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Life insurance is a contract between an insurer and an insurance policy holder, where the
insurer promises to pay a designated beneficiary a sum of money in exchange for regular or lump
sum premium, upon the death of an insured person or on maturity of the contract. There are
mainly five different types of life insurance policies. Two competing endowment plans are
discussed below.
An endowment policy is a life insurance policy designed to pay a lump sum after a specific
term either on its maturity or on death. It is a combination of savings and protection plan. The
risk is covered for a specific term period only. After maturity the risk cover ceases to exist.
Typical maturities are ten, fifteen or twenty years up to a certain age limit.
If the insured party dies during the contract, the nominee receives the total sum assured and
bonus accumulated to that point if any. If the insured survives the term period, he receives the
sum assured and all the accumulated bonuses for the term of the policy. Due to sum assured
being paid even on maturity and other benefit payments, the premiums on these policies are
comparatively very high and the sum assured is also relatively low.
Two similar endowment plans being offered by SBI Life and PNB MetLife are compared below.
SBI Life - Shubh Nivesh is a non- linked, with profit Endowment Assurance product with an
option of Whole Life coverage. The basic purpose is to provide Savings, Income and Insurance
Cover. Not only can it be used to save regularly for future but it also has the flexibility to receive
the maturity amount as a lump sum or as a regular income for a chosen period, depending upon
insured persons needs.
MetLife Endowment Savings Plan is a regular savings plan that helps to grow savings while
providing you death coverage. There is a flexibility to choose how much to save as well as
selecting a policy term between 10 to 30 years. It gives the benefit of systematic long term
savings along with the protection deserved. This is one sure way to save for a rainy day and build
a family corpus.
Insurance
Insurance
The Premiums are effected by various factors such as Age of Entry, Sum Assured and Term of
the policy. These effects are illustrated below for the two policies
Premium changes due to change in Age
I1
I2
25
20
Age
Term
25,00,000
25,00,000
45
20
25,00,0
00
SBI Life
120,600
122,825
130,20
0
PNB
MetLife
122,448
124,857
128,84
3
Sum Assured
Yearly Premium
Age
Term
Sum Assured
Yearly Premium
I3
SBI Life
PNB
MetLife
35
20
I3
25
25
25,00,000
25,00,000
25
30
25,00,0
00
120,600
91,325
72,175
122,448
94,428
73,595
Yearly Premium
SBI Life
48,240
120,600
192,96
0
PNB
MetLife
48,979
122,448
195,91
7
From these Illustrations it is clear that SBI Life gives more weightage to age of the insured party
compared to PNB MetLife. The rate of change of premiums for with age for SBI is more than
that of PNB MetLife. So for young people looking for insurance SBI Life is recommended.
Insurance
Conclusion
Both the plans have their own advantages and disadvantages. The SBI Life plan has many
options like deferred maturity payments and Riders, whereas the PNB MetLife plan has limited
premium payment option and better claim settlement percentage. Overall the SBI Life plan
seems to be slightly better option.
References:
http://www.sbilife.co.in/sbilife/content/9_7712
https://www.pnbmetlife.com/insurance-plans/savings/endowment-savings.html
http://www.sbilife.co.in/sbilife/images/contentimages/shubhnivesh_bi.htm
http://ill.metlifeportal.co.in/illustration/InsuredDetail.aspx
Appendix:
Benefit Illustration for SBI Life - Shubh Nivesh