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NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Life Insurance Products

Mr. Raghav Iyer, aged 35, wants a pure risk cover for 25 years at the lowest cost, with no maturity benefit. He also asks what happens if he outlives the term. Which product and outcome fits his requirement?

Term insurance fits because it is pure risk cover with the lowest premium and no maturity benefit. If Mr. Iyer outlives the 25-year term, the policy simply ends and no survival amount is paid, unlike endowment or money-back plans that include savings.

  1. ATerm insurance; no survival benefit is paid if he outlives the termCorrect
  2. BEndowment plan; the sum assured plus bonuses is paid on survival
  3. CMoney-back plan; periodic survival payments are made during the term
  4. DWhole life plan; the premiums are refunded at the end of 25 years

Explanation

A basic term plan offers only death cover and has the lowest premium because it carries no savings element. If the life assured survives the term, nothing is paid, unlike endowment or money-back plans. A return-of-premium variant exists but costs more and is not a basic pure risk cover.

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