Difference between Life Insurance Products and Pension Products:
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Life
Insurance Products
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Pension
Products
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Purpose of
Product : Life Insurance products have been designed basically to provide
protection against the financial consequences of an individual’s early and
premature death
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Pension products provide protection against the
financial consequences that may arise when the individual lives too long and
thus outlives one’s financial resources
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Contingency
covered: In case of life insurance, the basic contingency covered is that
of mortality
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In case of pensions it is postretirement income
discontinuity
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Product
structure: In the case of life insurance, a stream of premium payments
results in creation of a capital sum, known as the sum assured. This sum is
payable to the individual’s nominees or beneficiaries in the event of death
of the individual, or may be paid as a survival benefit at the end of the
term in the case of endowment policies.
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In the case of pensions, a capital sum, which we
may call a corpus or total consideration gets liquidated in part or whole
through its conversion into a stream of regular income payments . These are
known as annuities
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