Premium

Administrator — Wed, 16 May 2012 05:50:19 +0000

How would you feel if a customer gives you business every day of the year and it looks like he is never going to stop?

Great, of course!

And what if the same customer gives you 40 per cent of your income but takes away much more than that value as claims eat away even the profits you make from other customers?

Not so great, right?

That is how the country’s General insurance industry has felt for a long long time about Motor insurance. Things are changing, but slowly and painfully.

According to the just-released business figures of financial year 2011-12, the General insurance industry wrote a total premium within India of Rs 58,344.16 crore. Of this, about Rs 24,000 crore is likely to come from Motor insurance going by premium collection trends. In other words, 41 per cent of the total premium of the industry comes from Motor insurance.

Within Motor insurance, the ‘difficult’ portfolio is Motor Third Party Liability (TP) which is likely to be Rs 9,725 crore out of the

Rs 24,000 crore Motor premium. Just to give you a crude comparison, the 2010-11 claims in the TP business (the pool losses, as they are called) is estimated to be

Rs 10,000 crore.

How long can this go on?

Not long without someone dying.

Reforming Motor

That was the reason for the ‘reforms’ in Motor insurance initiated by the Insurance Regulatory and Development Authority (IRDA) about six years ago. (See Box Item: Motor Insurance Timeline.)

One of the key changes in Motor insurance today from ten years ago is that there is more demand for it. There is more business, but if we celebrate without fixing the obvious holes in it and thus making it into a profitable business, it would be nothing short of celebrating the fact that we have a larger hole to fall into!

India’s growth hunger is resulting in a booming automobile population and lenders are thrusting money into the hands of an eager public aspiring for their own transportation. Easy finance and an attractive line-up of vehicles of all prices and sizes have meant that Motor insurance has kept up its dominant – and threatening – position in the General insurance industry.

First, Get the Business

Insurance companies quickly took advantage of the newly permitted corporate agency system (through IRDA regulations in 2000) and appointed vehicle dealers around the country as their agents.

Result? The selling and servicing of the typical Motor insurance policy has moved from individual agents to corporate agency. Almost in toto.

The vehicle dealers, who in the good old days used to allow some individual agents to work back to back with them, taking part of the former’s commission, now approached the whole new revenue opportunity with major enthusiasm, eyeing consolidated commissions. In addition was the cream: the massive additional income because now it could automatically aggregate the entire after-sales repair business where earlier the insured would go away in search of his own favourite neighbourhood mechanic shop whose friend was likely the ‘flexible’ Motor insurance surveyor.

Of course, dealers as corporate agents offered various organisational strengths to seize this opportunity. As they were part of a nation-wide network of reputed vehicle manufacturing houses, they could offer add-ons such as call-centre support for follow-ups with the insured. And their bread-and-butter offering – the comprehensive repair facilities as per manufacturer specification across the country – was a perfect fit for both the insurer and the insured…

Everybody wins or Do They?

The benefits for the insurance industry were many. It had a new channel that had the power to capture any vehicle for insurance ‘at source’. The channel had the systems and the muscle to renew the insurance for as long as the insurer wanted to insure it.

Besides, the financial standing of these dealer-agents made it easy to tie up cashless facilities, something that an individual agent would be unable to provide.

Once the business was secured – or the means to secure the business was secured – the industry reckoned that three or four steps had to be taken to sort out the mess.

One was an urgent and desparately needed upward revision of TP rates. Another ten years had passed since the Motor tariff revisions of the mid-1990s, and claims just kept piling up, in the process bleeding General insurance companies. (See Box Item: Motor Insurance Timeline.)

The second urgent step that needed to be taken was making the Motor Own Damage (OD) cover and its premim rates dynamic, to keep pace with the growing automobile industry and changing automobile ownership patterns in India. In the first decade of the new century, fancier, costlier, heavier cars capable of creating more damage came into the market and that damage cost a lot more to repair – one reason being the technology and manufacturing developments in the automotive sector. New Generation cars were not ‘built’ with parts but with assemblies – each a group of pre-assembled parts that came as a unit. So when your car’s headlamp broke, you had to replace the entire headlamp assembly, at a cost obviously.

The third requirement was that the industry just had to control claims costs, both in TP and OD insurance. TP insurance was a disaster with cases pending before the special courts called Motor Accident Claims Tribunals for decades and everyone, mostly the lawyers, making the most money off it.

For insurance companies it meant paying the claim with years and years worth of court-specified interest. This happened even when the company was willing to settle the claim quickly because the accident victim’s side dragged on the case as their lawyers dangled dreams of fancy settlements before their eyes.

Out-of-court settlements, Lok Adalats and many other mechanisms have been pressed into service to take this big load off the industry’s shoulders but it is a job requiring years of hard work because these were sins of decades to be washed clean.

A fourth measure that the industry worked on and is still working on is to seek changes in the law that worked blatantly against its interests. Unlimited liability itself needed to be defined and contained somehow or priced into the premium.

The statute of limitations and limits of jurisdiction needed to be brought back. That is, the flexibility given by Motor Vehicles Act of 1988, allowing accident victims to file their case anywhere in India regardless of where they lived, where the defendant lived or where the accident took place, had to be restricted and so did the freedom to file the case even years after the accident.

Now What?

IRDA recently announced TP premium increases with effect from April 1, 2012. With the pricing of TP firmly in its hands, IRDA has also dismantled the Motor Pool and is willing to let go of its experiment that has proved that there is a dire need for raising premium rates to continue keeping pace.

Yet efficiency in this business will come truly only when the industry shows it can cut costs and run a tight ship without delayed cases and denied claims.

The Future

The certainty about Motor insurance in India is that it will continue to grow, and grow crazily. The other classes of General insurance have a long way to go to catch up. So if companies build up efficient management of this portfolio’s profitability, what is their largest portfolio can also become their most profitable!

Motor Insurance Timeline

1996: Tariff Advisory Committee (TAC), a statutory body that functioned as the price-setting authority for the industry, revises the India Motor Tariff (IMT) after a gap of over a decade. Rate increase hotly opposed by truck owners.

The newly formed Insurance Regulatory Authority’s (as IRDA was called then) Chairman, in his function as Controller of Insurance, splits the increases into three phases and advises the four General insurance companies then operating to prove that a premium rate increase is warranted with proper claims data. Companies fail to do so over the next several years.

2000: Insurance industry is opened up to the private sector.

2005: Most types of General insurance businesses taken off the tariff. Motor insurance is only partially detariffed. OD detariffed but with discounts limited to 20 per cent. TP was retained under a tariff but under the control of IRDA not TAC. TAC is subsequently wound up.

2007: India Motor Third Party Insurance Pool (the ‘motor pool’) is set up to segregate TP insurance for commercial vehicles. This would have the effect of showing the actual Premium to Claims ratio and hence prove the inadequacy of premium.

