Pvt Life insurers policy issuance dips 35% since April

The pension saga continues to take toll on the life insurance industry, particularly for the private players, as the number of policies issued by them is down by nearly 35 per cent, in the current financial year.

During April-October period, the number of policies issued by the largest life insurer, Life Insurance Corporation (LIC) of India, too, declined by eight per cent in the same period. As a result the first year premium collection of the life insurance industry, was down by 20.04 per cent to Rs 55,737.84 crore as against Rs 69,707.92 crore in the corresponding period last year.

According to the data collected by the Insurance Regulatory Development Authority (Irda), during 2011-12, life insurance industry sold close to 19.6 million policies, 15.31 per cent lower, compared to 23.14 million policies sold in the same period last year. In the same period, number of policies issued by the private players came down to 4.15 million from 6.34 million.
“Pension plans, which consisted of about 30 per cent of the sales, specially for the private players till the new regulations came into force in September 2010, now account for only 1.7 per cent of sales. Hence, the sales are down,” said S B Mathur, secretary of the Life Insurance Council.
The Council says premiums collected from pension plans dwindled to Rs 600 crore in the first

Why Term life Insurance policy is not attractive

The aim of any insurance plan is to protect the financial loss or expenditure due to any unfavorable circumstances. In case of life insurance policy also protect the financial loss due to the death or disability of the insured. A life insurance policy gives a specified amount (sum assured) to the insured in case disability and to the nominee in case of death of the insured. Most of the life insurance plans gives a specified amount (maturity value) at the end of the insurance period. But term insurance policies do not give any amount to the insured, if he or she is alive at the end of the specified term or maturity. So the insurance premium for term life insurance is comparatively very low than other life insurance policies.

The following table shows you the difference of a term life insurance policy and an endowment (a traditional type of life insurance) life insurance policy. Only Approximate figures for explain the difference.

Type of policy Term life policy Endowment

Age (Joining) 30 yrs 30 yrs

Annual Premium(Approx.) 10000 10000

Insurance Period 35 yrs 35yrs

Sum Assured 30,00,000 3,00,000

Maturity Value Nil 3,00,000 +

As pet the above table, in term life insurance, if the death of the insured happened any time before the maturity period (35 years) the nominee will get Rs. 30 Lakh. But in endowment life insurance the nominee will get only Rs. 3 Lakh. But if the insured is alive till maturity the term life insurance gives nothing, but the endowment policy gives Rs. 3Lakh plus bonus or loyalty addition as per the policy terms & conditions.

No maturity Value. The main disadvantage of the term life insurance policy is that it has no any maturity value. But when compare with the sum assured, we can see that the criticism has no value. To protect your family from insecurity you are paying this premium and can consider it as an expense for the financial stability of your family.

People wish to get back the money they are paying as premium. They do not think about the security which the term insurance policy provides. They value money more than security.

Normally nobody likes to die or even think about their death. Everybody think that they will live long. So they are not ready to spend this unnecessary expense.

But if you go for life insurance you must know the value of financial security, a life insurance policy assured than the money it gives back to the insured after few years. Any good saving scheme is suitable for this purpose and most of the time you can get back more from such saving schemes than life insurance policies.

If you want a sum assured of Rs. 3Lakh only, take a term life insurance for Rs. 3 Lakh sum assured and pay an annual premium around Rs. 1000 and invest the remaining Rs. 9000 in any investment scheme or even bank deposit, you will get back more than an endowment policy assured.

All figures in this articles are not actual, only approximate figures near about actual amount.

LIC likely to introduce four new products

Source: BusinessStandard
In view of the stable market scenario at present and sound economic conditions, LIC (Life Insurance Corporation) has planned to introduce at least four more products in the conventional and non-conventional category.

The insurance giant is planning to introduce a new pension system on pilot basis to encourage people from the unorganised sector to voluntarily save for their retirement. The insurance major will not enter banking business but its subsidiary is in process of obtaining banking license.

Speaking to Business Standard, LIC managing director AK Dasgupta said, “It is the right of every investor to enter the market, it is not going down further. The fundamentals of the market are very strong. Market conditions are very favourable for investors if they want to stay for long. They can invest in conventional and non-conventional products, provided they have a proper strategy.”

In view of the favourable conditions, he said, it was the right time for LIC to introduce new products. Without naming the products he said, “There will be at least four products in both the categories and at least one for women, though we have one of the best products for women, Jeevan Bharti, available in the insurance sector.”
When asked if it was a strategy to mitigate the lower premium figures, he said LIC’s premium income was down since
investors entered the market when it had been touching as high as the 22,000 mark. “They (investors) wanted to make short term profits. The situation is not the same now. We want to ensure a significant market share to close the current financial year.” He ruled out LIC’s direct entry into banking business but said, “LIC Housing Finance will soon enter the banking sector.”
On a new initiative called ‘Swavalamban’, to be regulated by Interim Pension Fund Regulatory and Development Authority (PFRDA), he said, “We have chosen a few districts across the country and initiated the process for the product for people of the unorganised sector. If a subscriber invests Rs 1,000 in the product, the Central government will contribute an equal amount. The contribution by the government of India will be available for the current financial year and three years thereafter. Any citizen, who is not part of any statutory pension scheme of the government and contributes between Rs 1,000 and Rs 12,000 per annum, can join the Swavalamban Scheme.”
Expressing his dissatisfaction over the central zone, Dasgupta said, “There is enough scope for them to do business by any channel, be it direct marketing for any other alternate channel.

shrinking for groth

Govt may relax LIC's equity exposure cap

The government is set to relax the equity exposure norms for Life Insurance Corporation (LIC), the largest institutional investor in the country, albeit with some riders. A finance ministry official said LIC would be allowed to increase its exposure to more than 10 per cent in corporate entities. At present, LIC can invest up to 10 per cent of capital employed by the investee company, or 10 per cent of the fund size in a corporate entity, whichever is lower. The capital employed includes share capital, free reserves and debentures or bonds.
The caveat, however, is the insurance behemoth would have to prune its book in illiquid stocks and unlisted investments, which constitute around Rs 5,000 crore, or two per cent of its total equity investment corpus.

LIC’s total investment corpus stood at nearly Rs 11 lakh crore as on March 31, 2011, of which 20 per cent, or Rs 2.2 lakh crore, was in equity. During 2010-11, LIC invested Rs 1.96 lakh crore, of which Rs 43,000 crore was invested in equities. In the current financial year, the insurer has plans to invest a similar amount in equities.
To be sure, LIC currently has equity stakes more than 10 per cent in 37 listed companies. Three years ago, the insurance regulator, Irda, proposed bringing down LIC holdings to under 10 per cent in all listed companies. However, it did not follow up on the proposal, given the anaemic state of the markets at that time.
There are around 100 listed companies in which LIC currently holds five to 10 per cent stake. Irda (Insurance Regulatory and
Development Authority) has already indicated it may relax the debt investment norms for LIC. The regulator is willing to allow it to invest up to 20 per cent in debt in a particular company. Currently, LIC’s debt exposure in a single company is capped at 10 per cent. However, this additional exposure may be allowed only for exchange-traded debt issues.
According to LIC sources, the equity investment portfolio of the insurer includes investments in more than 400 unlisted firms and the book value of such firms is estimated at Rs 1,500 crore.
The important unlisted companies where LIC has significant stakes include IL& FS, National Stock Exchange, Bombay Stock Exchange and UTI AMC. The directive, if it comes through, would mean LIC would have to come out of these investments over a period of time.
Besides, the ministry is of the opinion LIC's exposure in these companies (unlisted and illiquid stocks) is more than “desirable” and will have to be brought down to “comfortable” levels, not more than Rs 1,000 crore.
"Most of these investments, particularly the unlisted ones, are very old and have generated a significant value. So, it will not be difficult to come out of these investments. It should be brought down over a period of time, since most of it is policyholders’ money.
In the first phase, it should be brought down to Rs 1,000 crore of the total equity corpus,” the official added.
When contacted, a senior LIC official said the insurer had already initiated the process to prune illiquid stocks from its equity portfolio and unlock some of the longstanding unlisted investments. However, he added LIC was yet to receive any official intimation from the ministry in that regard.
"We have been demanding the relaxation in the equity exposure norms for a long time. Though we have been getting some indications the government is considering it, we are yet to get any official intimation,” the LIC official said. “We are aware of the ministry stance and we have been pruning our unlisted and illiquid exposure and trying to book some returns, whenever possible.”
In the current financial year, LIC knocked off more than 60 illiquid scrips and came out of certain unlisted investments as well, he said.
"Nearly 60 per cent of the stocks trading in BSE are illiquid, and since these involve policyholders' money, we have always been very selective about investing in stocks. All these have led to concentration of holdings in some companies,” he said.

