Insurance Help

Honesty is the best insurance policy.....

Posted by : N.Krishnaprasad

dear srikanth
i donot agree with you. Insurance gives capital protection but mutual fund doesnot. I am comfortable with ulip

Honesty is the best insurance policy.....

Posted by : kentmss

Dear Srinivas,
Insurance is NOT an investment. ULIPs are definitely NO-NO.
because ULIPs are being mis-sold (mis-sold being a polite way of saying con job) like no financial product has ever been mis-sold in this country. In India, ULIPs are a product which have been cynically designed to maximise profits to insurance agents and insurance companies while hiding the true numbers from investors. Nominally, a ULIP is a product that combines insurance and investment characteristics. In reality, they combine an extraordinarily high cost structure (meant primarily to feed agent commissions) with a non-standardised revelation of expense so that any meaningful comparison of investment performance between different ULIPs or between ULIPs and mutual funds is impossible. In other investment products, either there are no agent commissions (as in bank FDs) or agent commissions range from 0.25 per cent to 2 or 3 per cent (as in case of Mutual Fund Advisors). In ULIPs however, commissions range from 15 per cent to (hold your breath) around 70 per cent and are typically 25 per cent. And for some bizarre reason, this is considered acceptable by everyone concerned

Basically, ULIPs are expensive and opaque mutual funds disguised as insurance. This permits insurance companies to circumvent the strict transparency, expense, and commission-related laws that govern mutual funds. It also enables them to escape the scrutiny of SEBI, which has historically been a tougher regulator than IRDA.
Insurance is a great idea and most of us need it. But we need real insurance, which is to say term insurance. Here's what you should do. Make a liberal estimate of how much money your family will need if you die suddenly. Shop around and buy the cheapest term insurance you can find. You'll be stunned at how cheap term insurance is and also at how difficult it is to buy (The quickest way to get rid of an insurance agent is to say that you're interested only in term insurance). You probably won't be able to think logically about insurance as long as you don't realise that it's an expense. It's a necessary expense, like buying a helmet or going to a doctor, but it's not an investment. You need both insurance and investment. To get the best deal in both, don't mix them up.
Best of luck,
Srikanth Shankar Matrubai

Pension Plan

Posted by : chsrinivas

dear all,
thanks very much for this service.
the above article is true. pure term plan with diversified equity mutualfunds will always gives you the best option in case of risk or maturity. kindly remember that pension polices are taxable as income from other sources except 1/3 rd of maturity.
thanks

Honesty is the best insurance policy.....

Posted by : chsrinivas

dear sir,
thanks very much for this service. i also work for a life pvtinsurance company in andhra pradesh.your article is good. what is your personal views on present ulip polices?

Honesty is the best insurance policy.....

Posted by : kentmss

Dear Srinivas,
Insurance is NOT an investment. ULIPs are definitely NO-NO.
because ULIPs are being mis-sold (mis-sold being a polite way of saying con job) like no financial product has ever been mis-sold in this country. In India, ULIPs are a product which have been cynically designed to maximise profits to insurance agents and insurance companies while hiding the true numbers from investors. Nominally, a ULIP is a product that combines insurance and investment characteristics. In reality, they combine an extraordinarily high cost structure (meant primarily to feed agent commissions) with a non-standardised revelation of expense so that any meaningful comparison of investment performance between different ULIPs or between ULIPs and mutual funds is impossible. In other investment products, either there are no agent commissions (as in bank FDs) or agent commissions range from 0.25 per cent to 2 or 3 per cent (as in case of Mutual Fund Advisors). In ULIPs however, commissions range from 15 per cent to (hold your breath) around 70 per cent and are typically 25 per cent. And for some bizarre reason, this is considered acceptable by everyone concerned

Basically, ULIPs are expensive and opaque mutual funds disguised as insurance. This permits insurance companies to circumvent the strict transparency, expense, and commission-related laws that govern mutual funds. It also enables them to escape the scrutiny of SEBI, which has historically been a tougher regulator than IRDA.
Insurance is a great idea and most of us need it. But we need real insurance, which is to say term insurance. Here's what you should do. Make a liberal estimate of how much money your family will need if you die suddenly. Shop around and buy the cheapest term insurance you can find. You'll be stunned at how cheap term insurance is and also at how difficult it is to buy (The quickest way to get rid of an insurance agent is to say that you're interested only in term insurance). You probably won't be able to think logically about insurance as long as you don't realise that it's an expense. It's a necessary expense, like buying a helmet or going to a doctor, but it's not an investment. You need both insurance and investment. To get the best deal in both, don't mix them up.
Best of luck,
Srikanth Shankar Matrubai

Honesty is the best insurance policy.....

