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Life insurance is something that is expected to be part of everyone?s basic personal finance portfolio, but there is a plethora of variant options available in this segment that can be confusing for newbies to understand the nuances and opt for a sensible life insurance option.

In simple words, life insurance is an agreement where a beneficiary of the policy is expected to receive an ?agreed-upon? amount from the insurance company either due to the unfortunate demise of the policyholder or in some instances, depending on the terms of the policy, when the insurance term ends. However, to understand the various nuances of one?s individual policy and make the most out of one?s insurance policy, one has to clarify all the doubts associated with it so that everything is transparent and clear to the policy holder. Apart from the doubts one might have there are some acronyms or terms associated with insurance which most people are not familiar with. At the time of owning a policy one has to know about them in detail else such limited knowledge can prove harmful.

Understanding the basics

As a prospective policyholder do your research and figure out answers to some of the common doubts that generally arise before purchasing a life insurance policy:

* What is the amount of guaranteed returns on maturity

* What is the amount of premium to be paid

* The basic terms and conditions

* Is there any kind of loan facility available

* Can I have more than one insurance policies

* What happens if the policy lapses and payment of premium is discontinued

* Can a person who is single, own a life insurance policy

These are just a few basic things, but quite significant to know before purchasing any insurance plan.

Here is a checklist of other aspects that you need to be aware of before signing up for the policy:

Discontinuance of premium

Paying the premium on time is obligatory to prevent the insurance policy from getting ?lapsed?. In fact, it doesn?t get lapsed immediately if one doesn?t pay premium. There are pre-defined conditions regarding the premium payment.

n Policy holder has to consistently pay premium for the first three years of the policy

n After the commencement of the policy, in case one breaks the payment of premium within three years, even then he gets a chance to pay the due premium but that has to be within a period allowed

n Moreover, if one is not able to review the premium, the same policy can be revived by paying the surrender amount by the end of last year

What if policy lapses?

Depending on the type of insurance plan and subject to conditions that vary according to plans, your policy could still be revived. Here the timeline is the key ? the sooner you revive it, better your options are. What does this mean? For instance, if you revive a lapsed policy within six months, it can just be a simple matter of paying the overdue premium with interest to bring it up to date. Otherwise, it could involve other aspects like penalty. Also, the insurance company might reserve the right to renew your policy or request for a re-run of medical tests before they decide to renew your policy.

Can one buy a policy for someone else?

If one wants to purchase policy for someone else, in that case the person should be his/her kin or any other close associate. If one wants to gift an insurance policy to someone else then it is not possible because while purchasing policy for anyone, it is necessary that the person should be well aware of it. As far as beneficiary is concerned, the policyholder can name anyone as his beneficiary. In most cases, people prefer to name his or her spouse but other than spouse children, parents, and siblings can also become beneficiaries. In fact, one can have more than one beneficiary too.

What if dissatisfied policyholder wants money back?

After purchasing any insurance scheme if one is not satisfied with the terms and conditions of the policy and wants to have a refund, this can be done within 15 days after the receipt of policy papers. The period within which one can return the policy is termed as ?free-look? period. Most insurance companies today offer this ?free-look? period on their plans.

Which life insurance plan should one opt for?

Life insurance schemes can be classified into six different types:

* Term life insurance

* Universal life insurance

* Whole life insurance

* Children life insurance

* Senior citizen life insurance

* Mortgage protection life insurance

All these have their own significance and one can purchase the perfect plan depending on one?s need. For instance, if one wants the coverage for a specific period, say 10 or 15 years, the best option to go for is the term life insurance plan, while in case of whole life insurance there is no termination date. It gives one an insurance cover for the entire life and is also known as permanent insurance cover.

In essence, life insurance is an excellent way to ensure your loved ones are taken care of in case of a dire situation, where you may not be around to provide for them! It provides financial security to one?s family. Any time during the insurance term, one can revise the stipulations of the plan according to need. Do contact a life insurance agent/adviser or the customer service centre for accurate and current information on a policy before you opt for it.