LIC's operating cost is far lower than the international standard

LIC's operating cost was 6.58 per cent of premium in 2009-10 which is far lower than the international standard of 10-15 per cent.
With cost-consciousness and divergent distribution channels, more insurers are likely to make profits and the industry may head for brighter days ahead.
Life insurance sector has witnessed rapid growth in the past decade with private players entering the fray. Assets managed by the insurers have grown manifold in this period, even outpacing the mutual fund industry and the insurers have become a force to reckon with even in stock market. When the life insurance sector was opened up in 2000, the premium collected to the gross domestic product (GDP) was 1.77 per cent; this has risen to 4.6 per cent by 2009-10.
LIC, the only player in the life insurance sector in 1999-2000, collected Rs 34,897 crore that year. According to the Insurance Regulatory and Development Authority (IRDA), total premium underwritten by the life insurance sector was Rs 2,65,450 crore in 2009-10.
Although the topline of the insurers grew at double-digit till 2009-10, the bottomline of several private insurers are in the red, despite a decade of operation. The total accumulated losses of private life insurers was over Rs 20,143 crore by March 2010.
However, the silver lining is that according to
the I–Save.com report, as many as 12 out of the total 23 insurers turned the corner and made profits for the year ended in 2010-11.
Distribution
For any business, distribution is the key to success. Prior to 2000, LIC operated only through the tied agency (individual agents) model and individual agents continue to account for more than 90 per cent of the business currently. Private insurers too banked on individual agents to market their product, but over time they diversified their distribution channel to bancassurance (insurance sold through banks), brokers and corporate agents. Currently, tied agency accounts for just 50 per cent of the overall business of private players.
This is likely to go down further mainly on account of the regulatory changes which rationalised the commission structure for the agents. Recent IRDA guidelines that came into effect from July 2011 stipulate that agents which fail to achieve a persistency rate of 50 per cent will lose their licences. Two years from now, agents will have to ensure that at least three fourth of their policies sold in the previous year are renewed to qualify for a licence renewal.
This regulation will pave way for only serious agents to stay in the business. Going forward, the bancassurance channel is likely to contribute a chunk of new business premium. This, in turn, will reduce the operating expenses and may aid profitability for these companies.
Regulatory changes
Unit-linked insurance products or ULIPs are perhaps the most widely discussed and written about financial product. After their launch, the insurance industry witnessed phenomenal growth. However, IRDA has brought about many regulatory changes in this product.
Till the 2008-09 equity market crash, ULIPs accounted for more than 90 per cent of the products sold by some insurers, but due to stiffer regulation, volatile equity markets, cut in the agent commission and cap on charges for the ULIPs, the industry has been forced to reduce its dependence on ULIPs and it currently accounts for 55-60 per cent of the overall sales. Now, the product mix is slowly drifting in favour of traditional insurance products, which are yet to face the scrutiny of the regulator.
Profitability
After chasing the new business premium for several years, insurers have recently turned their focus on profitability rather than topline growth. The major reason for poor profitability was the higher operating expenses of life insurers. Agent commissions, generally perceived to be the lion's share of expenses, accounted for 6.85 per cent of the premiums collected while the other operating expenses accounted 10.85 per cent.
Life insurance companies' operating efficiency is measured by the ratio of operating expenses to gross premium income. According to the IRDA, in 2009-10, operating expenses of private life insurers was down to 20.86 per cent of the premium collected against 25.99 per cent incurred in 2008-09. Although the operating expenses moderated, the ratio remains in the band of 15-30 per cent for individual insurers.
Private insurers which have focussed on building distribution channels, branch offices and other infrastructure have had to bear higher expenses. Among the private players, SBI Life's operating expenses is among the lowest at 6.3 per cent.
In contrast to private sector insurers, LIC's operating cost was 6.58 per cent of premium in 2009-10 which is far lower than the international standard of 10-15 per cent. However with an average cost ratio of 21 per cent, other Indian private insurers are a long way off from meeting international norms.
By reducing operating costs, already eight of the 23 private players such as SBI, ICICI Prudential, Bajaj Allianz, Max New York Life and Aviva India have turned profitable in 2009-10. However, the sustainability of profits depends on persistency. Persistency is the per cent of policies that are continued for a specified period that varies between 13 months and 25 months. Persistency is denoted in conservation ratio.
The conservation ratio (renewal premium collected current year to total new business premium plus the renewal premium of last year) of top five private life insurers is, however, not encouraging and according to I–Save.com 2011 report, SBI Life's conservation ratio is at 47.9 per cent, Birla Sun Life's 56.3 per cent and ICICI Pru's, HDFC Life's and Bajaj Allianz's were all below 70 per cent.
Way forward
For life insurance companies, having multiple offices in metros is unnecessary since customer footfalls occur mainly for paying renewal premiums. After spending huge money on office infrastructure, several insurers are now moving towards rationalisation of the offices.
In the last two years, offices of the private insurers have decreased to 8,768 from 8,785. Since opening up of the sector in 2000, this is the first time that negative growth was observed in the number of branch offices.
Consolidation is visible in the insurance industry in the form of private players ceding stakes to foreign partners. The Bharti group has already reached agreement to sell its business to Reliance Industries.
On the other hand, Reliance Capital sold a 26 per cent stake in its insurance arm to Nippon Life for over Rs 3000 crore. Max New York Life sold 4 per cent stake to Axis Bank and had a marketing tie up.
After witnessing double-digit growth for most part of last decade, the industry witnessed negative growth in the early part of 2011. But the changes that will have the greatest impact on cost are the use of technology to offer products online and expanding the products mix by launching health insurance products.
Non-life insurance, which currently accounts for 0.6 per cent of GDP, offers great potential for life insurance companies.
With cost consciousness and divergent distribution channels, more insurers are likely achieve profits and the industry may head for brighter days ahead.

Education Loan

Education Loan
get loans for higher education in India / abroad


Learn more about our Education Loan Scheme under TMB Retail Loan Products.