2008: OD premiums are de-regulated

2009: Add-on covers are allowed

2010: IRDA announces TP premium rate increase based on Motor Pool loss experience. It also announces a plan for graded increase each year.

‘We Engage More with Intermediaries’

Mr Ritesh Kumar,

Managing Director and CEO,

HDFC Ergo General Insurance Company, Mumbai

The detariffing prompted a drop in the overall premium initially. As the time progressed the rating was rationalised as per the loss performance, resulting in decrease in premium for vehicles with relatively lower loss ratio and increase for few of the models with high loss performance. This change also encouraged actuarial practices to be put to use for pricing/reserving, analysis and so on.

On the permitted add-on covers, insurers initially filed for various add-on offerings, but the ones which are in demand are mainly a) Zero Depreciation, b) Loss of use/garage cash, c) Emergency assistance, and d) Consumables cover.

With formation of motor pool, the insurers began writing the commercial vehicles actively, hence gained experience of servicing the Commercial Vehicle TP claims

There have not been major challenges in selling these types of cover, as the channels of distribution remain the same. However, insurers’ engagement with the intermediaries has improved to ensure proper training on the product and process as understood by the channels.

‘More Clients will Soon Appreciate Risk-based Pricing’

Mr Ajay Bimbhet,

Managing Director,

Royal Sundaram Alliance Insurance Company, Chennai

Motor insurance is by far the single largest and fastest growing business line for all General insurance companies. Any change brought about in the arena created multifold effects in the industry.

Phased detariffing in Motor insurance led to extreme discounting, even to risky propositions. While customers could enjoy discounted premiums for the same product and coverage, insurers were strengthening their presence and cornering market share.

One of the positive outcomes for policyholders was that drivers with better experience enjoyed better pricing instead of subsidised prices for others.

The decade also saw healthy coordination between insurers and vehicle makers. They developed a symbiotic relationship, as insurers could share useful feedbacks with manufacturers.

Some of our technical suggestions to manufacturers include supply of child safety parts such as side body panels, door outer skin, introduction of anti-theft device, strengthening of a few body parts and repositioning of high-value components to minimise risk of damage.

These have been critical suggestions and helped bring down the overall cost to the end customer, and faster deliveries of repaired vehicles. Customers have a reason to rejoice that there are safer cars, which have helped reduce premium rates.

‘Customer Awareness’ today has dramatically improved, following promotional communication from IRDA as well as insurance companies. More and more customers today do their homework to understand the cover online before signing on the dotted line.

Increasing cost of repairs even for minor dents and bruises has encouraged better driving practices. We envisage more customers understanding the risk they transfer to the insurers and use risk-based pricing to their benefit.

‘A Gold Mine Awaits’

The business of Motor insurance appears to be emerging from a long, dark tunnel and heading for better times. As for the activity of selling, the intermediary of choice for Motor insurance seems to have firmly become the corporate agent – the vehicle dealer, to be precise.

What about the traditional channel of the individual agent?

Says Mr Mukesh Thakkar, Development Officer, The New India Assurance Company, who controls the lion’s share of vehicle dealer-corporate agency in the city of Mumbai: “Corporate agents, the vehicle dealers, are controlling almost all of Motor insurance procurement today. Only some renewals and two-wheeler business are left to traditional channels such as individual agents.

“Agents too don’t find this remunerative for the work involved and are not in a position to compete by way of providing service.

“Yet, the insurance companies are losing out because they are not closely and directly involved with the customer. There is a goldmine of prospects to be mined and they are yet at arm’s length.

“With the changeover to corporate agents, it is the vehicle dealer who owns the customer, in this case the policyholder. Insurance companies have lost that umbilical cord connection, which is a valuable lead for cross-selling”.

“Take yourself as a typical car owner. You would need Health insurance, you’d need travel insurance, coverage for your home and its valuables… Think of lakhs of such people who are the ones paying the industry Rs 25,000 crore in premium a year. Can’t we earn an additional amount equivalent to that at least by cross-selling?” asks Mr Thakkar.

MBR norms now apply to Corporate agents, too Insurance Regulatory and Development Authority (IRDA) has said corporate agents...
Maruti ins outfits face trouble Maruti Suzuki is facing trouble over its six subsidiaries that...
‘Terrorism Pool has no humane face’ The Terrorism Pool that the Indian insurance industry had set...

Related posts brought to you by Yet Another Related Posts Plugin.

Overcome the ‘Overwhelm’

Administrator — Wed, 16 May 2012 05:40:23 +0000

Do you ever get that feeling that the job you have to do is much bigger than your capacity to do it?

If you do, you have experienced ’overwhelm’. It’s becoming more common every day in the overly complicated world of “financial planning”.

Good & Bad Overwhelm

Overwhelm can be a good or a bad thing. It’s good when you are just swamped by work you love to do. Most solutions to good overwhelm just make you more productive. For instance, when you are overwhelmed by too many ideal prospects, you can be more selective and do just as well with less work.

Bad overwhelm is very different. While good overwhelm means you’ve got too much business, bad overwhelm means less.

Bad overwhelm can paralyse your performance to the point that you do nothing. It’s a sad but serious performance irony that the more you need to perform, the less likely you are to be able to. Overwhelm does that.

Are You Overwhelmed?

Overwhelm leads to ’burnout’. Burnout is the inability to make any measureable progress despite trying harder than ever to move forward. It’s working harder than ever and making less progress. It could be happening to you.

Take this test:

Are there many projects or prospects I don’t get to, regardless of their importance?

Am I tired all the time or alternatively am unable to sleep?

Do I dread tomorrow, next week or next year?

Do I feel frustrated and overworked but underpaid?

Has my production tapered off?

Do I feel like I’m an impostor in the business?

Have I lost my enthusiasm for the business?

Any ‘yes’ could mean you are experiencing bad overwhelm.

The Solution

Here’s how you can prevent or even reverse overwhelm and improve your business.

A. Simplify Your Business

Any start at simplification of your life and business will help release you from the “tyranny of too much”. The less you feel you have to do, the more you can actually accomplish.

The best place to start is with your business. Here are a few ideas:

1. Be more selective of the type of people you work with. Don’t try to solve everyone’s problems. Focus on the needs and concerns of a specific identifiable group with whom you have real influence. It’s your real natural audience. Work where people already want your advice. It’s the most valuable decision you will ever make.

2. Do the productive part of your job that feels the least like work. If you believe you work ’hard’ at your business, you may be doing the wrong work. The best use of your time is providing the service that gets the most satisfying results for the least effort.

