Once the Insurance Amendment Bill is passed, it is expected to remove lot of operational hurdles and is expected to align the provisions of the 1938 Act in line with the current industry requirements, CL Baradhwaj says | ||
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This Blog provides you UpToDate information on life & General insurance dealing mostly with LIC's New Plan Circulars, MillionDollarRoundTable tips on marketing,Financial analysis and INCOME TAX.
Once the Insurance Amendment Bill is passed
Once the Insurance Amendment Bill is passed, it is expected to remove lot of operational hurdles and is expected to align the provisions of the 1938 Act in line with the current industry requirements, CL Baradhwaj says | ||
STUDY RIGHT
There is one straight road to success in selling. It's paved with knowledge. Competency never lacks opportunity."
STUDY RIGHT
We believe you create a future, characterized by high performance and fulfillment, by making a responsible commitment to think right, work right, sell right, study right, and live right.
Here are ten strategies for forming the habit of studying right.
. Be a student of selling. In a world of change, you are never completely educated. You must keep educating yourself to cope with change. The more you learn about your job, the less fear there is. Fear is born out of ignorance.
. Prepare well. Spectacular performances are always preceded by spectacular preparation. Cultivate the will to prepare.
. Develop a mentor. Self-talk shapes your selling life. Take charge of your thoughts. Monitor what you are telling yourself about your situation and about your potential in selling.
. Watch your self-talk. Learn as much as possible about your prospects -- their reputations and capacities, who they are buying from now and what they are receiving for their dollars. Decide to be a shrewd observer.
. Stay brilliant on the basics. Rely on these fundamentals: Build credibility, be well mannered, simplify your recommendations, speak prospect's language, speak as one having authority, sell at your buyer's pace, avoid exaggeration and dogmatic statements, use repetition, make it the prospect's idea, summarize strategically, and close with confidence.
. Achieve competency levels. Become known for what you know. This is the high payoff. Now, your reputation precedes you.
. Write effectively. Simplicity is the formula for successful communication.
. Develop the slight edge. This principle has to do with what a slight improvement in one skill can do to your performance over a period of time.
. Out-distance competition. To out-distance your competition you must learn more and better ways to out-serve them. You then become your own best recommendation.
. Build your Research and Development Department. Develop a library of sales support material to stay current on your products and keep you sharp on new selling techniques. Subscribe to sales publications, and utilize the resources available on the Internet.
"GO ALL OUT - NO IN BETWEEN IN 2013!"
Good luck and good selling,
Jack and Garry Kinder
New insurance FDI plan to end oppn
Written by Bimabazaar- Adminstrator
Monday, 10 December 2012 11:55
Having secured Parliament’s approval for foreign direct investment (FDI) in multi-brand retail, the government is considering tweaking the planned amendments to insurance laws to win over opposition parties’ support for reforms in this key sector.
As per a fresh plan prepared by the finance ministry, the government plans to propose keeping the FDI cap in the insurance sector at 26% and allowing another 23% as foreign institutional investment (FII). Key members of the standing committee on finance from the Opposition have indicated their willingness to consider this proposal, which could also speed up listing of insurance companies on the exchanges.
This compromise formula is being prepared as the UPA government is bound to face stiff opposition to an earlier plan to raise the FDI cap insurance to 49% from 26%. The standing committee on finance had opposed any increase in FDI limits in the insurance sector.
Sources said the new proposal has the approval of finance minister P Chidambaram, and the government is trying to securing opposition parties' concurrence on it.
Bhartruhari Mahtab, Biju Janata Dal MP and a member of the standing committee on finance, told FE: “We have given our report to maintain the FDI cap at 26% in the insurance sector, and not raise it to 49%.” When asked about the new proposal being prepared by the government, he said: “Let the suggestion come to us (the standing committee), then we will take a call. Personally, I think it will be premature to react right now."
FE could not reach senior BJP leader Yashwant Sinha – chairman of the committee – recently. But in an interview to FE last month, Sinha had said that the government could bring the new proposal – 26% FDI and 23% FII and overseas corporate bodies – to the committee for its views.
Mahtab said that before bringing in the 26% FDI plus 23% FII proposal, the government will have to withdraw the changes being proposed to the existing Bill and the new proposals will have to be routed through Parliament afresh.
Finance ministry sources said permission to portfolio investment in the insurance sector could be pushed through executive orders. None of the insurance companies are listed on stock exchanges in India now. The Securities and Exchange Board of India recently unveiled norms for initial public offerings by insurance companies.
