In accordance with the guidelines of the Life Insurance Council, the benefit illustration that shows the likely benefit to the prospective customer seeking insurance policy is put forth considering two rates 4% and 8% per annum i.e. fund is expected to anticipated to grow at these rates. Both guaranteed as well as non-guaranteed or variable returns are denoted for a sample term and age. Variable returns provide to investors are decided basis the insurer's future earnings as well as mortality charges and other expenses.
The benefit illustration sheet with respect to each of the insurance product is a mere quantification of the likely benefits under different circumstances.
Benefit Illustration is also a reflection of the cost that is deducted from your premium amount each year which then decides your return. Deductions are made in lieu of distribution expenses, insurance cover extended, administration expenses and fund management among others. Benefit Illustration also includes death benefit in case the policy claim is made before the maturity term.
Unlike traditional insurance products, ULIPs provide each of the cost is provided clearly which enables to clealy understand your benefit at the end of a given year. In traditional products, costs is ascertained basis the maturity value.
Further, surrender value for a given product is also specified, in case the policyholder considers opting out of a policy.
How to best use the available figures in Benefit Illustration?
So, depending on your needs, you can use the benefit illustration sheet to your benefit. An endowment plan with a small sum assured value may not suffice the needs of a person looking for a extensive cover. Money-back plan cannot hold well for a youngster who is in a lucrative job with growing income flow.
More so, all insurance policies are to be provided with a customized benefit illustration sheet arat the time of making a sale. In ULIPs, net yield is depicted, which may be on the higher or lower side as reflected in the benefit illustration sheet considering other charges such as mortality etc.
Though, benefit illustration that comes for each of the insurance plan comes oi handy for deciding on insurance policy, you can also consider the maturity amount as well as other factors to best compare other similar plans.