This is scheme of choice for parents who wish to educate their children in professional courses in India / Abroad and help them get graduation / post graduation in any field of choice of the student. The cost of the education can be born by the loan from our bank.
Student Eligibility
Should be an Indian National.
Secured first class and wish for admissions in Professional / Technical / Other Courses of various studies.
Secured admission to foreign University Institutions.
Any Student who has attained the age of 18 years or Parent of the Student can avail the loan.
Eligible course of study
Studies in India
School education / Graduation / Post Graduation Courses.**
Professional courses: Engineering, Medical, Agriculture, Veterinary, Law, Dental, Management, Computer etc.
Courses like ICWA, CA, CFA etc
Courses conducted by IIM, IIT, IISc, XLR1, NIFT etc.
Courses offered in India by Reputed Foreign universities.
Studies Abroad
Graduation: For Job oriented Professional / Technical courses offered by reputed universities.
Post Graduation: MCA , MBA , MS, etc.
Courses conducted by CIMA-London, CPA in USA etc.
**When the age of the student is below 18, Loan may be sanctioned to his parents by complying the relevant condition mentioned further below.
Expenses considered for Loan
Fee payable to College / School / Hostel.
Examination / Library / Laboratory fee.
Purchase of Books / Equipments / Instruments / Uniforms.
Caution Deposit / Building Fund / Refundable Deposit supported by Institution Bills / Receipts.
Travel expenses / passage money for studies abroad.
Purchase of computers - essential for completion of the course.
Any other expense required to complete the course - like study tours , project work, thesis etc.
Quantum of Finance
Need based finance subject to repaying capacity of the parents / students with margin and the following ceilings: For Studies in India - Max. Rs. 10 Lakhs, For Studies Abroad - Max. Rs. 20 Lakhs.
Margin
Upto Rs. 4 Lakhs - Nil.
Above Rs. 4 Lakhs - Study in India - 5%.
Above Rs. 4 Lakhs - Study Abroad - 15%.
Security
Upto Rs. 4 Lakhs - No Security
Above Rs. 4 Lakhs upto Rs. 7.50 Lakhs Suitable Third Party Guarantee
Above Rs. 7.50 Lakhs and upto Rs. 20 Lakhs - 100% collateral in any of the form of Immovable property / NSC / Units of UTI / LIC policy / RBI Bonds or any transferable Government securities.
Capability Certificate
Foreign Universities require the students to submit a certificate from their bankers about the sponsor’s solvency and financial capability, with a view to ensure that the sponsors of the students going abroad for higher studies are capable of meeting the expenses till completion of studies. Charges: Rs. 100.00 per Lakh or part there of. Minimum Rs. 100.00, Maximum Rs. 500.00
Rate of Interest
Upto Rs. 4 Lakhs - BR + 3.50% (14.25% p.a.).
Above Rs. 4 Lakhs upto Rs. 7.50 Lakhs - BR + 3.50% (14.25% p.a.) *.
Above Rs. 7.50 Lakhs upto Rs. 20 Lakhs (With 100% Collateral Only) - BR + 3.00% (13.75% p.a.).
* Interest Rate Concession by 0.50% if covered by 100% and above collateral security.
Additional Incentive of 1% in R.O.I for servicing the interest during study and moratorium period.
Current Base Rate for Lending (BR) is 10.75% p.a.
Penal Interest
Any irregularity or default in repayment will attract penal interest of 2.00% p.a. over and above the above rate of interest or at such rates prescribed by the bank from time to time on the balance outstanding.
Disbursement
The loan will be disbursed in staged as per the requirement / Demand directly to the institutions / Vendors of books / Equipments / Instruments.
Sanction/Disbursement
All usual documents as per Bank’s Rule should be obtained. The Loan to be disbursed in stages as per the requirement / demand directly to the institutions / vendors of books / equipments / instruments to the extent possible.
Repayment
Holiday / Moratorium Period: Course period + 1 year after completing the course. If the student got employed within 1 year after completion of the course, the repayment should start immediately after the expiry of one month from the date of employment.
Maximum Repayment period of Loan: The loan to be repaid in 5-7 years after commencement of repayment. If the student is not able to complete the course within the scheduled time extension of time for completion of course may be permitted for a maximum period of 2 years. If the student is not able to complete the course for reasons beyond his control, sanctioning authority may at his discretion consider such extensions as may be deemed necessary to complete the course
Follow Up
Branch to contact college / university authorities to send the progress report at regular intervals in respect of students who have availed loans.
Guarantee / Co-obligant
Guarantee of Parents.
In case, the loan is sanctioned to Parents suitable third party guarantee is to be obtained.
Wherever loan is sanctioned to Parents, guarantee is to be obtained from the student on attaining his majority.
Interest Payment
Payable at monthly rests from the date of availment of loan. A separate Letter of undertaking is to be obtained from the Parent / Guarantor that the monthly interest will be paid from the income of the Parent / Guarantor.
Processing Charges
1.00% of Limit sanctioned without any maximum cap for studies abroad. No processing / upfront charges may be collected on educational loans for studies in India.

All the above Terms and Conditions are subject to change and sanctioning of the loans is at the sole discretion of the Bank. Service Tax on All Service Charges extra wherever applicable.
Download the Application Form:
http://www.tmb.in/retail_education_loan

Irda wants senior agents to mentor new ones

Insurance agents with more than five years of experience are in for a pleasant surprise. In a move that could provide additional income avenues to these agents, the Insurance Regulatory and Development Authority (Irda) plans a new set of agents — senior agents — to mentor junior agents.

In a recent discussion paper, Irda had suggested senior agents be allowed to mentor up to 15 licensed agents at a time, and as an incentive, the senior agents would be entitled to 25 per cent of first-year commissions on the policies sold by agents mentored by them.

   The move is expected to increase the productivity of the agency force in the insurance industry, lure more agents into the system and, most important, throw up additional avenues to experienced agents, particularly those solely dependent on commissions earned for their livelihood, said J Hari Narayan, chairman, Irda.
HANDHOLDING
* Those with 5 years of experience would be eligible to be senior agents
* To be a senior agent, an agent should have at least 100 policies in force
* A senior agent would monitor up to 15 new or junior agents
* They will get 25% of commissions earned by those they mentored in the first year



“Agency as a profession is becoming less attractive to the younger generation. We have seen only 15-20 per cent of the total agency force is solely dependent on commissions for their livelihood. Hence, in a bid to empower these agents and attract new people, there is a need to do something substantial about the agency channel,” he said.

Agents with at least five years of experience, and at least 100 operational policies, would qualify as senior agents. Insurance companies have been asked for their response by the end of this month.

Empowering experienced agents is important, since over the last one year, more than 500,000 agents left the industry, owing to low commissions and declining sales. The impact has been more severe for the life insurance sector, in which 85 per cent of the premiums collected are accounted for by the agency channel. According to Irda data, the number of agents in the insurance industry is around three million.

Insurance industry officials said Irda aimed to take the help of experienced insurance agents to revive the agency business as a profession and nurture new talent, since lately, an agency is often seen as a part-time business.

“As a result of low productivity, most agents who continue work part-time, and the profession is largely perceived as a low-income one. There is a need for steps to strengthen the agency system and provide agents with a suitable growth path for professional development through the sale of insurance products,” the discussion paper said.
Niladri Bhattacharya / Mumbai November 17, 2011, 0:00 IST

Why health insurance can’t be sold like life insurance

Direct selling as well as setting up a robust claim handling machinery and having a good product is a must for successful sales of health insurance plans
The Life Insurance Corp. of India (LIC) launched its health insurance policy “Jeevan Arogya” with much fanfare on 1 June, following the footsteps of its reasonably successful LIC Health Plus (a unit-linked insurance plan or Ulip) in January 2008. It is an open secret that the new product is not doing well and LIC’s famed agency force is by and large cold to the offering. This has been more or less the story for most of the health insurance products launched by life insurance companies, whether it is ICICI Prudential Life Insurance or HDFC Standard Life or Bajaj Allianz Life.

It is an interesting case study why all life insurance companies with their huge agency force (and bank assurance partners) have been unable to make a serious dent in the under-penetrated health insurance market.




However, the mystery is not that difficult to solve the moment you talk to a few industry insiders. Among the few who are willing to be quoted is Amitabh Chaudhry, managing director & CEO, HDFC Life Insurance. He says, “The problem here is that most of the insurance companies are looking at selling these products the way life insurance is being sold, like using same distribution channels, whereas ticket size is much lower in case of health. Thus it did not get the desired push.... they try to use the same mechanism for selling health, like companies have used the same salesperson who has been selling life insurance, though the mindset required is very different. No one has gone ahead to set up a separate distribution channel. Moreover, the management is treating it the same way and even the agents. The claims ratio is extremely high in case of health. There is a difference between life insurers and general insurers. Life insurers can sell three-year mediclaim, while general insurance can sell one-year mediclaim. This is an issue because funds are being locked here for three years. Besides there are some structural issues.”

Additional policy, not a substitute

The other issue is health insurance products of life insurance companies don’t really address the consumer’s main need of reimbursement of hospitalization expenses. All of them have a fixed sum in the range of Rs. 1,000-5,000 per day for each day of hospitalization. Clearly, this
sum cannot even come close to the actual cost of treatment for any disease in a decent hospital. This allowance is actually meant to cover incidental expenses such as loss of wages, expenses of the patients’ attendant or travelling expenses. Then most policies also offer a lump sum benefit for certain kinds of major surgeries. While this sum is substantial, it is only payable in case of specific surgeries and not for treatment of disease. Some policies also pay a lump sum if you contract some very serious disease such as cancer, stroke or organ failure.

