If you died tonight, what will your family do?

Does your family really need a crore rupees on your death? When I suggested Rs. 1 crore as sum assured for a customer, this was his instant reaction. Typical of us, I thought. When a sales person gives us a product/scheme our first thought goes to the 'commission' he or she makes. I keep wondering why. Even our vegetable vendor has to pledge us that the last rupee that we try to squeeze out of him is what he makes. It makes us feel happy. We completely forget that we need tomatoes, which we can afford, and which we like. Why should it be our concern how much he makes?
So, I set out to tell the client the following... Purchasing an life insurance policy can ensure that your family does not face undue hardship, if they lose you unpredictably to an accident or illness, or if you are no longer able to earn money and it will allow them to provide you with the funeral service that you des ire. Before purchasing the life insurance policy, you should be sure it provides the benefits that your family will need after you are gone. The insurance benefits will provide your family with solace in a time of crisis, so be sure to obtain the needed insurance benefits for your family.
Honestly, if you died tonight, what would your family do? How would they pay the home loan EMI, car loan, society charges, utilities, taxes and other bills? Where would the money come from for new clothes for your children, for college fees, or even for your spouse to enjoy an evening out with friends? Very few people are comfortable answering this question. They live like they will never die and most will die like they never lived. When you have lived a good life, and have a family that you love your answers have to be far, far better than these.

What you say My family will get by My family could cut back expenses My family could sell the house or other assets I dont know

What you really mean You do not know You do not know how You have only one house which is your only asset Aha, the truth!

Thats why we buy life insurance. So that the answer to that question is, without hesitation or doubt: Theyll be provided for. One of the most important insurance instruments that will provide benefits to the family is the life insurance policy. This policy is used to ensure that any existing debts that you have will not be a burden to your family if you die unexpectedly. The life insurance policy is also used to provide the family with money to pay bills or pay for the funeral, especially if you were the chief wage earner for the household. How much life insurance do you need? The chart below shows the annual income the insurance proceeds can generate based on the following assumptions: The beginning amount will earn a 5% return after taxes, with principal and interest exhausted in 20 years by withdrawing an amount equal to 8% of the original principal every year. Note that different assumptions will generate different results.< /FONT>

Life Insurance Amount Rs.1,000,000 Rs.2,000,000 Rs.4,000,000 Rs.5,000,000 Rs.10,000,000 Rs.20,000,000

Annual Income It Will Generate Rs. 80,000 Rs.1,60,000 Rs.3,20,000 Rs.4,00,000 Rs.8,00,000 Rs.16,00,000

Example: A life insurance death benefit of Rs.4,000,000 would provide your family with an income stream of Rs.3,20,000 a year for a 20-year period, after which the entire amount would be depleted. So, if you earn Rs.3,20,000 a year, you may wish to consider Rs.4,000,000 of life insurance.

How exclusive is that? That depends on a number of factors, including your age, health and personal habits (such as whether or not you smoke), and type of insurance. You have several insurance options, depending on need, budget and situation:

• Term life insurance provides pure death benefit protection, generally for the smallest cost. It is ideal for the person who needs a high amount of coverage but cannot afford endowment for now.
• Endowment policies can provide lifelong protection for a fixed, level premium. Additionally, it combines death benefit with cash value accrual. However, the initial cost is generally higher than for a comparable amount of term life insurance.
• Unit Linked Insurance Policy (ULIP) is a fairly new entrant in the insurance space. They are plans that offer a mix of protection and investment (two-in-one package).

Let me tell you what my customer did. Without worrying too much about the premium he took a term insurance policy of Rs. 1 crore about 2 years back from the cheapest source. Every year he has been adding Rs. 2 lakhs of endowment policies - a nice way to keep up with the inflation, and the fact that the booming economy has taken his income from earth to stratosphere he is more inclined to save. Contrary to his first reaction his wife and children wouldnt be rich.
However, they would be able to continue to enjoy the financial security and standard of living he has worked so hard to build for them. Life insurance can replace income lost due to the death of an income earner. It is a cost-effective way to make sure your dreams are completed if you die and are unable to complete them yourself. You may not need Rs 1 crore of life insurance. You may need less. You may need more. The important thing is to make sure you have the amount thats right for you.
Remember your dreams are joint dreams. Do not leave your spouse to fend for herself. Give her the confidence to tell the kids, "Papa has become a star, but nothing will change for us". Give conviction to her voice. Let the 5th birthday be at the same hotel as the 4th birthday. Let the interior decorator be told, yes the plans remain the same. Let the kid's dream of the coolest school education. Let the in-laws not decide where your wife should stay. Let not the kids who lost one parent to fate lose the other parent to a full time job. Simple, insurance is not because you will die. It is because they will live. Insurance is not just important it is necessary. Unless you are independently wealthy or have strong consistent income streams you cannot meet the level of expenditure expected if you are sacrificing insurance.

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