Posted by : chsrinivas

dear sir,
thanks very much for this service. i also work for a life pvtinsurance company in andhra pradesh.your article is good. what is your personal views on present ulip polices?

Honesty is the best insurance policy.....

Posted by : chsrinivas

dear sir,
thanks very much for this service. i also work for a life pvtinsurance company in andhra pradesh.your article is good. what is your personal views on present ulip polices?

Honesty is the best insurance policy.....

Posted by : chsrinivas

dear sir,
thanks very much for this service. i also work for a life pvtinsurance company in andhra pradesh.your article is good. what is your personal views on present ulip polices?

Honesty is the best insurance policy.....

Posted by : latikav

On March 16, 2001, Kumar had taken a life insurance policy for himself for a sum assured of Rs 10 lakh. He had given the following answer to a question in the proposal form that asked:
“Do you consume alcohol”? Yes/No; average usage per day.
Ans: Yes, 1 peg per week.

Seven years later, Kumar died of liver cirrhosis, caused by chronic alcoholism. Because of the false statement in the proposal form, the insurance company repudiated the claim. Kumar must have been embarrassed to admit his problem of chronic alcoholism while filling up the proposal form, but little did he know that in spite of paying premiums regularly and taking a policy, he would leave his family stranded in its hour of need.

Policyholders are in danger of seeing claims on their insurance policies turned down because they fill the proposal form very carelessly or make the agent do the job (irrespective of whether they are literate or illiterate). What the proposer doesn’t realise here is that this document will be referred back to at the time of claim and a careless “yes/no” will prejudice the claim settlement. A proposal form is the foundation on which an insurance contract stands.

Insurance contracts are based on trust. Since the insurance company knows nothing and as a proposer you know everything about the risk, it is your duty to make a full disclosure of all the facts that will affect the insurer’s decision to insure you and the terms on which they insure you. A lot of times, people tend to lie about their health for fear of not getting the policy, or having to pay up a higher premium. While this may get you a policy easily; at the time of a claim, you will land in trouble. And then, you may get cynical about insurance and find yourself in agreement with someone who said
“Insurance is like marriage. You pay and pay but you never get anything back.”
Insurance agents also tend to play smart. They will prompt your answers at the time of filling a proposal form and make it sound like it’s just a formality, lest they lose out on a customer. But the law says “buyer beware.” The contract is between you and the insurance company and not between you and the agent. As a party to the contract, you are expected to maintain utmost good faith in the insurer.

An essential part of the insurance contract is the understanding that each has taken the other entirely into confidence. If there were to be any question of one withholding from the other what he needs to know, the entire transaction would be void. So you need to watch out - as mistakes can prove costly.

The insurance regulator in India has also made it mandatory for insurance policies to be issued with the proposal form duly filed in.

All too often, customers and insurers are only too happy to complete a transaction without this important document - leaving the door open for disputes on what was intended to be covered or excluded.

Some tips:
Be honest and forthright in responding to the questions in a proposal form as any erroneous information could result in the insurer denying you coverage.
Don’t sign on a blank incomplete proposal form. You will be held responsible once you sign on the document. You should check the correctness of the information before signing. And keep copies of the filled & signed proposal form.
You need to bear in mind that your duty to disclose is of an ongoing nature. Many people do not realise that every renewal of an insurance policy is a new policy, i.e. a new contract requiring disclosure. Say Ravi took his first health insurance policy in 2004 from Sigma Insurance Co and for the question in the proposal form pertaining to

“Whether you have any other health insurance policies in force,” he replied in the negative, which was true. But it was no longer true when the policy was renewed with the mutual consent of both parties in 2005, as Ravi had taken another health insurance policy from a different insurer. Ravi was obliged to inform Sigma Insurance Co about the new policy that he had taken because the original proposal form becomes incorporated into the renewed policy and continues to form the basis of the contract.

As always, the devil is in the detail, lurking in the fine print of your proposal form. So, please take some time off before signing the proposal form as some investment in time today will help avoid any heartburn later. The unexpected happens all the time… so just having an insurance policy tucked away somewhere is not enough; due diligence while filling the proposal form is of utmost importance.

(V Ramakrishna-DNA Money)

Honesty is the best insurance policy.....

