Life Insurance Products and Policy Contracts
Product families
Candidates must distinguish term assurance (pure protection, no cash value), whole of life (cover for the whole lifetime, often with cash value), endowment (pays on death or survival to maturity), and annuities (income for life in exchange for a lump sum). Understand unit-linked versus with-profits products, universal life flexibility, and group versus individual cover.
Policy contract terms
Know the standard provisions: free-look period, grace period, reinstatement, incontestability, suicide clause, misstatement of age, beneficiary designation, assignment, surrender value, and policy loan provisions. Be clear on exclusions, waiting periods, and premium payment modes.
Traps
Questions often test the difference between surrender value and paid-up value, or between a beneficiary and an estate. Another trap is the free-look period length: it is a statutory or contractual minimum, not an indefinite right. Watch for questions that imply an endowment pays only on death.
Worked example
A 20-year endowment with sum assured 100,000 matures. If the life assured survives, the insurer pays 100,000 plus declared bonuses. If death occurs in year 10, the insurer pays the sum assured plus bonuses accrued to that date. Rule of thumb: an endowment pays on whichever event occurs first-death or survival.
Key rule
Read the product name carefully: term has no maturity payout, endowment pays on survival, and whole of life pays only on death.