There are some points that can help you to weigh a company before you associate yourself with an insurance company.

1. Financial track record of the insurance company
The most important factor of an insurance company is the financial well-being that can attract you to take an insurance policy from a particular company. In the Indian context where an experienced foreign player is involved, the financial performance of the foreign partner is equally important. One can judge the company’s financial performance on the basis of the claim amount settled, frequency of claims, rating given by an independent international rating agency such as Standard & Poor.

2. Financial underwriting norms
Financial underwriting means to assess the extent to which an individual should be insured in monetary terms. Generally, an individual should be insured sufficiently enough so that he can continue to lead a lifestyle post-retirement as he was leading before retirement. With this perspective, he should probably look at getting himself insured up to 10-15 times his annual salary. So, ideally you should stick with an insurer that follows prudent financial underwriting norms. Many insurance companies in their enthusiasm to expand their policy base may undertake to insure a larger quantum of risk than necessary. In this way, they overexpose themselves for enhancing the risk levels. Insurance being a matter of sharing risk, financial underwriting becomes an important factor to determine the future liabilities of the companies.

3. Insurance agent
The insurance agent of the insurance company is the link between the insurance company and the individual applicant. Often it is observed that applicants freely discuss various issues with the agent including medical ones such as a heart problem running in the family or hereditary diabetic problem. Some agents are also co-operating by not revealing these sensitive details to the insurance company. An applicant must understand that the agent is putting the premiums contributed by other applicants at risk by not disclosing your true medical condition. He could well cooperate with another applicant in future by concealing his true medical history, and put at risk your premium. So, when you apply for an insurance policy you ought to consider these things.

4. Management’s pedigree
Another factor that coincides with financial stability is the management of the insurance company. Financial stability is generally a direct consequence of good management. As in other industries, life insurance also thrives on good management and if anything, given the sensitive nature of the industry, it needs a solid management at the helm more than the others. In the Indian context, both partners should have a lot of integrity and experience in the financial sector. If the Indian partner already has a history in a financial field like housing finance and banking and also has an AAA rating to boot, that should tell you something about the company’s proficiency.

If you are planning to purchase a life insurance policy, you may want to weigh these factors. You must understand that purchasing a life insurance policy needs a different approach than investing in a bond or a fixed deposit. Life insurance involves a longer commitment and a larger amount that will you or your survivors at a time when they need it the most. So don’t get carried away by what your agent tells you, do a little homework on your own for a change.

FOR MORE ARTICLES- www.savetaxindia.blogspot.com

My spouse and I are professionals working in reputed companies. We have two children, 15 and 18. For their future, and also our post-retirement days, we have invested in a sufficient number of bonds, fixed deposits and real estate. Do we still need to invest in life insurance policies?
The decision to buy life insurance depends on your responsibilities and financial needs for the future. Since your children are still economically dependent on you, it is essential to provide them a cover that will give them financial security in case of any eventuality to you. Moreover, you can use life insurance as collateral for loans, to finance children’s education, for retirement income, etc. Life insurance policies are comparable to other savings instruments available in the market. A key advantage of insurance products is that there is a tax rebate on premiums paid for certain income groups up to a prescribed amount. And, the policy proceeds are tax-free, thus providing a high net yield. A judicious mix of different savings instruments is imperative for proper financial planning.
In case I decide to invest in a child policy, how would it be different from investing in a regular term insurance plan?
A term insurance policy purely offers protection. A child policy has a specific objective of ensuring that by the time your child attains a certain age, he/she has a lump sum for higher studies or starting a business. That apart, it also provides financial security to the child in case anything unfortunate happens to you.

I am a 40-year-old man and have recently purchased an apartment worth Rs1 crore. I am confident that I will be able to service it with my present investments but what if something untoward happens to me? Is there a life insurance plan to insure the home loan? Should I go for it?

Your liability increases the moment you sign on a home loan, which makes it necessary for one to take a life insurance plan. This will help ensure that your loved ones keep living a peaceful life even if something untoward happens to you. There are mortgage reducing term assurance plans that are designed to give the borrower a life cover equivalent to his outstanding home loan. With such plans, the objective is to introduce customized risk protection at an affordable price. The payment of EMIs (equated monthly instalments) progressively brings down the outstanding loan over the years and the insurance cover reduces correspondingly. Thus, in the case of any unforeseen event, the insurance cover will ensure that your family will continue to enjoy the home you had worked hard for, and not be burdened with any loan liability. Thus, you ensure that you gift your family, a home and not a loan.

I am a 30-year-old man. I bought a money-back plan and I’m considering replacing this existing life insurance plan. Are there any risks in doing so?

When you buy an insurance policy, you have acted responsibly and in the interests of your family. Hence, it is not advisable to cancel plans that you have already bought. However, if you do decide to cancel an existing plan, it is better to weigh the options carefully. You must know that cancelling existing plans may result in some financial loss to you. Please evaluate the extent of such a financial loss and weigh it against the additional benefits of replacing it with a new plan. Also, compare the new plans on price, guarantees available, and withdrawal options and if it is a money-back plan, then the amount and frequency of money-back instalments. Most importantly, do not cancel any existing coverage until the new plan has been approved, paid for, and delivered to you.

