Comparative Study Of Endowment And Term Insurance Plan Commerce Essay

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Insurance is an upcoming sector, in India the year 2000 was a landmark year for life insurance industry, in this year the life insurance industry was liberalized after more than fifty years. Insurance sector was once a monopoly, with LIC as the only company, a public sector enterprise. But nowadays the market opened up and there are many private players competing in the market. There are fifteen private life insurance companies has entered the industry.

After the entry of these private players, the market share of LIC has been considerably reduced. In the last five years the private players is able to expand the market (growing at 30% per annum) and also has improved their market share to 18%.

For the past five years private players have launched many innovations in the industry in terms of products, market channels and advertisement of products, agent training and customer services etc. In the western world, life insurance evolved mainly from the maritime industry. Started by private financiers who used to gamble on the lives of seafarers by offering five times the money deposited with them in case of certain contingencies?

In its present form, life insurance has its origin in England and made its debit in India in the year 1818.Initially, Indians were not considered on par with Europeans as far as their insurability was concerned. There were also many other failures. It was in the early part of the 20th century that some kind of legislation was made to regulate the industry. From then on life insurance made great strides in the country.

At the time of independence and thereafter, there were more than 200 companies operating in India and not all of them on sound ethical principles. Many factors combined together to prompt the then government to nationalize the life insurance industry in 1956 to form the Life Insurance Corporation of India.

The years from 1956 to 1999 saw the life insurance corporation of India emerge as a giant financial institution and the lone organization purveying life insurance, if we ignore the minimal presence of postal life insurance. The institution succeeded in penetrating in many areas and segments of the population and in garnering public money for public welfare.

It was in the 1990's that the winds of change started sweeping over India and brought in their wake many changes in the economy. Liberalization ensured competition in many fields and there was a clamor that the insurance industry too is opened up to Private Indian and foreign players to provide the customer with a choice.

The Malhotra committee, appointed in 1993 was given the mandate to study the industry and to suggest the changes that were necessary to make it modern and in tune with people's aspirations. The report submitted by the committee was the precursor of the IRDA Bill.

By the passing of the IRDA Bill, the Insurance sector has been opened up for the private companies to carry on insurance business. Now the life insurance industry in India is rapidly evolving and growing. It has witnessed a big growth as many Indian and foreign were entered in to the Indian insurance sector. The life insurance industry in India has become fiercely competitive with the entry of several new players including major multinational insurers after the deregulation of the sector. It has opened up a range of untapped opportunities for new entrants into the industry, as the potential market for buyers is high since the emerging market in India has a low insurance penetration and high growth rates.

The various life insurers entered India:-

1. HDFC Standard Life Insurance Company Ltd.

2. Max New York Life Insurance Co. Ltd.

3. ICICI Prudential Life Insurance Company Ltd.

4. Kotak Mahindra Old Mutual Life Insurance Limited.

5. Birla Sun Life Insurance Company Ltd.

6. Tata AIG Life Insurance Company Ltd.

7. SBI Life Insurance Company Limited.

8. ING Vysya Life Insurance Company Private Limited.

9. Met life India Insurance Company Ltd.

10. Royal Sundaram Life Insurance Company Limited.

11. Aviva Life Insurance Co. India Pvt. Ltd.

12. Sahara India Insurance Company Ltd.

13. Shriram Life Insurance Company

14. Life Insurance Corporation of India.

15. Reliance Life Insurance Company Limited.

16. Bharti AXA Life Insurance Company Limited.

Types of insurance products

Term assurance plan- In insurance language this is a "pure risk cover" and can be described as an insurance or risk management product in its purest and simplest form. In case of your untimely death, your dependents will receive the risk-cover amount or the 'sum assured'. On the other hand, there is no survival benefits if you survive the policy term, and you also do not get back the premiums paid.

Endowment assurance plans- It is a traditional investment-cum-insurance plan. In other words, it provides both life cover (in the event of death of life insured) or maturity benefits if he/she survives the policy term. Endowment plans are typically front-loaded. Therefore it makes sense for you to remain in the policy for at least 12-15 years.

Money-back policy- It is a variant of the endowment assurance policy-the difference is that you get the survival benefits intermittently over the life of the policy. Thus taking care of his lump-sum monetary requirements to enable him to meet his financial goals and major commitments. The maturity benefit is the sum assured value less the survival benefits already paid under the policy, plus bonuses accrued, if any. In case of untimely death the nominee will receive the entire sum assured without considering the payouts already made to you before the unfortunate death.