Posted by : latikav

On March 16, 2001, Kumar had taken a life insurance policy for himself for a sum assured of Rs 10 lakh. He had given the following answer to a question in the proposal form that asked:
“Do you consume alcohol”? Yes/No; average usage per day.
Ans: Yes, 1 peg per week.

Seven years later, Kumar died of liver cirrhosis, caused by chronic alcoholism. Because of the false statement in the proposal form, the insurance company repudiated the claim. Kumar must have been embarrassed to admit his problem of chronic alcoholism while filling up the proposal form, but little did he know that in spite of paying premiums regularly and taking a policy, he would leave his family stranded in its hour of need.

Policyholders are in danger of seeing claims on their insurance policies turned down because they fill the proposal form very carelessly or make the agent do the job (irrespective of whether they are literate or illiterate). What the proposer doesn’t realise here is that this document will be referred back to at the time of claim and a careless “yes/no” will prejudice the claim settlement. A proposal form is the foundation on which an insurance contract stands.

Insurance contracts are based on trust. Since the insurance company knows nothing and as a proposer you know everything about the risk, it is your duty to make a full disclosure of all the facts that will affect the insurer’s decision to insure you and the terms on which they insure you. A lot of times, people tend to lie about their health for fear of not getting the policy, or having to pay up a higher premium. While this may get you a policy easily; at the time of a claim, you will land in trouble. And then, you may get cynical about insurance and find yourself in agreement with someone who said
“Insurance is like marriage. You pay and pay but you never get anything back.”
Insurance agents also tend to play smart. They will prompt your answers at the time of filling a proposal form and make it sound like it’s just a formality, lest they lose out on a customer. But the law says “buyer beware.” The contract is between you and the insurance company and not between you and the agent. As a party to the contract, you are expected to maintain utmost good faith in the insurer.

An essential part of the insurance contract is the understanding that each has taken the other entirely into confidence. If there were to be any question of one withholding from the other what he needs to know, the entire transaction would be void. So you need to watch out - as mistakes can prove costly.

The insurance regulator in India has also made it mandatory for insurance policies to be issued with the proposal form duly filed in.

All too often, customers and insurers are only too happy to complete a transaction without this important document - leaving the door open for disputes on what was intended to be covered or excluded.

Some tips:
Be honest and forthright in responding to the questions in a proposal form as any erroneous information could result in the insurer denying you coverage.
Don’t sign on a blank incomplete proposal form. You will be held responsible once you sign on the document. You should check the correctness of the information before signing. And keep copies of the filled & signed proposal form.
You need to bear in mind that your duty to disclose is of an ongoing nature. Many people do not realise that every renewal of an insurance policy is a new policy, i.e. a new contract requiring disclosure. Say Ravi took his first health insurance policy in 2004 from Sigma Insurance Co and for the question in the proposal form pertaining to

“Whether you have any other health insurance policies in force,” he replied in the negative, which was true. But it was no longer true when the policy was renewed with the mutual consent of both parties in 2005, as Ravi had taken another health insurance policy from a different insurer. Ravi was obliged to inform Sigma Insurance Co about the new policy that he had taken because the original proposal form becomes incorporated into the renewed policy and continues to form the basis of the contract.

As always, the devil is in the detail, lurking in the fine print of your proposal form. So, please take some time off before signing the proposal form as some investment in time today will help avoid any heartburn later. The unexpected happens all the time… so just having an insurance policy tucked away somewhere is not enough; due diligence while filling the proposal form is of utmost importance.

(V Ramakrishna-DNA Money)

Honesty is the best insurance policy.....

Posted by : latikav

On March 16, 2001, Kumar had taken a life insurance policy for himself for a sum assured of Rs 10 lakh. He had given the following answer to a question in the proposal form that asked:
“Do you consume alcohol”? Yes/No; average usage per day.
Ans: Yes, 1 peg per week.

Seven years later, Kumar died of liver cirrhosis, caused by chronic alcoholism. Because of the false statement in the proposal form, the insurance company repudiated the claim. Kumar must have been embarrassed to admit his problem of chronic alcoholism while filling up the proposal form, but little did he know that in spite of paying premiums regularly and taking a policy, he would leave his family stranded in its hour of need.

Policyholders are in danger of seeing claims on their insurance policies turned down because they fill the proposal form very carelessly or make the agent do the job (irrespective of whether they are literate or illiterate). What the proposer doesn’t realise here is that this document will be referred back to at the time of claim and a careless “yes/no” will prejudice the claim settlement. A proposal form is the foundation on which an insurance contract stands.