The insurance business in India isn’t just growing, but also becoming more sophisticated in terms of product offerings. To help readers keep ahead of developments in this business, Mint features a Q&A on insurance every Monday.
What is a group pension scheme? Do life insurance companies offer such a scheme?
A group pension scheme is a product which an employer sets up for the benefit of his employees. All staff can become members. Most life insurance companies offer group superannuation products. A well-structured group superannuation plan helps create an irrevocable fund during the working lifetime of the employees for their pension benefits after retirement. The employer can make a contribution of up to 15 percent of the basic salary of the employee towards this fund. The employee can also make voluntary contributions into the superannuation fund. Investments of up to Rs1 lakh per annum in group superannuation schemes by employers for each employee are exempt from the fringe benefit tax.
I invested in a unit-linked insurance plan (Ulip) a year ago. With the current fluctuations in the stock market, do you think I should switch to the secure fund or move over to traditional plans? Will this result in a loss for me?
Ulips are long-term investments products unlike most other financial products, which are short-term in nature. Your investment is just a year old and will not yield a high fund value in the current scenario. Also, Ulips come with a surrender charge, which will impact your fund value. This is a penalty levied on the early surrender of a Ulip. If we review the historical data for the Sensex, it can be clearly seen that the probability of losses reduces if you have invested for a long term.

It may be a little harsh on policyholders who do not pay their premium on time but a uniform definition of lapse of insurance policy by Insurance Regulatory & Development Authority (Irda) is likely to ensure that more covers stay in force. A committee headed by Irda’s member actuary R Kannan has suggested a grace period of 15 days for policyholders who pay premium on a monthly basis, while a 30 days grace period will be available to those who pay their premium annually, half-yearly or quarterly. For a large number of policyholders, who at present enjoy a grace period of up to 60 or 90 days, it will mean that they have to pay the premium sooner than they have been used to. In order to ensure a level playing field, both existing and new policyholders are covered under the uniform grace period. “There is no uniformity between one player and another. There is a huge communication gap as the grace period is not mentioned by the regulator. Irda has taken this step to harmonise the system,” Kannan told Business Standard. He said that the panel was of the opinion that the move will help companies get high investment yield. Irda’s recent study on lapsation and its impact on the life insurance industry shows that in terms of premium, the lapse rate increased to 6.95 percent at the end of 2006-07 from 4.40 percent in 2002-02. During the same period, the value of the lapsed premium stood at Rs 20,521 crore. While insurers supported the panel’s recommendation, they are not too enthused about the change in the period during which a policy, on which premium has not been paid, can be revived. At present, an insured person can revive a policy on which premium has not been paid for two-three years. This period is proposed to be raised to two to five years. To revive a policy, the insured can pay the unpaid premium and interest on it during the specified period. “Extension of the revival period certainly helps the customer but the insurance company has to be careful that revival is not being sought after health risks surface. Therefore, revival after a long period of lapse should normally be subject to underwriting and possible medical assessment,” said IDBI Fortis Life Insurance Managing Director and Chief Executive Officer G V Nageswara Rao. “The uniform grace period will help Irda bring about standardisation in the system and easy access to comparable data and in turn provide a benchmark against the industry to find where the company stands,” said Max New York Life Corporate Vice President for product management. The insurers are of the opinion that it is more necessary to make the payment of premium convenient to the customers to ensure that policies do not lapse. “Along with tightening of grace period, it is also necessary to incentivise the policyholder to pay premium in advance if he so desires. At present, premium paid in advance is allocated only on the due date, which discourages policyholders from paying in advance. If this can be relaxed, it would help in preventing lapses” Rao said.

One suit does not fit all. With insurance sales you have three major choices to take. Each has advantages along with a whole list of disadvantages. Ignore the local insurance ads, first you have to decide what type of agent you want to become. The three types will be examined, and you will see the differences. All 3 types are consistently looking for new agents to replace those that did not make the grade.

Property Casualty Insurance Agent These are companies well known by the tremendous amount of advertising they do on television and in magazines. You should recognize many of the names like Allstate, Nationwide, SF, Farm Bureau, Liberty Mutual, and Farmers to name a few. As a total force they compose one fourth to one third of the entire agents in the state.

Another name for a property casualty agent is fire and casualty. The of course they write a major portion of the automobile, homeowners, liability, and business coverage. Most additionally have a license to write life insurance and health insurance. The main word in describing these agents is Captive. Very, very few of these agents broker business. In fact their contract usually does not allow them to place coverage with another insurance company.

The other big distinction is that they are almost always a one man office. They could also have a main agent who is assisting another agent that someday may get their own office. If you look in the phone directory under one of the above named insurance companies, you will see the office name is their agent's name. For example: John Smith Insurance Agency. The one man property casualty shops, are very male orientated and very company dictated. If the constraints of running a business can be handled, these agents rarely switch companies.

Independent Multi-Line Insurance Agent This type of insurance operation sells auto insurance, house coverage, business liability, life insurance, health insurance and more. The key word here is independent. There are many contracts with insurance carriers competing for their business. Calling them for an auto quote might have the agent research six or eight companies for the best rates or best coverage for you.

Some agent owners are very strict on requiring their agents only write coverage with companies they have major contracts with. Other agent owners will allow their agents to sell life and health insurance policies with any of over 500 companies of this style that they choose. You might have to work first for a few years as a customer service representative at an hourly rate. At some point the owner may allow you to get your own insurance agent license. If they don't drop out, at least half stay with the agency an entire career.

