A couple of weeks ago I was sitting with an agent (insurance, stock and mutual funds) for investing some money into mutual funds/stocks. He asked me regarding life insurance. "I already have one and I am not interested in another one", that's exactly what I said. Though mutual funds and stock does give you profits he said to me, first take care of your security and then go for profits. Insurance will take care of that - Security First.The next day while coming to the office an incident happened that made me ask some questions about insurance.

1. Do I really need insurance and that too a life insurance?

As long as I don't have any one depending on me I don't need insurance. However, if you are married and have children and their financial status is going to be affected by your absence. You would need life insurance. Even, if you don't have any children now you may need life insurance. Probably, your parents might be depending on you for their financial needs. Therefore, depending on the load and the number of your dependents you have, the more life insurance you need.

Variable life insurance: This type of insurance is much more flexible than the whole life insurance. The best benefit here is the fact that it allows the policy owner to borrow against the policy maturity amount.

2. How much life insurance will I need ? How to assess life insurance needs?

This will vary from individual to individual. It will depend on whether you are married,have one or more kids,future expenses,loans,mortgage,education and wedding expenses for children etc. By weighing these and other factors, you can calculate your life insurance needs. As a rule, you will need a life insurance coverage of at least 7 years of your current annual income.

Every person's situation is different. Your financial situation may look the same as your friend in the office next to you, your needs are different. Calculating how much life insurance you need shouldn't be a guessing game. You can make a calculated assessment of your needs and your loved ones dependent on you.

3.Should I purchase life insurance on my spouse?

Yes, if your spouse works. You should have a separate life insurance policy. Financial problems can be averted if you spouse is working and you have life insurance to cover. To make up for your spouse's contributions to the family a life insurance may still be required even if spouse is not working.

Major factor in getting life insurance is your dependents. Some points you could think of:

What lifestyle you want your family to have when you are not around?

What would happen to your spouse who is not working and not having any income?

Any debts,loans,credit cards you want to pay off?

Any special needs, especially health?

Educational expenses for your children?

Parents, who become financially dependent to you?

These are some areas where you will feel the need to have a life insurance. You can start thinking of life insurance if you feel one or more of the above situations apply for you.

Universal life insurance is popular amongst people for it allows the policyholder to decide the on premium and benefit whereas the other kinds of policies do not let the policyholder to get the benefits from the life insurance fund till the time of death. Buying a universal life insurance can also protect your loved ones against financial problems that may occur after the insurer dies.

Cheriyan Thankachen

Term life insurance begins with low premiums initially. the premium amount increases with the age of the person.