“The government can come to the standing committee with this; it hasn’t so far. That’s when we will decide,” Sinha had said.
http://www.financialexpress.com/news/new-insurance-fdi-plan-to-end-oppn/1042785/2
vinay mohanty
Set up a system to make it easy for people to give you referrals.
Set up a system to make it easy
for people to give you referrals.
Would you like to have your clients, friends and family tell all of their co-workers, friends, family and everyone else they know about you?
Then let's start with some basic truths!
The reason most agents and advisors have trouble getting referrals is that people don't generally talk about salespeople! What is there to talk about? Except maybe negatives?
However, they do talk about people who have made a real, positive difference in their lives! They tell people about the accountant who saved them thousand of dollar on income taxes! They talk about the doctor who helped them to finally quit smoking! Or, the attorney who helped them to avoid a costly lawsuit!
The talk about people who have actually helped them solve a problem(s). They talk about the people who have gone beyond what was expected. The talk about people they like, trust and respect.
So if you want people to talk about you, and tell all of their co-workers, friends, family and everyone else they know about you, then make yourself referable!
Making yourself referable means creating value from the customer's perspective. It sounds obvious, but your products and services have value directly in proportion to how well the customer perceives that your product/service solves a serious problem they have, or creates an opportunity for them. For example, does it allow them to have more income to do the things they want to do in retirement, or does it help the client enhance their eligibility for college financial aid because of some special feature.
You can't create your value proposition and sell value unless you identify critical information from the customer. The best way to create value is to help the prospect to identify a problem or opportunity for themselves. by asking Questions during a thorough fact-find!
Remember, 'Good enough' never is! Even excellent service is probably not enough to get people to talk about you, to attract the clients you really want. Only extraordinary service will draw the world to you!
Give away valuable extras: free reports, newsletters and seminars.
Teach a course and offer free educational workshops.
Help clients and prospects to identify and solve their main problems. Not just the problems that you can make money on.
Provide service before your clients ask.
Conduct regular annual reviews, client workshops, client surveys and client appreciation events. Don't wait for your clients to call you with their questions or a problem.
Learn from every mistake. Your customers, especially the unhappy ones, are your best Research & Development team! Call them, ask questions and learn from them.
This extreme service attitude will draw the world to your door!
vinay mohanty
If bimabill 2012 passe in lokosabha
10/2/2013 The BIMA Bill 2012
passed by Lok Sabha recently would come into force after its approval by the
Rajya Sabha and assent by the President of India. The new law will have far
reaching impacts, especially in areas where we as professionals are most
concerned. Significant proposed amendments will be deliberated upon in the
emergent meeting.
VIEWS:-1.FDI Partners in
the Indian Insurance Companies from 26% to 49%
2.Existing Provision on Insurance Act 1938
Sec40,40A,41,44,45(Commission or otherwise for procuring business, Limitation
of expenditure on Commission, Prohibition of rebates, Prohibition of cessation
of payment of commission, Interest of policy
holder.
3.Amendments proposed to be made
by IRDA.(Penalty,Commissione ,Few Sec omitted.
4.Expectations of LIAFI (Hereditary commissione our right,no
changes agent commissione,Need to be preserved as it is &others benefit.
JAGO
-- INSURANCE AGENT
Protest INSURANCE AMENDMENT BILL -2008
"AN
OBSTACLE MAY BE EITHER A STEPPING STONE or
A
STUMBLING BLOCK "
vinay mohanty
reliance-life-ulip-mis-selling-justice-served
http://www.moneylife.in/article/reliance-life-ulip-mis-selling-justice-served/31172.html
vinay mohanty
vinay mohanty
Investors lost Rs.1.5 trillion due to insurance mis-selling says Mr chidambarm FM article from live mint
New Delhi: Finance minister P. Chidambaram couldn’t have been more spot-on when he spoke this week about what’s hurting the insurance industry’s growth in India.
“In my view, the reason why insurance is stumbling in India is because of mis-selling of products and complex products,” Chidambaram said in a public speech on Monday, reported by PTI. “If you want to sell insurance to India, you must sell simple products and must make it absolutely clear to agents and other officers that they should not mis-sell.”
Policyholders in urban India, where few buyers of insurance can claim they don’t have a rip-off story to tell, would know exactly what Chidambaram meant.
