BOMBAY, 22 October — Whenever disaster strikes, it makes one introspect — not just about the values of life but also about future security. The collapse of the Twin Towers in New York on Sept. 11 has made us all relook at one hitherto always neglected facet of life — insurance. As fear of terrorism mounts, there is now the undeniable to secure the future, not just ours but of those near and dear ones too.

And given the present environment in which we live, where insurance is imperative, we all need to look at the various insurance options that are available. Insurers in India have reassured, for now, that the rates are not to be hiked in the wake of this catastrophe.

When safety and security becomes the first concern of investors across the globe, naturally, insurance jumps to the top of the list of financial services being demanded.

Insurance at this point of time, means life insurance. And in this category, there are normally, two types of policies which are made available — Whole Life Policy and Endowment Policy.

It normally seen that when most people think of life insurance, they think of a traditional whole life policy. These are the simplest policies to understand: You pay a fixed premium every year based on your age and other factors, you earn interest on the policy’s cash value as the years roll by, and your beneficiaries get a fixed benefit after you die. The policy takes you into old age for the same premium you started out with. Whole life insurance policies are valuable because they provide permanent protection and accumulate cash values that can be used for emergencies or to meet specific objectives. The surrender value gives you an extra source of retirement money if you need it.

On the other hand, an endowment life insurance policy is designed primarily to provide a living benefit and only secondarily to provide life insurance protection. Therefore, it is more of an investment than a whole life policy.

Endowment life insurance pays the face value of the policy either at the insured’s death or at a certain age or after a number of years of premium payment.

Endowment life insurance is a method of accumulating capital for a specific purpose and protecting this savings program against the saver’s premature death. Many investors use endowment life insurance to fund anticipated financial needs, such as college education or retirement. Point to be noted is that the premium for an endowment life policy is much higher than that for a whole life policy.

In endowment policies, one can go for various other options like the money back option wherein a part of the sum assured is paid to the policyholder in the form of survival benefits, at fixed intervals, before the maturity date. The risk cover on the life continues for the full sum assured even after payment of survival benefits and bonus is also calculated on the full sum assured. If the policyholder survives till the end of the policy term, the survival benefits are deducted from the maturity value.

Then there is also something known as the annuity scheme wherein your regular contributions over a period of time (or a one-time contribution) accumulate to form a corpus with the insurer. This corpus is used to yield you a regular income that is paid to you until death, starting from your desired retirement age. Some annuity schemes have the option to pay your survivors a lump sum amount upon your death in addition to the regular income you receive while you are alive.

There are various variations in the whole life and endowment plan wherein one can go for an option for maturity with or without profit. Or go for the facility of paying the premium for a limited period. Or pay the entire premium in a lump sum.

There is also the Convertible Whole Life Plan. Here the policy is issued as a whole life plan with an option to convert it into an endowment assurance at the end of a stipulated period of time. This is a plan suitable for those who cannot afford high premium in the initial years but have prospects of increased income within a few years. So where does one go and look for insurance? In India, till November 1999, it was the government owned Life Insurance Corporation (LIC) which had a monopoly. But now there are a host of private sector insurer’s too.

Undoubtedly, LIC continues to remain the market leader. But in the private sector, as a survey conducted by a brand tracking agency, ICICI Prudential Life leads the private sector pack.

This was followed by HDFC Standard Life, SBI Life, Birla Sun Life, Old Mutual Kotak Mahindra Life, Tata AIG, Allianz Bajaj, Max New York Life, ING Vysya Life and Dabur CGNU Life.

Life is too precious and more so when there are dependents. Thus in today’s times of uncertainty, where death may lurk in any corner, insurance is a must. If you have not yet got insurance, go for it immediately.