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What is a Non Participating Life Insurance Plan?

By Finserv MARKETS - Aug 12,2019
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Benefits Of A Non-Participating Life Insurance

There are some insurance terms that can be almost intimidating for a person who is not familiar with these terminologies. Though there may be nothing much complicated about it, the term itself can confuse a first-time insurance buyer. For instance, there is a term called “mortality charges” in a ULIP plan that may give an entirely different meaning if you search the dictionary. However, it simply means the cost incurred on providing life cover to the insured.

Similarly, the term “non-participating life insurance” confuses many but the meaning is as simple as the term suggests. Let us understand what it really means.

What is non participating life insurance?

A non-participating life insurance is one where the policyholder does not participate in the profits. In a participating policy, the insured is eligible to earn bonuses or dividends out of the profits of the insurance company. Pure term life insurance is one example of non-participating insurance. Endowment and money back plans are examples of participating insurance because the insured earns bonuses and dividends as per the performance of the insurance company.

Though policyholders of non-participating plans are not eligible for bonuses and dividends, they benefit in terms of lower premiums, guaranteed benefits and other advantages. ULIP plans are also available in participating and non-participating forms but both types have their own advantages and disadvantages.

For instance, Bajaj Allianz Long Life Goal available at Finserv MARKETS is a non-participating ULIP plan but offers several advantages such as affordable premiums, waiver of premium in case of death or disability, loyalty additions and return enhancement. You get all the insurance, investment and tax benefits of a unit linked insurance plan with this policy.

Features & benefits of non-participating life insurance

  • Inflexible

Once a non-participating policy is bought the benefits and terms of the plan can’t be changed. All the benefits such as sum assured, policy term, maturity amount, etc. are fixed at the time of policy issuance.

  • Guaranteed benefits

Non-participating insurance or ULIP plans provides guaranteed returns which means there are no fluctuations in the death and maturity benefits. Depending on how you see it, it can be a positive thing or a negative thing. In a participating plan, you may be eligible for bonuses; however it comes with market risks.

If you are risk averse but still want guaranteed returns and derive the benefits of ULIP plans, a non-participating insurance plan is a perfect fit.

  • Secured returns

The returns that you can expect from a non-participating life insurance policy is secured against economic and market fluctuations. In a non-participating plan, you don’t have to worry about your premium getting higher to compensate for the insurance company’s bad performance in a particular year. No matter what the business or market conditions, you are guaranteed a fixed death or maturity benefit with a non-participating policy.

  • Things to watch out for

Be careful to clearly understand the benefits when you buy a non-participating life insurance policy. You cannot change the benefits, terms and conditions once a non-participating policy is issued in your name. If you want to earn higher returns compared to endowment and money-back plans, you can invest in a non-participating ULIP plan. A non-participating plan will not declare bonuses but you will still have the opportunity to earn from market-linked funds. You will also be able to switch funds according to market movements, investment goals and risk appetite.

When you buy the Bajaj Allianz Long Life Goal plan on Finserv MARKETS, you get guaranteed whole life insurance up to the age of 100. You can pay premium up to a limited period of 10-25 years depending on your choice and get lifelong cover and also regular income if your survive the policy term. Not only do you get ULIP tax benefits, but also periodical return of life cover charges, yearly loyalty additions and a hiked-up income with the return enhancer benefit.

Each non-participating and participating insurance plan has their advantages and disadvantages. Before choosing the right type of financial product, one must decide on the investment horizon, goals and risk appetite. Most importantly, you must understand how the product works, the returns you can expect and the risks involved.

Finserv MARKETS, from the house of Bajaj Finserv, is an exclusive online supermarket for all your personal and financial needs. We understand that every individual is different and thus when you plan to achieve your life goals or shop for the gadget of your dreams, we believe in helping you Make it Happen in a few simple clicks. Simple and fast loan application processes, seamless, hassle-free claim-settlements, no cost EMIs, 4 hours product delivery and numerous other benefits. Loans, Insurance, Investment and an exclusive EMI store, all under one roof – anytime, anywhere!


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Bajaj Finserv Direct Limited ("BFDL"), erstwhile Bajaj Financial Holdings Limited is a registered corporate agent of Bajaj Allianz Life Insurance Company Limited and Bajaj Allianz General Insurance Company Limited under the IRDAI composite registration number CA0551 valid till 10-Apr-2021. BFDL also renders services to Bajaj Finance Limited (‘BFL’) and Bajaj Housing Finance Limited (‘BHFL’) (referred hereinafter as ‘Lending Partner’) in sourcing of customers, providing preliminary credit support activities, fulfilment services and post-acquisition customer services related to lending business. Registered Office: Bajaj Auto Limited Complex, Mumbai – Pune Road, Akurdi, Pune – 411 035 CIN: U65923PN2014PLC150522