Moreover, this money is not available for regular diseases. So all in all, these policies address a niche requirement of the customer and is actually meant to be in addition to, and not in substitution of, the regular mediclaim policies. Ironically, this is not the main reason for the lack of penetration by life insurance companies as only the more aware customers (who are very few) understand this. The real reason for the failure to sell health insurance lies elsewhere.

Distribution hiccups

Coming to distribution, life insurance agents in India have been brought up on a diet of selling high-value investment products with just a small dash of life insurance and a high dollop of commission. The whole focus of agency force is to build a relationship with the insured person to be able to sell him more products as well as get references that will again increase sales. Since the main motive is investment returns (and tax benefits), claims are far and few. Since the number of claims (as a percentage of the number of policies sold) is small, the number of death claims rejected is even smaller as a result of which even the one odd rejection of death claims by the life insurance company does not really impact the relationships built by the agents (in any case the specific client whose claim is rejected is dead so the relationship comes to an end anyways). There is relatively low impact of lack of disclosure in the proposal forms which the agent gets signed as blank from the customer and fills up later.

Contrast this with health insurance. Firstly, it tends to be taken for all the family members and not just the client. Claims are inevitable. Given the low claims from its bread and butter life insurance business, the insurance companies are not really geared with a well-oiled claim handling machinery, which can tackle the deluge of claims that are inevitable in health insurance. As a result, the claim settlement tends to get delayed. The agent is also not geared to provide assistance to multiple clients at the same time. The client is still around and the agent has to bear the brunt of the client’s ire. The relationship becomes strained for a product that has low annual premiums (as compared with high investment premiums that the agent is normally used to getting) and low commissions (again as compared with investment-oriented policies). The agent also runs the risk of losing the client’s lucrative life insurance business. This is the major reason why most life insurance agents steer clear of the health insurance product.

According to a good friend who is among the top agents for LIC in India, “I rather tell a client that we are not able to assist him with health insurance than lose him forever.” In fact, the number of agents who sell health insurance only is an insignificant fraction of the three million-plus life insurance agents. This is the reason behind the lukewarm response to LIC’s Jeevan Arogya. The agency force is aware of the several claim issues that are yet to be sorted out from the earlier LIC’s Health Plus and want to steer clear of the new product.

One possible way out is to sell these plans through the Internet and phone only. Since the client purchases the product on the Web or on the phone, he does not really expect the same telephone/chat agent to help him if a claim arises and he will approach only the company in case of claim. Direct selling as well as setting up a robust claim handling machinery and having a good product is a must for successful sales of health insurance plans. The distance marketing guidelines that have come in force from 1 October should also help.

Life insurance companies can play a significant part in spreading the much-needed health insurance coverage in India and hopefully will be able to get over the initial bumps to make their entry into health insurance more successful.

Illustration by Shyamal Banerjee/Mint

Harsh Roongta is CEO, Apnapaisa.com.

We welcome your comments at mintmoney@livemint.com

How To Relax During Weekends

Weekends are always welcome after a week long indulgence in work. It brings with it the respite and relaxation which rejuvenates one for the next week's activity. But before one, realises, the weekend takes off on its wings, hardly being utilized the proper way.


Here are few weekend ideas or tips as to how to relax during weekends.


1.Let rest be the top prerogative on your weekend agenda, for it is the only time when you can really rest.

2.Complete your household chores in a more relaxed way and rushing into them in a dash to complete them. This only hamper the purpose of relaxing.

3.Engage your children in household activities like gardening or cleaning, which serves the double purpose of completing the job, while spending quality time with them, as well as relaxing.

4.Do not have too many engagements, even in the name of relaxation like visiting a theatre, going to a pub or the mall. While you may be interested in doing all of them, see to it that you allow some time for yourself .
5.Too many activities during the weekend may leave you with your energy ebbed.

6.See to it that you spend quality time with yourself in solitude. While it is very relaxing, it also allows you to assess yourself and pull up your socks for the following week.

7.While you may adhere to discipline, see to it that you do not get into a lot of scheduling, which may get you on your toes in fulfilling them, driving away relaxation.

8.Do not also keep away too much from activities, which will bring in boredom.

9.Spend your time with people whose company you really relish.

10.Last but not the least concentrate on a healthy diet and get yourself good sleep. This is the best way to relax and help you bounce back to work for the following week.

So go ahead with these simple weekend ideas and tips for relaxed weekend.
thanks oneindia
Regards..maanu

Special planning for ‘special’ kids

Every child is special.” If you recall, this was the famous tag line of the Oscar nominated Hindi movie, Taare Zameen Par. But if you indeed have a special child, a victim of a mental/physical handicap, the parent’s responsibility doubles. Especially when it comes to finances, parents have to make higher provisions for a special child given that the little one may never be able to earn a living for himself.
“When you think of financial planning for a child, the two major expenses are education and marriage. When it comes to a special child, over and above these conditions, you may have to provide for the income for the entire life of the child. More than the savings, it is difficult to arrive at a ballpark figure to take care of your child, as it may run into over 50 years of planning,” said Swapnil Pawar, financial advisor and director at Park Financial Advisors.
Even if the child could eventually generate income based on his abilities and skill sets, retirement planning should be done in a manner that the child has sufficient means of income through alternative sources.
“However, the margin of error will be significant. For example, if the figure works to Rs 50 lakh, then probably you have to save over a crore to meet your child’s expenses as things can drastically change in 5-6 decades. So, the modality of income generation can be complicated,” Mr Pawar adds.
Where should parents invest?
The investment plan will vary from family to family based on their overall financial situation. There is no silver bullet here. Asset allocation is key and knowing the kind of corpus and returns that you would need for your goals is paramount, experts say.
“As a general rule, a portion of the portfolio should be allocated to equity and this portion could be higher considering the time horizon in such cases (for retirement goal: parents as well as child’s) is more than 30-plus years. Parents should also have exposure to real estate (not as an investment, but as a residence),” said Amar Pandit, a Mumbai-based certified financial planner.
If you have two children, then you should ideally invest in a residence for your special child as housing loan EMI/rent is the biggest expenditure in an individual’s life-time.
“Debt can be added through PPF, EPF and more importantly, LIC’s Jeevan Aadhar (for special children or dependents). This policy provides for guaranteed additions at the rate of Rs 100 per rs 1,000 sum assured for each completed policy year and is a good option parents must consider,” he says.
Source: Economic Times

Customer is the king

Loyalty to Company A cannot/will not be rewarded by competitor company B. Why should they? Why not? This is the question experts and the Insurance regulator (IRDA) had raised a few years ago when discussing the issue of health insurance and the transfer of credits gained in a situation where a customer shifts from health insurer A to B.

This intervention by the IRDA has now resulted in good news for customers availing health insurance, especially th-ose who are not satisfied with their existing insurer. From October 1, 2011, health insurance has become portable and you are now free to move to another provider and ca-rry along all the credits gained for having been loyal.

New regime
To get a better perspective of the whole idea of portability we need to explore how things worked before 01/10/11. Let us say you were a customer, who had a Health Insurance policy with ABC Company, and were not satisfied with their service. You approached company XYZ to transfer your policy and they would have said that you will be treated as a new policyholder. Meaning, all the benefits you had accrued by regularly paying your premium to the earlier insurer would stand nullified and you would need to build your loyalty from scratch. It meant that money was wasted.

The IRDA defines portability as — “The right accorded to an individual health insurance policy holder (including family cover) to transfer the credit gained by the insured for pre-existing conditions and time bound exclusions if policy holder plans to switch from one insurer to another insurer or from one plan to another plan of the same insurer, provided the previous policy has been maintained without any break.”

From your perspective as a customer, you need to understand two major points from the above definition to realise how it applies to you.

When one avails of a health insurance policy, he is not given any cover for claims arising out of a disease/condition he/she is ailing from, on the day of taking the claim.

