Life insurance for the under privileged

Industrial insurance is a form of life insurance; therefore, most of the characteristics of life insurance are present in this insurance apart from the following dissimilarities of life insurance for the underprivileged:

  1. The premiums in industrial insurance are payable weekly and monthly whereas in ordinarily life insurance, they are payable annually, semi-annually, quarterly and monthly.
  2. The premiums, instead of being payable at the office of the insurer are collected in most of the cases at the houses of the assured persons by insurance agents.
  3. The amount of a policy in industrial insurance is generally not more than Rs. 1,000 whereas in other forms of insurance it is usually more Than Rs. 1,000.
  4. In Industrial insurance, medical examination is not essential, but in other forms of life insurance, medical examination is required in most of the cases.
  5. Industrial insurance is extended to every member of the family. Thus, it covers more areas than the other forms of insurance.

Types of contracts: The policies issued under this form of the insurance are generally limited payment life or endowment plans because saving element in these plans are maximum.

Life Insurance for the underprivileged

Cash Values

The Industrial policy should be in force for a longer period for getting cash or paid up values. It may be from 3 years to 5 years. Extended term assurance is available after payment of premiums for at least six weeks.

Loan Values

Since the servicing cost of the loan is higher and the protection element is elapsed in granting loan, the policy does not bear the provision for loan.

Assignment

Assignment of the industrial policy is prohibited because the amount secured May not useful to the assured in case of assignment.

Indisputable Clause

The industrial policy becomes indisputable after one year of the issue whereas the ordinary life insurance policies become indisputable after two years on any ground except that of fraud and age admission.

Suicide

The suicide waiver clause does not apply to this policy.

Reinstatement

Industrial police that have been in force more than 5 years not more than six months in arrears may usually be reinstated without medical examination.

Conversion of Plan

The industrial policy can be converted into ordinary endowment policy or whole life policy.

Beneficiaries

The beneficiaries of the policy may be usually those persons who got the insurable interest in the life of assured.

Premium rates

The premium rates in industrial life polices are generally higher than that of ordinary life is insurance policies because of higher mortality cost, higher cost of administration and higher lapse rates.

In India, the form of industrial Insurance Policy is Janata policy which is issued generally to comparatively poorer sections of the society. The maximum amount under this policy is Rs. 1,000, the minimum sum assured is Rs. 250 and the maximum sum assured to a policyholder is Rs. 3,000.

The maximum age at entry is limited to 45 years. No medical examination is required up to 35 years. A lapsed policy can be revived during a period of 3 years form the due date without medical examinations. No loans or other benefits are granted on this policy.

Janata Personal Accident Policy

This scheme would benefit industrial workers, domestic servants, road transport operators and the like who are engaged in hazardous jobs.

The scheme is truly a janata scheme for anybody between the ages of 16 to 60 can join it. The annual premium is Rs. 12 or one rupee per month. Risk cover is for Rs. 10,000. The scheme is designed injured and Rs. 200 as cash help for hospital expenses.

According to chairman, G.V: Kapadia of GIC, it is meant for the worker, the office goer, truck operator, rickshaw-puller, students or just anybody. Such a scheme would be a great help to the people, it covers apart from death and hospitalization, loss of limbs and disablement.

  1. Group Life Insurance

Under this plan a large number of persons are insured by a single policy without medical examination at a low cost. The group consists employees of a common employer, debtors of the same creditor or members of the same trade union. The policy is issued to the employer, creditor or the trade union although the number and information of all the assured lives are mentioned, in the policy.

Life Insurance for the underprivileged

Life Insurance for the underprivileged

Minimum Number of Persons Insured

The minimum number of be insured is fixed according to the nature of business, number of employees and methods of contribution. The contributory plan is that where employees are also liable to pay a portion of the premium. In non-contributory plan, only employer pays the whole amount of premium.

In non-contributory plan , all the employees should be included under this plan whereas in the contributory plan all employees may not be insisted for contribution. However, 75 per cent of the employees must be covered by this scheme.

Eligibility

Only regular and permanent employees are included under this scheme. Seasonal and part time employees are excluded from this scheme.

Termination of Employment

The employee who is terminated may elect within thirty-one days and without medical examination to take an ordinary policy in his own name.

Group term Insurance Scheme by corporation

This scheme is a form of renewable term insurance. In the event of death of life assured while in service, the sum assured is paid to the dependents of the Deceased persons. A policy is issued to the employer and each member included in this scheme is given a certificate thereto. The sum assured cannot be assigned or mortgaged.