3. Eliminate items in your tool box you never use. Honestly, if you don’t use the tool, what’s the point of carrying it around? When I say ‘tools’ I mean alternate services… you know the whole menu of financial undertakings that so many overwhelmed advisors list on their business cards. Some advisors have so many tools in their tool boxes they can scarcely tote them around anymore. They get slow, tired and ineffective. They also get lost in the marketplace because they stand for nothing specific. You will only ever be known or referred for what you do the very best. Be in charge of that.

4. Stop doing/learning things that don’t apply to your natural market. I can’t believe how much perfectly good time advisors waste learning information they will never use, for products they can never sell to people they will never know. Go deep into appropriate knowledge rather than wide into information you’ll never need. You’ll be a better advisor with less frustration, immediately. You’ll also free up tonnes of time.

5. Take time off regularly. Taking time off actually makes you more productive in less time. It’s one of the big secrets of high performance. The practical reason is that vacations harness natural motivation and make you more productive before you go and when you return. Make this natural tendency work for you.

B. Declare Yourself

Business clarity attracts results. Confusion repels them.

Be clear on what exactly what you ’do’. Decide what you want to be known for, for whom you want to work and then make sure you don’t keep it a secret. You have to promote yourself all the time. The job never ends.

Remember these wise words:

“Until one is committed, there is hesitancy, the chance to draw back, always ineffectiveness. Concerning all acts of initiative (and creation), there is one elementary truth, the ignorance of which kills countless ideas and splendid plans: that the moment one definitely commits one-self, then providence moves too.

“All sorts of things occur to help one that would never otherwise have occurred. A whole stream of events issues from the decision, raising in one’s favour all manner of unforeseen incidents and meetings and material assistance, which no man could have dreamed would have come his way. Whatever you can do or dream you can, begin it. Boldness has genius, power and magic in it.Begin it now.” – Johann Wolfgang von Goethe

Declare yourself to the marketplace. Stand for something. Put a stake in the ground. When you do, you will find that the world will help you achieve your goals. When you do not, you are all alone.

Do not keep yourself a secret. Unless you ASK, you will not GET.

C. Connect in Writing

Part of the problem clients have with advisors is that they have inaccurate or incomplete expectations about their services. If clients are mystified about your work, it will be hard for you to live up to or exceed their expectations. You’ll both be dissatisfied.

Communicate your specific service and benefits clearly to your prospects and clients. When they know what you ’do’, they are better able to take advantage of your value. They will also be in a better position to refer it to the people that they know who can use it.

Setting the stage at the outset of a relationship is the way to get the job done. Our Relationship Engagement Document is critical to establishing relationship expectations. It’s all the soft facts about your relationship – who, what, where, when and why… and how. (Ask me and I’ll send you a sample.)

Connecting or re-connecting with clients in writing reduces overwhelm one client at a time.

D. Acknowledge Challenges & Pressure

’Overwhelm’ is often triggered by outside factors. Market turmoil, unfavourable media reports, regulatory issues all contribute to it. It’s easy to ’hide’ from clients and prospects under such pressure but it is exactly the wrong thing to do if you want to be a high performer.

Communicate most when the challenges to your business and service are greatest. That’s when people, clients and prospects most want to talk. They need your light when it’s the foggiest.

The best advisors talk when others hide, and attract the business of the less courageous.

E. Work with a Team

There are several ’teams’ high-performing advisors use. They all help reduce overwhelm.

1. A study group of associates in the same business is a way to work out your challenges and minimise your overwhelm safely with people who understand what you are doing and what you need to accomplish. Whatever helps the individuals in the team improve, is what you want on your regular agenda. The job of everyone on a team is to help everyone else look better.

2. The second team is a ‘Client Advisory Board’. This sounding board of clients whose advice you respect and need, helps you be more certain of your value. This is most often an informal group. Recognise key clients, include them in your decisions and use them to help mould your business model. The loyalty, referrals and new business you can generate are well worth your time. The reduction in overwhelm alone more than pays for your time.

3. Finally there is your team of complementarily skilled experts who handle the jobs you have ’simplified’ out of your business – Your Expert Financial Team. This is how to bring the best advice to bear on the needs of your marketplace. They are ideal members of your study group.

To sum up, bad overwhelm is bad. But the solution to it not only makes your business more effective and profitable it can change your life. The courage to change is the first requirement.

The author is a US-based Professional Speaker and Performance and Productivity Expert. Comments and feedback on this column are welcome. Please email: feedback@premiumonline.in

JUST ASK! 5 Steps to Getting More Referrals Asking for referrals goes a long way towards making your...
Time to Go Visible! If you stop promoting yourself in these hard times, then...
Three Simple Ideas that Drive High Performance Jim Ruta in this special column, tells you about the...

Related posts brought to you by Yet Another Related Posts Plugin.

‘Financial Planning? Not for ME!’

Administrator — Wed, 16 May 2012 05:30:34 +0000

The 9 Excuses

I do not understand FP: People feel they do not have the time and patience to understand FP. They do not understand that FP – or a Financial Planner – can change their life or lifestyle. But that is the whole point. If you don’t have the time or the understanding of something technical, the right thing to do is to use the services of a specialist.

I do not believe in FP: A person does not leave anything in his life to chance. He should therefore take the same care with his finances – for this will have a long-term effect on his and his family’s lives and future.

He should remember that FP is only a tool and the Financial Planner is only a means for him to achieve his end – that of financial freedom. The planner can only translate his goals and define ways to achieve them; and has no role to play other than as motivator and, eventually, doer. The primary role has to be the client’s.

FP is not for me: It is only for rich people, or so people think. FP is a CREATOR of wealth and not a BOOSTER of wealth. Proper FP techniques will help people create wealth from nothing. This is something we will see in detail later on in this series. In fact, FP is needed as much for those who don’t have money, as for those who have money. “Money makes more money,” after all!

I have already done FP: Which, in most cases, means: He has invested in gold, bought a house with a home loan, has been paying premium on a miserly Life insurance policy or has started a systematic investment plan (SIP) for a paltry amount in a mutual fund.

FP is not investment alone. FP starts with deciding the PURPOSE for which you invest. Without proper financial goals, there is no FP. As the saying goes: If you don’t know where you want to go, how will you get there?

I am very lucky, I have rich parents: A variation of this is ’ I don’t have dependants’: People may count on getting a huge legacy from their rich parents – but what happens if things turn bad and they get nothing?

At the other extreme, they feel that FP is not needed, as they have no dependants – but they forget that this, precisely, is the main reason why they should have proper FP. After all, not having any dependants could also mean you don’t have anyone you can depend on in future, if things really go wrong!

Some feel that nothing will happen to them, as “God will look after me”. They forget that “God only helps those who help themselves.”

