• 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…..

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• What is Life Insurance and a Life Insurance Company? Can a Life Insurance Company Help Me?

• Find out below:

Life Insurance is insurance for you and your family's peace of mind. Life insurance is a policy that people buy from a life insurance company, which can be the basis of protection and financial stability after one's death. Its function is to help beneficiaries financially after the owner of the policy dies.

It can also be a form of savings in the long run if you purchase a plan, which offers the option of contributing regularly. Additionally, a little known function of life insurance is that it can be tied in with a person's pension plan. A person can make contributions to a pension that is funded by a life insurance company. These are considered private pension arrangements.

In addition, you should also make a list of what you feel needs to be protected in your family's way of life. With a life insurance policy in place, you can:

• provide security for your family • protect your home mortgage • take care of your estate planning needs • look at other retirement savings/income vehicles

• Do You Really Need Life Insurance?

• If there is someone who would suffer economic hardship if you died, then the answer is yes... you need life insurance!  Families with young children have a clear need for life insurance. If both spouses work, the loss of one income will cause the family immediate economic hardship and make it harder for them to realize future goals, such as paying for the children's' education. But even if one spouse works "inside the home" and doesn't bring in a formal income, his or her death will require the surviving spouse to hire child care, housekeepers and other professionals to help run the household - and that can be a significant new expense.

• If you are married without children or single, then you may need life insurance to protect your partner or surviving family members against the costs associated with your death.  Funeral expenses, probate and administrative fees, outstanding debts, special obligations to charities, and federal and state taxes are costs that all of us must consider.  And, they can add up quickly. Unless you already have sufficient financial resources, your survivors will probably need life insurance to cover these expenses.

• What Happens To Your Family If You Don't Have Enough Coverage?

• Under any circumstances, the loss of a loved one is a traumatic experience.  But, if your family is also left without sufficient money to meet basic living needs or prepare for future goals, they will have to cope with a financial crisis at the same time. Depending upon their current financial resources and ability to "get back on their feet" emotionally and financially, your family might be forced to move to a less desirable home or community, abandon education and career plans, reorder family priorities (such as the amount of time spent with the children) and, in general, cut back on the quality of life you have worked hard to achieve.

• Your family might even be forced to go into debt simply to pay the expenses, like funeral costs, taxes, and medical bills, that result from your death.  A moment's reflection will tell you that the lack of sufficient life insurance coverage when a loved one dies can have devastating consequences for a family...consequences that can last for years.

• I am a 35-year-old man with a monthly income of about Rs40,000. I have already invested in a term plan and now I intend to make provision for my three-year-old child. What is the best option?

• You can opt for specific children insurance plans to save money for children’s education and marriage. The benefits under these policies are designed to guarantee targeted savings for the child. So, where conventional forms of savings work only as long as the parent is alive and well, a typical child plan continues the savings plan even in the event of the parent’s death or disability. This ensures that you construct a fail-safe plan for your little stars’ future and help them shine the brightest.

• These plans allow withdrawals which coincide with the requirements of the children at different stages of life, be it education, profession or marriage, among others. There are options under children insurance plans in the market to insure the life of the parent or that of the child. It is advisable to take the option with the life of the parent insured as it can make the child the beneficiary and hence provide protection during the child's growing years. A good child plan can be a vehicle to ensure a smooth, guaranteed and risk-free financial future for your little star.

• I am 33 and am planning to buy a life insurance plan. How can I add to my insurance against an accident or a fatal mishap?

• A good child plan can help ensure a risk-free future for your child

• Most companies will offer riders on your base policy which provide additional protection to the insured in case of an accidental death or disability arising due to accident-related mishaps. Riders are flexible options that provide additional protection to a customer which helps him plan his life insurance needs more effectively. They allow customization of a life insurance policy to suit the specific needs of customers. Thus, you can opt for a personal accident benefit rider that is a low-cost additional benefit that is paid to the nominee in case the insured’s death is caused by an accident. It is very important to always read sales brochures and the policy document so that you are aware of the plan in its entirety.

• I have invested in a pension plan for my retirement. Keeping in mind the present rate of inflation, I am worried that what I am saving today might not suffice in the future. Is there a way to protect my savings against inflation?

• Yes, you can protect your savings against inflation by choosing a pension plan that provides the option of increasing the premium as your income grows or through indexation, which is a technique to adjust premium payments with the price index.

• This ensures that over the years, your purchasing power is protected against inflation.

• On what basis do insurers grant life insurance? Can they also refuse to insure?

• Once a prospective buyer applies for insurance cover, his proposal for insurance undergoes scrutiny. This process is called underwriting—it includes assessment of risk on the life of the proponent in terms of age, income, health condition, family history, tenure of the policy, amount of sum assured, among other things.

• While scrutinizing the proposal, if the underwriter comes across a medical condition or family history that indicates a risk on the life of the proponent, the proposal for insurance may be accepted at higher rates compared with a normal life, or if the risk is higher than usual, it may be declined.