Understanding the Benefit Illustration in Life Insurance Policy

Life insurance is a contract between an Insurance Company & the Life Insured. In this contract, the insured has to pay a premium for a specific number of years. In return, he is entitled to some benefits, which is declared in Benefit Illustration, which is specific to Life Insured only. Benefit Illustration of person A and person B will vary because Benefit Illustration of a particular plan of a Life Insured depends on his age. It is always advisable that one should consult Benefit Illustration before purchasing a policy. It tells you all the truth related to your policy. What a Benefit Illustration tells you:

1. Your Name.
2. Premium amount.
3. GST levied on the premium on 1st year and 2nd year onwards.
4. Premium paying term.
5. Death benefits with every progressing year.
6. Sum Assured & Maturity benefit with each progressing year.
7. In the Traditional Non-participating plan, fixed maturity is mentioned.
8. In the Traditional Participating plan, the bonus on Sum Assured is 4% & 8% in Benefit Illustration as per IRDA guideline. In participating, Plan return may vary what is shown in BI. You have to check the bonus history of a Life Insurance company to speculate your tentative return on investment.
9. Surrender value with each progressing year.
10. In ULIP Plan: Benefit Illustration narrates charges levied…..there are four types of charges a) Mortality charge, b) Admin Charge, c) Fund Management Charge d) Allocation Charge.

It is a truth that Life Insurance sellers rarely disclose the Benefit Illustration to customers. Customers are seldom asking for a customised Benefit Illustration due to ignorance. A Benefit Illustration will reduce the chance of misselling by 80%. Whatever company representative tells you, if it is not mentioned in Benefit Illustration, you are not entitled to such benefit.

3 vital pieces of advices are:

1. Before purchase, one must go through carefully and understand Benefit Illustration as per his age.
2. Get all points mentioned above clarified by the company agent.
3. After receiving the policy bond, compare the printed Benefit Illustration in the bond with the illustration you have consulted before purchase. Both should be identical.

Life Insurance is a long-term commitment. So proper understanding of Benefit Illustration will enable you to choose a policy of your choice and protect you from misselling. If you wish to know more to safeguard yourself from misselling, please register with us for FREE by clicking the button below.