Are you confused about which life insurance plan to choose from? Here’s a handy reckoner to help you choose the right plan.

Latte, cappuccino or espresso? With milk or without? With sugar or without? One picks and chooses carefully to get one’s favourite cuppa customised to one’s taste. I’m sure there are other areas in one’s life one is equally choosy about, say for example, which smartphone one flaunts, which sunglasses protect one’s eyes from the glare and so on. Yet, the same alacrity seems to be missing when one is making one of the most major decisions in one’s life — choosing a life insurance plan. Why? Especially, when it’s the only way to financially protect one’s dependents and still fulfil the financial goals even in the event of one’s death.

While it can be a bit daunting initially since one is on unfamiliar ground, it is actually just a matter of getting in touch with the right adviser who will demystify the seemingly complex world of insurance and educate you about the plans that would work best for you. It is imperative that you understand the terms of insurance, weigh the options carefully and make an informed decision about the coverage that is right for you and your family. Basically, life insurance and living benefits insurance can be of two types: Insurance that only protect your dependents, and insurance that protects your dependents and provides a savings and investment avenue as well.

First step

Before you begin the process, it is vital to get in a trusted adviser and discuss your needs and understand which options work best for you. It is important to establish what your need is and have a goal in mind. Once that is done, evaluate which life insurance policies suit those needs the best. Compare between policies to zero in on the one best suited to you. Another important thing is to evaluate the rider options.

Equally important is to evaluate the company you are buying the policy from. You need to check for customer service feedback, claims settlement ratio, financial stability, distribution reach, payment facility provided etc. Once you receive the policy documents, go through the documents to review all what you have opted for. Also, revisit your plan from time to time as needs and goals change overtime.

What you need to understand

Understand what types of life insurance plans are available as it is important that you find out all you can about the kinds of covers available and understand the terminology.

What are the key drivers that make you save?

If you are looking at long-term goals, then life insurance is probably the best solution as it allows for both savings and protection. Key drivers for savings could include your children’s education, their marriage or similar needs for which you need to think and plan long term and invest in a plan that matures and gives you the financial reprieve when you need it most.

How much cover should I have?

The cover you need is directly proportional to your personal life situation and the lifestyle you and your family want to lead. Typically, the rule of thumb is to have a cover of 10 times your annual income. However, there is no hard and fast rule here. Each one has different goals and varying premium paying capability. One needs to be realistic though.

The first step in figuring out how much is right for you is to estimate how much your family would need to continue its current lifestyle in your absence. It is also important to understand what stage of life you are in — a single person has very few responsibilities; as a parent you would have different responsibilities; and if you are approaching retirement your needs will be vastly different.

So say, you are 38 years now and you want an income of Rs 75,000 per month when you retire at 58 years. At the same time, in case of your untimely demise you might still want to ensure your spouse to have a hassle-free retirement. How do you choose the right plan? This is where an agent/adviser plays an important role. Get your trusted adviser to come in and discuss the best options available that will give you the income you want.

Understand the implications clearly and once you are sure which plan works the best — in terms of ease of payment (premium) and benefits provided — go ahead.

How do I know it’s the right policy for me?

Once you have an estimate of how much insurance/savings you will need, it's time to think about the type of policy that best fits your needs. Usually there is no one policy that can meet all your life insurance needs.

You can choose a policy depending upon the risk profile and how much time you have to attain the financial goal you are planning for. If you have a mammoth capacity for taking investment risks and your financial horizon is over 10 years, you may choose ULIPs with an equity bias. These policies are subject to market risks and they allocate your premium amounts in equity and debt depending on the type of funds you choose ranging from equity, debt and balanced fund depending upon you risk profile.

For the risk averse, traditional plans make the most sense. For instance, if you are a parent of a growing child, a single plan may not serve the purpose of providing for your dependents. You will need a plan for their future needs as well and something specific for the child's educational needs. A combination of products works the best. Likewise, you may initially have a policy with no additional cover for disability due to illness or accidents, but later in life you may feel the need for such a cover.

Should I throw in a cover that includes various untoward incidents that may happen?

Policies with such a cover, say for disability or critical illness, are often viewed as ‘expensive’. Some see it as money spent on policy features they hope or think they will never use. Yet, without adequate insurance, you run the risk of financial disaster should anything untoward happen to you. The key is to buy the right type of insurance with the right amount of cover at the right time. Don’t get side-tracked by anything — match the right insurance cover for the right stages of your life.

Make it a habit to review your life insurance needs and change your life insurance cover whenever there is a change in the financial situation, such as a rise in your income or a rise in financial responsibility by way of an additional family member or the need to take care of aging parents or a large house loan. Each of these situations calls for review of insurance cover to ensure you are adequately covered at all times with the right insurance policy.

The author is Director and Chief Marketing Officer, Max Life Insurance. The views expressed in this article are her own

Motor insurance has undergone tremendous innovation and customisation in the past few years. However, the same cannot be said about customer behaviour. While we do come across highly evolved customers who avail comprehensive motor insurance schemes with varied add-on covers, a majority of the customers tend to remain satisfied with a basic third party motor insurance policy cover or at best a comprehensive policy.

Let’s take a hypothetical situation to understand the advantages of availing motor insurance add-on covers. Punit is travelling late night with his spouse and a 3-year-old daughter. He is travelling on a deserted part of the highway when he is confronted with a car breakdown. The problem being a mechanical failure, the vehicle is rendered immobile and cannot be driven even for a short distance to reach a nearby garage. With no motor garage nearby and a poor mobile network, Punit has no option but to seek a ride from a truck driver who agrees to drop the family to the nearest hotel. The question here is: Could Punit have done something in advance to ensure help from the insurance company to prevent his family from going through so much trouble?

