Buy a term plan and secure your family
But it is not only a loss for the policyholders, it’s a loss for the insurance provider also because an income source has been decreased. This is the reason why insurance providers offer incentives in terms of this loyalty rewards program so that the insured individual is motivated for staying and completing the whole tenure of insurance plan.
Loyalty rewards act as a way of offering some extra benefits to the consumers of any service or product in the way of bonuses or points. It helps the insurance providers in designing the product/service lucrative enough for their customers to stick with it & not get shifted to any other product of the similar type. The main objective of this loyalty rewards program is offering a type of dividend to those who are loyal towards the issued service or product.
These rewards are awarded against market investment tools, credit cards, different kinds of insurance, & more. The features of these rewards compels an individual to keep up with the service or product for continuing to enjoy the same kind of benefits in the future as well.
As discussed already, irrespective of being a popular kind of insurance amongst the earning people, term plans have their portion of lapses. For incentivizing the term policy, a lot of insurance companies have started offering additional bonuses when the customers complete a particular amount of time with their policy.
In case of a lot of public insurance companies, the addition of loyalty rewards starts from the tenth year of the policy. It may vary from one insurance provider to another. In this situation, the insurance provider determines the addition of loyalty by measuring the difference between the performance and guaranteed additions of the insurance providers. This extra amount of money is accumulated every year & are paid with the proceeds at the time of maturity. Therefore, unlike private insurance providers, the public sector includes a limit of 10 years for availing of the rewards program.
In case of a private insurers, the term insurance plan can range between 10-30 years. In fact, the ten-year duration might seem like it is pretty long when there are investment tools with the 3-5 years of maturity term. Consequently, the customers tend to keep away from the term policies. For avoiding this and retaining their customers, the private insurance providers have begun to offer loyalty rewards from the sixth year of the policy. Moreover, the majority of the insurance providers offer wealth booster in a cycle of every 5 years, beginning from the 10th year of the policy. Such a wealth booster raises the amount of money along with the rise in the funds, hence, compounding it & making sure you get a higher amount of sum assured. It depends on the insurer to insurer in this case also.
This loyalty rewards program is generally standard throughout the investment policies like ULIPs, wherein, a huge part of the premium amount is assigned to some investment fund. In this plan, the rewards are calculated according to a percentage of amount of sum assured, and the payment is done either at the maturity time of the plan along with other advantages or within regular intervals that can be three/five years. Such an evaluation can be different from one company to another. But, this is pretty different from the loyalty rewards on term insurance both in reference to the procedure of calculation and the time duration.
The insurance providers can calculate the rewards on the basis of a percentage of the amount of sum assured and as discussed above, the payment is done either within regular intervals or at the time of the maturity of the insurance plan along with the other benefits. Hence, the computation and the eligibility requirement for the benefits can be different for different insurance products as well as insurance providers. Taking into consideration that a public sector insurance provider offers loyalty rewards to the insurance people starting from the tenth year of the policy.
In such a case, the insurance provider makes the calculations for the loyalty benefits by making an estimation of the difference between the guaranteed performance and the additions of the insurance provider. These benefits are collected over the policy years and then offered to the policyholders at the maturity of the plan. Alternatively, the policyholders must have owned a policy for around ten years at least to become eligible for this additional benefit of loyalty rewards.
A plan which is offered by the private insurance provider offers loyalty rewards usually on the sixth year of the policy. More essentially, this money related to the wealth booster keeps on increasing as the funds of the policyholders grow. Hence, the insured individual gets the benefit of compounding that can make a higher amount of returns throughout the years during the maturity of the policy.
The policyholders must keep some of the things in mind, one of them is that a loyalty rewards program only does not make an insurance plan good. Therefore, remember to take this added advantage into consideration as a plus-point provided to an insured individual for motivating the policyholders in keeping their investment active.
The insurance buyers must know that the other features of the policy such as return on investment, rates, quality of funds, and size of the cover along with other similar things are more essential factors to compare online term insurance against whole life insurance. It is recommended that you go through all the features of the policies while choosing the correct term plan, which suits your needs and budgets.
The insurance experts recommend the buyers to make a comparison of the plans online, which are offered by various insurance providers, and then select the best plan. In case the customers have any queries regarding the loyalty rewards, then they can take assistance from the insurance service companies and get their queries resolved.
Most of the policyholders are yet not familiar with the exact advantages of the term insurance plan and therefore, fail to get the maximum benefits out of it. Therefore, try to gain more knowledge regarding the same before purchasing an insurance plan.
Everybody knows that policyholders receive a no-claim bonus against the car insurance plans and enjoy continuity advantages on health insurance policies. Now, after all the discussion above, you must be aware of the fact that the insured people also get loyalty rewards on term insurance plans.
It should be clear now that the loyalty rewards program makes the term plan attractive enough for the customers to continue with the same basic plan. The way of selecting the term policy primarily is dependent on the factors like tenure, amount of insurance premium, and the flexibility of the adjustments of the term, instead of these additional rewards.
Hence, there can be situations where the basic plan of life protection along with the exclusions and inclusions could be better while the loyalty rewards may not be as attractive as the competitors.