Life insurance is an umbrella which protects a family from the financial hardships which accompany the premature death of its breadwinner! That is why buying adequate Life Insurance is the first step towards Financial Planning.

We all strive to identify & meet our financial needs and goals in life by carefully managing our finances. By inculcating judicious spending habits and planning a diversified investment portfolio designed to reach the financial objectives at different stages of life we aspire to meet these goals. We all have dreams and ambitions in life. When you, as a young individual or a young couple, start saving and investing your earnings, you have dreams of a happy financial life, with your investments enabling you to lead a comfortable lifestyle. At the same time, you also ensure that you are able to provide for your children's education / marriage expenses and eventually lead a comfortable retirement.

However as a matter of abundant prudence we have to also ensure that these goals do not die a natural death in the unexpected event of the premature demise of the Head of the family.

For this purpose while chalking up the financial plan, the assessment of life insurance requirement has to be given due importance. The Umbrella i.e. the life insurance cover should be big enough to ensure that the family expenses are protected and the financial goals like children's education, marriage etc are also met, even in absence of the major earner of the family.

When any such type of protection, as mentioned, is envisaged, naturally the amount of life insurance cover i.e. Sum Assured needed will be substantial. The only policy which will offer this type of cover at cheapest premium is Term Insurance policy. This policy is also called Pure Life Insurance because at the end of the policy period, the policy holder who outlives the policy does not get anything in return. On the other hand in case of death of the policy holder, the nominee or the beneficiary receives the full amount of policy i.e. the Sum Assured. This is the precise reason that the Term insurance cover is available at the minimum premium.

Apart from this basic insurance cover there are other types of insurance policies which are investment oriented as well and an expert advisor's guidance to understand the implications of buying different policies becomes highly imperative.

But life can take unpredictable and unpleasant turns. As a prudent family head, you could also give a thought to the possibility of a premature death and its consequences on the family's financial needs and goals.

Life insurance provides for the fulfilment of these financial goals, in the unfortunate event of the income earner's death. Hence, it is extremely important to be insured and arrive at the correct insurance amount, because one would neither want to be under-insured, nor over-insured.

For a prudent Investment Manager, inclusion of an appropriate Life Insurance in well thought-out portfolio is inevitable so as to cover the associated risk arising out of any unexpected future mishappening.

Insurers, today, offer a variety of plans that give you risk coverage as well as aid in wealth accumulation. Here is a snapshot of the various available types of policies and what they offer.

- Most basic, cheapest and purest form of life insurance.
- If you outlive the policy, you get no money back; if you die during the policy tenure, your nominees get the amount for which you are covered.

- These policies cover you for as long as you live, irrespective of the tenure.
- The policyholder pays regular premiums until his death, following which the money is handed over to his family.

- Provide a combination of life cover and savings.
- On maturity, you get back Sum assured and accumulated bonuses.
- Investments are predominantly in fixed income instruments and returns are modest.

- These policies provide a combination of a life insurance cover (the 'protection' component) and investment (the 'savings' component).
- They work like mutual funds, allowing you to choose between investment options predominantly in equity, debt or a mix of both (called balanced option).
- ULIPs entail greater transparency and are flexible plans where you can select an investment fund as per your risk appetite.

It pays to be Healthy! Health is Wealth!

With hundreds of options, the process of selecting the most appropriate plan can be daunting. It requires a thorough understanding of insurance plans, research to determine which plan will meet your needs, and the ability to negotiate the lowest possible rates for your business. This is where Myra & Co. adds value. We have the expertise and relationships to help you identify the best plan for you.

What is General Insurance?

Insuring anything other than human life is called general insurance!

General Insurance comprises of insurance of property against fire, burglary etc., Personal Insurance such as Accident and Health Insurance, and Liability Insurance which covers legal liabilities. There are other covers also such as Errors and Omissions Insurance for professionals, credit insurance etc.

