Non-Linked and Non-Participating Term Insurance Plans

So, if you are willing to get a term insurance cover, it is important to know and understand the various types of plans offered under term policies so that a decisive decision can be made by you.

So, let’s find out what is a non-linked non-participating term insurance plan and other related details in this post.

What Does N0n Linked Insurance Plan Mean?

As suggested by the name itself, a non linked insurance plan is a term policy that is not linked or related to the market performance of the insurance company from whom you buy the plan. So, in the other word, the policy and the benefits received from it will not be affected by the business or performance of the insurer. The nominee of the policyholder will simply receive the fixed benefit as per the conditions of the policy if there is any unfortunate situation like demise of the insured.

Generally, all the Term Insurance Policies are non-linked or not related to market fluctuations because they are not connected with the business of the insurer in the market. Hence, they are termed as low-risk plans and suit people with low-risk appetite.

What Does Non-Participating Term Plans Mean?

All insurance companies offer non-participating term plans, also termed as non-par plans. But, do you know what they mean? Well, these are policies under which the policyholder doesn’t participate in the market performance or profit of the company/insurer. In other words, the policyholder in such plans would not receive any bonus or extra profit other than the pre-decided or fixed maturity at the time of buying the plan.

As such under pure term plans, there is no maturity benefit offered to the insured if the person outlives the plan and hence, these policies do not provide any bonuses too. That is why, most of the traditional term policies are regarded as non-participating policies.

So, if the insurer does exceptionally well in terms of profits, you can’t make any claims of benefits or bonuses. Likewise, if the insurer goes into severe losses, you will still not be impacted and will receive the benefit claim as per your policy term.

Non-Linked and Non-Participating Term Insurance Plan- Features

As discussed above, the non linked insurance plan and non-participating term policies are the ones which the insured buy for a fixed duration. Here, if the policyholder dies within the policy term, the nominee receives a fixed death benefit. Below are some common characteristics of a non-linked and non-participating term insurance plans:

1. Not influenced by the market fluctuations – We already discussed above that the term policies are not related to the market or business of the insurer as well as they are non-participating policies. Thus, the plan has nothing to do with the insurance company’s performance and benefits.

Being Non linked insurance plan, they do not in any way affected by the performance of the market. Similarly, being non-par, these policies do not contribute in the profits or losses of the insurer. Hence, they are eligible only for the fixed return (death benefit) promised by the insurer and no additional benefit.

2. Allow the policyholder to gain a Fixed Return – Since the term plans have nothing to do with the market fluctuations of the insurer, the nominee of the insurance plan is sure to get guaranteed return in the form of death benefit in case of demise of the policyholder during the term of the plan.

3. Available at reasonable premium – Being non linked insurance plan and non-participating plans, term policies are available at an affordable premium price and can easily be afforded by common people. Hence, these policies are popular among the masses.

4. Term plans are low-risk products – The risk factor in terms of returns in any investment comes when the plan is market -linked. The greater the policy is connected to the market, the higher is the risk factor. However, since term plans are non linked insurance plan as well as non-par policies, they are safe from market instability and are low risk policies. It is meant for investors who are simply looking at life cover to secure family members in their absence.

Who Should Opt for a Non-Linked and Non-Participating Term Insurance Plan?

A non-linked non-participating term insurance plan can be availed by anyone. But it especially suits the ones who are looking for simple life cover. These are low risk plans available at low premiums. The only aim to buy such plans is to receive higher life cover if anything happens to the insured during the term of the policy.

These plans are not at all risky, which makes them viable options for many and they fulfill the key expectations of policyholders.