There is a wide spectrum for adaptations and modifications of the basic or conventional types of life assurance. The variants can be developed and, honestly, are developed to cater for special life assurance needs of different classes of insuring public in line with the dynamism in the business world.
In addition, the competitive nature of life assurance business coupled with increasing institutionalization of competing schemes such as extended family system, mutual insurance association, age-grades and philanthropic organizations gave credence to the increased innovations in the variants of life assurance business.
Here are examples of these variants are highlighted below:
1. Investment-linked policy: this is a variant of term assurance designed to allow the life assured to benefit from the investment of the life assurance portfolio/fund, to secure insurance protection is event of early death or maturity of the contract (whichever comes first) and to provide for accidental death benefits and waiver of premium disability benefits. This type of policy specially provides for:
·
Regular cash withdrawals at 5 yearly intervals
up to a maximum of 50% of the amount in policy-owners’ account.
·
Cash benefit on survival;
·
Cash benefit at death
·
Accidental death benefits.
·
Family protection
·
Waiver of premium disability benefit.
2. Mortgage protection assurance: this is another adaptation of term assurance designed to provide the life assured an amount sufficient to pay off the amount outstanding under a mortgage redeemable over the term of the policy by level installments of principal and interest on the death of the life assured.
Hence, the assurer deems the outstanding obligations
of the life assured should he die before the maturity of the contract. Thus the
assured’s defendants are relieved of the mortgage redeemable obligations
through this type of insurance.
Premiums are payable for a period lesser
that the contractual period, or until the early death of the life assured. And
no-payment is made if the life assured survives the contractual period because
at that period of time no further mortgage obligations will be outstanding.
Mortgage protection assurance are issued
without profits participation.
3.
Education endowment assurance.
Education endowment assurance is designed to pay an income of non-fifteenth of the sum assured payable at intervals of four months for a period of five years commencing from the end of the selected terms. The insurance can be issued on the life of a parent for the benefits of a named child or children. Early death of either child or parent does not invalidate the contract.
Thus, there are provisions for conversions to suit the need of
the beneficiaries. At death of the parent, premium payments stop and payment of
benefits commence at the agreed selected date. And at the death of the child
who supposed to have benefited from the contract, the parent can convert the
policy to ordinary endowment assurance or opt for a change in the beneficiary.
Premium payments in education endowment assurance are payable throughout the term of the policy or until the death of the life assured within the selected term. Education endowment assurances are without profit participation'
.
4. Prosperity plan assurance:
A prosperity plan policy is another variant of endowment assurance designed especially for those who would need cash at regular intervals. It is an insurance arrangement providing for the installment payment of the capital sum assured over the period of insurance.
Unlike the ordinary endowment assurance where the sum assured is payable at maturity date or earlier death of the life assured, this variant provides that the policyholder will collect a given percentage of the policy proceeds commencing five years of the policy and at regular five yearly intervals thereafter.
If any installment payment had been made and the life assured dies before the maturity of the contract, the balance of the original sum assured will be paid to the defendants plus the accrued bonus. Prosperity plan policies are usually issued with profits participation.
5. Family income benefits assurance:
This life assurance variant cannot be contracted for its purpose alone. It is usually contracted as riders to main life assurance policies. The insurance arrangement provides quarterly income payments of one quarter of the income amount assured commencing on the death of the life assured if this occurs during the selected term and ceasing at the end of the term.
Premiums are payable for a period which is shorter than the term of the policy, or until the prior death of the life assured. This additional insurance protection is issued without profits participations.
There is litany of the variant products or adaptations of the
fundamental life assurances. Many more will be developed or innovated as the
market need arises. Mentions of the other few in the Nigerian insurance market
will suffice.