I can handle it on my own: “Jack of all trades and master of none” – we have heard this saying. Very often, people feel they have done all the calculations and follow-ups for proper FP. But they reckon without the intricacies of FP – it is like fighting a war without proper understanding of the enemy or without sufficient and proper ammunition. If a doctor is required for surgery or a cobbler for mending shoes, why not a qualified Financial Planner for FP?

I will do it tomorrow! “It’s the job that’s never started that takes the longest to finish,” said author J R R Tolkien. People are very afraid to take the first step. They would want to go over things so many times and it becomes too late to really take action! To slightly paraphrase Sam Levenson, they firmly believe in: “I am going to stop putting things off…. starting tomorrow.”

These people forget the golden rule of the “Power of Compounding” (Premium, January 2011, Insurance ++ by Team FIrstStep Solutions, The Magic of Compound Interest, Page: 20) and have to pay for the delay in decision making very dearly. But by then, it is too late to matter! Delayed FP is as good as denied FP!

I do not need FP as I do not want to pay: “A free lunch is found only in mousetraps” said John Capozzi. Like the mouse, who pays for the food with its life, these people could lose very heavily by relying on hearsay or chance information which comes their way free, and most likely from an unreliable and uninformed source.

Remember all those schemes of investments in teak trees and other plantations not very long ago! Lakhs to crores of rupees were ripped off unwary investors by unscrupulous promoters.

A good Financial Planner will automatically wave a red flag when it comes to such imprudent investments. By paying a small amount of fees for FP, you will save what you would have otherwise paid all through your life, in trying to make good the amount lost on such investments!

For me, returns are most important: This is because uninformed investors think, “Only high-risk investments yield high returns”. But that is not the whole truth. The truth is that high-risk investments have a CHANCE of yielding high returns. They have a chance of becoming total losses too!

FP, on the other hand, leads to optimum returns – not necessarily the best returns. As they say in prudent investing, “Return OF capital is more important than return ON capital!”

Financial Planners make the best effort to match your risk-appetite with the probable returns from an investment, so that your investment meets the goals of FP.

Conclusion

We all have our dreams, our goals. We have to achieve them and, for that, we have to make a plan and carry it out. We have to evaluate our progress towards the goal by deciding on intermediate milestones. If we fall behind, we have to re-work our plan and find ways to make up for lost time. Proper management of finances can do all this, and this is what is called FP.

We can always dream of buying a fancy car or a second home, or of going on a world tour, without proper FP. But with FP, this becomes POSSIBLE!

FP motivates us, supports us at every twist and turn of life, and strikes the right balance between the present and the future.

So if all these excuses are just that – excuses – who should do FP? We will take a close look at that in the June 2012 issue of Premium.

The author is Associate Professor, Finance, at SP Jain Institute of Management and Research, Mumbai. Comments and responses are welcome. Email: feedback@premiumonline.in

In the first instalment of this column in the April 2012 issue of Premium (Plan to Prosper, Don’t take this Easy, Page 36), we said that most people shy away from financial planning (FP). This makes it important, even imperative, that we make extra efforts to make people see why they should adopt FP. Indeed, they do all they can to avoid FP and come up with all sorts of excuses. The 9 ExcusesI do not understand FP: People feel they do not have the time and patience to understand FP. They do not understand that FP – or a Financial Planner – can change their life or lifestyle. But that is the whole point. If you don’t have the time or the understanding of something technical, the right thing to do is to use the services of a specialist.I do not believe in FP: A person does not leave anything in his life to chance. He should therefore take the same care with his finances – for this will have a long-term effect on his and his family’s lives and future.He should remember that FP is only a tool and the Financial Planner is only a means for him to achieve his end – that of financial freedom. The planner can only translate his goals and define ways to achieve them; and has no role to play other than as motivator and, eventually, doer. The primary role has to be the client’s.FP is not for me: It is only for rich people, or so people think. FP is a CREATOR of wealth and not a BOOSTER of wealth. Proper FP techniques will help people create wealth from nothing. This is something we will see in detail later on in this series. In fact, FP is needed as much for those who don’t have money, as for those who have money. “Money makes more money,” after all! I have already done FP: Which, in most cases, means: He has invested in gold, bought a house with a home loan, has been paying premium on a miserly Life insurance policy or has started a systematic investment plan (SIP) for a paltry amount in a mutual fund. FP is not investment alone. FP starts with deciding the PURPOSE for which you invest. Without proper financial goals, there is no FP. As the saying goes: If you don’t know where you want to go, how will you get there?I am very lucky, I have rich parents: A variation of this is ’ I don’t have dependants’: People may count on getting a huge legacy from their rich parents – but what happens if things turn bad and they get nothing? At the other extreme, they feel that FP is not needed, as they have no dependants – but they forget that this, precisely, is the main reason why they should have proper FP. After all, not having any dependants could also mean you don’t have anyone you can depend on in future, if things really go wrong! Some feel that nothing will happen to them, as “God will look after me”. They forget that “God only helps those who help themselves.” I can handle it on my own: “Jack of all trades and master of none” – we have heard this saying. Very often, people feel they have done all the calculations and follow-ups for proper FP. But they reckon without the intricacies of FP – it is like fighting a war without proper understanding of the enemy or without sufficient and proper ammunition. If a doctor is required for surgery or a cobbler for mending shoes, why not a qualified Financial Planner for FP? I will do it tomorrow! “It’s the job that’s never started that takes the longest to finish,” said author J R R Tolkien. People are very afraid to take the first step. They would want to go over things so many times and it becomes too late to really take action! To slightly paraphrase Sam Levenson, they firmly believe in: “I am going to stop putting things off…. starting tomorrow.”These people forget the golden rule of the “Power of Compounding” (Premium, January 2011, Insurance ++ by Team FIrstStep Solutions, The Magic of Compound Interest, Page: 20) and have to pay for the delay in decision making very dearly. But by then, it is too late to matter! Delayed FP is as good as denied FP! I do not need FP as I do not want to pay: “A free lunch is found only in mousetraps” said John Capozzi. Like the mouse, who pays for the food with its life, these people could lose very heavily by relying on hearsay or chance information which comes their way free, and most likely from an unreliable and uninformed source. Remember all those schemes of investments in teak trees and other plantations not very long ago! Lakhs to crores of rupees were ripped off unwary investors by unscrupulous promoters. A good Financial Planner will automatically wave a red flag when it comes to such imprudent investments. By paying a small amount of fees for FP, you will save what you would have otherwise paid all through your life, in trying to make good the amount lost on such investments! For me, returns are most important: This is because uninformed investors think, “Only high-risk investments yield high returns”. But that is not the whole truth. The truth is that high-risk investments have a CHANCE of yielding high returns. They have a chance of becoming total losses too!FP, on the other hand, leads to optimum returns – not necessarily the best returns. As they say in prudent investing, “Return OF capital is more important than return ON capital!”Financial Planners make the best effort to match your risk-appetite with the probable returns from an investment, so that your investment meets the goals of FP.ConclusionWe all have our dreams, our goals. We have to achieve them and, for that, we have to make a plan and carry it out. We have to evaluate our progress towards the goal by deciding on intermediate milestones. If we fall behind, we have to re-work our plan and find ways to make up for lost time. Proper management of finances can do all this, and this is what is called FP.We can always dream of buying a fancy car or a second home, or of going on a world tour, without proper FP. But with FP, this becomes POSSIBLE!FP motivates us, supports us at every twist and turn of life, and strikes the right balance between the present and the future.So if all these excuses are just that – excuses – who should do FP? We will take a close look at that in the June 2012 issue of Premium. The author is Associate Professor, Finance, at SP Jain Institute of Management and Research, Mumbai. Comments and responses are welcome. Email: feedback@premiumonline.in