Nevertheless, if he/she continues as a regular premium payer for 4 years, then the insurance company will be bound to pay for claims arising out of the existing condition. In the past, if you shifted from one company to another, you were requ-ired to again do a premium paying term of 4 years to claim for PEDs.

Now, with portability, you can carry forward credits gained for pre-existing disease/condition to the new insurer from day one itself.

Time exclusions
Time exclusions in a health insurance policy are certain illnesses for which no claims will be entertained for a set period from the date of taking the policy. For example, treatment of conditions/diseases like cat-aract, piles cannot be claimed in the first 365 days of taking the policy. The reason for this is that these are treatments which can be postponed for many days and hence the insurance company could have individuals taking a policy just for claiming for such treatments. Such exclusions are called one-year exclusions, two year exclusions and so on till four years.

In case you were covered under the existing insurance policy for a period of one year, the waiting period of 30 days and first year exclusions will not apply in policy to be renewed. The two-year exclusions shall apply for a period of one more year. Pre-existing condition exclusion shall apply for a period of three more years. Similarly will be the case with two years, three years and four years exclusions, where the period already spent with the earlier insurer will be credited to you. This also includes the 30 day mandatory waiting period. This helps the customer.

(The writer is the CEO of bankbazaar.com)

IRDA wants insurers to disclose pension benefits upfront

Insurance regulator IRDA today asked all insurers, selling pension products, to disclose in the policy document maturity benefits, a move that will make it easier for individuals to opt for the best policy as per their needs.

While issuing guidelines for pension products, IRDA said, “All pension products shall have explicitly defined assured benefit that is applicable on death, on surrender and on vesting, which is disclosed at the time of sale.”

The new guidelines by the Insurance Regulatory and Development Authority (IRDA) will come into force from December 1, 2011. Existing pension products, which do not comply with the guidelines, will have to be withdrawn from January 1, 2012, it said.

The guidelines do away with the earlier requirement of providing a minimum guaranteed return of 4.5 per cent on all pension products that did not find favor with life insurers.

The insurers at the time of sale of policies would have to make an illustration of the returns which it is expected to provide, in the range of 4-8 per cent, to the policyholders.

“The need for greater security of the pensioner’s fund and the stability and financial viability of the insurance companies need to be balanced for healthy growth of the sector,” IRDA said.

In September 2010, IRDA introduced guidelines for pension products which mandated returns on such products to be linked to the reverse repo rate and the minimum guaranteed return was fixed at 4.5 per cent.

The guidelines did not find favor with insurers, who argued that they would be forced to invest only in debt instruments.

Following this, there was a decline in the sale of pension products as private insurers did not come out with any regular premium unit-linked pension products.
Read more at: http://profit.ndtv.com/news/show/irda-wants-insurers-to-disclose-pension-benefits-upfront-187127?cp

Irda may crunch illustration rates for life plans next year

It is difficult to resist an insurance policy that pays around Rs52 lakh on an annual investment of Rs1 lakh for 20 years. This is assuming a growth rate of 10% each year; the Insurance and Regulatory Development Authority (Irda) allows agents to show growth at 6% and 10%.

So when the agent points out at this figure in the benefit illustration of the policy, you tend to think your policy will actually match the return mentioned. What you may not realise is that these are just assumed rates of growth and only for illustrative purposes.

This has become a matter for concern for the regulator, which is considering altering the rates to make the illustrations more conservative. In fact, as a step towards putting this theory in practice, the new guidelines on pension plans issued on 8 November have reduced the illustration rates to 4% and 8%.



File photo of IRDA chairman, J HariNarayan. Photo by Bharath Sai.

Says J. Hari Narayan, chairman, Irda: “The rates used for illustrative purposes are pitched too high and the fear is that these projected returns when seen on a piece of paper may cause some sort of an illusion in the minds of the customers, who will believe the assumed rates as the real return of the policy. Therefore, the rates of return need to be a little conservative.”

The regulator’s concerns are not unfounded. While in unit-linked insurance plans (Ulips), a 10% assumed rate of return may still hold water, considering that over period above 10 years equities are capable of returning at least 10-12%, it is too high a number for traditional plans that invest mainly in debt products.

Why do you need an illustration?

The illustrations help a customer understand a policy better. Basically, a benefit illustration is a year-by-year summary of costs and benefits and how costs will affect the growth of your fund. While costs are known in the policy, one needs to assume a rate of return in order to show the implication of these costs on the returns. To provide a solution, the regulator allowed two rates: 6% on the conservative side and 10% on the aggressive side.

In the example mentioned above, a sum of around Rs52 lakh means a return of 8.41%. A net yield of 8.41% on an assumed rate of 10% means the cost impacts the return of the policy by 1.59 percentage points.

The problem

Chances are that the actual impact of cost may get buried under the hefty sum of Rs52 lakh that a projected rate of 10% offers. Says Narayan: “Projections on paper have a greater authority and a customer starts expecting the same returns that he sees on paper. That is digressing from the purpose of an illustration which is to indicate the costs and benefits of a policy to the customer. By having a conservative rate, the customers’ expectations will not be unrealistic and the focus will be on the main purpose of the policy.”

But the insurers argue that in case of Ulips, which invest up to 100% in equities, a 10% return may not be too euphoric. Says Puneet Nanda, executive director, ICICI Prudential Life Insurance Co. Ltd: “For Ulips that invest largely in equities, a return of 10% over a long term is achievable. However, if Ulips are investing in fixed-income instruments, then a 6% rate should hold good.”

However, in case of traditional plans that invest largely in debt products, the projection of 10% may be unrealistic. Agrees Kamalji Sahay, CEO, Star Union Dai-ichi Life Insurance Co. Ltd: “Traditional plans offer moderate to conservative returns. In the last 15 years, the returns have been an average of 5%, including bonuses. Hence, if the illustration shows an yield on an assumed rate of 10%, it is not only unrealistic but will also lead a customer to believe that the policy is capable of such returns. In the case of traditional plans, 4% on the conservative side and 8% on the aggressive side should be good.”

The proposed solution

The regulator is still deliberating upon the new illustration rates to be taken for illustrative purposes in life insurance policies. According to the regulator, it may clip the 10% assumed rate to around 7-8%.

However, any changes in this regard will come through only next year. Says Narayan: “This is the wrong time of the year to introduce any changes since insurers do a lot of business in this quarter and the next quarter. Any change will come through only after April or May.”

The regulator is increasingly looking at ways to make insurance policies user friendly, but in order to get the best out of a policy illustration, look at these things: the impact of costs on your return in the case of Ulips and the guaranteed payout in the case of traditional plans.

deepti.bh@livemint.com

Tests get tougher for insurance agents Published: Thursday, Nov 10, 2011, 10:00 IST

Things were much easier for life insurance agents before. But it all changed after October 1, 2011, when the new syllabus took effect.

A simple comparison will help. The older syllabus would see at least 7 out of 10 clear the test. However, under the new framework - which is considered much tougher - only 4 out of 10 applicants are expected to get past the hurdle.

“After the new syllabus, the examination has got stricter. But this will only help us in producing quality and professional agents.

Earlier, the passing percentage was as high as 70% against the current 38% for the industry,” said Rajesh Sud, managing director and CEO at Max NewYork Life Insurance.

“Agents contribute 90-95% to our premiums received. Candidates will take time to get hold of this new examination. Passing percentage and rapid recruitment both have definitely taken a hit,” says RR Dash, zonal manger, Life Insurance Corporation.

Experts say this switch in the syllabus has a bigger purpose: to help agents grasp the nuances of the market and understand the needs of the customer better. Also, a revamped pattern, they add, will be useful in enhancing their product selling skills to meet the customer’s requirements.

“Recruiting life agents has always been challenging for the industry. Some 30% of our business comes from the our agency force, and now with the falling success ratio, recruiting may get affected too,” says Aneesh Khanna, senior vice president head- marketing & product management, IDBI Federal Life Insurance.

There is a contrarian view though. Some say the change in the syllabus is beneficial up to the extent of only producing quality agents as the cost incurred by the players does not measure up to the outcome. “Cost for training of agents has gone up at least 6-7 times as against the cost incurred when the older syllabus was in place. Also, the new syllabus is not very different and advantageous from the older one,” says GN Agarwal, chief actuary at Future Generali Life Insurance.