The customer services representative are almost entirely female. The owner agent is usually male, and may own a few more offices in other small cities. His agency force, unless business insurance is a priority, averages about 80% female.

Insurance Captive Career Agency One major life, health, and annuity insurance company is represented by the agent. Newspaper ads and campus recruiters draw oodles of potential representatives constantly to their door. About 20% of the agents are female and the first year turnover is horrendous. Agencies may range from a dozen agents to two or three hundred. Some provide initial subsidies, others provide little more than promises. Only a few somehow find a way to make it past years one, two, and three. At least 75% or these agents will switch to another firm, or if successful enough they go fully independent on their own.

This mega size group of agents carries they highest amount to pitfalls and dropouts. However the wealthy, experienced agents have the grit and determination to start in this category, and then move unto greener pastures.

About MDRT
The Million Dollar Round Table (MDRT), The Premier Association of Financial Professionals, is an international, independent association of more than 35,000 members, or less than 1 percent, of the world's most successful life insurance and financial services professionals from 476 companies in 76 nations and territories. MDRT members demonstrate exceptional professional knowledge, strict ethical conduct and outstanding client service. MDRT membership is recognized internationally as the standard of sales excellence in the life insurance and financial services business.

Mission
To be a valued, member-driven international network of leading insurance and investment financial services professionals/advisors who serve their clients by exemplary performance and the highest standards of ethics, knowledge, service and productivity.

History
In 1927, 32 extraordinary life insurance producers, each of whom had sold at least $1 million of life insurance, dreamed of a forum dedicated to fostering a high-standard, professional approach to life insurance sales and service. Founded on the belief that growth is a result of exchanging ideas, the concept was: "To receive, individuals must give."

Out of this dream emerged MDRT – an international, independent association that represents the world's best sales professionals in the life insurance-based, financial services industry.

MDRT, a positive influence in the life insurance industry, has developed a rich tradition of sharing knowledge for the benefit of clients, prospects, producers and companies.

Code of Ethics
MDRT members should be ever mindful that complete compliance with and observance of the Code of Ethics of the Million Dollar Round Table shall serve to promote the highest quality standards of membership. These standards will be beneficial to the public, and the insurance and financial services profession.

Strategic Plan
MDRT has a strategic plan that it follows when developing new programs and benefits for its members. The strategic plan contains nine goals and objectives to guide the organization in helping its members better serve their clients and learn from one another.

Executive Committee
MDRT is governed and managed by a five-member Executive Committee duly elected each year by the MDRT membership.

Court of the Table and Top of the Table
Court of the Table and Top of the Table serve as additional incentives for members to increase their levels of production. Court of the Table members must earn three times the MDRT base production requirement, and Top of the Table members must earn six times the base production requirement. Both Court of the Table and Top of the Table members can take advantage of additional member benefits provided exclusively to them.

Annual Meeting
The MDRT Annual Meeting has been described as a one-of-a-kind event, unrivaled in the world of business. Every year, more than 6,000 of the world's top producers gather in a spirit of camaraderie for one of the greatest gatherings of financial services professionals in the world.

Annual Meeting attendees are exposed to some of the finest and most innovative sales ideas in the life insurance-based, financial services business. The meeting offers about 100 speakers during its motivational Main Platform presentations, educational Focus Sessions and insightful breakfast and evening sessions. And, perhaps most importantly, members can network with other top financial services professionals from around the world, building friendships that last a lifetime.

Top of the Table Annual Meeting
The purpose of the Top of the Table Annual Meeting is to provide an annual educational meeting for the exchange of advanced sales ideas and for the development of interpersonal relationships among leading financial producers who are Top of the Table members. During the four-day meeting, about 40 professional, nonmember and Top of the Table member speakers discuss subjects of vital concern to those in the life insurance and financial services industry.

MDRT Experience
The purpose of this event, which is held every two years, is to bring MDRT's Annual Meeting experience to producers in other countries. This event, modeled after MDRT's prestigious Annual Meeting, delivers cutting-edge sales techniques and ideas, technical information and motivational concepts for those in the life insurance and financial services business. The MDRT Experience is open to both MDRT members and nonmember producers.

MDRT Foundation
The MDRT Foundation is the philanthropic arm of MDRT, The Premier Association of Financial Professionals. The mission of the MDRT Foundation is to increase member and industry participation and to give funds to worthwhile charitable organizations throughout the world.

The MDRT Foundation provides a vehicle for MDRT members and corporate partners to pursue their philanthropic goals, which highlight the compassion and integrity of the life insurance and financial services industry.

Since its formation in 1959, the MDRT Foundation has granted more than $21.4 million to charitable organizations serving people in 67 countries and all 50 U.S. states. Starting in 2003, thanks to the Million Dollar Promise Appeal, the MDRT Foundation has awarded more than $1 million in grants each year. In 2007, more than $2.8 million in grants was distributed.

Myth #1:Hey, You're Paying the Premiums... Insurance Should be Bought and Used for Every Accident and Disaster.
Insurance is designed to protect one from catastrophic disasters. An insurance rule of thumb: If you can pay for the loss or damage without a financial hardship then pay it, otherwise expect your insurance premium to eventually show an increase. Also, buying every type of insurance just isn't necessary. Sometimes the risk is worth taking rather than paying a premium

Myth #2: If I am Alive, I Must Need Life Insurance!