New PG course in financial planning Students from the eastern region of India can now hope...
Don’t Take This Easy!, G Balasubramanian, M Com (Hons), LLB, Grad CWA, FCS, FCA Financial planning is pretty much like planning your dream vacation...
Individual wealth to triple in 4 yrs! Individual wealth of Indians zoomed by over 18 per cent...

Related posts brought to you by Yet Another Related Posts Plugin.

9 Simple Ways to Stand Out

Administrator — Wed, 16 May 2012 05:20:00 +0000

When many of my colleagues pop the question why only some people make it to the top in spite of their skill levels being similar, I have always told them to look at them a little closer and deeper. I believe that leaders have certain distinct qualities that they develop and nourish; and grow with it over time. Eventually, it helps them stand out in the crowd.

Here are nine steps which I believe will make you stand out from the common run:

1. Be honest

Whether you are selling, advising, helping out or trying out something, you need to be honest with yourself. You will be forced with situations that will test your honesty but how you face them and challenge them will be the true test of your mettle.

Imagine a situation where you have to decide on an investment on behalf of your client. One product gives you better commissions, but the other is what is beneficial for the client in the long run. Which one would you recommend?

2. Success is just an outcome

You must have come across this many times over. You may not get the result you want every single time. Some blame it on luck and get bogged down by it. To recognise that the outcome is a probable chance is important. That does not mean you leave it to luck. Why don’t you gamble with hard work? In all probability that will increase the chances of the desired outcome.

However, the key is not to be bogged down by failure. After all, failures teach you more than success. So next time you get into doing something, just put in your efforts and leave the rest out of your mind.

3. Take decisions

The biggest block to move on is the inability to take decisions. Many people are not able to take decisions because they fear the outcome. My famous quote from one of the great leaders of the industry is: “If you don’t take a decision, how will you know if you are right or wrong?”

Take that fear out of your system, even if it means that you will make some wrong decisions. At least you will have learnt something to benefit you in future. If you are the anxious type and fear taking decisions, the best way to start is to let your confidant into the issue and share the options. That way, you will settle your nerves and be able to take a decision.

4. Show commitment

& intent

The biggest attention grabber, especially when you are dealing with clients regarding their finances, is the intent and level of commitment you show. Unless they get the feeling that you are interested in their well-being and that your actions will guide them towards that, the trust factor does not exist.

Imagine you are in a showroom to buy a television and no salesperson shows any interest in you. Are you likely to walk out or still wait and buy? Isn’t this because of the choices you have? What many fail to realise is that choices are available for everyone and it does not take too much to exercise the same.

5. Practise being patient

Many people have lost the quality of patience. This is being attributed to changing lifestyles, demanding work environment and a changing cultural landscape. Some even have asked me as to what is wrong in expecting a result immediately. Having invested time and knowledge in a prospect, you expect them to go with you.

I suggest that you carefully examine the situation and communicate your eagerness. Do not close the opportunity. Being patient helps you in keeping many windows of opportunity open. It also gives you a sense of calmness.

6. Let the smile flow

Wear a smile on your face. It makes you look good. I had the opportunity to get acquainted to a great human being, who always had a smile for everyone. When I asked him about the reason, he said “Everyone faces some painful issues every day. The last thing they want to see is a sad face. When I smile, they are forced to return the same. At least that can swing their mood to a positive framework”.

It is being concerned about others that matters. And when you do something positive, you create a positive energy around you and it spreads.

7. Un-complicate life

There may be many things on your mind that keep you preoccupied. This usually hinders your thought process. This primarily comes from the way you have complicated your life with too many expectations, comparisons, ifs & buts and diluting Your value system. This reshapes the way you carry on with life.

If you keep your notions simple and not burden yourselves with too many expectations, you can lead a life that is not complicated. Focus on the simple good things. Do things that you love the most. Start enjoying the basics again. That way you will start enjoying life like a kid.

8. Learn every day.

Share the knowledge

One of the biggest threats to any professional is when he or she ceases to learn. Learning is the foundation of growing. Learning does not mean reading alone. You can learn from your interactions, books, friends, children and competition. Learning gives you insights about the gaps you have and helps you bridge them.

One of my friends religiously followed the principle of learning something new every day. It worked like magic. Soon he was a wealth of knowledge. However, the important thing is to share that knowledge with others. Sharing helps it grow. You dwell into new dimensions and create a society which is aware.

9. Respect people,

whoever they are

Greatness is about how you are perceived by others and not measured in the amount of wealth you possess. One of the ways to win over others is to know how to respect them.

Take this case in point

There was this CEO of a company who would greet the liftman with a ‘Good morning’ and ‘Good evening’ every single day, sometimes even enquiring about his work and so on. The CEO respected the lift man for what he did with obvious passion. On the day the CEO retired from service, the liftman asked for time and met the CEO with a flower bouquet, wishing him health and happiness. If you respect others, and be kind and pleasant, you will touch many hearts. And it does not cost anything!

Try and walk these steps and slowly you will realise the change it brings to your life, family and the society.

The author is a marketing professional who has worked in communications, information technology, telecom and insurance industries. He has also taught Communications, Strategic Marketing and International Business at business schools in India and abroad. Comments on and responses to this column are welcome at feedback@premiumonline.in

12 Ways to be an Under-achiever Let ‘Guests’ Gobble up Your Time! In the latest installment of his series on why agents...
Three Simple Ideas that Drive High Performance Jim Ruta in this special column, tells you about the...
12 Ways to be an Under-achiever Don’t Remember Things In this series on 12 ways in which many agents...

Related posts brought to you by Yet Another Related Posts Plugin.

‘Jack: Straight From The Gut’ by Jack Welch ‘People First, Everything Else Second’

Administrator — Wed, 16 May 2012 05:00:59 +0000

The Book

Mr Jack Welch, former Chairman and CEO of General Electric (GE), one of the largest companies in the world, embodies what many believe are the qualities of the ultimate corporate leader: Courage, knowledge and the ability to keep a top company extremely profitable for 20 long years.