Non-Life Insurance companies have products that cover property against fire and allied perils, flood storm and inundation, earthquake and so on. There are products that cover property against burglary, theft etc. The non-life companies also offer policies covering machinery against breakdown besides the policies that cover the hull of ships and so on. A Marine Cargo policy covers goods in transit including by sea, air and road. Further, insurance of motor vehicles against damages and theft forms a major chunk of non-life insurance business.

Why should one Insure?

One of the main reasons one should insure is to protect one's belongings and assets against any unanticipated financial loss. When one has earned and accumulated property, protecting it is prudent. The law also requires us to be insured against some liabilities. That is, in case we cause a loss to another person, the affected person is entitled to compensation. To ensure that we can afford to pay that compensation, the law requires us to buy liability insurance so that the responsibility of paying the compensation is transferred to an insurance company.

Who should buy general insurance?

Anyone who owns an asset can buy insurance to protect it against losses due to fire or theft and so on. Each one of us can insure our and our dependents' health and well-being through hospitalization and personal accident policies. To buy a policy an individual should be the one who will bear financial losses if they occur. This is called insurable interest.

What kinds of policies are there?

Most General Insurance policies are annual-that is, they last for one year. Some policies are given for longer periods-like fire insurance for residences-and some for shorter periods-like insurance for goods transportation or for emergency medical treatment during foreign travel etc. which offers insurance only for the event in question.

How much should I insure for?

The amount you insure for is called the Sum Assured. Normally a policy should cover the value of the asset-either the market value while insuring, or the cost of replacing the asset should it be lost or destroyed. The premium will depend on the Sum Assured.

Can I take two policies and get claims under both of them?

In case of an Indemnity Cover (one that seeks to compensate the actual loss )--for instance, a policy that covers property, if there are two policies in vogue, the loss shall be shared by both the policies. In no case can an insured get more than the actual pecuniary loss he or she has incurred. On the other hand, in respect of benefit policies like the Personal Accident policy, where a fixed compensation is paid, no matter what the actual loss is, one may obtain more than one policy.

On what basis is claim paid?

In Indemnity Policies, the upper limit of a claim is the Sum Assured and this usually applies for the period of the policy. Certain policies, however, allow for reinstatement of the Sum Insured by payment of proportionate premium for the remaining period of the policy. The actual claim will be the actual extent of financial loss as validated by documents like bills. If the property is underinsured, the insured shall bear a rateable proportion of the loss. There can be more than one claim in the policy period but the sum assured is usually the limit for the policy period unless reinstated.

Nowadays Health Insurance policies-which cover hospitalization costs-have also a cashless settlement of claims. That is, you don't have to pay for the treatment at the hospital and then make a claim for reimbursement of the expenses. The insurance company has a service provider called the Third Party Administrator (TPA) health services, who liaises with the hospitals and directly makes the payment for your treatment as per the terms of your policy and coverage.

What is the periodicity of premium payments?

Most General Insurance policies are annual and the premium payment is in advance. No risk commences unless you have paid the premium. In some long term policies, companies have the facility of collecting premiums periodically.

Why do different people have different premiums ?

The premium is calculated on the extent and nature of the cover you want. A higher sum insured means a higher rate of premium. Similarly a higher risk will be charged a higher premium.

An example of this is that an older person will have to pay a higher premium for health insurance for the same sum insured. Sometimes the risk is higher depending on the location of risks-for example in motor insurance in areas where accidents are higher. So the premium will vary according to the nature and severity of the risk

If I buy a policy and don't make a claim, it is a loss. So, why should I buy insurance?

General Insurance is not meant to be for savings or investment returns. It is meant for protection. What you pay for is the protection against a risk. To approach it as something from which returns should be obtained is not the correct approach as there is a price to pay for protecting a property worth lacs for a few hundred rupees.

If there are problems with claims what can I do?

First you should write to the company and give them sufficient time to respond suitably. If they don't respond or in case of a dissatisfactory response, then you can approach the appropriate judicial channel. For complaints relating to Personal Insurance covers up to a value of Rs.20 lacs, you may approach the Insurance Ombudsman in your area.