Life insurance is designed to take care of one's dependants after the caregiver's death. If you have no dependants, then you probably don't need life insurance. This includes children and retired persons... usually they don't have people that depend on their income so life insurance for these groups can, in rare instances, be beneficial but is usually unnecessary.

Myth #3: I'm the Breadwinner in the Home, So Only I Need Life Insurance.

Have you seen the cost of childcare lately? Add that along with housekeeping, food preparation, home accountant, and school transportation. From that list alone one can see how much a spouse really contributes to the household budget. It is estimated a non-working spouse contributes at least, but usually more, the equivalent of a full time job. For this reason it is important to buy life insurance for everyone in the household if the absence of their income would cause a financial hardship.

Myth #4: Whole and Universal Life are the Best Life Insurance Choices Since I Can Get My Money Back.
Term life insurance is probably the best choice for most. Term life is set for a specific term, like 10-30 years, with a much lower premium than whole and universal life. Your best bet? Buy term life and invest the premium difference in a retirement account.

Myth #5: Flood Insurance is Only for People Who Live in a High Risk Area.

Everyone who lives in a National Flood Insurance Program area is eligible and can buy flood insurance. These areas are not always prone to floods so even if you think your area is low risk you may be eligible.


Myth #6: My Son Uses the Car for Delivering the Newspaper and His Pizza Delivery Job. He's Not Self-Employed So Our Auto Insurance Will Cover Any Accidents.

If your vehicle is used for anything but personal use, then you will probably need to extend your personal auto policy to cover business use of your vehicle. Don't think just because you were unaware of your coverages this will get your accident paid for--your insurance policy is a contract that you agreed to adhere to. If you don't understand all the coverages in your contract you need to contact your agent about the questions you have.

Myth#7: I Don't Need Disability Insurance... If I Become Disabled Social Security Will Take Care of Me.

Don't count on Social Security to take care of all your needs if you become disabled. If you are able to get Social Security for your disability (not all get approved to receive disability benefits so don't assume you will) then you will still have to wait months before you receive benefits and your disability needs to be long-term to qualify. And even if you qualify for benefits, will it match your current salary? Probably not. Find out more why disability insurance is important at Considering Disability Income Insurance.

Myth #8: If I Need to Stay in a Nursing Home When I am Older, The Government Will Pick Up the Bill.

Again, don't count on Medicare or Medicare Supplemental Insurance to pick up the bill. If you can qualify, Medicaid may pay up to half of the cost. Choosing long term care insurance can help you pay for the costs of a nursing facility or home care if the need arises. Also, do you really want your family to have to pick up the bill if you acquire a long term illness or disability? Long Term Care Insurance is a great option and if started early in life the premiums can be very reasonable

Myth #9: Umbrella Insurance Coverage is Just for Rich People.

Umbrella insurance is not just for the wealthy. With the common occurrence of lawsuits, umbrella insurance is a must for every home, auto, and watercraft owner. Umbrella insurance is designed to give one added liability protection above and beyond the limits on homeowners, auto, and watercraft personal insurance policies. With an umbrella policy, depending on the insurance company, one can add an additional 1-5 million in liability protection.

Myth #10: People Who Decide not to Purchase Health Insurance Don't Affect Others.

People who choose not to purchase health insurance eventually affect the lives of every American. There are many reasons why some Americans are uninsured. Regardless of the reasons, having so many uninsured individuals drives up the cost of goods when people get sick and cannot do their job. In addition, when many people in a company choose not to purchase health insurance, it sends a message to the employer that health insurance may not be an important benefit which in-turn could cost other workers a loss of their health insurance benefit. Also, when healthy people choose not to be a part of their company's health insurance pool, it raises the costs for everyone else because the risk is spread through less people. And, when people make such low wages that they cannot afford health insurance, the number of people eligible for Medicaid rises (which is paid by your tax dollars!). For these reasons, many have encouraged the government to switch to a Universal Health Care System where the government would help manage health care.

When you’re looking to purchase insurance you will have many decisions to make. Choosing an agent is one decision that you must consider. Beyond the usual consideration there is one that is often over looked and many times not consider at all. The consideration is should you use a captive insurance agent or an independent insurance agent? You may be asking the questions “what is a captive agent?”, and “what is an independent agent?” But the biggest question is “why should this be a consideration?”



The term “captive agent” refers to the agents working relationship with the company he or she represents, and the same for the “independent agent”. A captive agent has an exclusive relationship with the company he or she represents. The company mandates that the agent only sells the products offered from that company only, for the privilege of working under their name. An independent agent has no exclusive relationship with any company he or she represents. The agent is free to choose the product he or she will sell and the company he or she will sell for.



Before we look at the question of “why should you consider one type agent over another?” let us look at the way agents get paid. All agents have some form of commission pay. New agents generally start out with a combination of paid and commission while the veteran agent is generally a full commission agent. Insurance agent must consider what company will give him or her best chance to earn a living. Most agents look to work for big name companies because working for a big name company may offer them more opportunity to make a sale and get a commission check.



That said; now let’s look at the biggest question why should you consider what type of agent you use? The reason comes down to two more questions. The first question is about family, and the second question is about trust. The question about family is this, when the agent is presenting you with a product who’s family does he or she have in mind? The question of trust is a personal one for you as the client. When you look into the agent’s eyes do you trust that what is being offered is what is best for your family and not the agents?



