First and foremost, the possibility of your house getting damaged by floods may not seem like an incident of rarity if you recall the deluge that hit Mumbai on July 26, 2005. If you say that it was a one-time deluge, such once in a blue moon incident can cost you a fortune. According to official statistics, the 2005 flood damaged over 1, 87,000 houses across Maharashtra, affecting eight lakh families.

Secondly, the premiums are reasonable for home insurance when you compare it with the single largest investment of your life. It works out to approximately Rs 60 per lakh to protect the house structure. Even for furniture, the premium is Rs 60 per lakh. For electronic appliances, the premium amount will be 1% of the value of electronic goods.

The premium depends on a variety of factors related to the size of the home, geographical location, type of construction etc. Home insurance is not applicable to kutcha (under constructed) dwellings.

Discounts for opting for multiple sections within the policy are built into the plans. You can get discounts of 15-25% on premium if you sign up for more than four to six sections of the home insurance policy.

 While insuring your home, the insurer always looks at reconstruction value. Reconstruction value is the cost you incur for redeveloping your damaged house. This value is different from the market value.

Sum insured is calculated by multiplying the built up area of your home with the construction rate per sq. feet. For example if the built up area of your house is 800 sq. feet and the construction rate is Rs 800 per sq. feet then the sum insured for your home structure would work out Rs 6.4 lakh.

Most insurers give details on construction costs in their websites. According to industry estimates, the reconstruction value is Rs 800 in big cities like Delhi, Mumbai, and Bangalore etc. In tier II and tier III towns, the reconstruction value is Rs 600 and Rs 400, respectively. Insurers deduct depreciation on furniture, durables, clothes, utensils etc. while calculating the value of your home. However, most insurers do not apply depreciation to jewellery.

In case of any loss or damage to the home, you have to immediately inform the insurance company or your agent. Submit a written claim document to the insurance company within the stipulated period. This claim document should contain a detailed account of the articles lost/damaged and the actual value of each article. The claim request will be sent to the company’s claims department. Insurer’s surveyor will submit the final survey report (FSR) along with the documents submitted by you.

On receipt of the documents, the claims department processes the claim. On approval of the claim, a letter is sent to the insured giving the approved amount of settlement along with the discharge voucher. Payment cheque is released on the receipt of the signed discharge voucher. The documents the insured have to submit will vary from reason to reason. However, they broadly include the filled claim form, photocopy of the policy, final police report and copy of all invoices, repair estimates etc. since it’s a structured product and the premium is economical, this policy may be worth a look. Better safe than sorry.

Insurance is normally meant for the bread-winner of the family. This is because the earning capacity of the head of the family decides the insurance coverage that his family would require, in case of his demise. This is a very common perception among the people today. Nandini Grewal, a housewife in her mid-30s too had a similar view. Though she gave in to social obligations, she was not sure whether she should buy the investment oriented insurance policy pitched to her. Many people, including Nandini, believe that insurance is a forced form of savings. Hence the key message thrust on them is that insurance will not only provide some cover to your family, but can also give you some amount on maturity.

 “Do I need life insurance?” was Nandini’s question. To find an answer, we must understand what life insurance exactly is. Life insurance is primarily a tool by which an individual can transfer the financial risk (to his/her family) of his/her early or untimely demise to the insurance company.

 The number one reason why people usually buy life insurance is to replace the income lost upon the death of a family member. It is also to demonstrate caring and to feel comfortable that they have indeed done something to secure their family’s future. Whether they need insurance or not is considered irrelevant. Life insurance is generally a very personal decision and should be bought only if there is some significant economic impact of your untimely death on your family.

Therefore, a housewife needs to ask herself the following questions:  

   1. Is my husband’s income sufficient to take care of my children, liabilities and family goals?
   2. Are there any immediate expenses or recurring expenses that would come up should something happen to me today?
   3. Does my husband have adequate cover? If so, how much and what kind of expenses, liabilities and goals would I have to address in case of his untimely death?

Ensuring that your husband has sufficient cover is far more important for a housewife than ensuring that she has sufficient cover. Considering that the husband has sufficient life cover, there is no pressing need for a woman to buy life insurance.  However if one must buy life insurance, then you can opt for a simple term plan that will give a very good cover for a low premium. A term cover of Rs 5 lakh for a 45 year old woman will cost Rs. 1,900 per year.