“The cost of training has definitely shot up, but compared to private players, we have not been much affected as we have our in-house training department,” added Dash of LIC.

In addition, this has not only affected the performance of urban candidates, but also the participation of candidates from rural areas which has slipped significantly. If the passing percentage continues to remain low, this may also impact the business of those insurers whose major chunk of business comes from their agency force.

How to redress your grievance online

Shilpy Sinha & Preeti Kulkarni, ET Bureau

The protection of policyholders' interest, it seems, is on the top of the agenda of the Insurance Regulatory and Development Authority (Irda). Through a media campaign, it has increased focus on educating policyholders and publicising the grievance redressal mechanisms.

It has also introduced the Integrated Grievance Management System (IGMS), a platform to help customers lodge and track their complaints online. The regulator also has a grievance cell, besides several Insurance Ombudsman offices.

Consumer activists are still sceptical about the series of steps being taken by the regulator to protect policyholders' interests, but one cannot deny the need for a campaign to create awareness about the intricacies of the existing grievance redressal mechanism.
In case of life insurance, grievances pertain to unilateral change of policy terms and conditions after issuing a policy, and rejection of claims on grounds of suppression of material facts by the insured.

In general insurance, the list includes non-settlement or partial settlement of claims, delay in approving the claim, refusal to renew health insurance policies and loading of premium.

Whatever be the grievance, your first stop for redressal has to be your insurance company. You can register your complaint through a branch office, phone, email , website, etc. You can also approach the company's grievance redressal officer.

Insurers are required to acknowledge your complaint in writing within three working days of its receipt. The grievance redressal norms also require the company to specify the period by when it is likely to be resolved.

If a resolution is effected within three days, you will be intimated. If not, the company will have two weeks to send a final letter of resolution. But, if your complaint is rejected, the company has to disclose the reason and also inform the policyholder about other redressal avenues available.
The next step is to take your grievance to the regulator through IGMS, IRDA Grievance Redressal Cell or the insurance Ombudsman offices. Most companies barring a dozen are now integrated on the IGMS platform. The idea behind setting up the IGMS is to monitor complaints and analyse patterns.

The nature of the complaints varies, but the most common complaint in life insurance is that of policy bond not reaching customers. In case of nonlife, it is non-settlement of claims. Once we receive complaints we escalate the case to senior executives of insurance companies.

With IGMS, you can route your complaint through the newly launched website (www.igms.irda.gov.in). You need to register yourself on the portal to file and, later, track your complaints. Once lodged, the complaint is forwarded to the insurer concerned.

The details of the complaint can be viewed online by the consumer, the insurance company and the Irda. A token number is provided by Irda for subsequent follow-up. However, no action is taken on the complaint by Irda, and it is for the insurance company concerned to deal with the grievance.
This apart, Irda already has a grievance redressal cell in place, which would be your next stop should the insurer fail to resolve your complaint.

You can do so by dialing 155255 or by sending an email to complaints@irda .gov.in.

The cell does not pass orders, but complaints received are taken up with the insurers.

Do not rely on others to file your complaint, as the ones sent in by third-parties like lawyers or agents are not considered by the cell.
Unlike the Grievance Cell, the Ombudsman has the power to pass orders. It addresses issues related to rejection or delay in settlement of claims, disputes on premiums, and non-issuance of a document after collecting the premium. Complaints have to be filed with the Ombudsman office under whose jurisdiction your complaint will fall.

Cases entailing a value of up to Rs 20 lakh fall in the ambit of Ombudsman's powers. Recommendations can be made within a month of the receipt of the complaint, while a verdict has to be given within three months. If need be, the Ombudsman can also award compensation to the policyholder.

The Ombudsman is appointed by the Insurance Council and is supposed to be independent; the order passed by the Ombudsman is binding on the insurance company, but it is open to the insured whether to accept the award or file a consumer complaint if he/ she is dissatisfied with such an award.

If you feel the order is in your favour, you are required to intimate the Ombudsman within 15 days. You can also approach consumer forums or civil courts for relief if the insurer fails to comply with the Ombudsman's order or you are not satisfied with it.

Private players chase premium SURESH PARTHASARATHY

With cost-consciousness and divergent distribution channels, more insurers are likely to make profits and the industry may head for brighter days ahead.

Life insurance sector has witnessed rapid growth in the past decade with private players entering the fray. Assets managed by the insurers have grown manifold in this period, even outpacing the mutual fund industry and the insurers have become a force to reckon with even in stock market. When the life insurance sector was opened up in 2000, the premium collected to the gross domestic product (GDP) was 1.77 per cent; this has risen to 4.6 per cent by 2009-10.

LIC, the only player in the life insurance sector in 1999-2000, collected Rs 34,897 crore that year. According to the Insurance Regulatory and Development Authority (IRDA), total premium underwritten by the life insurance sector was Rs 2,65,450 crore in 2009-10.

Although the topline of the insurers grew at double-digit till 2009-10, the bottomline of several private insurers are in the red, despite a decade of operation. The total accumulated losses of private life insurers was over Rs 20,143 crore by March 2010.

However, the silver lining is that according to the I–Save.com report, as many as 12 out of the total 23 insurers turned the corner and made profits for the year ended in 2010-11.
Distribution

For any business, distribution is the key to success. Prior to 2000, LIC operated only through the tied agency (individual agents) model and individual agents continue to account for more than 90 per cent of the business currently. Private insurers too banked on individual agents to market their product, but over time they diversified their distribution channel to bancassurance (insurance sold through banks), brokers and corporate agents. Currently, tied agency accounts for just 50 per cent of the overall business of private players.

This is likely to go down further mainly on account of the regulatory changes which rationalised the commission structure for the agents. Recent IRDA guidelines that came into effect from July 2011 stipulate that agents which fail to achieve a persistency rate of 50 per cent will lose their licences. Two years from now, agents will have to ensure that at least three fourth of their policies sold in the previous year are renewed to qualify for a licence renewal.

This regulation will pave way for only serious agents to stay in the business. Going forward, the bancassurance channel is likely to contribute a chunk of new business premium. This, in turn, will reduce the operating expenses and may aid profitability for these companies.
Regulatory changes

Unit-linked insurance products or ULIPs are perhaps the most widely discussed and written about financial product. After their launch, the insurance industry witnessed phenomenal growth. However, IRDA has brought about many regulatory changes in this product.

Till the 2008-09 equity market crash, ULIPs accounted for more than 90 per cent of the products sold by some insurers, but due to stiffer regulation, volatile equity markets, cut in the agent commission and cap on charges for the ULIPs, the industry has been forced to reduce its dependence on ULIPs and it currently accounts for 55-60 per cent of the overall sales. Now, the product mix is slowly drifting in favour of traditional insurance products, which are yet to face the scrutiny of the regulator.
Profitability

After chasing the new business premium for several years, insurers have recently turned their focus on profitability rather than topline growth. The major reason for poor profitability was the higher operating expenses of life insurers. Agent commissions, generally perceived to be the lion's share of expenses, accounted for 6.85 per cent of the premiums collected while the other operating expenses accounted 10.85 per cent.

Life insurance companies' operating efficiency is measured by the ratio of operating expenses to gross premium income. According to the IRDA, in 2009-10, operating expenses of private life insurers was down to 20.86 per cent of the premium collected against 25.99 per cent incurred in 2008-09. Although the operating expenses moderated, the ratio remains in the band of 15-30 per cent for individual insurers.

Private insurers which have focussed on building distribution channels, branch offices and other infrastructure have had to bear higher expenses. Among the private players, SBI Life's operating expenses is among the lowest at 6.3 per cent.

In contrast to private sector insurers, LIC's operating cost was 6.58 per cent of premium in 2009-10 which is far lower than the international standard of 10-15 per cent. However with an average cost ratio of 21 per cent, other Indian private insurers are a long way off from meeting international norms.