The scheme is applicable to all the permanent employees of an employer. The amount of insurance to each employee is determined by mutual understanding of the employer and the corporation.

In are of non-contributory scheme all existing permanent employees must join the scheme. The amount of insurance is generally fixed for all employees of a given class. There may be different amounts for a different classes of employees.

Group Insurance for U.P. Government Employees

The U.P. Government has enforced the scheme of group insurance   for their gazette and non-gazetted government servants since March 1, 1976. The scheme will, however, not apply to those state police personnel who had already been provided with group insurance cover separately. The members of the teaching community and legal profession in the State had also been brought within the ambit of group insurance scheme earlier.

Under the scheme, each Government servant would be required to subscribe Rs. 10 per month in lieu of which the Life insurance Corporation of India will pay Rs. 12,000 to the family of the Government servants who die in harness.

Otherwise, the employee concerned will, on retirement, be paid his share of money deposited. The employee concern will, on retirement, be paid his share   of money deposited by him along with compound interest at the rate of six per cent annum.

  1. Disability Benefit

This benefit is granted to all the lives assured excepting a few polices such as pure endowment, the temporary Assurance, Mortgage Redemption Assurance, Convertible term Assurance, the deferred Annuity, Retirement Annuity and Restrictive Policies. The benefit is offered free of cost and no premium is charged for the purpose.

The Nature and extent

If a life assured is disabled by accident from earning , he will be exempted from paying premiums on this policy falling due after the date of disablement. This benefit will be granted only on the first Rs. 20,000 of assurance on a life.

The policy must be in force for the full sum assured at the time the disability occurs. The disability must be result of an accident and must be total and permanent and such that there is no scope to do any work, occupation, or profession. Satisfactory proof of the disability must be furnished to the corporation within 90 days.

Extended Disability Benefit

The extended disability benefit provides for waiver of premiums and also for payment of an amount equal to the sum assured on permanent total disability as a result of an accident. The accident: must occur before the age 60 during the continuation of the policy.

Benefits

  1. Payment in monthly installments spread over 10 years an additional sum equal to the sum assured by the policy, the first installment becoming payable one month after the date of disablement. However, if the policy becomes a claim before the expiry of the said period, the disability benefit installments which have no become due will be paid along with the claim.
  1. Waiver of payment of future premiums up to an assurance of Rs. 1,00,000.

The annual premium for the benefit is Rs. 2 per thousand.

Conditions

The disability of the Life assured shall not

  1. Be caused by intentional self-injury, attempted suicide, insanity or immorality or while the life Assured is under the influence of intoxicating liquor, drug or narcotic; or
  2. Taken place as a result of accident while the life assured is engaged in aviation or aeronautics in any capacity other than that of fare-paying, part or non-paying passenger; or
  3. Be caused by injuries resulting from riots, civil commotion, rebellion, war, invasion, hunting, mountaineering, steeple chasing or racing of every kind; or
  4. Be result form the life assured committing any breach of law; or
  5. Arise from employment of the Life Assured in the armed forces or military service of any country at war.

The disability must be disability which is the result of an accident and must be total and permanent and such that there is neither than nor at any time thereafter any work, occupation or profession that the life Assured can never sufficiently do or follow to earn or obtain any wages, compensation or profit.

4. Pension Plans

Today several schemes, providing regular pensions to the employees after their retirement, which may continue even after his death, may be for a specified time or during the life time of his wife as was chosen.

Deferred Annuity plan is the effective method to provide for the pension. The pension plan can be purchased through the employer or it can be purchased individuality. In case   of non-contributory plan, participation by all the eligible employees in specified categories is compulsory. The existing employees in other categories may be given the option of joining the scheme.

Benefit on Death During Service

If the member dies while in service, all contributions with interest thereon at a rate ascertained by the corporation are returned to him.

Insurance of Weaker section of Society

The Government of India has provided insurance to the weaker section of the society to the tune of Rs. 5,000 at the death. Other people may get benefit of this insurance provided they pay Rs. 75 per annul premium to the LIC.

Half of the premium will be met by the State Government and Central Government as provided n the budget in the budget 1995-96. The amount of insurance has increased to Rs. 10,000 w.e.f. 15-8-96. It has been extended to all types of people who were unable to purchase polices on their lives.

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