It’s a phenomenon that goes back to the first decade of privatization, when an around three-million-strong sales force, which took home up to 40% of the first-year premium as commission, sold life insurance products that were built like investor traps.
Complicit in this were life insurance companies that stood to benefit because of very high surrender charges (charges levied by the insurers when an investor stops paying premiums midway), as investors let policies lapse when they discovered that the policies were unsuitable.
According to a Goldman Sachs report, profits from the lapsed policies were enough not only to wipe out losses in some companies, but actually show profits at the aggregate.
The other group to benefit was the sellers of these products—agency commissions for the period 2004-05 to 2011-12 totalled Rs.1.13 trillion.
The mis-selling of life insurance products in the decade after the 2000 privatization is a textbook case of poor regulation and mis-managing the transition from a state monopoly to free markets. So big became the public uproar over the predatory sales of life insurance products that the regulator, in July 2010, was forced to step in and change the rules around the product being mis-sold—the unit-linked insurance plan (Ulip). But the damage had been done. Ulips, almost single handedly, have caused a deep erosion of investors’ money and confidence in the markets.
vinay mohanty
SELL RIGHT
"The best ways to keep people coming back are:
be believable, credible, attractive, responsive and empathetic."
SELL RIGHT
We believe you create a future, characterized by high performance and fulfillment, by making a responsible commitment to think right, work right, sell right, study right, and live right.
Here are ten strategies for forming the habit of selling right.
. Give it your best. Do every selling job to a finish and accept nothing but your best every time. As a professional salesperson, you are paid for the quality of service you provide with what you know, for those you know.
. Look like a winner. If you look like a winner, it's much easier to be one. You'll look as if you represent a reliable company. You'll look as if you're accustomed to influencing people and closing sales.
. Enjoy every sales call. Before every sales call, ask yourself this question: How would I feel about making this call if I knew it was going to be a good sale?
. Pay attention. Learn as much as possible about your prospects -- their reputations and capacities, who they are buying from now and what they are receiving for their dollars. Decide to be a shrewd observer.
. Build relationships. All things being equal, or not equal, prospects tend to buy from salespeople they trust, respect and like the most.
. Sell ethically. What is your ethical base? Can you articulate it? Can you identify how it influences your personal and professional behavior? Ethical behavior is doing the right thing, because doing the right thing is the right thing to do.
. Manage sales resistance. Realize resistance doesn't mean denial or refusal. In selling, it means, "Give me a reason to buy!"
. Close sales confidently. The most important factor in closing sales is not the customer. It's not the product. It's not the price. It's not the terms. It's not the weather or business conditions. It's you - the individual behind the sale - the closer who is thinking right and who has mastered a closing strategy.
. Develop endorsements. No advertising is as trusted as the spontaneous testimony of delighted customers. Expect endorsements.
. Serve what you sell. Never forget a client. Never let a client forget you.
"GO ALL OUT - NO IN BETWEEN IN 2013!"
Good luck and good selling,
vinay mohanty
How NRIs can buy LIC Policies?
NRIs can buy LIC Life Insurance cover under Non-Medical (Special) scheme or Medical scheme, depending on their health, sum insured they are opting for and where (country) they are working -
What is a Non-Medical (Special) Scheme?
1- Applicable if insurance is obtained during visit to India or through Mail Order Business (when LIC Agents visits the country of residence of NRI for completing the necessary formalities)
2- Maximum age at entry would be 45 years
3- LIC Plans with high risk cover and term rider benefits would not be allowed.
4- The proposer should be employed in Government or reputed commercial firm or should be a professional such as Chartered Accountant, Doctor, Teacher, Lawyer, Accountant, Engineer, etc.
5- This scheme is applicable to those NRIs who are residing in Group VI, VII and VIII countries only. ( See Annexure-V for group details).
What is a Medical Scheme?
When proposer has to undergo medical tests (special medical tests) to buy LIC Policies. Blood, Sugar, Heart, S.Chol, ECG, Thread Mill etc required as per policy Amount and age.
Who is a Non-Resident Indian as per LIC?
As per LIC following persons will be treated as NRIs for taking Life Insurance Policy -
1- A non-resident Indian is a citizen of India temporarily residing in the country of his/her present residence and holding a valid passport issued by the Government of India.
2- NRI should not be a green card holder. He/She should not have applied for or planning to apply in the near future for acquiring citizenship of his /her present country of residence or any other country.
3- It is clarified that People of Indian Origin having foreign nationality and residing in foreign countries (PIO) are not considered as NRIs for the purpose of allowing insurance.