By reducing operating costs, already eight of the 23 private players such as SBI, ICICI Prudential, Bajaj Allianz, Max New York Life and Aviva India have turned profitable in 2009-10. However, the sustainability of profits depends on persistency. Persistency is the per cent of policies that are continued for a specified period that varies between 13 months and 25 months. Persistency is denoted in conservation ratio.

The conservation ratio (renewal premium collected current year to total new business premium plus the renewal premium of last year) of top five private life insurers is, however, not encouraging and according to I–Save.com 2011 report, SBI Life's conservation ratio is at 47.9 per cent, Birla Sun Life's 56.3 per cent and ICICI Pru's, HDFC Life's and Bajaj Allianz's were all below 70 per cent.

Way forward

For life insurance companies, having multiple offices in metros is unnecessary since customer footfalls occur mainly for paying renewal premiums. After spending huge money on office infrastructure, several insurers are now moving towards rationalisation of the offices.

In the last two years, offices of the private insurers have decreased to 8,768 from 8,785. Since opening up of the sector in 2000, this is the first time that negative growth was observed in the number of branch offices.

Consolidation is visible in the insurance industry in the form of private players ceding stakes to foreign partners. The Bharti group has already reached agreement to sell its business to Reliance Industries.

On the other hand, Reliance Capital sold a 26 per cent stake in its insurance arm to Nippon Life for over Rs 3000 crore. Max New York Life sold 4 per cent stake to Axis Bank and had a marketing tie up.

After witnessing double-digit growth for most part of last decade, the industry witnessed negative growth in the early part of 2011. But the changes that will have the greatest impact on cost are the use of technology to offer products online and expanding the products mix by launching health insurance products.

Non-life insurance, which currently accounts for 0.6 per cent of GDP, offers great potential for life insurance companies.

With cost consciousness and divergent distribution channels, more insurers are likely achieve profits and the industry may head for brighter days ahead.

Keywords: cost-consciousness, divergent distribution channels, insurers, fife insurance sector, private players

Benefits befitting the modern woman

The fairer sex scores over men in terms of insurance policies that are tailor-made to suit them

In today’s day and age when the fairer sex has almost everything tailor-made to suit her modern day needs, there is no reason why she should not have exclusive financial products that cater to her. Women are moving away from being just homemakers to breadwinners. So it is evident that they, like their male counterparts, need financial protection and savings.

This makes them primary candidates for insurance products. Women in India however, are grossly under insured as of today. According to data available with IRDA, women constitute only a little over 20% of the total lives covered by the country’s life insurers, including LIC, the largest insurer by premium collected.

Although “women only” products are being marketed with much aplomb by insurers in India today, the fact is that insurance products for women have been in vogue in developed markets for quite some time now. Women in the US are major customers of health insurance and all women aged between 18 and 60 years do have some kind of health cover.

Though the premium differs in terms of age, the coverage is quite extensive. Women also have insurance policies that include comprehensive maternity coverage for the full scope of maternity services from preconception through postpartum.

Internationally women are being wooed by insurers to buy an auto or car insurance. Car insurance for female drivers is substantially low priced and has a much lower premium than that for male drivers, since it has been observed that male drivers commit a higher proportion of road offences, which result in more claims by them than by women.

In the US there has been a considerable rise in the women’s car insurance market due to the increase in the number of women drivers and their relatively lower claims. Women's car insurance policies are designed specifically for lady drivers. Along with the traditional coverage that provides financial protection for all cars, such policies include features like handbag insurance, which cover the policyholder's handbag and its contents if stolen while driving the insured vehicle.

The special services in this policy include ladies breakdown recovery, wherein the insurance company not only compensates for the breakdown but takes responsibility to locate the car and send help at the required destination.

A 24-hour emergency helpline is another added advantage. Women’s car insurance often gives cover for overnight accommodation if the car breaks down in a secluded region. In India, however, such highly customized products are a far cry.

Until now only LIC and Bajaj Allianz and Birla Sun Life in the private insurance sector have insurance products tailor-made for women. However, a clutch of private sector players such as Star Union Dai-ichi, Reliance Life Insurance, Future Generali Life Insurance and TATA AIG have fathomed the potential for women-specific insurance products and are believed to be launching such products by the end of 2009.

Micro-insurance initiatives taken up by several NGOs are also catering to women in rural India. These can’t be categorized as women-only products as they provide coverage for failed crops, loss of crop or cattle, accident and health. There is a definite client base among women for the same.

According to insurance sector experts, insurers earlier shied away from specific products for women because women have more complex health needs than men and in addition need cover for pregnancy and related reproductive health needs.

Women also have a high incidence of chronic illnesses for which they need to undergo continuous medical treatment. Moreover, women are exposed to risks of diseases such as osteoporosis and autoimmune diseases such as lupus, multiple sclerosis and rheumatoid arthritis - all of which require long-term treatment.

None of these things were specifically covered under unisex insurance policies. However, with statistics proving that women have a higher life expectancy than men and are making important financial decisions today have been the deciding factor for many insurers who are redesigning their earlier policies and putting in riders to suit the needs of the ladies.

“Women take important decisions in every household and at work. To cater to their special needs, we offer innovative, women-specific plans, which provide investment benefits, savings, retirement solutions and medical insurance. Our special plans help mothers plan for their children's education, save for the future and take care of all medical emergencies in the family,” says a senior official of Bajaj Allianz.

One might argue why should a woman buy an insurance plan, especially if she is a homemaker. Financial planning experts say that services rendered by a home-maker are valuable and can be quantified in financial term for insurance purposes.

Besides, she too needs an independent means of income for her old age and savings for health expenses. Further for a working woman, an insurance policy can bring about big savings on the tax front. Although it is not advisable to buy a life cover just as a tax saving tool, one must be aware of its implications.

Life insurance offers tax benefits under two heads - deduction and exemptions. Deductions are based on the amount invested and are cut from the gross amount. Exemptions can be availed on maturity. Thus, deduction up to Rs 1 lakh is allowed under Section 80C of the I-T Act on premiums up to 20% of the total sum assured.

For a health insurance policy deduction up to Rs 15,000 (Rs 20,000 in case of senior citizens) is allowed under section 80D of the I-T Act. These measures can be used by women as effective tax-saving methods.

Women today have a bunch of insurance products to choose from. The country’s premier insurer LIC offers Jeevan Bharti which is a money back policy for women. Besides, the life cover and periodic payments during the policy term, the plan covers women against critical illnesses and congenital disabilities in the newborn. These benefits are in-built and come at an extra cost.

Bajaj Allianz Life Insurance offers two different policies for women - Bajaj Allianz House Wives and Bajaj Allianz Working Women. Both these policies are designed specially for women and cover critical illness benefit, reconstructive surgery benefit for breast cancer, congenital disability benefit and complications of pregnancy benefit.

However, there is a cap on the amount of cover. In case of reconstructive surgery benefits due to breast cancer, a patient gets only 30% of sum assured (maximum Rs 30,000) for one breast and 40% of sum assured (maximum Rs 40,000) for two. The rider also covers the newborn for congenital diseases. The company has a limit of 50% of sum assured (maximum Rs 2.5 lakh) for two children.

Among others, Birla Sun Life Insurance offers a critical illness rider for women. It offers a maximum cover of Rs 10 lakh and covers 29 illnesses. Among non-life policies there is Birthright insurance, a mediclaim policy by New India Assurance that covers women between 18 and 40 years of age. Any expectant mother (up to three months pregnant) can buy this policy for coverage against specific congenital anomalies at the time of birth or within two years of delivery.

Experts, however, advise women to check out the features of the policy and read between the lines, before being taken in by the marketing spiel of insurance agents. Before buying, one must read the policy document carefully, particularly the exclusions. Does it really offer you something that an ordinary insurance policy will not? Or is it the policy which luring you into making a sub-optimal choice?

Let’s consider an example to illustrate better. LIC’s Jeevan Bharati policy is a case in point. It is a money-back policy aimed at women. A 25-year-old woman needs to pay an annual premium of Rs 7,345 for a cover of Rs 1 lakh for a 20-year term. The premium for a simple money-back policy with the same cover and tenure would be far less, at Rs 6,273.

