORIENTAL COLLEGE OF COMMERCE & TECHNOLOGY

 RISK INVOLVED IN ENDOWMENT POLICY-

ORIENTAL COLLEGE OF COMMERCE & TECHNOLOGY

ORIENTAL COLLEGE OF COMMERCE & TECHNOLOGY

ORIENTAL COLLEGE OF COMMERCE & TECHNOLOGY

 Introduction of money back policy

ORIENTAL COLLEGE OF COMMERCE & TECHNOLOGY

ORIENTAL COLLEGE OF COMMERCE & TECHNOLOGY

 Things to Consider Before Buying Money Back Policy

ORIENTAL COLLEGE OF COMMERCE & TECHNOLOGY

 Benefits of money back policy

ORIENTAL COLLEGE OF COMMERCE & TECHNOLOGY

ORIENTAL COLLEGE OF COMMERCE & TECHNOLOGY

75/ 20 Years 20% 20% 20% balance 40% + bonus NIL

93/ 25 Years 15% 15% 15% 15% balance 40% + bonus

ORIENTAL COLLEGE OF COMMERCE & TECHNOLOGY

ENDOWMENT VERSUS MONEY BACK

ORIENTAL COLLEGE OF COMMERCE & TECHNOLOGY

 Endowment versus money back

ORIENTAL COLLEGE OF COMMERCE & TECHNOLOGY

Term Plan 10 10 2751 -

PPF NIL 10 29444* 460666

ORIENTAL COLLEGE OF COMMERCE & TECHNOLOGY

 Bajaj Allianz Invest Gain Plan Review-

Key Features of Bajaj Allianz Invest Gain Plan:

ORIENTAL COLLEGE OF COMMERCE & TECHNOLOGY

 Benefits you get from Bajaj Allianz Invest Gain Plan:

ORIENTAL COLLEGE OF COMMERCE & TECHNOLOGY

PARTICULARS Endowment policy Introduction Features Benefits of endowment policy

Introduction of endowment policy Features of endowment policy Benefits of endowment policy

Introduction of endowment policy

Features of endowment policy

Benefits of endowment policy-

TYPES OF ENDOWMENT POLICY

TYPES OF ENDOWMENT POLICY.

Modified endowments (U.S.):

RISK INVOLVED IN ENDOWMENT POLICY

RISK INVOLVED IN ENDOWMENT POLICY-

Introduction of money back policy

Things to Consider Before Buying Money Back Policy

Benefits of money back policy

Endowment versus money back

Bajaj Allianz Invest Gain Plan Review-

Benefits you get from Bajaj Allianz Invest Gain Plan:

Sample illustration of premium of Bajaj Allianz Invest Gain Plan

Reliance Endowment Plan Review

WEBSITESy WWW.MANAGEMENT.COM y WWW.SCRIBD.COM y WWW.WIKIPEDIA.COM