Independent agents generally have a wide variety of products and companies. This variety is good for the client and the agent. The client has a better chance to find a company that can fit exactly what they need, the client can shop for the best price, the best company rating, and the best product without having to go or call company after company. The agent can look for what is the best product for this client and not feel pressure into selling anything that is close to what the client needs.



There are many more facts to consider when choosing your agent, however don’t leave this consideration out. It may be the most important one of all.

A rash of policyholder complaints about misleading sales practices has fueled a growing number of class action suits against life insurance companies. The offending practices usually take one of two forms: "churning" (also known as "twisting") or promises of "vanishing premiums."
Churning and twisting
Once a policyholder has been paying into a whole life insurance policy for some time, its cash value builds up, making the policy more valuable. Some unscrupulous life insurance agents then convince their customers to use the built-up cash value of their existing policies to buy a "new, improved" policy - one with more coverage, different features, or a different payment schedule.

What these agents neglect to tell their customers is their existing policies are usually quite adequate for their needs, and when they use the built-up cash value to purchase a new policy, they start from square one in building up cash value in the new policy. This practice is called "churning" or "twisting." It's unethical - and illegal. Some agents churn because they earn a commission for each new policy they sell.

The fallout from churning isn't immediately apparent. A customer doesn't have to shell out any money up front because the built-up cash value of the existing policy pays the initial premiums of the new one. Once you use the cash value; however, it's gone.

Texas insurance commissioner Jose Montemayor says "churning" profits insurance agents at your expense. " If you bought the original policy at an earlier age, the new policy might cost more and offer less coverage. In addition, if you should die during the first two years of a new policy, the insurance company can contest claims for the death benefits," Montemayor warns. "Many companies pay larger commissions to agents for new policies than for renewals."

A policy's cash value is actual money the policyholder owns, although usually just on paper. Cash value can be used as security for a loan or converted into an annuity. If a policyholder decides to cancel a life insurance policy with built-up cash value, he's entitled to that money, minus the surrender charge.

Vanishing premiums

Life insurance companies take the money they collect in premiums and invest it - that's how they make their money. In the case of permanent life insurance policies such as whole life and universal life, companies then apply some of those investment earnings back to the value of your policy.

During the early 1980s, interest rates were high and it looked like they'd keep on climbing. So, life insurance companies projected the rate of return from investing today's policy premiums would eventually pay for any future premiums. Some agents told customers they would only have to pay premiums for a few years. The agents claimed returns on the insurance company's investments would pay for the policy after that.

As it turned out, those rosy projections weren't accurate. Interest rates fell, and customers who'd been told their policies would start paying for themselves kept getting bills in the mail. Angry policyholders protested, only to be told insurance company projections weren't guaranteed. In some cases, customers were able to prove they were not informed of that when they signed up for their policies.


Please note that this description/explanation is intended only as a guideline.

As your life changes, your financial needs change as well. Re-evaluating your insurance coverage after your spouse has passed away is an important part of getting your finances in order. If you're older or have grown children, you may need less life insurance or none at all now that you're widowed. But if you have children or other people who are financially dependent on you (e.g., elderly parents), you may need more life insurance than you think.
Your coverage needs
Though your family has changed, the need to protect your children's future remains. Life insurance can help ensure that your children will be provided for if something happens to you. The amount of life insurance you need depends on the number and ages of your children, as well as your income, debt, and assets. A good rule of thumb is to buy coverage that equals six to eight times your annual salary. You will want to make sure that you have enough insurance to cover your children's day-to-day living expenses and the cost of their college education. Ask your insurance agent or a financial planner to help you evaluate your needs and find a life insurance policy that's right for you.

Beneficiary Designations
Whether you have children or not, you should also review and update the beneficiary designations on any life insurance policies you own. Your insurance agent can help you with the necessary paperwork. If you don't have an agent, you can always call your insurance company and ask to speak to someone in the policyholder service department for more information. But don't name a minor child. Insurers generally won't make settlements directly to minors, and the probate court handling your estate may require that a trust be set up, and a guardian appointed, to manage the proceeds.

Tips on buying life insurance

You may have the opportunity to purchase group life insurance through your employer, trade groups, or professional associations
If you're concerned about the cost of premiums, consider low-cost term life insurance
Find an experienced insurance agent or financial planner to help you evaluate your situation and the products available
Check insurance company ratings, such as A.M. Best and Standard & Poor's, for an insurance company's financial stability
Be sure to shop around for the best rates
Periodically review your life insurance needs to make sure that you have the proper amount of coverage

Please note that this description/explanation is intended only as a guideline

Anytime a major life change such as divorce occurs, it's time to sit down and review your insurance coverage. You might think that because you're single now, you need less life insurance or even no life insurance at all. But this isn't necessarily true.
If you don't have children, and no one else is relying on you for support, divorce will probably reduce your need for life insurance. After all, the main purpose of life insurance is to protect loved ones that are relying on your income. But in some cases, divorce will increase your need for life insurance. This could happen if you:

Have children who are relying on you for support (whether or not you are the custodial parent) Have increased financial obligationsLose coverage you previously had Want to ensure that child support or alimony will continue to be paid
The terms of your divorce settlement may also affect your need for life insurance. For example, if you are responsible for paying child support or alimony, you may be required to buy life insurance with your ex-spouse as beneficiary or maintain life insurance coverage you already have.

An insurance agent or a financial planner can help you evaluate your coverage needs and options.

