Life Insurance Products

Non Traditional Life Insurance Products : Purpose & Need

• These products have often been considered as being part of the financial market and compared with other instruments of capital accumulation.
• Purpose of savings and investing  is to achieve inter-temporal allocation  of resources, which is both efficient and effective.
• Inter - Temporal allocation means allocation across time.Traditional Cash value plans have been called "Bundled Plans' as their structure is bundled and presented as single package of benefits and premium

Limitations of Traditional Plans:

a.Cash value Component: The savings or cash value component in traditional insurance policies is not well defined.

b.Rate of Return: Rate of Return is not easy to ascertain.

c.Surrender value: The ash and surrender values ( at any point of time), under these contracts depend on certain values (amount of actuarial reserve and the pro- rate asset share of the policy) determined quite arbitrarily. The method of arriving surrender value is not visible.

d.Yield: The yield on these policies may not be high as can obtained from more risky investments