Google Adsense Privacy Policy
As per the new terms & conditions made by Google Adsense a few days ago, all the publishers have to post a Privacy Policy in their sites advising the visitors specifically about cookies and web beacons. If you don't agree with the new conditions , you'll be kicked out of the Google Adsense program at the end of May.

Here is what the new policy says :

"You must have and abide by an appropriate privacy policy that complies with applicable privacy and data protection laws and that clearly discloses that third parties may be placing and reading cookies on your users’ browser, or using web beacons to collect information, in the course of ads being served on your website. Your privacy policy should also include information about user options for cookie management."

Cookies & Web beacons:
Most adsense publishers are familiar with http cookies (or web cookies). They are a small parcels of text sent by a server to a web client(browser) and then sent back unchanged by the client each time he/she accesses that server. But the term Web beacon may be new to you.
A web beacon (also known as tracking pixel or pixel tag or clear GIF) is a small transparent graphic image (usually 1 pixel height and 1 pixel width) that is placed on a website or even in an email that is used to moniter the behavior of the client/user visiting the webpage, to find out some user information like IP address,etc.

So, to abide the new terms of Adsense, you have to include an appropriate Privacy policy in your site/blog.
If you are new or not sure how you need to create a Privacy Policy, Don't worry! There are a few Adsense Privacy Policy Generators which will make your life easier.. SERPRank's Privacy Policy Generator is one of those.