The Rs 1,072 extra charged for Jeevan Bharati goes into providing cover against certain critical illnesses and even congenital deformities in children born after buying the policy. If a policyholder is diagnosed with any of the specified critical illnesses — including breast, ovarian and cervical cancer — she will get 50% of the insured amount immediately.

The money thus received may help her foot the fat medical bill of cancer treatment. That’s a real benefit, no doubt. But not every woman may require such a benefit, especially if she already has health insurance or has no plans to raise a family. The critical illness benefit in Jeevan Bharati is not optional — it comes bundled with the policy.

So anybody who sees a benefit in the health rider must also accept the abysmal 6% to 7% returns of money-back plans. That’s why women-specific plans work better as optional riders that can be attached to a base policy.
Another advantage that women get is they have to pay low premium on life cover. In life insurance, the younger you are the lower is your premium.

So a 38-year-old woman ought to pay a premium equal to what a 35-year-old man pays for a similar life cover. This is because the average life expectancy of a woman is around 67 years while for a man it is around 65 years.
Most of the other private insurers, even if they don’t offer special plans for women, offer them discounts on premium rates due to higher life expectancy in women compared to men.

Companies usually take a setback of two years while calculating the mortality charge. As per the company website, a 29-year-old woman has to pay Rs 3,188 per annum for Birla Sun Life’s Rs 10 lakh term insurance (20-year policy term), while for the same a male will have to shell out Rs 3,254.

However, while some companies do offer discounted premiums to their women customers there is evidence that the fairer sex is not getting a fair deal despite conclusive evidence of higher life expectancy.

Thus, while there are many benefits offered to women as of today as far as insurance products are concerned; there are several loopholes that need to be addressed. However, that is not an excuse for women not opting for insurance products.

Whether you are working or non-working, a life cover is a must. A term policy can be bought to fulfill this need. Beyond that, your financial health should decide whether they should buy a specific plan. Riders and plans do have some merit as they cover women-specific diseases, which normal health plans don’t. And they cover pregnancy-related expenses after a waiting period.

Before buying do check if you are already covered for the diseases mentioned under a group medical cover provided by your spouse’s or your own employers. With these few basics in mind, buying a women specific insurance product does make sense for the modern woman today, whatever be her role in the society.

Source: Nirmal Bang

Life Insurance Policy

Looking for Best & Cheapest Life Insurance Policy ? Compare Now !

MyInsuranceClub.com/Life-Insurance

Best Child Plans

Get him 50 Lakhs-Invest Rs125 a day Compare Lic,Sbi,Kotak,Hdfc,I-pru

www.bimadeals.com/Childplan

Health Insurance in UK

For most people in the UK, purchasing health insurance is still an affair of option, and one that they're reluctant to make. When there could be many causes for this procrastination, most of the time, people just do not look to trust that they may fall seriously ill, or stack-up ceiling high medical bills. For others, the method of searching the best supplier is daunting. However, when you compare this to the plight of being uninsured and meeting with an accident or falling seriously ill, you realize that you are better taking pains now than later.
In the UK, the NHS does take care of your health requirements, but not without some limits, most of which could prove to be real trouble for you. For example, the NHS usually does not provide for:

1. Treatments for drug-abuse such as rehab or therapy

2. Treatment for HIV/AIDS

3. Plastic surgery or corrective treatment, and a few others too.

Taking yourself individual health insurance, on the other hand, allows for you with a lot of benefits; over and above what NHS may, in terms of where & how you would like to get treated, letting you select from a variety of options and select really fast.

If you're an employee, the select is usually already made for you. Your employer will normally buy group insurance that will cover most illnesses and medical checkup treatments. All the same, many employees choose getting another health insurance to get over any limits that the group insurance policy may possess. Many as well consider buying insurance for their homes, if that is not covered up in the group health insurance plan. Purchasing family insurance is a very bright step, and one that a lot of individuals who get health insurance are keen on taking. This is in particular valuable if you have a large amount of dependants, if for instance, you would also want to provide for your parents along with spouse and children. Insurance for your family also

comes in very handy in emergencies - something your group insurance may not cover.
Even so, the one type of insurance that is most essential and often neglected is individual insurance. If your employer does not allow for group insurance, or if you are an independent working professional, you need individual health insurance to pay your medical bills when you can't. Unlike people with family or group insurance you are at maximum risk, since you have close to 0% insurance from anything life may throw at you.
And contrary to what you might trust, getting insurance is not difficult at all. Quite a few providers are eager to have you as a client, and there are many websites that can help you pick the right one. From your computer at home, you can compare health insurance premiums, profits, features and providers, with such an internet site. All you need to do is fill a simple form, to get quotes from suppliers that match all your criteria and requirements, along with advice and assistance for understanding the process.

Get health insurance, and give your health the extra care and support it needs.

Irda may allow agents to sell products of more than one insurance company

MUMBAI: The Insurance Regulatory and Development Authority (Irda) plans to allow agents to sell products of more than one insurance company, allowing private insurers to access the vast army of agents selling products of the market leader - the Life Insurance Corporation (LIC).

Agents can sell products of only one insurer under existing norms, but Irda Chairman J Hari Narayan said the current global trend was to do way with tied agents, who can retail products of only one company. "The idea is to allow agents to sell products of more than one company. This model has been tried in Hong Kong. In England, tied agents have vanished," he said.

The capping of charges on unit-linked insurance plans (Ulips) in September 2010 had reduced the income of agents, resulting in many exiting the sector and forcing the regulator to consider opening up alternative avenues of income.
More than 3 lakh agents have exited the insurance business after the regulator introduced stringent norms.

The new norms led to more than 100 products becoming ineligible. The number of agents came down from 3 million in 2009-10 to 2.65 million in 2010-11, according to data compiled by the Life Insurance Council. LIC has 13.5 lakh agents distributing its products.

"The move will increase earnings of agents. Though consumers buy Ulips of private insurers, when it comes to life products they only go for LIC. This would help us bolster our sales," said Renu Dhavan, an agent with ICICI Prudential.

Private insurers have largely followed the bancassurance model, in which banks distribute insurance products. However, access to LIC agents, particularly the bigger ones, will increase the reach of private insurance companies.

LIC had a market share of around 76% in terms of new business premium for the financial year up to August 2011 while the remaining was divided among 23 private insurance companies. The state-owned insurer has been increasing its market share mainly because of its strong base of traditional products, which were unaffected by the change in regulations, and its group retirement plans.

New Norms

The new regulations introduced a year ago increased the lock-in period and quantum of life insurance cover while capping charges that could be paid out as commission to agents.
Before September 2010, bulk of the premium paid in the first year was passed on by the insurer as commission to the agent responsible for bringing in the client. This created an incentive to sell new policies while existing ones were often surrendered after the initial years.

The intent of the new rules was to encourage consumers to buy more protection against accident or death. The Indian insurance market is dominated by Ulips -investment products with a nominal life cover that compete with mutual funds.

Irda had also made it mandatory for agents to retain 50% of their business in the second year.

This regulation, known as persistency norms, refers to the percentage of business retained without lapsing or being surrendered.

Many agents have found it difficult to meet these norms and operate in a scenario where the commission payable has come down.

The difficulties being experienced by agents were one reason for the insurance regulator to consider allowing them to diversify their portfolio.


Some feel that the changes, if implemented, will lead to so-called mis-selling, in which the buyer is not properly informed about the product.

"Private companies will try to lure agents with higher commission as what is happening in the bancassurance channel. Many agents will join private sector companies for easy money and will be out of the business soon," said Anil Jha, senior business executive, Life Insurance Corporation of India.

Bharat Purohit, a Pune-based agent who is said to be one of the largest distributors of LIC policies, said, "There will be more mis-selling. Selling insurance is a subject of trust and relationship."

On average, agents earn Rs 5,000 on a monthly basis and only 5-6% have additional income.

At present, commission is embedded in the insurance product. After the Insurance Act is amended, the regulator will have greater flexibility to change the commission structure. The essence of this change is the agent will become an investment advisor over a period who will be paid by the consumer for his services.