Insurance contracts are based on trust. Since the insurance company knows nothing and as a proposer you know everything about the risk, it is your duty to make a full disclosure of all the facts that will affect the insurer’s decision to insure you and the terms on which they insure you. A lot of times, people tend to lie about their health for fear of not getting the policy, or having to pay up a higher premium. While this may get you a policy easily; at the time of a claim, you will land in trouble. And then, you may get cynical about insurance and find yourself in agreement with someone who said
“Insurance is like marriage. You pay and pay but you never get anything back.”
Insurance agents also tend to play smart. They will prompt your answers at the time of filling a proposal form and make it sound like it’s just a formality, lest they lose out on a customer. But the law says “buyer beware.” The contract is between you and the insurance company and not between you and the agent. As a party to the contract, you are expected to maintain utmost good faith in the insurer.

An essential part of the insurance contract is the understanding that each has taken the other entirely into confidence. If there were to be any question of one withholding from the other what he needs to know, the entire transaction would be void. So you need to watch out - as mistakes can prove costly.

The insurance regulator in India has also made it mandatory for insurance policies to be issued with the proposal form duly filed in.

All too often, customers and insurers are only too happy to complete a transaction without this important document - leaving the door open for disputes on what was intended to be covered or excluded.

Some tips:
Be honest and forthright in responding to the questions in a proposal form as any erroneous information could result in the insurer denying you coverage.
Don’t sign on a blank incomplete proposal form. You will be held responsible once you sign on the document. You should check the correctness of the information before signing. And keep copies of the filled & signed proposal form.
You need to bear in mind that your duty to disclose is of an ongoing nature. Many people do not realise that every renewal of an insurance policy is a new policy, i.e. a new contract requiring disclosure. Say Ravi took his first health insurance policy in 2004 from Sigma Insurance Co and for the question in the proposal form pertaining to

“Whether you have any other health insurance policies in force,” he replied in the negative, which was true. But it was no longer true when the policy was renewed with the mutual consent of both parties in 2005, as Ravi had taken another health insurance policy from a different insurer. Ravi was obliged to inform Sigma Insurance Co about the new policy that he had taken because the original proposal form becomes incorporated into the renewed policy and continues to form the basis of the contract.

As always, the devil is in the detail, lurking in the fine print of your proposal form. So, please take some time off before signing the proposal form as some investment in time today will help avoid any heartburn later. The unexpected happens all the time… so just having an insurance policy tucked away somewhere is not enough; due diligence while filling the proposal form is of utmost importance.

(V Ramakrishna-DNA Money)

Insurance

Posted by : sankara1970

Insurance companies have posted negative profits/growth last year.
LIC also forced to introduce ULIP one after another.
How the insurance companies will be able to meet the claims.

Pension Plan

Posted by : RANJAN

PLEASE do not go for any of the pension plans or even ULIPs if you want create a pension at age 58 or 60.

PENSION depends upon ONLY 2 things -

1) IMMEDIATE ANNUITY RATES WHEN YOU ARE 58 or 60

2) YOUR CORPUS at the time of RETIREMENT.

The first one is not in your hands. Second one is entirely in your hands. So do not bother about PENSION. Bother about the size of your CORPUS at the time of retirement. Your insurance agent will disagree.
His commission is based on your FIRST premium.

If you go for any INSURANCE scheme - if your life is covered - risk premium is deducted from your premium contribution. Then the agent's commission and the charges by the insurance company including managing your investment are deducted. By getting into any insurance scheme - you are limiting your corpus. Insurance companies are not very transparent about their charges. SO regarding INSURANCE - have enough PURE TERM COVER WITH NO MATURITY VALUE.

For investment go for SIP in Diversified equity Funds. If you create a good corpus - you can automatically create a good pension by investing in any immediate annuity scheme at that time.

You can invest in the following 6 funds via SIP of Rs 4000 each

1) HDFC TOP 200

2) DSPML TOP 100

3) Sundaram Select Focus

4) Birla Frontline

5) Reliance Growth

6) DWS Investment opportunity

Opt for DIVIDEND REINVESTMENT. This gives you an opportunity to shift to dividend payout at the time of retirement. If your dividend income is enough - you have the option to stay invested and enjoy tax free dividend income instead of ANNUITY - which is taxable.