The Three Payment Plan, also known as a modified form of endowment assurance, is a life insurance policy designed to cater to both long-term and short-term financial needs. As the name suggests, this plan offers three payments throughout the term of the policy, providing financial flexibility to policyholders. Here are the key features and details of the Three Payment Plan:
The plan offers survival benefits equal to 25% of the sum insured at two specific points during the policy term:
25% of the sum insured is payable upon the completion of one-third of the policy term.
Another 25% of the sum insured is payable upon the completion of two-thirds of the policy term.
These survival benefits provide policyholders with access to funds to meet short-term financial exigencies without terminating the policy.
If the policyholder chooses not to withdraw the survival benefits, a very attractive special reversionary bonus is available. This bonus is typically declared by the insurance company and adds to the policy's overall value.
On completion of the full term of the policy, the remaining 50% of the sum insured, along with any accrued bonuses, shall become payable to the policyholder. This maturity benefit can serve as a lump sum for long-term financial needs or goals.
In the unfortunate event of the life insured's demise during the policy term, the following benefits become payable:
The full sum insured
Any accrued bonuses
Unclaimed survival benefits
Special reversionary bonuses (if applicable)
Depending on the insurance provider, policyholders may have the option to attach supplementary covers or riders to enhance the coverage of their Three Payment Plan. These supplementary covers can provide additional benefits or protection.
The Three Payment Plan is suitable for individuals who have both long-term financial needs and anticipate the requirement of money relatively earlier. It allows policyholders to access a portion of their sum insured at specific intervals during the policy term to meet short-term financial needs while maintaining the overall contract. This can be beneficial for those who want a balance between long-term savings and short-term liquidity.
Insurance companies typically offer tools or calculators to help individuals estimate the premium they would pay for a Three Payment Plan policy. Premiums are determined based on factors such as the insured's age, sum insured, and chosen policy term.
In summary, the Three Payment Plan is a versatile life insurance policy that provides a combination of survival benefits, bonuses, and a lump-sum payout at maturity. It is designed to meet the financial needs of individuals who require both long-term savings and access to funds for short-term exigencies without terminating the policy.
Death claim is usually payable to the nominee/ assignee or the legal successor, as the case may be. However, if the deceased policyholder has not nominated/ assigned the policy or not made a will, the claim is payable to the holder of a succession certificate or such evidence of title from a Court of Law.
State Life distributes its profits among it policyholders every year in the form of bonuses. Bonuses are credited to the account of the policyholders and paid at the time of maturity or at the time of death (if earlier) . Bonus is declared as a certain amount per thousand of sum assured.
Life insurance is normally offered after a medical examination of the life to be insured. However, to facilitate greater spread of insurance and also as a measure of relaxation, State Life has been extending insurance cover without any medical examination, subject to certain conditions. This facility is called Non-medical Scheme.
Underwriting of a risk involves consideration of material facts on the basis of which a decision will be taken whether to accept the risk and if so at what rate of premium.
The amount payable by State Life on termination of the policy contract at the desire of the policyholder before the expiry of policy term is known as the surrender value of the policy.
It is not possible to raise money against your life insurance policy. However, there is a provision available by way of assignment or mortgaging the policy provided the policy has been in force for a minimum stipulated period.
The calculation of life insurance premiums is primarily based on age of the person to be insured, sum insured and term of the policy.
The policyholder has to apply for loan in a prescribed form and submit the policy document with the form duly completed.
A policyholder can repay the loan amount either in part or in full anytime during the term of the policy.
If the policy has acquired a surrender value and a premium has remained unpaid beyond the grace period, the policyholder will entitled to benefits under one of the following two options given hereinafter, depending on the option exercised (if any) in his Proposal for this policy:
A – Automatic paid-up Option
This policy will be converted into a paid-up policy. The paid-up Sum Insured will be specially calculated to allow for the clearance of all outstanding dues of State Life against the policy.
B – Automatic Premium Loan Option
So long as the net surrender value of the policy equals or exceeds any due premium remaining unpaid beyond its grace period, State Life will continue to keep this policy in full force, and treat the said premium as paid by creating an automatic premium loan against the net surrender value of the policy.
