Skip to content

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

Mr. Raman Iyer, aged 40, buys a 20-year pure term plan with a sum assured of Rs 1 crore and pays no maintenance beyond premiums. He asks the adviser what happens if he survives the term. Which is the correct statement about a standard term plan without return of premium?

A standard pure term plan pays nothing if the life assured survives the term. The premium pays only for the death cover, which is why it is cheap. Maturity benefits arise only in return-of-premium variants, and bonuses arise only in participating policies.

  1. AMaturity benefit equals the premiums paid with 4% interest
  2. BNo survival benefit is paid, and the premium buys only the risk coverCorrect
  3. CHalf the sum assured is paid as maturity benefit
  4. DThe accumulated bonus is paid on maturity

Explanation

A standard pure term plan pays only on death during the term. There is no maturity value, so the premium is low. Return-of-premium variants differ, but the question states a standard plan without that feature. Bonus applies only to participating plans.

Did you get it right without looking?

One question tells you little. A timed set on Life Insurance Products shows your real accuracy, how long you take and where you lose marks.

Practise Life Insurance ProductsFree diagnostic mock

More Life Insurance Products questions