Today, LSX Lawfirm will give you an article about: “Types of life insurance in Vietnam”, as follows:
Legal grounds
Law on insurance business 2000
What is life insurance?
According to the provisions of Clause 12, Article 3 of the 2000 Law on Insurance Business:
“Life insurance is a type of insurance business in case the insured person lives or dies.”
Life insurance is a commitment between an insurance company and an insured in which the insurance company is responsible for paying the insured amount (insurance amount) to the participant when the participant has event predetermined and the policyholder is responsible for paying the premium in full and on time.
From a legal point of view, life insurance is a contract of commitment to pay insurance premiums from a life insurance company when an unfortunate accident occurs to the insured, provided that the policyholder pays a fixed premium. The full term according to the pre-agreed period can be 5 years, 10 years, 30 years…. In there:
- Insurance enterprise or life insurance company an enterprise established, organized and operating under this Law and other relevant laws for business in insurance and reinsurance. .
- An insured person is a person whose health and life – the main insured subject of a life insurance policy. Currently, an insurance policy has only one main insured (except for some participating products for pregnant women).
- The insurance buyer is actually the person who pays a periodic premium to maintain the contract. The insured can be the policyholder.
An insurance policy has two parts: the main life insurance part and the supplementary insurance purchased with the main product. Accordingly, depending on the insurance package that the customer participates in, life insurance will cover the risks of accidents, injuries, critical illnesses, death and illness in hospital, surgery, and dental maternity…
The main purpose of life insurance is to protect people against unexpected risks, but besides that, life insurance combines elements of savings and investment.
Types of life insurance in Vietnam
Term life insurance
Term life insurance is also known as temporary life insurance or term life insurance. This is an insurance contract signed to provide financial security to the beneficiary if the policyholder dies suddenly within the time limit specified in the contract.
With this type of insurance, if the death does not occur within that time, the insured does not receive any money. Conversely, if death occurs during the effective term of the policy, the insurer is responsible for paying the sum insured to the designated beneficiary of the policy.
Term life insurance has different types of insurance such as: Fixed term life insurance; Renewable term life insurance; Convertible term insurance; Declining term life insurance; Term life insurance increasing.
Characteristic
Insurance period is determined
Liability and insurance benefits are temporary
The premium is low because there is no need to set up a savings fund for the insured.
Purpose
Covering funeral and burial expenses
Sponsor family and loved ones for a short time.
Payment of debts owed to the insured’s loans or mortgages
Lifetime insurance
Whole life insurance is a type of insurance in which the insurance period is indefinite; and the sum insured is paid to the heirs upon the death of the insured. Currently, this type of insurance also guarantees to pay the insured as soon as they live to 99 years old; such as Prudential insurance, Manulife insurance with 4 new products; ACE Life Vietnam with Life insurance…
Whole life insurance has different types of insurance such as: Life insurance with continuous premium payment; one-time fee payment; stipulate the number of times to pay fees; or Non-profit Whole Life Insurance; participate in profit sharing.
Characteristic
The sum insured paid once upon the death of the insured
Term of insurance is not specified
The premium paid once or periodically and remains unchanged throughout the insurance period
The premium is higher than for a life with a term because the risk of death is certain; so the insurance amount paid.
Purpose
Ensure income to stabilize family life and protect finances; create and start a business for the next generation or take care of children when they grow up.
Term life insurance
A type of insurance in which the insured commits to pay regular sums for a definite period of time; or throughout the life of the insured. If the insured dies before the due date, no payment will be made.
Characteristic
Periodic allowance for the insured for a specified period or until death.
One-time premium payment
If the benefit is periodic until death, the period is indefinite.
Purpose
Secure a fixed income when you retire or when you are old and weak.
Reducing the need to depend on social welfare or children in old age.
Sponsor the standard of living for the remaining years of life.
So, the sum insured is payable upon the expiration of the policy; or the death of the insured during the period of insurance.
Fixed term of insurance (usually 5 years, 10 years, 20 years…)
Premiums usually paid periodically and do not change throughout the insurance period.
Profits shared through premium investment and can also be refunded when there is no condition to continue participating.
Purpose
Ensure stable life for family and loved ones. Moreover, it is to create an education fund for children; establish a disciplined savings fund, invest safely, retire in old age, repay debt when no longer have financial capacity.
Periodic payment insurance
So, this is life insurance. If the insured lives up to an agreed period in the policy; the life insurance company must periodically pay premiums to the beneficiaries as agreed in the insurance policy. Recurring premiums paid in one or more installments. The insurance contract will terminate if the beneficiary dies.
Investment-linked insurance
Investment-linked insurance is a life insurance product that helps you to simultaneously satisfy two purposes: financial protection against risks and financial savings and investment. In which, profitable investment will be the main factor.
After deducting insurance and management fees for insurance enterprises; the remaining money used to buy investment products in the associated fund. However, unlike traditional insurance, participants in investment-linked insurance must accept the risk that they may lose all of their investment.
Pension insurance
Pension insurance is a type of life insurance that insurance companies offer to supplement the insured at the end of working age. There are two types of pension insurance: for individuals and for groups of employees.
You can also refer to the artlce related to Procedures for establishing a foreign insurance branch in Vietnam or Legal capital of enterprises in the field of insurance in Vietnam or Life insurance foreigners can learn in Vietnam
Related questions
Types of costs in an insurance policy include:
The initial premium in life insurance is the fee deducted from the periodic premium and the premium paid before it is allocated to the policy account value.
Risk premium: is a monthly deductible fee to ensure the payment of insurance benefits according to the provisions of the main insurance product.
Contract management fee: is a monthly deductible fee for the insurance company to perform necessary work related to the management and maintenance of the contract and provide information related to the contract to the insurance company. insurance buyer.
The sum insured is the amount used as the basis for determining the insurance benefits as prescribed. The insurance amount is selected by the policyholder in accordance with the insurance company’s regulations and recorded in the insurance claim or in the contract’s appendix. Usually, when participating in insurance at reputable companies, you will be advised by staff quite carefully about this to make the right choice for your current financial situation.
The premium and the sum insured are closely related. In practice, the total premium is usually calculated based on the sum insured and the premium rate using the following formula:
Premium = Rate of premium x Amount of insurance,
Amount of insurance = Premium : Rate of premium
As such, the insurance amount is the basis for calculating the premium. The higher the premium, the greater the benefit. However, before participating in insurance, please consider joining with a suitable fee to ensure the maintenance of the contract
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