Mr Welch became CEO of the company during troubled times and laid off more than 1,00,000 workers. In this book he reveals the facts behind the layoff and many other difficult decisions he had to take to turn around GE and also how he helped the remaining employees build it into one of the most successful companies in the world.

Mr Welch has had such an impact on modern business that his personal history offers all managers valuable lessons. His memoirs are filled with insights into leadership and management strategies, both those that worked and the ones that failed. In this book, his autobiography, he captures the excitement of his highest-stakes decisions.

Small wonder, entrepreneurs and business owners find the core of his philosophy very valuable in building their own business with the right culture and attitudes.

The Author

Born in 1935, John F Welch Jr. grew up in the working-class part of Salem, in the US state of Massachusetts. His parents had not even graduated from high school. But he credits his strong-willed mother with much of his success. She taught him how to compete ferociously, and told him that his stutter was simply a case of his brain being too fast for his mouth.

His ‘hugs and kicks’ way of dealing with GE staff was taken directly from Grace Welch, as was his trademark self-confidence. Yet in the book he makes a distinction: “Arrogance is a killer, and wearing ambition on one’s sleeve can have the same effect. Self-confident people aren’t afraid to have their views challenged. They relish the intellectual combat that enriches ideas.” This attitude of brash openness would become part of GE’s own culture.

Hired by GE in 1960 to join a team developing a new type of plastic, from the beginning Mr Welch was determined to fight bureaucracy and be himself, even if it meant getting sacked. His first year was so awful, he says, he almost left.

Despite blowing up a factory and building another one only to discover the product had major flaws and was not ready to go to market, Mr Welch rose up through the ranks and managed to more than double GE’s embryonic plastics business in three years.

In the 1970s American corporate life, command-and-control was the way to manage and no one talked about ‘passion’ or ‘fun’. Mr Welch took a different approach: “I tried to create the informality of a corner neighborhood grocery store in the soul of a big company.” His philosophy of informality included riotous celebrations whenever even small milestones were reached. “In those days, I was throwing hand grenades, trying to blow up traditions and rituals that I felt held us back”.

Of course, it was his results that really got him noticed. In April 1981, Mr Welch was chosen the CEO.

How the Book Grew

Mr Welch was inspired to write this memoir after receiving hundreds of letters from people. All their working lives they had felt the pressure to conform to be successful, but in him they found a successful non-conformist, a person who had shaped the company he worked for instead of letting it shape him.

What the Book Says

In short, ‘People first, strategy and everything else second’.

Mr Welch admits he did not have detailed plans for where he wanted the company to go; only that he knew how he wanted it to ‘feel’. Creating a new culture among 4,00,000 employees and 25,000 managers with layers of bureaucracy was always going to be a hard task. It would end up taking two decades.

For Mr Welch, it was all about people. By hiring the best, you got the best ideas, and if those ideas could freely circulate in a ‘boundaryless’ environment (a term he invented), it would be one of the best places in the world to work. In his first years he spent a lot of time in staff reviews, trying to cut out the dead wood and identify the stars.

Intense locked-door sessions involving brutal personal scrutiny resulted in many staff leaving. Mr Welch pioneered the system of managers whereby they had to annually remove 10 per cent of their staff. “Rigorous differentiation” he says, “delivers real stars – and stars build great businesses.”

By the mid-1980s, Mr Welch had reduced the GE workforce by around 25 per cent, earning him the nickname ‘Neutron Jack’ (the people get blown away but the buildings are left standing). If GE was going to move ahead, he was telling everyone, it had to spend more money on fewer people. Mr Welch did exactly that, creating a firm six times larger than the one he inherited, but with fewer managers overall and only 25 more vice-presidents.

Be the Best or Not at All!

Mr Welch’s first time in front of Wall Street as CEO – a talk before financial community representatives in 1981 – was, by his own admission, a bomb. In that 20-minute speech, he gave his audience a primer on what he felt it would take for a company to be viable in the long term.

Winning companies, he said, would be the ones that “search out and participate in real growth industries and insist upon being Number One or Number Two in every business they are in – the Number One or Number Two leanest, lowest-cost, worldwide producers of quality goods and services.” It was a strategy to which he would commit his company with the fullest effort imaginable – a strategy that would change the face of GE forever.

GE was into many businesses. Mr Welch’s signature business strategy was that each of them would have to become either No. 1 or No. 2 in their field, or they would be sold off. The strategy struck fear into some of GE’s underperformers, but was easily understood and created a focus. If they were not No. 1 or No. 2 why be in the business?

Despite some failures, GE grew six times larger under Mr Welch, a player in everything from CT scanners, to finance, to the NBC TV network.

Other initiatives that developed under Mr Welch included: ‘Six Sigma’ quality control (allowing for only 3.4 defects/million in production operations while the prevailing rate was 35,000/million); globalisation (not simply acquiring more businesses around the world but developing local talent); and e-business (Mr Welch couldn’t even type or use the Internet in 1997, but a couple of years later had GE aggressively facing up to any possible challenges from start-ups).

In his final year (2000) at GE, earnings jumped to a record $12.7 billion on revenues of $130 billion. In the previous six years, GE had more than doubled its revenues, earning the title, The Most Valuable Company in the World.

The Lesson

‘Jack’ is a classic not simply because of Mr Welch’s success, but because it is a fine record of American big business in the last decades of the 20th century. It gives the reader a good feel for what it must be like to be the CEO of one of the world’s biggest firms and the author’s descriptions of acquisitions and the fight for the leadership are gripping.

There is a lot of talk now about being an entrepreneur and an innovator, with the suggestion that if you don’t start your own company you are somehow missing out. The fact is, most people still work for companies, and this book’s message is that you can still have a very satisfying working life if you can find a firm that is as interested in generating new ideas as it is in making money. And if you are an entrepreneur or business owner, here is the way to run a company – told by someone who ran his company very successfully!

Gem from JACK

“There’s no straight line to anyone’s vision or dream. I’m living proof of that. This is the story of a lucky man, an unscripted, uncorporate type who managed to stumble and still move forward, to survive and even thrive in one of the world’s most celebrated corporations. Yet it’s also a small-town American success story. I’ve never stopped being aware of my roots even as my eyes opened to a world I never knew existed.”

5 Strategy-Focused Questions

A colleague gave Jack Welch an article about the 19th century Prussian general, Helmut von Moltke. This triggered in Mr Welch a series of questions that were much more useful to him over the years than all the data-crunching in strategic plans. Five simple questions brought strategic thinking to life:

What is the detailed global position of your business and that of your competitors – including market shares, strength by product line, and by region, today?

