None...Life itself is a risk....It is death insurance but they are hiding it. They are scaring the people and cheat them into it...only 5 % is paid by insurance companies as a settlement of claims...The rest is just syphoned off to support unwothy entities...AIG...the largest insurer is dying...Funny how they can insure?

Answered by randomcloud , an ibibo Citizen, at 7:42 PM on September 26, 2008

One must provide enough, so as to generate a future income stream that will take care of the financial needs of their dependants. How much insurance you need depends on your annual income, your expenses and your existing assets. Use our Insurance Calculator to get a rough estimate of how much you should insure yourself for. Concept of Human Life Value Generally speaking, one can estimate the extent of life insurance by calculating one's “Human Life Value” (HLV). This is the net present value of one's future earnings. Put simply, it is the amount that a person's family would permanently lose, should anything unfortunate happen to that person. As a thumb rule, a 30-year old should insure oneself for about 8 times his or her annual income. At 35, this is about 6 times. Of course, the exact amount must be adjusted according to the number of dependents, existing investments and one's lifestage. For instance, if at 30, a person has two children and parents to provide for, the amount of insurance should also be higher. You can calculate your Human Life Value by multiplying your current annual income with the number of years remaining for your retirement. Let's assume that you are 30 years old and you earn Rs. 4,00,000 per annum. Now, if your retirement age is 55 you have 25 years to go before retirement. So your Human Life Value is (25 x 4,00, 000) = Rs. 100, 00, 000 (One Crore rupees).

Answered by Om Prakash , an ibibo Master, at 6:35 PM on September 22, 2008

Life insurance has always been a rather neglected area for the public.

Historically, consumers have bought life insurance for reasons of tax saving rather than the core need of providing for one's family in case of death of breadwinner.

Secondly, Indian consumers have been unaware that insurance too needs change with every change in one's life stage (e.g., if one gets married or has children, one's need for insurance goes up).

As a result only 8 per cent of India's population is insured and the average insurance size is around Rs 80,000.

This implies that people who think they are insured are also heavily under-insured.

One of the most significant reasons for this is the inability of the advisor / agent to educate the customer about the true nature of life insurance.

They have tried to highlight the product rather than the need. The need for risk coverage / the need to provide for untimely death is more difficult to explain and hence has been till lately ignored.

Aggravating the situation is the fact that term insurance was expensive until recently.

Basically, the amount of insurance one should buy is directly dependent on his/her economic value, otherwise known as the 'Human Life Value'. This varies from person to person.

'Human Life Value' is the capitalised value of the net earning of an individual for the rest of his working span.

It is, in short, the present value of the total income of the individual, which his lost to the family in the event of his untimely death.

Let us take an example:

Mr X, aged 35, earning a gross annual income of Rs 200,000 today, will retire at the age of 65.

Age of a Person 35
Age of Retirement 65
Years to Retirement 30
Annual Gross Income Rs 2,00,000
Personal Expenses + IT Rs 56,000
Net Disposable Income Rs 1,44,000
Annual growth in Income (10% every yr) 10%
Total Income till Retirement Rs 2.36 crore
Rate of discounting 6%
Net Present Value Rs 41.24 lakh

If he doesn't return home today, his family will have lost this amount forever.

Therefore, Mr X's Human Life Value = Rs 41.24 lakh.

A simpler way of looking at it is as follows:

Suppose,

Monthl y income of a person = Rs 10,000
His personal expenses per month = Rs 2,000
Monthly income provided to family = Rs 8,000
Therefore, annual income provided = Rs 96,000
Amount of money to be put in the bank
to earn Rs 96,000 pa at 6% interest rate = Rs 16,00,000
Hence, HLV is = Rs 16 lakh

Please note that we have not even taken into account the future income growth of the person. This is, therefore, not an exact way of calculating the Human Life Value. This is only a representation to give the customer a fair idea of how this works.

Normally, when the Human Life Value concept is used, the amount arrived at is much more than what the prospect would have normally thought of.

The advisor, therefore, must necessarily suggest a package, which covers this amount at an affordable premium.

For example, if we calculate the premium amount for Rs 16 lakh pure-term cover for a 32-year-old man, the amount will be roughly around Rs 6,000 per annum for a term of 20 years.

This works out to just 5 per cent of his annual salary (annual salary equal to Rs 1,20,000).

Thus, dying too soon or rather planning for uncertainty of life is the most important need that life insurance fulfils.

However, there are other objectives that one could have in mind, which can be achieved through life insurance.

The important ones being:

* Living too long: Retirement planning.
* Living Death (physical disability, etc).
* Children's education and marriage.
* Wealth and estate creation.

Hence, depending on his objectives, the quantum of life insurance can vary.

Take

Answered by Nagendra , an ibibo Master, at 7:18 PM on September 20, 2008