Premiums might vary from company to company but in general there is no need to pay anything significantly more than this number. The right approach to buying life cover is to consider whether the risk has the potential to endanger the family’s future. Nandini did some self intent consideration on whether her death besides an emotional loss could cause any financial damage. She listed down all the expenses that would come up in case of her absence under the following broad heads: Tuition Teacher for kids, Care taker for kids, Help for cooking.

She figured out that her husband’s income was sufficient to take care of all the above expenses and leave aside an organized figure for investments per annum. She also figured out that should something happen to the couple (Nandini and her husband); her husband had sufficient life insurance to provide for their dependents. This thought process and a few calculations made the decision easy and Nandini decided to simply invest most of her savings and see if an insurance company can issue her a low cost term plan. There is no doubt that duties and responsibilities of housewives are selfless and incomparable. However, when it comes to life insurance, one must make a thorough assessment of individual situation and then take a prudent call.

Life insurance broker named Sham was always the top salesman for his company. In fact, he just completed his 8th straight year as the number one insurance agent when he decided it was time to hang them up and retire.

His best friend and partner Paresh took him out for a drink one last time - on company time, of course. Paresh asked, "Sham, you're the best life insurance agent I've ever seen. For the past 8 years, you've been outselling everyone. And every time I ask how you do it, you never tell me. Now that you are retiring, let me in on your secret. How do you sell so many life insurance plans?"

Sham thought for a moment. "You know what, Paresh, you're right. I do have a secret to selling life insurance. I've kept it to myself for all these years. But now that I am retiring, I can't think of a better person to keep it alive than you. So, I will tell you how I do it."

Paresh started to get more excited as the thought of having this wonderful knowledge coursed through his mind. He could hardly contain himself.

"Tell me, Sham. What is it? I'm dying to know."

Sham took a sip from his drink and leaned back on his chair, scanning his surroundings to ensure that this top-secret data would not fall into enemy hands. He then leaned forward and began to speak.

"Paresh, when you first start, you have to tell them about all the features and the benefits of the plan. Make sure you tell him - and always him - that it is his duty as the man of the house to protect his family. Doing otherwise would be considered a failure as a husband and as a father."

Paresh seemed unimpressed. "Everyone does that, Sham. You know that. That isn't very insightful."

Sham did not seem concerned with Paresh' protest. "Easy, relax. Just listen to me, and it will all become clear." Sham took another sip while Paresh sat both anxious and nervous.

"Now," Sham continued, "during every presentation, I always suddenly stop my pitch and ask the client if he is feeling OK. Inevitably, he will always answer 'yes' to that question. When he does, I look at him in a strange way. And every so often, I will ask if there is anything I can do for him. Maybe get him a glass of water or if he wants a moment to himself."

"Interesting approach" replied Paresh. "How effective is it?"

Sham looked around and then looked Paresh square in the eye. "To be honest, it rarely works. But, it's the next step which always hooks them."

Paresh could no longer take it. "Sham, please tell me!"

Sham smiled. "I always say: 'Please don't let me scare you into making a rushed choice. Sleep on it tonight. If you should wake up in the morning, please give me a call and let me know. I'll by DYING to hear from you."

What is Life Insurance? A lot of people go through their entire lives before understanding what life insurance is all about. A brief description is not at all needed for explaining what life insurance is. Sometimes it requires only one instance and we start believing how important it is to get ourselves insured.

 An unfortunate incident occurred in Mrs. Malhotra’s life, and it was the life insurance policy of Mr. Parag Malhotra her husband who saved her from its clutches.

Mr. Malhotra died four years back due to a massive heart attack. Parag Malhotra had many debts; debts that, when he died, got transferred to his wife Ashwini. Unfortunately, Ashwini was a housewife, and did not have a flow of income she could use to pay off her husbands' debts. And with the costs of the funeral to pay off as well, Ashwini was in a very tight spot.

She didn't know what to do. She didn't want to have to borrow money—or know if she even could—but she knew that somehow she’d have to pay it all off…she still remembers that day. It seemed like all her husband's creditors had banded together and come over. Then another man came to the door, she thought, 'Oh god, not another one.'"

But the man at the door was Parag’s life insurance agent. In his hand he held a check from Parag's insurance company for Rs.2, 10, 00,000. Years before, Parag had purchased a term life insurance policy. Ashwini didn't even know he had bought it.

Ashwini used the life insurance money to pay off all the debts. With the money left over, she was able to continue living as she had when Parag was still alive. Term Life Insurance had protected Ashwini. It can protect you and your loved ones as well.