What actions have your competitors taken in the past two years that have changed the competitive landscape?

What have you done in the past two years to alter that landscape?

What are you most afraid your competitors might do in the next two years to change that landscape?

What are you going to do in the next two years to leapfrog any of their moves?

The One Minute Manager by Kenneth Blanchard & Spencer JohnsonSixty Seconds to Success! Success in managing people and projects – in short, in...
Motivation and Personality by Abraham Maslow All Needs are Not Equal Self-actualisation embodies success in its most rewarding dimensions. Here is...
Who Moved My Cheese? by Spencer Johnson, M D Roadmap to Navigate Change This management book with a cult status tells you how...

Related posts brought to you by Yet Another Related Posts Plugin.

When the Nominee Gets the Money!

Administrator — Wed, 16 May 2012 05:00:58 +0000

G Balasubramanian, M Com (Hons), LLB, Grad CWA, FCS, FCA

In the first instalment of Legal Angle (Premium, April 2012, Nominee: Only a Hand that Receives, Page: 18) we made it very clear that a nominee has no claims to an asset on the death of its owner and that the real owner is the legal heir. But every rule is proved by its exception and here is the exception to the nominee rule: Shares!

Yes, if a person dies without making a will, the nominee becomes the owner of shares. However, if there is a will, then the nominee will have to pass on the shares to the legal heirs.

In a recent decision, Bombay High Court held, in the case of Harsha Nitin Kokate Vs.The Saraswat Co-op. Bank Limited & Others, that a nominee – and not the legal heirs – shall be eligible to get the shares of a deceased shareholder.

In this case, the deceased, Nitin Kokate, had a demat account with the Saraswat Co-op. Bank Limited. He executed a nomination in the prescribed form in favour of his nephew. This was done well after Nitin’s marriage with Harsha. On Nitin’s death, his widow filed a petition that the shares held by her late husband in his demat account be transferred to her, as she was his only legal heir as per law, instead of to his nephew, as per the nomination. Nitin Kokate had died intestate (that is, without leaving a will).

The nephew, on the other hand, claimed the shares on the demat account as his since he was the nominee under Section 109A of the Companies Act, 1956, and Section 9.11 of the Depositories Act, 1996.

In the verdict, Justice Roshan Dalvi said: “A reading of Section 109 (A) of the Companies Act and 9.11 of the Depositories Act makes it abundantly clear that the intent of the nomination is to vest the property in the shares, which includes the ownership rights thereunder, in the nominee upon nomination validly made as per the procedure prescribed, as has been done in this case.” In other words, according to Justice Dalvi, under the provisions of the Companies Act and the Depositories Act, the nominee becomes the absolute owner of the shares, unless the deceased has prepared a will.

So, if a person has not executed a will, the legal heirs will have no right to get the shares transferred to their name. Only the nominee will be entitled to all the shares. The normal rule that a nominee is only a trustee and not the owner, will not apply in this case.

Where Nomination is NOT allowed!

Yes, you read that right. Nomination is not allowed in the case of a demat account held in the name of a Hindu Undivided Family (HUF). As per a National Securities Depository Limited (NSDL) circular, on the death of the Karta of a HUF, the HUF may appoint the eldest surviving male member of the HUF as the new Karta.

If the value of securities lying in the demat account does not exceed Rs 10 lakh, then the securities shall be transmitted to a new account opened in the name of the new Karta, by following certain formalities. However, where the value of securities exceeds that amount, order of a competent court will have to be obtained to transfer these securities. More expenses involved here!

Nomination of MFs

As in the case of demat accounts and HUFs, no mutual fund (MF) holder except an individual can effect a nomination. And the nominee can only be an individual or individuals. That is, body corporates, HUFs and so on cannot nominate their MF holdings.

The general rules for MF nominations are:

Nomination will result in all the amounts payable in respect of your MF holdings to vest in and be transferred to your nominee upon your death. If your legal heir is different from your nominee, your legal heir cannot dispute this action of the asset management company (AMC) of handing over the amount to the nominee. The legal heirs can however recover their share from the nominee.

A minor cannot nominate, nor can the guardian do so on his behalf. A minor may however be a nominee and the guardian can sign on his behalf.

An NRI can nominate, but the power of attorney-holder cannot nominate on his behalf. An NRI can be a nominee subject to the exchange control regulations in force.

In the case of joint holdings, nomination is allowed. However, in the event of death of any of the holders, the mutual fund units will be transmitted to the surviving holder’s name. In the case of death of all holders, the units will be transmitted to the nominee.

The Folio Story

If you hold MF investments in more than one folio, you need to make separate nominations for each folio! The flexibility you get is that you can nominate different individuals for different folios if you wish.

To repeat, the nomination made in any existing MF folios will not be automatically carried over for any new folios created for fresh MF purchases. Each new folio needs a separate nomination request. However, for fresh investments in existing MF folios, the nomination given earlier will be applicable.

For all these (folio-wise) nominations, if you nominate more than one person you have to specify the percentage of the value each should receive. For example, you may nominate Mr A, Mr B and Mr C, for a 40, 25 and 35 per cent share respectively. If each nominee’s share is not mentioned, the AMC (the company that runs the MF) may make equal payment to all the nominees.

The Procedure

To nominate, the account holder(s) must fill the prescribed nomination form and submit it to the AMC. This can be done at the time of the initial investment or at a later date, even after the investment is made.

The nomination can be changed anytime till the units of the MF are redeemed, by simply filling up a new nomination form and submitting it.

The author is Associate Professor, Finance, SP Jain Institute of Management and Research, Mumbai. Comments and responsesare welcome. Email: feedback@ premiumonline.in

Here are some technical terms used in this article and their detailed meanings.

DECEASED – the dead person

WILL – A document, signed by the maker, properly witnessed, which specifies how his property should be distributed on his death

DYING INTESTATE – dying without making a will

According to a verdict of the Bombay High Court, ‘under the provisions of the Companies Act and the Depositories Act, the nominee becomes the absolute owner of the shares, unless the deceased has prepared a will.’

What if you don’t want to nominate?

In recent times, asset management companies (AMCs) have also come out with a “Declaration for Non-intention to Nominate”.

This is for the use of account holders who don’t want to nominate their holdings to ensure that there is no fraudulent misuse of the nomination facility later on. As it is in the case of no nomination, these investments will be passed on to the appropriate persons depending on whether the person concerned executed a will or died intestate.

Nominee: Only A Hand that Receives So you thought nomination means filling up one more boring...
Get Your Share of Wealth! The recent see-saws on world stock exchanges may have given...
Policies in demat form soon? Insurance policies will soon be available in dematerialised form too,...

Related posts brought to you by Yet Another Related Posts Plugin.