What Documents Required by NRIs to apply for LIC NRI Life Insurance?
1- Prescribed Proposal Form depending on the type of policy selected (Form No. 300 in majority of the cases).
2- NRI Questionnaire (Annexure-II).
3- Medical Report (not applicable if the proposal is under non-medical scheme).
4- Special Questionnaire (Annexure-III) (if proposal is under 'Mail Order Business' and if the agent does not visit the country of residence of proposer).
5- Special Medical Reports, if called for.
6- Attested Copy of Relevant Pages of Proposer's Passport.
7- Proof of Age and Income.
8- Initial Deposit equivalent to Instalment Premium under the proposed plan of insurance.
Things to Take Care
1- Minimum Sum Assured allowed would be Rs. 2 lakhs and maximum would depend on conditions of insurability. However, under mail order business, maximum sum assured would be limited to Rs. One Crore only.
2- Personal Financial Questionnaire (PFQ) and/or Proof of income in the form of income tax returns, copy of employment contract where emoluments are mentioned, Certificate from Chartered Accountant, etc. would be required if the sum assured is high or if the proposal is submitted through Mail Order Business.
3- All types of plans are allowed subject to the conditions that -
a- Critical Illness Benefit is not granted.
b- Term Rider Benefit would be restricted to certain limit of Sum assured
c- Sum Assured would be restricted in respect of term insurance plans.
4- Policies are issued in Indian Rupees only
Are LIC's premiums higher for NRIs as compared to resident Indians?
No. The premiums are the same for residents and non residents. However, if NRIs are living in countries where risks are higher, premiums maybe higher.
Are there any limits on the sum assured?
In case of LIC policies, if the NRI chooses to conduct his medical examination in the foreign country, the sum assured will be limited to Rs 1 crore. If the NRI has his medical examination done on a visit to India, then he can get a higher cover. But it depends on individual underwriting.
vinay mohanty
IRDA has Revised Norms for Traditional Life Insurance Products
The Insurance Regulatory and Development Authority (IRDA) has revised the minimum death benefit and minimum surrender value norms for traditional life insurance products. Traditional life insurance products now come with a mandatory higher minimum death benefit and surrender value.
What is changed?
1- Minimum Death Benefit
For customers below 45 years, the minimum sum assured should be higher by 10 times (as against the existing five times) the annual premium or 0.5 times the annual premium multiplied by the term of the policy or 105 per cent the premium paid as on the date of the policyholder’s death.
2- Minimum Guaranteed Surrender Value
There is also a minimum guaranteed surrender value of 50 per cent of the total premiums paid, if the policy is surrendered in the second or third year while the same would be 75 per cent for the fourth year, and goes progressively upward.
What happen to Existing Policies?
Life insurers have been given time to withdraw group and individual policies before March 31 and June 30 respectively and have to file for product approvals afresh in line with the new guidelines.
Last year in June'2012, the IRDA issued a draft guidelines on the proposed above changes in life insurance products.
vinay mohanty
SUMASSURED ELIGIBILITY CONDITIONS
SUM ASSURED ELIGIBILITY CONDITIONS.
AGE Upto 30 years 22 times of gross Annual Income.
AGE 31 to 40 tears 17 times of gross annual income.
AGE 41 to 50 years 12 times of gross annual income
AGE 51 years and above 10 times of gross annual income.
vinay mohanty
LIC chairman on vision2020
click on billow link for chaiman merohotra,s statements
http://dl.dropbox.com/u/9243963/TOIM_2013_2_1_8.pdf
http://dl.dropbox.com/u/9243963/TOIM_2013_2_1_8.pdf
LOAN PRINICPAL PAID BY THROUGH CHEQUE only.
Loan repayment Principal paid by only through CHEQUE. And interest paid upto 5,000 only allowed by cash. Above 5,000 paid by only through chqeue.
LIC agents are freely allowed asMF agents
Good Opportunity for LIC Agent.
Refer to trail mail, Earlier SEBI waive Off the ARN License Fee but now they has also waive off the Examination of Mutual Fund License for those person having 5 Year experience in Financial Industry such as LIC or Postal Agent.