Beneficiary Designations
If your ex-spouse is the named beneficiary of your life insurance policy, he or she will be entitled to receive the proceeds when you die. To avoid this, update your beneficiary designations. Your insurance agent can help you with the necessary paperwork. If you don't have an agent, you can always call the insurance company and ask to speak to someone in the policyholder service department for more information. But don't name a minor child. Insurers generally won't make settlements directly to minors, and the probate court handling your estate may require that a trust be set up, and a guardian appointed, to manage the proceeds.

Tips on buying life insurance

You may have the opportunity to purchase group life insurance through your employer, trade groups, or professional associations
If you're concerned about the cost of premiums, consider low-cost term life insurance
Find an experienced insurance agent or financial planner to help you evaluate your situation and the products available
Check insurance company ratings, such as A.M. Best and Standard & Poor's, for an insurance company's financial stability
Be sure to shop around for the best rates
Periodically review your life insurance needs to make sure that you have the proper amount of coverage

Please note that this description/explanation is intended only as a guideline.

You are a proud owner of a Honda Civic. Like all proud owners you have taken an insurance policy for the car. The insurance policy is of an amount that ensures that if the car is a total loss (in an accident or it is stolen) you will get enough money from the insurance company to make good the loss.

When it comes to your life, do you take the same precautions as you did for your car? Remember, unlike a car, with your life you do not get a second chance. Have you taken enough life insurance to ensure that if you die too early your family will get a sum that will ensure that they do not have to make any adjustments in their life style? As a broad rule of thumb, you should have life insurance equal to at least 10-12 times your annual income.

Most Indians just do not have enough life insurance that will satisfy the above criteria. In their defense they will claim that they cannot afford to buy that kind of life insurance amounts for themselves.

But this is a fallacy. Let's turn again to the car insurance example to understand why.

For the car insurance, at the end of an uneventful year, the renewal notice arrives in the post and you pay it. So it goes on and on till you sell that car. At that time if you have had no occasion to make a claim you consider it as your good fortune. You obviously do not rue the money that you spent on your car insurance and do not look for a return on the money spent on your car insurance. Obviously while fixing the premium for such car insurance the insurance company does not have to build in this element and hence the pricing is low.

However, most people have a very different behavior when it comes to life insurance. They still want to get something back if they do not die during the policy term. Most of us still consider insurance to be a tax planning tool and not as something that will help our family in case of our death. And when we decide to purchase insurance, we instinctively go for the "maximum bang for the buck" strategy, mixing our insurance and "investment" needs. The surging popularity of Unit-Linked Insurance Plans (ULIPs) is a classic case in point. Our instinct tells us to ask, "If I am paying this much towards my insurance, what am I getting in return?" What they do not realize is that whatever they get in return is only from what they pay. The price of any life insurance plan that provides returns will obviously be much higher than if you were to take a plan that pays out if you die (called a term insurance plan) but otherwise pays nothing (much like the car insurance).

It seems genuinely hard for most of us to grasp the concept of insurance as purely a death cover. A Plan B that will ensure that even if we, as primary wage earners in the family, are no longer there, the insurance payout that we paid for during our lifetime will ensure financial stability for our family.

If we were to indeed give maximum weightage to this latter aspect, our predilection for "getting something in return" from our insurance policy will cease. The result will be that more and more of us will realize the best insurance product is the one that only covers the risk of death i.e. a pure risk cover.

A term insurance policy is insurance for the sake of insurance. Taking a term policy means that you are declaring to the world:
"This instrument is ONLY in case I am not there to support my family. For saving money, creating wealth, reaching my financial goals such as my children's education or increasing my wealth during my lifetime, I shall take advantage of the very many pure investment tools that are available."

Because a term insurance plan doesn't try to disguise as an investment plan or any other savings tool, it is the cheapest form of insurance. In effect, you pay the least towards maximum cover. This allows you to be adequately protected against the risk of death.

There are compelling reasons why you should adequately cover yourself, and not just use your insurance as a tax-saving tool.
New illnesses and diseases appear every day. The chances that you could contract something terrible and hand in your card have never been as high. You need to ensure that whatever happens, your family isn't left holding a near-empty pot of gold.

The insurance payout your family receives in the event of your demise has to last them a long, long time. Which means you need to be insured for a large, large sum. Which type of policy do you think will give you such a large coverage at low prices?
The term insurance policy that you take is a necessity for your family. Do not make the mistake of considering it a luxury for you and sacrifice it! You NEED to have a term insurance policy. Let's put it this way - the knowledge that you have adequately provided for your family if you die, will give you great peace of mind...and increase your longevity!

- Insurance is an investment: Most of us look at Insurance as a means of saving tax or making handsome returns on the money back policies.

- Life Insurance Cover is sufficient: LICs deep penetration has ensured awareness about life cover, but very low focus is given to protecting life-time assets like home, jewellery etc

- Healthy People do not need insurance: It makes sense to look at a Health Insurance policy even if one is healthy coz:
Premium cover is lower for the young and healthy and even expenses for minor ailments are usually covered in the Health Insurance plans.

- I am insured by my company: Most salaried people get into this trap and do not look at checking the quantum of cover they need and comparing it with what they get from their employers.

- Home Insurance covers all disasters: Do check to verify if your policy protects your home from natural calamities like floods and earthquakes

There was a time when Indian consumers didnt have much options to choose from- while buying Insurance products. The situation was particularly severe in case of Life Insurance as there was just one company- LIC.