Ins cover for ayurveda?

Administrator — Wed, 16 May 2012 05:00:58 +0000

Kerala, it seems, is planning on becoming the first State to bring Ayurvedic treatment under insurance cover. The move is part of an action plan of the State Government to boost traditional knowledge in healthcare and transform Kerala into a global hub for this Indian system of medicine. The Ayurveda Action Plan is part of the 10-point development strategy under the Vision 2030 initiative adopted by the State Government and mentored by Mr Sam Pitroda, media reports said.

Ins cover for 2 cr families in M’rashtra Nearly two crore families with an annual income of up...
IPL-5 records highest cover Everything about Indian Premier League (IPL) is grand, not least...
8 firms in race for Fidelity MF assets At least eight companies are in the race to acquire...

Related posts brought to you by Yet Another Related Posts Plugin.

Health ins premium growth stumbles

Administrator — Wed, 16 May 2012 05:00:54 +0000

Growth in premiums for the Health insurance segment has fallen to 25 per cent in 2011-12 from 35 per cent registered in 2010-11. The dip is mainly blamed on a fall in the number of government-driven schemes and the economic slowdown, media reports say.

In 2010-11, the total premium for the segment was estimated at Rs 13,000 crore. Given the fact that penetration of Health insurance is marginal in the country, the drop in growth is not very encouraging though the private players have recorded a healthy growth rate, a top Health insurance company official reportedly said. According to the Federation of Indian Chambers of Commerce and Industry (FICCI), steps must be taken to boost Health insurance penetration in the country, which now covers only 15 per cent of the population.

A National Sample Survey Organisation data suggests that about 65 per cent of the country’s poor get into debt and 1 per cent fall into BPL category each year because of health issues. According to estimates, by 2025, around 18.9 crore Indians will be at least 60 years of age, the report added.

Cigna to enter Health insurance with TTK Group With an increasingly affluent middle class, India is calling Connecticut-based...
Bharti Axa Gen aims at 45% in premium growth Bharti Axa General Insurance is reportedly confident of posting a...
IRDA pushes Govt-backed Health ins plan The Insurance Regulatory and Development Authority (IRDA) is fully backing...

Related posts brought to you by Yet Another Related Posts Plugin.

Bharti AXA’e e-Protect

Administrator — Wed, 16 May 2012 05:00:50 +0000

Bharti Axa Life Insurance Company

e-Protect

Company: Bharti Axa Life Insurance Company

Type of policy: Term insurance policy that can be purchased online

Minimum age at entry: 18 years

Maximum age at entry: 60 years (-) policy term

Maximum age at maturity: 60 years

Policy term: 10, 15, 20, 25 and 30 years

Premium paying term (PPT): Same as the policy term

Premium payment mode: Yearly or half-yearly

Minimum sum assured: Rs 25,00,000

Benefits:

Death benefit:

On death of the life insured, an amount equal to the sum assured will be paid to the nominee.

Family Care Benefit:

On death of the policyholder, a part of the sum assured is paid as a lump sum amount of Rs 1,00,000 to the nominee within 48 hours of submission of all relevant claim documents.

Premium discounts for non-smokers:

If a non-smoker applied for a sum assured in excess of Rs 50,00,000, he will be eligible for special rates.

Tax Benefits: Eligible for benefits under Section 80 C of the Income-tax Act, 1961.

Bharti AXA Life Triple Health Insurance Plan Company: Bharti AXA Life Insurance Company Type of policy: Health...
Bharti AXA Power Kid Insurance Plan Company: Bharti AXA Life Insurance Company Type of policy: “A...
IndiaFirst’s Maha Jeevan Plan Maha Jeevan Plan Company: IndiaFirst Life Insurance Company Type of...

Related posts brought to you by Yet Another Related Posts Plugin.

Administrator — Wed, 16 May 2012 05:00:46 +0000

L&T General Insurance Company

My Health

Company: L&T General Insurance Company

Type of policy: Non-linked, non-participating, Limited Pay endowment plan

Minimum age at entry: Proposer: 18 years; Children: 3 months

Maximum age at entry: Proposer: 65 years; Children: 18 years

Minimum sum assured: Rs 3 lakh

Maximum sum assured: Rs 10 lakh

Benefits:

• Double Sum Insured for treatment of a critical illness: The Policy provides an additional cover equivalent to the sum insured (which essentially doubles the sum insured) for treatment of a critical illness.

• Maternity and newborn baby cover: The policy provides coverage towards maternity expenses and newborn baby cover up to the limit of sum insured as below:

- Maximum of 5 per cent of sum insured or Rs 25,000 for a normal delivery and 10 per cent of sum insured or Rs 50,000 for a caesarean section or actual cost, whichever is lower.

- Coverage is applicable only to the first two children for self and lawful spouse who are covered under a single policy for a continuous period of 48 months.

- Newborn baby will be covered for a period of 90 days from date of birth within the maternity limits.

• Reinstatement of sum insured in case of hospitalisation due to an accident:

The entire sum insured gets used up and there is a second hospitalisation due to an accident, the sum insured is ‘reinstated’ or ‘replenished’ to the extent of claim amount but not exceeding the sum insured. This additional amount will be available only once during the 12-month policy period and shall trigger when the basic sum insured opted under the policy has been exhausted or is inadequate to cover this second hospitalisation due to accident.

• For hospitalisation exceeding 10 continuous days: Lump-sum recovery benefit will be paid.

• Two-year policy option: This allows the policyholder to renew the policy at the end of 24 months

• Free health check-up: After every two consecutive renewals once the policyholder is above 45 years at the time of the second renewal

• Treatment expenses for pre-existing diseases/injury/illness: This will be covered from the third year of the policy

• Family floater option: Coverage up to four members of the family – lawful spouse and two dependent children up to the age of 18 years under a single policy and single sum insured.

• Family discount: If policyholder chooses to opt for individual sum insured for each of the family members under a single policy instead of a Family Floater option, he is eligible to get a family discount of 10 per cent on the total premium payable for covering more than two members which includes him, lawful spouse, maximum two dependent children and dependent parents only. Family discount will be available for a maximum of six persons only.

• Cumulative bonus: The sum insured progressively increases by 5 per cent on every renewal, for every claim-free year, subject to a maximum accumulation of 50 per cent of the sum insured.

Tax Benefits: Eligible for benefits under Section 80 D of the Income-tax Act, 1961.

LIC’s Jeevan Arogya LIC's Jeevan Arogya ...
IndiaFirst Money Back Health Insurance Plan Company: IndiaFirst Life Insurance Company Type of policy: A unit-linked...
Chola Individual Health Line Chola Individual Health Line Company: Cholamandalam MS General Insurance Company...

Related posts brought to you by Yet Another Related Posts Plugin.