It means now any LIC or Postal Agent may also start his Mutual Fund Business without any Examination & he just need to attained 1 day Training conducted by NISM and after that He may Apply for ARN Card Free of cost.
vinay mohanty
http://www.thewealthwisher.com/
http://www.nlm.nih.gov/medlineplus/tutorials
http://www.fileguru.com/apps/lic_plan_presentation
http://www.thewealthwisher.com/
http://finance.taaza.com/insurance/
http://gawno.com/2009/06/top-23-insured-celebrity-bodyparts/
www.geevee-rajahmundry.blogspot.com
http://moneyexcel.com/3342/lic-flexi-plus-plan-review
http://www.intouchtoday.com/insurance/inpc_life-changes.php ( insurance marketing)
http://ramvijay3539.blogspot.in/
http://www.fileguru.com/apps/lic_plan_presentation
http://www.thewealthwisher.com/
http://finance.taaza.com/insurance/
http://gawno.com/2009/06/top-23-insured-celebrity-bodyparts/
www.geevee-rajahmundry.blogspot.com
http://moneyexcel.com/3342/lic-flexi-plus-plan-review
http://www.intouchtoday.com/insurance/inpc_life-changes.php ( insurance marketing)
http://ramvijay3539.blogspot.in/
Agent profession protection day
tomorrow is our app day we will celebrate in wonderful way. In our
division, parvathi puram branch is there. there we will celebrate app
day. Parvathipuram branch agents associasion build a new building
worth Rs 25,00,000, for association activity , congrats them by mail they done a
wonderfull work for our association LIAFI
vinay mohanty
TPAs Can’t Reject Claims
Third Party Administrators (TPAs) of insurance companies have been under fire for sometime. For several years, there has been significant number of complaints against them for, either delaying the process or rejecting claims.
Insurance Regulatory and Development Authority (IRDA) is not comfortable with this fact hence, in latest draft guidelines for standardization IRDA has said that TPAs should only process the claim to facilitate the insurer to take decision on claim settlement or claims rejection, as applicable. In other words only the insurer would have the right to settle or repudiate a claim.
Experts say that the main issue is that TPAs sometimes even question the treatment administered by the hospitals and the tests the insured is asked to undergo. Clearly, they can’t be allowed to interfere so much.
In fact, Gaurang Damani filed a Public Interest Litigation (PIL) in Bombay High Court last year against TPAs where he sought clarification on the roll of TPAs.
In the PIL he said that while the roll of a TPA is only to process claims, in practice, the insurers offer incentives to them depending on the amount of claim reduced. A TPA may also decline or dispute a claim over the treatment being taken by the insured.
Insurers give the authority of settling (accepting/rejecting) a claim to the TPA, usually where the claim value is low and the case doesn’t involve too much assessment. The TPAs settles such claims without involving the insurer in this process.
However, IRDA in its draft guidelines has clearly mentioned that hereafter TPAs will have to convey the repudiation of a claim to the insured, only after they have been advised to do so by the insurer.
Defining the roll of a TPA IRDA said that while they can process, assess and evaluate a claim, they will not be allowed to go beyond that.
Currently, around 50% of the private general insurance industry’s claims are settled by TPAs.
New insurers usually outsource the claim settlement process through TPAs because settling claims in-house requires expertise and manpower, which the company doesn’t have in its initial years.
However, TPAs defends their position by saying that they reject claims based on the policy features. They further add that claims are processed faster through them than insurers as they have required expertise and manpower.
But insurers feel that if these draft guidelines are imposed, the time taken to address claims would be reduced by at least 30-35%. This is because TPAs have been asked to process claims within two working days in the draft called for standardizing billing formats.
vinay mohanty
worlds number one agent
Gideon du Plessis failed in the 10th standard and never went to college. He is today the highest earning insurance agent in the world, with annual commissions amounting to Rs 7 crore (Rs 70 million) plus.
A record he has maintained over the last 12-14 years, selling 700 policies yearly. Labelled by the Million Dollar Round Table -- an international association of leading life insurance and financial services professionals -- as "the most productive agent in the world", Plessis' efforts means an average daily accretion of two risk covers for his insurance company Old Mutual Plc.
Looking at the India [ Images ]n scenario, the largest life player, Life Insurance Corporation of India boasts of its highest selling agent earning a commission of Rs 2.1 crore (Rs 21 million) in 2003.
The highest average is in the region of Rs 1-1.5 crore (Rs 10-15 million), said LIC [ Get Quote ] sources.
So what is Plessis' secret of success? He lives by 12 mantras that have taken him so far since he got into the insurance selling profession 23 years back.
