Archive for September 12, 2010

Traditional insurance plans remain an expensive option: Amar Pandit

Publication: The Economic Times Mumbai; Date: Sep 15, 2010; Section: Personal Finance; Page: 16

THERE is a lot of hue and cry from life insurance companies that unit- linked insurance plans (Ulips) are set to lose their charm. I don’t think so, as Ulips will still continue to pay lucrative commissions for the first five years. However, competition seems to be forcing insurance companies to launch traditional life insurance products, as there is no cap on the cost of these products and it will allow life insurance companies to pay very high commissions. Yet again, the life insurance industry seems to be missing the point and the focus will be on products where there will be a higher commission payout.

So what are traditional plans? There are six types of traditional plans: endowment plan, money-back plan, whole-life plan, pension plan, children’s plan and term plan. Except for the term plan, the others are available in Ulips as well. Traditional plans are insurance policies where the policyholder has no control or choice over where the investments will be made, whereas in a Ulip a policyholder has around five to six choices based on different combinations of equity, debt and cash. » Read more..

Market forces take over bank accounts

Publication: Business Standard, Mumbai;   Date:Sept. 12, 2010                 

Savings rate deregulation, if implemented, is likely to lead to high volatility in returns.

There is a lot of buzz around Reserve Bank of India’s (RBI) thought process on deregulation of savings account interest rate. How will a deregulation of savings account interest rate affect you.

A savings account currently fetches a depositor an interest rate of 3.5 per cent as specified by RBI. Banks, therefore cannot decide the interest rate on savings accounts on their own like they do in case of fixed deposits (FDs) and other products. That’s why, while investing in FDs, you can choose between banks that offer you a better rate.

Soon, you might be choosing between banks before opening a savings bank account too. The regulator is planning to let banks decide the interest they would like to pay on savings account too.

» Read more..