With multiple Insurers now operating in both Life and Non-Life insurance sectors, the customers have a clear option to pick and choose not only the plan(s) but also the insurer.

One can obviously not compare (meaningfully) all plans from all companies- but you should remember to get alteast 3-4 quotes for your specific Insurance requirement.

Choose your company basis:- Whether they have the specific insurance product you are looking at
- What is the reputation of the company in terms of claim settlement,servicing (reminders/alerts etc).
- What is the pricing of the product?
- What has been the historical performance of its products- this becomes critical in ULIPs and other investment related products

The process of comparison ensures that- you have chosen the product/company
- Your selection is based on a structured mapping of requirements with features/benefits available

So next time you think of buying an insurance- make sure you Compare and Choose the Best Deal only at savetaxindia

Do you understand Insurance Jargons.
Do you understand what are you planning to buy?
If not read this so next time someone comes to sell, you ask him certain more details

Single premium policy - A policy which will need you to pay just one lump-sum amount.

Annual premium policy- A policy which will require you to pay every year.

Sum assured- It is the amount of money an insurance policy guarantees to pay before any bonuses are added. In other words, sum assured is the guaranteed amount you will receive.

Maturity value- It is the amount the insurance company has to pay you when the policy matures. This would include the sum assured and the bonuses.

Bonus-This is the amount given in addition to the sum assured.

Reversionary bonus- It is a bonus that is added to policies throughout the term of the policy. It may or may not be declared every year. When it is declared, it will not be given to you immediately.

With profit bonus- This is linked to the profit of the company. If the company makes a profit, it declares a bonus in accordance with the profits. The profits are added to your insurance policy and given to you either on maturity of the policy or to your nominee if death occurs before that.

Guaranteed bonus-This is part of the sum assured. It will be paid to you irrespective of the profits of the company.

Term insurance-It provides policyholder with protection only. If the policyholder dies within the specified number of years (the term), his nominee gets the sum insured. If he lives beyond the specified period, the policyholder gets nothing.
This is the cheapest and most basic type of life insurance.

Endowment Insurance-You are given a life cover just like term insurance. If you die during this period, your beneficary will get whatever amount you are insured for. Unlike a term insurance cover, if you live, an amount will be paid to you on maturity of the plan.This kind of policy combines saving (because money is given to you on maturity) with some protection (your nominee gets an amount if you die).

Rider-It is an optional feature that can be added to a policy.
For instance, you may take a life insurance policy and an add on accident insurance as a rider. You will have to pay an additional premium to avail this benefit.

Annuity-This refer to the regular payments the insurance company will guarantee at some future date. So, say, after you cross 52, the insurance company will start giving you a monthly or quarterly return.This is often done to supplement income after retirement.

Surrender Value-Halfway through the policy, you might want to discontinue it and take whatever money is due to you. The amount the insurance company then pays is known as the surrender value. The policy ceases to exist after this payment has been made. Do remember, you will lose out on returns if you withdraw your policy before time.

Paid-up value-is different. If you stop paying the premiums, but do not withdraw the money from your policy, the policy is referred to as paid up. The sum assured is reduced proportionately, depending on when you stopped. You then get the amount at the end of the term.

ULIP Policy- This refers to policy where part of your funds are invested in stock market and your returns are based on how your insurance company has invested your money in the stock market.This type of insurance are referred as Investment plans.

Tax saving plans- These set of policies are referred to policies which individual buyes to save tax.They have lock in period for such Policies.

I assume there are other 100 terms of Insurance and hope other keep adding to this list.This list will increasing day by day as new plans/ trends keep coming up the Insurance sector.

SO watch out for this section with keen interest.

A well-planned life insurance fund can clear the pending debts of the insured after his or her imminent demise. At times, this can mean the difference between retaining the family house & heirlooms and losing it by default to the creditors.

It can also avoid the possibility of a distress sale whereby an item might have to be sold at a much lower price owing to the urgency of funds.

Insurance can also pay for the cost of higher specialised education. Education in certain specialised fields can cost a staggering amount and owing to the intense competition in the job market today, not many people have the liberty of choice.

The need of education is clear. Parents who want to provide for their ward's education must carefully save money to provide for their future. Scholarships are not easily available either. Life insurance can easily provide for expected educational costs even if the insured dies before his children's education is complete.

At times, after the death of the sole-earning member of a household, the surviving spouse may need a secondary qualification current to the prevailing employment market situation. This additional education is critical since only one parent has to bear the responsibility of the entire family. A life insurance policy can provide the funds required to stabilise the family situation until the pending tension has eased off.

Do you need life insurance?

Every person has an economic value in life, which is connected to the income potential of the individual. So every income provider or producer has to be properly insured against any shortfall that might result from his or her death when some one else will be dependent on that person's income for financial security.

Without proper planning, a sudden financial emergency can force a family to act in a manner that would be inconceivable or unthinkable for most parents. They might have to halt children's education and/or have to sell the house and/ or the car and/ or fall deep into debt.

Life insurance does not replace the intrinsic value of a person's metaphysical self. Nothing and no one can. What it does attempt to provide is solid and tangible security to weather the storm that might befall the individual's family and dependents after his demise

Life insurance is many different things to many different people. For some, it is a premium to be paid on time. For others it offers liquidity since cash can be borrowed when needed. For the investment-minded, it denotes a constantly growing capital account and numerous other benefits.