Based in Cape Town (South Africa [ Images ]), Plessis starts his week Monday morning at 5:30. He flies 2,000 km to meet his clients in various parts of South Africa, works 17 hours at a stretch -- doing business across office desks and/or over a cup of tea in the comfort of clients' homes, encounters at least six to eight persons daily, and then relaxes over the weekends playing golf.
But ask Plessis as to how he sells insurance? And he'll tell you he does not. "People buy people, not policies," he told Business Standard in an exclusive interview.
Insurance continues to be sold and not bought. So the idea is to ask questions and more questions, collect all the information about the client and then go back to him/her with a solution. You are not selling anything to anybody ever, but rather providing a solution to meet his/her needs, said Plessis.
Plessis was on a tour of India last week, educating the agency force of OM Kotak Mahindra Life, Old Mutual's joint venture in the country, on succeeding in the insurance business.
"It is important to pay attention to detail. Flowers on your client's birthday, condolences when the secretary's distant relative passes away. The personal touch matters and goes a long way," he advised local agents, who were more keen to learn if he sat on the chair or on the sofa when doing business.
Since the age of 10, Plessis wanted to earn money with his mouth. Aiming to be a teacher, but having failed in English, Plessis decided that salesmanship was where his talent lies. Plessis started out as a postman, then became a bank clerk visiting farms to sell products, before he was picked up by Old Mutual to sell insurance policies. Since then, Plessis has never looked back.
Plessis does not only target the high networth individual. Rather, 60 per cent of his clients are from the middle class.
Plessis' mantras
See at least 6-8 people daily
Selling is not telling: ask a lot of questions & go back with a solution.
Attend to details
Go soft in life
Delegate staff
People buy people, not policies
Educate yourself properly
Time management
Wake up to achieve what you want
Elephants don't bite, mosquitoes do
Desire
Enthusiasm
vinay mohanty
6 rules of great financial life ?
6 pillers of great financial life
Now I am going to talk about 6 areas of financial life which are like pillers. If you are clear about these ground rules and start some serious work on all of them, your overall quality of financial life should go up. But having said that, its a long term activity !
1. Rule of Earning
“Do not depend on a single income. Invest and create a second/ third source of income”
So many people just never focus on this. A person in a job has just taken it as his fate, that his only source of income will be his Salary. For him alternate source of income other than his salary is like a distant dream which he can only see, but could not achieve. The same happens with a businessman at times. He depends solely on his business income. Why? Why not also have some other passive income from other non-core business area.
Atleast start thinking in that direction ? Lets Explore some extra income source. I dont say, it need to be some grand income, but lets make some start atleast, if not in action taking, atleast in thinking about it, I personally tasted some passive income from my first book royalty, while it was not a big one (opposite to what people think) , it atleast gave me some good feeling. Other than our business income, I had some source of income from other stream. Thats important ! . It can be a small income, not a grand one . Thats okay ! . Whatever is your specialization, you must be god gifted into some or the other thing in life, start sharing about it with world by writing about it, you never know when you start making fans for yourself and it might bring some opportunity to you in life. Nandish has written a nice piece of “Giving your Gifts to the world” on our Jagoinvestor Wealth Club, check it out . If you are damn good about something , why not offer consulting or accept freelance projects in your own capacity.
Forget all that, at minimum, If you are a person who comes home early, why not take some tutions to make few extra bucks. Its not about earning a little more, its about the habit of creating an extra income. You never know when, in the future when you might have to look at it seriously! . So the point is, go ahead and put a small seed in your head about “Creating Alternate income” .
2. Rule of Spending
“If you buy things that you do not need, you may soon have to sell things you need”
People are over spending. There is no doubt about this. Just look at your own expenses & write them down. Question each of your expenses, do you really need them? Is it out of necessity or just a desire which you can avoided altogether or atleast minimized? The answer will be in front of you. If you have not yet tracked where your money is going and if you are our special member at Wealth Club, you might want to download this Budget Template.
One of our Bangalore clients told us last year that he has seen a lot of his friends, who buy a car on the first day of getting the job! and mostly they dont need it. Its either to show off, or just that short term desire of own it, without thinking about long term aspects of it. Its just unplanned!. Then there are people buying 25 shirts, when they only need only 12. There are people, who don’t have the `haisiyat` of driving an Alto Car, but they have bought a Honda City just to show off !
It just violates the rule of spending!.