Whole life plan- This policy provides the life assurance cover for almost the entire life. Most of the insurance companies provide protection up to the age of 100 years. The sum assured is paid to you once you reach this age, and the policy is terminated. In this payment of premium is for whole life, and the sum assured is paid to your nominee in the event of your death. In other words, this is equivalent to a term plan over your lifetime.

Pension plan- A pension plan can be looked as more of an investment product offered by insurers to cater to the "golden" retirement years of an individual. Also referred to as retirement plans, these are designed to ensure that you are financially independent during your retirement years. Most of the pension plans also provide an optional life assurance cover in them.

Child plan- It basically aims at ensuring the achievement of life goals of your child. The goal can be higher education, financial help in establishing a business or profession, or even marriage. In a child plan, the life assured can be the parent or the child. The beneficiary for the policy, however, is the child. As a child is a minor, the life insurance contract is between the parent and the insurance company. In case of early death of the parent, the premium payment is waived off by the insurance company and the policy continues as originally planned.

Unit Linked Insurance Plan- ULIPs have been the darling of insurance companies, intermediaries and the insured population alike over the last five years. The main reason for this popularity is the twin advantage of a pure life cover (insurance component) and a range of investment funds or options (savings component) to match your risk profile. While the pure life cover provides the much needed financial security to your dependents in the event of your untimely death, the savings component allows you to participate in the capital markets and build wealth over the long-term tenure of the policy.

Introduction To HDFC Standard Life Insurance.

HDFC Standard Life Insurance Company Limited. is one of India's leading private insurance companies, which offers a range of individual and group insurance solutions. It is a joint venture between Housing Development Finance Corporation Limited (HDFC Limited), India's leading housing finance institution and a Group Company of the Standard Life Plc, UK. As on February 28, 2009 HDFC Ltd. holds 72.43% and Standard Life (Mauritius Holding) 2006, Ltd. holds 26.00% of equity in the joint venture, while the rest is held by Others.

Our Key Strengths

Financial Expertise

As a joint venture of leading financial services groups, HDFC Standard Life has the financial expertise required to manage your long-term investments safely and efficiently.

Range of Solutions

We have a range of individual and group solutions, which can be easily customised to specific needs. Our group solutions have been designed to offer you complete flexibility combined with a low charging structure.

Standard Life Group (Standard Life plc and its subsidiaries)

The Standard Life Group has been looking after the financial needs of customers for over 180 years. It currently has a customer base of around 7 million people who rely on the company for their insurance, pension, investment, banking and health-care needs. Its investment manager currently administers £125 billion in assets. It is a leading pensions provider in the UK, and is rated by Standard & Poor's as 'strong' with a rating of A+ and as 'good' with a rating of A1 by Moody's. Standard Life was awarded the 'Best Pension Provider' in 2004, 2005 and 2006 at the Money Marketing Awards, and it was voted a 5 star life and pension's provider at the Financial Adviser Service Awards for the last 10 years running. The '5 Star' accolade has also been awarded to Standard Life Investments for the last 10 years, and to Standard Life Bank since its inception in 1998. Standard Life Bank was awarded the 'Best Flexible Mortgage Lender' at the Mortgage Magazine Awards in 2006.


Protection Plans help you shield your family from uncertainties in life due to financial losses in terms of loss of income that may dawn upon them incase of your untimely demise or critical illness. Securing the future of one's family is one of the most important goals of life. Protection Plans go a long way in ensuring your family's financial independence in the event of your unfortunate demise or critical illness. They are all the more important if you are the chief wage earner in your family. No matter how much you have saved or invested over the years, sudden eventualities, such as death or critical illness, always tend to affect your family financially apart from the huge emotional loss.

For instance, consider the example of Amit who is a healthy 25 year old guy with a income of Rs. 1,00,000/- per annum. Let's assume his income increases at a rate of 10% per annum, while the inflation rate is around 4%; this is how his income chart will look like, until he retires at the age of 60 years. At 50 years of age, Amit's real income would have been around Rs. 10,00,000/- per annum. However, in case of Amit's unfortunate demise at an early age of 42 years, the loss of income to his family would be nearly Rs. 5,00,000/- per annum.

However, with a Protection Plan, a mere sum of Rs. 2,280/- annually (exclusive of service tax & educational cess) can help Amit provide a financial cushion of up to Rs. 10,00,000/- for his family over a period of 25 years.

