Archive for Life Insurance

Thinking of getting Life Insurance? Great. Just don’t treat it as an investment.

In the past couple of years, there’s been a lot of noise about the need for life insurance – everyone’s telling you to get it – from your friendly agent to your neighbourhood bank to all those screaming television commercials. They all remind you of good and bad events in life, make you dream about your children’s educational needs, their marriages, your old age or illnesses. They warn you of impending doom, of the need to buy life insurance Right Now!

It is true that an unforeseen accident can leave a family not only emotionally bereaved but also financially devastated. As an earning member with dependents, it is your responsibility to protect your family in the event something happens to you and you are not able to provide for them anymore. But, do you know all the facts about Life Insurance? Do you know how much cover you need and how to calculate it? Do you know the term you need it for? If you can’t figure out the answers to these questions yourself, you’ll be putty in the hands of some unscrupulous agent. » Read more..

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..

Not insurance, but a savings policy

Publication: Business Standard Mumbai;   Date: 2 November, 2008;    Section: Product Analysis;   

Yet another product that defies the basic principle of not mixing insurance with investment.

Most insurance buyers forget one simple thing – they should be buying only life, health or any other cover from insurance companies. Instead they lose their focus and buy products, which are completely different in nature. Here we give you one such example.
Take for instance, HDFC Savings Assurance Policy. The marketing material of this policy reads something like this: “You need to plan today to ensure a bright future for your child, build your dream home and fulfil all your other aspirations. To help you realise your dreams, we present HDFC Savings Assurance Plan.” Interestingly, in spite of being an insurance policy, there is absolutely no mention of life insurance cover at all.

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All for term, term for all

Publication: BUSINESS STANDARD, Mumbai;   Date: Sep 7, 2008;    Section: Insurance;  

With insurers slashing term plan premiums by up to 40 per cent, this is an opportunity for customers to shift from their high-cost insurance policies.

The best thing you can buy from an insurance company is – an insurance policy. However, we often end up buying high-cost endowment or unit-linked insurance plans (Ulips). The argument is that there should be some returns, at least from any investment.
Over the years, term plans have been shabbily treated by life insurance companies. No wonder they form a very little part of their overall sales. In fact, if one wants to buy it, most insurance agents would try to sell you anything but a simple term plan.

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Get smart, get the right life cover

Publication: The Economic Times Mumbai; Date: Jul 16, 2008; Section: Personal Finance; Page: 19

Scan The Market For An Insurance Policy That Provides Pure Risk-Protection Facility

It’s a cool December evening and Arjun Kanetkar, a high-profile insurance salesman, marches into the office of one of his prospective clients Pooja Mistry, a successful entrepreneur in her late thirties. He knows that Pooja’s husband is a high-profile corporate executive and they have two daughters. » Read more..

Cover for children

Publication: Business Standard, Mumbai;   Date: June 1, 2008;    Section: Insurance;  

While insurance companies may want to sell child plans on the pretext of creating a corpus, the overall costs are too high to even consider such products. 
Atul Sharma, 55, was a very happy man. Just recently, he had bought life insurance policies for his two grandchildren, aged two and four. “I have gifted two insurance policies to my grandsons,” he proudly proclaimed. 
The premium: Rs 1.5 lakh per annum for 15 years for a cover of Rs 20 lakh each. Also, both these policies came with an initial charge of around 35 per cent. Yes, the numbers are quite high. And that is because these are endowments plans. “I am investing for their future,” Sharma felt.  
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Do homemakers require life insurance policies?

Publication: The Economic Times Mumbai; Date: May 29, 2008; Section: Personal Finance; Page: 21

Anju Grewal, a housewife in her mid-30s, agreed to buy life insurance after been chased by her cousin. Though she gave in to social obligations, she was not sure whether she should buy the investment oriented insurance policy pitched to her. Many people, including Anju, believe that insurance is a forced form of savings. Hence the key message thrust on them is that insurance will not only provide some cover to your family, but can also give you some amount on maturity.

“Do I need life insurance?” was Anju’s question. To find an answer, we must understand what life insurance exactly is. Life insurance is primarily a tool by which an individual can transfer the financial risk (to his/her family) of his/her early or untimely demise to the insurance company.

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Investing – A really bad idea

Publication: The Times Of India Mumbai; Date: Apr 22, 2008; Section: Your Money; Page:40

WHO would buy a product which has a minimum 35% cost in the first year and 5% from second year onwards, with a return of only 5-6%? You’d think not many sane people would do it. Yet, time and again, countless people buy such products for the wrong reasons,likesaving tax, forced savings, and investment. You guessed it—I’m talking about traditional life insurance policies.

Traditional insurance products such as endowment and money-back policies have for long escaped the cost scrutiny that most financial products are subjected to. These products, from LIC or private insurance companies, are sold with a strong emotional pitch, and people who buy it seldom think about what they are getting into. Rarely do they pay attention to what kind of cover they are getting, such is the single-minded focus on what they’ll get back at maturity.

» Read more..

Cover for your home

Publication : Business Standard, Mumbai; Section : Insurance; Date: August 26, 2007

It’s hard to miss the HDFC Standard Life home loan insurance advertisements on television these days, “Mr Kumar rahe na rahe, Kumar Sadan hamesha rahega.” However, unlike the fictitious Mr Kumar, there are many individuals who worry that about the adverse impact of the home loans if something happened to them. This is where a home loan insurance product comes to the rescue. Home loan insurance plans, also known as mortgage redemption plans are policies that cover your home loan liability. Though there are some minor variants, most plans offer a sum assured that reduces as your outstanding home loan comes down every year. In such plans, it is not your home but your loan that is covered should something happen to you. For instance, if you have taken a home loan of Rs 40 lakh and covered this through a home loan insurance. If after a year, your outstanding loan comes down to Rs 39 lakh, then your sum assured also comes down to Rs 39 lakh. In short the sum assured is adjusted against your home loan liability.

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A pension plan you can do without

Publication: DNA,Mumbai;   Date: August 4, 2007;    Section: Personal Finance;   Page: 6

LICs Market Plus is a losing proposition

Life Insurance Corporation of India (LIC) launched unit linked insurance plans (Ulips) much later than its private sector counterparts. And though these products have been in vogue for around five years, the insurance behemoth has only two Ulips as on date, one of which is Market Plus, a deferred pension Ulip.
The Webster dictionary defines pension as “a fixed sum paid regularly, especially to a person retired from service.”
In the Indian context, pension plans can be divided into two categories: immediate annuities and deferred annuities. An immediate annuity is an actual pension plan that keeps the sanctity of the word pension intact. On putting money in an immediate annuity, the insurance firm pays the policyholder a certain sum of money at yearly or other regular intervals (monthly, quarterly, semi-annually or » Read more..