Slowly but surely, this will take them towards disaster. It will come as surprise (to them) one day. Spending is a core activity of your life. You earn so that you can spend it, nothing wrong with it, but there is a difference between spending and over-spending. Understand it today to make your future more robust.
3. Rule of Savings
“Do not invest what is left after spending, instead spend after you save/invest”
This is directly related to rule 2 above. If you do not control your spending, you can never be able to save much and then you will never be able to give your best for your wealth creation. Fix this clearly & prominently in your head. For most people the formula is
Saving = Income – Expenses
If you rely on the natural flow of life, you can never save. Life will give you all the reasons why you can only save amount X . At times Nandish tells me – “Manish , you know what, if you do not define the purpose for your money, money will find its own purpose” . This is very strong point , for a moment, just slow down and think about it. you will realise what it means. You need to control the flow of money and you have to create that flow yourself.
I just ask to most of the people to do this 1 min experiment. I tell them – “Imagine your employer says that from next month, you will get a salary cut of 10% and all you will get is just 90% in your income. For most of the people, will they not be able to live the same life as they lived till now ? If the answer is YES , then why are they waiting for ? Why not give that small salary cut to yourself as your gift to your financial life. You will enjoy this salary cut in coming years. trust me.
So your next task today is tell your family, yourself and your relatives that from now on you will be living on just 90% of your salary – PERIOD! . Start doing it and slowly you will see that magically – you will be able to manage things – Try it! It works! .Your assets , your net worth , and every bit of wealth comes from those tiny savings you consistently do for years. That’s the most important ingredient part of your wealth creation. If you do not focus on optimizing it, nothing else will work out!
4. Rule of taking Risk
“Never test the depth of the river with both your feet”
There is a very thin line between risk and calculated-risk. Calculated risk is the risk which is taken after due thought, and by accepting the future consequences and a thought full evaluation of how the odds are stacked.
If you invest a big sum of money in stocks, just because markets are going up and you do not want to miss the train, and just because that guy on CNBC said you should , then you are taking a risk. You will not be able to sleep at night for sure.
However if you look at the current market and tell yourself that – “Markets have not moved up from last 5 years, and this kind of situation in past have been proven to give great returns in next 5 years and you are economically ready to loose up to 30% of your money, and thats why you choose to invest in stocks, then its a calculated risk! . You have put some reasoning , thoughts and accepted the downside of that decision and hence you are taking that risk !
Taking risk is not a bad thing at all. It’s the only thing which can help you grow at exponential rate. Those who don’t take risks, just die a simple life most of the times. The best things in the life are on the other end of the Risk , its on the opposite side of it. So take risks, but always make sure they are calculated one ! . Over the long term, one an average, you will do great. Its proven already, I am just reminding you!.
5. Rule of Investing
“Do not put all your eggs in one basket”
Warren Buffet is not a very big fan of diversifying. All the money he has today, comes from stocks, but there is one simple rule he has followed – “Put all your eggs in one basket, if you know you are an expert of that basket and closely keep an eye on it”.
Most of us are not like Warren Buffet! . So lets not copy him. What if you have put most of your money in one single asset class or a property or a particular branch of a bank? or just a single stock. Things can go wrong, and when it goes wrong, you will cry out loud, but no will will be able to help. You will be helpless and will regret like anything.
As a best practice make sure that your wealth is not in a single place. Remember that portfolio diversification is mainly a tool of minimizing risk, not for maximizing returns, so don’t ask a stupid question like – “Will diversifying my money to different places increase my returns?” – The answer is “It might… or it might not!/. But properly done, it will surely minimize the risk of losing your wealth in future.” .
6. Rule of Expectation
“Control your expectations, and control your happiness – they are same thing”
One very dedicated reader of this blog – Pattu, who teaches at IIT Chennai, told me once that he does not expect equity to give him more than 8% of returns in long term and he always invests his money in equity, assuming that he will get 8% or better in long run. Anything more than that would be a bonus for him. I am sure that he must be happy all his life and will never be disappointed with equity returns.
In financial life, we expect agents to work in our favor, we expect financial products to give us amazing returns, we expect financial planners to charge less, but give an awesome experience (Like we give to our paid clients) , we expect life insurance companies to pay our family, even if we make some mistake while disclosing some important information, we expect our credit card to forget the penalty for in-case we don’t pay on time, we expect government to decrease the tax rates.
If you look, we are an “expecting” machine in our life. I can say from my tiny experience of life till date, happiness and expectations are just the two different words for the same thing. If you want to get in control of your happiness level, just control your expectations in life. Stop the expectations from others, better control yourself and your expectations, because thats all you can control. not others.