Life insurance is nothing but the creation of capital funds on an installment basis. Only here, the results are guaranteed. Life insurance is basically a property that is bought under a contract, accompanied by contractual guarantees that ensure large sums of money at the death of the insured.

The contractual guarantee is the promise to pay, backed by one of the oldest and most stably regulated financial industry operating in the Indian sub-continent today.

Insurance Buys Time and Money

People like to refer to life insurance as time insurance, the reason being that life insurance proceeds are paid to the insured's beneficiaries in case of death. The money proffered by life insurance helps buy time to adjust to the change of circumstances. Insurance provides large amounts of cash that will keep the lifestyle for the survivors the way it was before the insured's death.

Insurance Offers Peace of Mind

For the person who buys an insurance policy, it offers absolute and complete peace of mind. He or she knows that the decision made by him will provide sound benefits in the future, whether or not the individual may live to see it. The life insurance policy will subsequently prove this in the future if and when funds are needed. This is the guarantee of the insurance contract.

Multiple Applications

The future is uncertain for each and every one. No one knows how long he or she will live. The investment benefit is paid to the insured's beneficiaries after his death or it can be used during the life as well. Life insurance policy owners can turn to the cash value of the policy in case of a financial emergency when all avenues are either blocked or denied. They know that they can avail of loans based on their insurance policies.

Insurance policy owners can use the cash value of their policies to meet their long-term financial needs as well. They may have purposefully invested in insurance to use the cash in the policy for their children's future marriage expenses or higher education fees.

Enduring Elasticity

Since life insurance is flexible enough to serve several needs, the insured can keep several long-term goals in mind once he or she invests in the insurance plan. The cash value of the policy can be allocated towards augmenting the monthly income during the retirement years. Leisure years should be turned into pleasure years. Permanent life insurance is designed on the concepts of long-term flexibility.

Financial Security

The insurance policy offers contractual guarantees to people looking for peace of mind when they buy life insurance. Life insurance offers complete financial security. The purchase of life insurance demonstrates concern for a family's future financial well being.

Regard for Family

The purchase of life insurance clearly displays care and concern for the people the policy owner loves.

Insurance is Safer

No financial institution can do what life insurance does. No industry can back its products with reserves and surplus as sound as those of the insurance industry.

The proof of strength and safety that insurance companies have ensured even under the most adverse of conditions is a matter of pride for the entire insurance industry. For generation after generation, life insurance has been acclaimed as the very benchmark of security against which the other industries are measured.

As old age approaches, security and comfort become the most sought after. Advances in science and technology have thankfully lead to an increase in life span but at the same time there exists a requirement of funds for the individual during his retirement period to carry off a certain standard of living and fulfill the day-to-day essentials of life.

Proper financial planning during an individuals’ productive years can put to rest these issues but sadly, such savings habits in every individual is hard to come by. By foreseeing the growing needs of the future and saving an appropriate amount well in advance can help the individual tide over the financial problems that may arise in his old age.

Retirement planning has not been taken seriously in our country. One of the reasons for the pension market not being very attractive may be the not -so -attractive financial options that were available earlier.

Professionalism:

Today, things have changed for the better. More professionalism is expected to come in with the entry of foreign companies in insurance.

Multiple options:

These insurance companies will also bring in a variety of financial products to choose from. Besides the insurance plans will be designed in a manner to suit every individual, be it the urban or the rural customer.

Flexibility in Plans:

The individual need not compromise anymore by merely accepting whatever was handed over to him whether it suited his needs or no. The customer is king today and can purchase just the right product according to his financial needs. In this changed environment, he can have tailor made products too. Insurance companies may come out with policies combining healthcare and pension as also taking into consideration the rising inflation. Such combinations will find a number of beneficiaries.

Improved Service:

An important area that will go through a total revamp is service. The insurance agents will have to brush up their skills in order to gear up for the competitive market. And you as a customer can expect prompt service unlike yesteryears.

Multiple information channels:

Informed decision-making is another of those upcoming areas. The customer can take an informed decision today. Insurance agents will not be the only source of information. With dime a dozen channels of information mushrooming each day the customer is bombarded with information explosion. The internet contains a wealth of information and each and every customer can now look forward to receiving every minute detail of the product he plans to purchase at his finger tips.

Buying an insurance policy is a long-term investment and it would only do well if you consider all those benefits you will receive in comparison with your financial outflow. With an increased number of financial options available and an equal number of sources for information a proper analysis could help you gain much more than you actually expected.

Buying Life Insurance cannot ever be compared with other investment decisions since it is very much in contrast with those stock market investments where you wait for the right time to buy and sell. Neither is this like receiving tips on a particular scrip doing well in the market and holding great future prospects.

Buy life insurance at the earliest. Do you know when you would fall ill? Are you sure about your future income earning potential? Are you sure you will never meet with an accident? If not buy insurance now.

This is because the future is always uncertain. Just as buying insurance is a necessity so also buying insurance early in life is important too. With proper financial planning one can work out as to how much money an individual is entitled to after the end of a particular term. A policy that will fulfill your child's future educational needs would have to be timed appropriately so that he receives the policy amount at that time when he needs it the most.

By taking a policy early in life you not only benefit in forking out a lower premium amount but also make a wise decision as far as insuring risks to yourself and your family is concerned.