Insurance is a great way to get a significant amount of money in the future in
case of any misfortune. Life insurance is the financial security. The most
famous type of insurance in Pakistan is life insurance which may be utilize by
people across all socioeconomic statuses. With addition of giving financial
security life insurance can be used as an investment. It provides security from
a child’s college education to managing wedding expenses (mypaisa, 2017).
Types Of Life Insurance
Common types of life insurance policy
which are generally practiced in Pakistan are as following:
3.1.1. Protection insurance policies
this type of life insurance an accumulated amount is paid to policy holder when
any specified event occurs – such as death or injury. Term insurance is the
most common form of a protection policy. These
policies can be individual insurance plans, or group insurance plans which may
include a range of people such as an organization’s employees.
Term life insurance policy
is also type of life insurance policy which is based on a specific term but
cash value is not involved in term life insurance. Like endowment life
insurance the Return of premium in term life insurance is same to a large
extent that repays all of premiums to the policy owner at the end of term,
before his death. It offers cash surrender values if the insured doesn’t die.
This type of policies is available in 15, 20, or 30-year term. Premium Term Life is the life insurance in the policy holders get a lump
sum on the maturity of policy or on the death of policyholders.in this policy maximum
age limit is 65.the benefit amount ranges from 5,000,000 to 10,000,000.the
standard annual premium on profit of 5 lakh is Rs 15,000 up to 35 years and Rs.
30,000 is the annual premium on profit of 10 lakhs up to 35 years(Aggarwal,
3.1.2. Investment Insurance
By these type of policies capital or savings can be
grow. Premiums must pay at regular intervals. These involve whole life,
universal life and variable life policies. State Life, EFU and Jubilee provide
both types of life insurance.
The working purpose of State Life Insurance company is
to provide encouragement to different customers. Its main aim is to provide benefits
to their customers and protect them from many unknown harms by commending them to
the suitable policy plan at a payable price. a customer can choose an insurance
policy that is suitable according to his need which is providing by a life
insurance company. Both Individual and group life insurance are the two regions
which are focused by life insurance in Pakistan, where as individual life
insurance has a part of 79% in the life insurance business (i.e.79%). While, both
individual and group life insurance shares about 99% of total life insurance business
in the country. The Other types of life insurance products such as annuity
plan, pension plan, children education plan and accident & health insurance
which are not popular and have only about 1% share in total life insurance
business. Life insurance is most likely to benefit lower-income portions of the
population (IAP, 2006).
3.1.2.i. Whole Life Policy:
These are the simplest policies to understand.
You pay a fixed premium every year based on your age and other factors; you
earn increases in the policy’s surrender value as the years roll by and your
beneficiaries get a fixed benefit after you die. The policy takes you into old
age for the same premium you started out with. Whole life insurance policies
are valuable because they provide permanent protection and accumulate surrender
values that can be used for emergencies or to meet specific objectives. The
surrender value gives you an extra source of retirement money if you need it.
The benefits depend on insurer it may be 5 lakhs or 10 lakhs (Sate life
insurance corporation of Pakistan).
3.1.2.i.a Sunheri Policy
Sunheri Policy is an innovative life insurance product. It is flexible,
secure and addresses inflation quite economically. The special feature of this
plan is that there will be increment of 6 % per annum with no insurability
evidence in both a sum insured and premium. From the third policy year forward,
the policyholder is given with a statement demonstrating the development of
cash value of the policy and sum insured for the year. Additionally, this
policy make participation in the surplus of State Life and presently the rate
of bonus is Rs 105 for each thousand for each annum of the adjusted opening
This plan is appropriate for those people who have begun their career and
expecting increment in their income over a specific timeframe say a year or
two. The expansion in premium and sum insured encourage them to meet their
expanded insurance requirement with increment in incomes (Sate life insurance
corporation of Pakistan, 2016).
3.1.2.i.b. Shehnai Policy
This policy is an innovative life insurance product. Its
eligible age limit if from 20 years to 60 years and its maturity age is 70
years. It solves the issues of many parents who wish to accumulate money for
their kids’ higher education, marriage and other costs in future. The term of
the plan pays the lump sum benefit as the child reaches the age of 25 years.
Shehnai Policy is flexible and meets the challenges of inflation.
There is option of automatically increment of 6% per annum in sum insured and
premium from third policy year forward. From the fourth policy year onward, the
policy owner is given with a statement showing the buildup of cash value of the
policy and sum insured for the year. The policy also participates in the
surplus of State Life and currently the rate of bonus is Rs. 105 per thousand
per annum of the adjusted opening cash value. The benefit of this policy is that this policy gets mature at age of
25 years of child. The cash value sum with whole bonuses will pays to child
(state life insurance corporation of Pakistan, 2016).
3.1.2.i.c. Sadabahar Plan
Sadabahar is also one of anticipated endowment
type policy plan with profit which presents all-sum benefit at certain stages
over the premium-paying term or on earlier death. Additionally, this plan has
feature of an Accidental Death Benefit (ADB) rider which provides additional
sum assured to policyholder death occur due to an accident.
This plan is a safe instrument for cash provision at the time of need. With
this plan, the policyholder can secure greater protection and continued
prosperity for the family at an affordable cost. Admissible Ages and Terms for
This plan is available to all general public members, whose age is from 20 to
60 years nearest birthday. Both males and females can buy this plan. under this
plan are 12,15,18, 21, 24, 27 and 30 years Terms are offer. On the death of
insured man rates of bonus applicable will
be 25% higher than those on anticipated endowment plan (State Life, 2016).