HDFC Term Assurance Plan

This plan is designed to help secure your family's financial needs in case of uncertainties. The plan does this by providing a lump sum to the family of the life assured in case of death or critical illness (if option is chosen) of the life assured during the term of the contract. One can choose the lump sum that would replace the income lost to one's family in the unfortunate event of one's death. This helps your family to maintain their financial independence, even when you are not around.




High cover at a very nominal cost.

Flexibility to choose the Sum Assured.

Additional benefit options can be availed at marginal costs.

Premium amount remains the same over the term of the policy in case of regular premium

Option of paying single premium or regular premium.

Tax benefits under sections 80C, 80D and 10(10D) of Income Tax Act, 1961.

ICICI Prudential Life Insurance Company Limited.

ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank - one of India's foremost financial services companies-and Prudential plc - a leading international financial services group headquartered in the United Kingdom. Total capital infusion stands at Rs. 47.80 billion, with ICICI Bank holding a stake of 74% and Prudential plc holding 26%.


We began our operations in December 2000 after receiving approval from Insurance Regulatory Development Authority (IRDA). Today, our nation-wide reach includes 1,960 branches (inclusive of 1,096 micro-offices), over 237,000 advisors; and 6 bancassurance partners.


For three years in a row, ICICI Prudential has been voted as India's Most Trusted Private Life Insurer, by The Economic Times - AC Nielsen ORG Marg survey of 'Most Trusted Brands'. As we grow our distribution, product range and customer base, we continue to tirelessly uphold our commitment to deliver world-class financial solutions to customers all over India.

The ICICI Prudential Edge

The ICICI Prudential edge comes from our commitment to our customers, in all that we do - be it product development, distribution, the sales process or servicing. Here's a peek into what makes us leaders.


1. Our products have been developed after a clear and thorough understanding of customers' needs. It is this research that helps us develop Education plans that offer the ideal way to truly guarantee your child's education, Retirement solutions that are a hedge against inflation and yet promise a fixed income after you retire, or Health insurance that arms you with the funds you might need to recover from a dreaded disease.


2. Having the right products is the first step, but it's equally important to ensure that our customers can access them easily and quickly. To this end, ICICI Prudential has an advisor base across the length and breadth of the country, and also partners with leading banks, corporate agents and brokers to distribute our products .


3. Robust risk management and underwriting practices form the core of our business. With clear guidelines in place, we ensure equitable costing of risks, and thereby ensure a smooth and hassle-free claims process.


4. Entrusted with helping our customers meet their long-term goals, we adopt an investment philosophy that aims to achieve risk adjusted returns over the long-term.


5. Last but definitely not the least, our team is given the opportunity to learn and grow, every day in a multitude of ways. We believe this keeps them engaged and enthusiastic, so that they can deliver on our promise to cover you, at every step in life.

Insurance Plans

ICICI Prudential has a wide array of insurance plans that have been designed with the philosophy that different individuals are bound to have differing insurance needs.


The ideal insurance plan is one that addresses the exact insurance needs of the individual that will depend on the age and life stage of the individual apart from a host of other factors.

Life Insurance Plans:

Under Life insurance plans, ICICI Prudential offers plans under the following major need categories:


 Education Insurance PlansHYPERLINK "" 

 Wealth Creation PlansHYPERLINK "" 

 ProtectionHYPERLINK ""PlansHYPERLINK "" 


Pension &Retirement Solutions:

The primary objective of a pension plan is to help you provide for your financial needs in your post retirement years. You will find a Pension Planning Calculator on the site, meant to make your pension plan review as simple as possible. The calculator is the first step in your Pension Plan scheme, there are othe steps towards getting the Indian pension policyyou need.


Click here to know more about our pension plan solutions.


ICICI Pru LifeTime Pension Maxima

ICICI Pru LifeStage Pension Advantage

ICICI Pru Elite Pension II   

ICICI Pru Assure Pension  

ICICI Pru ForeverLifeHYPERLINK ""   


Protection Plans

The sole objective of these plans, as their name indicates, is to serve the protection needs of the customer and by doing so, safeguard one's family from the financial implications of unfortunate circumstances than one cannot foresee.


Under the Protection Plans platform, ICICI Prudential brings to you the following products:




Plan Name


Plan Type


Pure Protect 








Home Assure













Comparison of Term Insurance Premium



















Endowment Plan of Life Insurance






















Children Plan of Life Insurance

•Helps you secure your child's dreams

•Economic support when your child needs it most

•Funding major milestones























According to me HDFC standard life is better because it provide better facilities and give better policies to customers, making the customers aware about their policies. More over it is also beneficial in children future planning also. HDFC also provides term assurance at low price than ICICI prudential.