Investor Anand Bhojwani, 41, finds himself in a sticky situation. He can no longer continue with the life insurance policies of his family members. According to insurers in the city, the economic meltdown has scared away many from investing in life insurance policies, even as existing customers want to withdraw from the scheme.

Bhojwani paid his first premium of Rs1 lakh against his Birla Sun Life insurance policy in March this year. "But now my financial priorities have changed, and at this moment I would rather withdraw," he said. It is surprising that people are losing confidence in life insurance schemes known for safe returns in the long term. "The situation is such that the present is looking so bleak, how can one think of investing money that will come in only after death," Bhojwani said.

On the other hand, the terror attacks have prompted many Mumbaikars to invest in anti-terrorism insurance cover. Insurance experts say that an adequate life insurance policy could be all that one needs to take care of a specifically-designed terror insurance.

"Life insurance provides a cover for death in any situation, and this includes terrorism," said insurance agent and property dealer A Ranjan. He, however, added customers of certain private companies are feeling the pinch as hidden clauses pertaining to service taxes and such are slowly being revealed by companies. "For all these reasons, clients are hardly interested in investing in life insurance policies," he said.

"There are companies who club investment schemes with insurance policies," said investment counsellor Vinayak Kulkarni. "Since most of these customers are investment-illiterate, they tend to buy the policy looking at the insurance but ignoring clauses related to the market. The recession will definitely hit their pockets." Kulkarni suggested that the safest way out would be to invest in policies that are exclusively for life insurance and have nothing to do with investments or the market.

Source : Central