To ease the mental stress and extend assistance during such breakdowns, companies offer motor add-on covers which provide technical aid to the policyholder at the site itself as well as offer assistance service and in some cases, financial help to avail accommodation or alternate transport.

Let’s look at the various Motor Add-on Covers that could have provided a much needed assistance to Punit and his family:

Technical assistance

With the facility of technical assistance over the phone, the insurance company provides assistance through telephone thus enabling the vehicle owner/driver to rectify any minor mechanical errors/faults/non-functioning on the spot.

Trained technician

Let’s assume your vehicle has a dead battery. While a car with a dead battery can be started using an external power source, it is imperative for a trained technician to be present on-site for the same.

Tyre change/replacement

While replacing a flat tyre is not very tedious, it may not be possible for everyone. Insurance companies provide the facility to arrange for a tyre replacement on the site.

Alternative conveyance

In the event of your vehicle being immobilised, the company can arrange alternative mode of conveyance.

Towing service

If your vehicle is immobilized, the insurance company can provide you towing services to the nearest garage.

Accommodation

The insurance company would facilitate your hotel accommodation near the breakdown/accident spot.

Hydrostatic cover

Hydrostatic cover protects against damage to the engine due to water ingress which is not covered under a standard car insurance policy.

Arrangement of keys

In the event of you losing the keys of your vehicle, the insurance company can arrange for pickup and delivery of spare keys to the place where your vehicle is located. Alternatively, the company can provide the service of unlocking your vehicle with the help of expert technicians.

So the next time you buy or renew your car insurance policy, make sure to ask for the Add on covers.

The author is Head, Customer Service Motor, ICICI Lombard. The views expressed in this article are his own

Lava International Ltd., established in 2009, is one of the fastest-growing mobile handset companies in India. It has demonstrated quick and robust expansion since inception, showing profitability and growing sales since the first year of its operations.

Q. What is the total market share of Lava in the smartphone market? How much is the contribution from tier-II and tier-III cities/towns?

A. As per the import data for January-August, 2013, Lava has an overall 13% market share and 8% in smartphone segment. We expect our smartphone market share to grow at a rapid pace given the strong portfolio of products that are planned in future.

At present, about 82% of our volumes come from tier-II and tier-III markets.

Q. Are you planning to reposition yourself? If yes, how?

A. Lava as a brand has been successful with the entry and mid-segment phones so far on the back of strong products, healthy distribution set-up and a continued focus on service. Our focus now is to acquire a larger pie of the premium smartphones market and that requires us to position ourselves differently and take off from the platform established over the past four years. We will soon launch IRIS Pro — a premium series of smartphones.

Q. Lava recently entered into tablet business. What has been the response so far?

A. Lava has a wide product portfolio that encompasses tablets, feature phones and smartphones having various models in bar and touch form factor at multiple price points to suit all categories of consumers. With respect to tablets, we have received a positive response. We launched our first tablet in February 2013 and since then there has been a rise in demand. We sold approximately 38,000 units in the FY 2012-13. The primary reason for increasing demand of tablets has been the cost benefit that we are offering to consumers over other high-end brands.

Q. How do you differentiate your products as compared to the product offerings from competition?

A. As such every player in the industry is a competitor and the market size is large enough for every player to find its own space. We feel that a mobile phone can add tremendous value to a user’s life. Hence, to bring in differentiation in our products, we are focusing on multiple areas — reliability through design quality, component quality and process quality and superior sensorial experience in touch, sound & sight. Going forward, we will build a mechanism through which we will be able to offer an enhanced software experience and add value based on usage behaviour of the consumer.

Q. What are your expansion plans?

A. We have already invested in products in China and have a large expansion plan in building up software capabilities in India and China in order to enhance the user experience. Our focus remains strong on the Indian market, which, we believe, has a huge potential. At present, we are selling more than 1 million handsets per month and are targeting to sell 1.5 million handsets. We are also focusing on creating excellence in service through some strategic initiatives that we have undertaken and hope these will succeed in offering consumers with a great after-sales support.

New Delhi, November 17
Soaring inflation, high fuel cost, rising cost of education and health insurance premiums have eroded the real incomes of middle-class Indian families, with household savings rates dropping by a staggering 40% in the last three years, says an Assocham survey.

"Poor households are unable to maintain the consumption levels at current prices while middle income families find their purchasing power erode fast, thus having far less surplus money," Assocham secretary- general DS Rawat said.

The survey found that net financial savings by Indians, which include deposits with banks and non-banking finance companies, cash, investment in stocks, debentures and small savings instruments have dipped considerably because of rise in household financial liabilities.

The majority of the families in metropolitans are slashing spending, trying to save money and go for value buying while shopping. One in four said they are going to try to increase their income and for this would like to switching to a better-paid job, taking a second job or working overtime.

Moreover, high inflation is putting enormous pressure on companies too in terms of high input cost, coupled with demands for higher salary hikes.

As much as 82% of the respondents said the salary hike last year was not in sync with the cost of living which has gone up by almost 40-45% and thus were expecting higher salaries, the survey found.

Besides, 82% of the respondents in metro cities said they have been falling behind financially and their standard of living has been impacted by at least 25%.

To cope with inflation, most middle and lower income families have cut back consumption wherever possible, are buying cheaper products, have postponed the purchase of little indulgences and cut out discretionary spend altogether. — PTI