Chapter 17

Life Insurance for the

Under-Privileged
Slide prepared
prepared by:
by:Abdullah
AbdullahAl
AlYousuf
Yousuf Khan
Khan
Slide
Assistant Professor
Professor
Assistant
IUBAT
IUBAT

McGraw-Hill/Irwin

Copyright 2006 by The McGraw-Hill Companies, Inc. All

rights reserved.

Introduction
Under-privileged persons are those
persons whose;
Income are too low to purchase life
insurance policies,
Who do not have adequate provision for
old-age and family security and
Who become incapable to earn adequate
income due to;
Accident,
Injury or
Illness.

Alternative Life Insurance

offered to Under-Privileged
1.
2.
3.
4.

Industrial life insurance

Group life insurance
Disability benefit policies
Pension plans

1. Industrial Life Insurance

Designed for people working in industry.

My also apply to low income classes of business.
Or low income classes of the society.
May be issued without medical examination.
Premiums are collected by agents in weekly or monthly
basis.
It provides clean up funds of the assured.
With a low amount, family protection is not always
possible.
Encourage the habits of savings amongst the low
income group.
Weekly premium can be easily saved and may provide
funds to create property.

1.1Features of Industrial Life

Insurance
Types of contract
Limited payment, endowment.

Cash values
3 to 5 years in force will generate a cash value.

Loan values
No provision for loan.

Assignment of policy
Not allowed.

Indisputable clause
After one year.

Suicide clause
Not applied.

Reinstatement
For a policy over 5 years and lapsed not more than 6 months.

Conversion of plan
Can be converted into ordinary endowment policy or a whole life.

Beneficiaries
Who has insurable interest in the life of assured.

Premiums rates
Generally higher.

2. Group Life Insurance

Large number of persons are insured in a
single policy.
Without medical examination, so low cost.
The group may consist of;
Employees of a common employer
Debtors of the same creditors, or
Members of the same union

The policy is issued to the;

Employer or
The creditor, or
Trade union

2. Policy Feature
Eligibility
Only for regular and permanent employees.

Termination of employment
Can take a ordinary life insurance within 31
days from termination.

Group term insurance by corporation.

a policy is issued to the employer and each
member included is given a certificate.

For government employees

3. Disability Benefit
The benefit is offered free of cost and
no premium is charged for the purpose.
This benefit is granted to all lives
assured except;

Pure endowment
Temporary assurance
Mortgage redemption assurance
Convertible term assurance
Differed annuity
Restrictive policies

4. Pension Plan
Several pension plans providing regular
pensions to the employees after their;

Retirement
May continue even after the death
May be for a specified time, or
During the life times of his wife

Deferred annuity plan is the effective

method to provide for the pension.
It can be purchased through the
employer or individually.

End of Chapter