Life Insurance is a contract between you and a life insurance company, which provides your beneficiary with a predetermined amount in case of your death during the contract term

Buying insurance is extremely useful if you are the principal earning member in the family. In case of your unfortunate premature demise, your family can remain financially secure because of the life insurance policy that you have purchased. The primary purpose of life insurance is therefore protection of the family in the event of death.

Today, insurance is also seen as a tool to plan effectively for your future years, your retirement, and for your children's future needs. Today, the market offers insurance plans that not just cover your life and but at the same time grow your wealth too.

If you have dependants and financial responsibilities towards them, then you certainly need insurance.

Having a family means dependants, which , in turn means financial commitments. Financial commitments come in the form of loans, children's education, medical expenses etc.

Imagine what would happen if one were to lose his life suddenly or become disabled and cannot earn... Being insured in a situation like this is a necessity.

The amount of premiums payable depends upon the type of policy, term of policy contract, insurance cover level and your age.

Other benefits that by insurance one can get are:
Tax benefits
The Tax deductions that are available under our insurance and pension policies are described below:

• Under Sec.80C of the Income Tax Act and Under Sec.80CCC (maximum overall limit is Rs.1,00,000/-
• Maturity Benefits are exempted Under Sec.10(10D) of the Income Tax Act subject insurance cover limits.

As a tool of financial planning :

• Most insurance plans available today have a built in savings element that helps you to meet your dual financial goals of life cover and Savings for the future.

Acts as collateral security for loans in many situation:

• Insurance promotes compulsory savings with regular premium payments and helps build up a corpus of funds along with financial security for the dependants in case of premature death.

• Approach your insurance adviser and disclose your intent and seek for advice.
• Disclose all the facts that are known to you about you in the application/proposal.
• Understand the plan features suggested by the adviser and ensure that it is within your savings capacity.
• Continue to pay the premiums till the maturity of the policy as it ensures the purpose for you have taken the policy.
• Demand the service that you are eligible because you are paying for it.

Term Insurance is known as pure life cover, is the cheapest form of life insurance. Under this insurance policy the insurer agrees to pay your beneficiaries the sum assured in event of your premature death. This is suitable for you if you are looking for a low cost life cover, but remember there is no maturity benefit as there is no savings component in this type of policy.

An Endowment Policy is a combination of savings with risk cover. These policies are specifically designed to accumulate wealth and at the same time cover your life.

If one dies during the tenure of the policy, the beneficiaries will receive the sum assured along with the accumulated bonus additions and if one outlive the policy tenure he will receive the sum assured along with accumulated bonus additions (if any).

ULIP are Unit Linked Insurance Plan that helps to invest your savings component of insurance premium in a better way through various fund options after deduction of the said plan charges.

One of the simplest rules is to assume that insurance is a replacement for your lost earning capacity.

• Calculate your total income for the years that you expect to work.
• Assuming that the prevailing interest rate is 8%, you need to insure your life for at least 12 times your current annual income.
• Assuming that a family needs Rs.100000 annually for household expenditure and the rate of interest would be at 8%, then the breadwinner needs to have a life insurance policy of approximately Rs.1200000 so that the interest earned by placing this as deposit will fetch almost the same amount of annual income that the family were getting.
• However to calculate your insurance need more precisely with the help of your insurance adviser who would take into account the current financial position and insurance that you had purchased if any and arrive a figure which will be more relevant.

Yes, there is a policy called "MoneyBack". This is also called anticipated endowment policy with an additional feature of receiving a benefit at regular intervals during the tenure of the policy. The risk cover continues for the entire sum assured inspite of the installments already paid.

Generally, all policies provide yearly, half yearly, quarterly and monthly modes of premium payment.

Generally speaking children do not require insurance cover, but you can take insurance plans on your life keeping the beneficiary as your child. There are good plans that ensure the future of the child in the event of the death of parent by waiving all future premiums or they pay premiums to your policy for the remaining period of the policy (till a specified age of the child) in such an untoward incident.

Yes, there are limited payment policies available where you can opt for such a facility, for example pay for 10 years but your policy tenure is for 15 or 20 years.

Riders are optional additional features that covers special risks like:

Accidental death, critical illness, disability due to accident etc... which can be obtained by paying a little additional money except in case of critical illness.

It is better not to miss but still you miss you will have grace period after the due date. Unfortunately if you miss even the grace period they policy will lapse, that means the promised insurance cover will not be there you will be left with only a lesser surrender value.

There are certain ULIP plans offer cover continuance option where the insurance cover will continue (even if you don't pay the premiums) till the fund value of your account goes down to the minimum set level, but to avail this benefit you will have continue to pay premium for a specified period.

On maturity, you will receive maturity benefits according to the type of policy and plan except in case of pure risk policies.

• Traditional Endowment:
  Sum assured + Accrued bonuses
• Traditional Money Back:
  Balance of Sum assured (if any)+ Accrued bonuses
• Unit linked Insurance Plans:
  Fund Value (at the prevailing NAV)

Yes. The younger you are, the lower is your insurance premium (the life risk cover charge) amount.

In saving linked plan you can take loans when the policy acquires surrender value, in case of unit linked insurance plans you are generally offered partial withdrawal facility after 5 years of premium payments.

The Life Insurance companies' investment portfolios are created in accordance with the IRDA guidelines.