Practice these 6 rules in your financial life
If you can master these 6 rules in your financial life, your quality of life will improve. Each decision of yours should originate out of these 6 piller rules.
What do you say? Which rule did you like the most? Share it with us in comments section…
vinay mohanty
Tipping an insurance agent? book revue
What if producers got tips instead of commissions?
This is just one of the interesting concepts brought up in a new book, “Flirting with the Uninterested,” by Maria Ferrante-Schepis and Maddock Douglas founder Mike Maddock. Ferrante-Schepis is managing principal of insurance and financial services at Maddock Douglas and Life Insurance Selling’s newest monthly columnist, .
Beforedismissing the idea as outlandish, think for a minute about the reasoning behind the concept. Many would-be producers shy away from the industry because they don’t want to starve on commission while building their business. This could be a way to circumvent that problem. In the workbook section at the end of the book, the case is made (admittedly in much more detail) roughly in this manner:
“In today’s model, producers are expected to work on commission from the get-go. In this new model, perhaps they could receive a small salary and have an initial upside in tips.”
In today’s society, people often make tipping decisions based on “social norms.” As the book says, “How many times have you gone into a restaurant and tipped someone who you thought just gave you average service? Maybe even below average? Why do you do that? Because it is the ‘norm.’”
The book also points out how paying for a cab ride with a credit card through an automated system in the cab now presents you with automatically calculated “suggested” tips of 15, 20, 25 or even 30 percent! “People, as a rule, will do the socially correct thing. So, do you really think they would stiff the insurance agent if they knew he was working for tips?”
If agents worked for tips, would the industry be able to price products differently? Certainly. Consumers would be made aware that agents were not earning commission on the sale of policies. As a result, they would be paying less for coverage — or at least no more after they tipped the agent. Agents would be compensated differently with small salaries supplementing the tips, and it might be easier to attract new blood to the industry.
“Tips, you may say, are unpredictable, but not if you have a steady flow of people you are serving,” the book says, and goes on explaining potential ways this type of system could be implemented.
“The point is,” the authors say, “imagine our industry if it was being invented today and did not exist before. How would you do things? If you don’t change our existing model, you can bet someone from the outside will.”
Of course, many of the wide-ranging and somewhat unorthodox concepts in this book may never come to fruition, but some of them just might. And it will get you thinking about possibilities.
In the interest of full disclosure, I did write the foreward for this book after reviewing an advance copy. I will send a free copy of “Flirting with the Uninterested” to the first five people who email me (banderson@lifeinsuranceselling.com) requesting one and providing a mailing address. Interested readers can also get the book through Amazon starting Monday, Jan. 14.
vinay mohanty
General Insurers Want Policies With Longer Term Renewals
Poor renewals and low levels of penetration of general insurance products in the retail lines of business have prompted insurers to ask Insurance Regulatory and Development Authority (IRDA) to allow issuance of longer term policies with renewal every 3-5 years.
The retail lines of business include health, home, personal accident and motor insurance.
Currently general insurance products are renewed annually. However, some insurers issue health insurance policies up to a maximum of three years.
As per insurers ticket size is small in retail line of business so a longer term renewal will definitely be less cumbersome for customers.
For insurance companies, customer acquisition, printing and issuing of policies are big one-time costs.
For customers, long term policies offer better value as insurers propose to price them lower by factoring in the no-claims discount into the premium. Also, long term policies reduce the possibility of it lapsing.
However, IRDA has expressed some concerns regarding the longer term policies. According to IRDA long term policies must have proper accounting in place and adequate actuarial support to calculate premium on a long term basis.
According to estimates, nearly 70% of two-wheelers and 35% of four-wheelers are uninsured even though they are legally required to have a cover, which is a huge structural problem for insurers.
Insurers say that the third-party premium could be levied for a longer duration as one-time registration or road tax.
Longer term renewals would also be beneficial for two-wheelers, where ticket size is low and renewals are poor. Posted on January 18, 2013 by Akanksha
vinay mohanty
greet with sending cards
vinay mohanty
Free ARN Now as AMFI waive off Rs 3000 Registration Fee from 1st Feb 2013
In terms of SEBI Circular no. CIR/IMD/DF/21/2012 dated September 13, 2012, a new cadre of distributors, such as postal agents, retired government and semi-government officials (class III and above or equivalent), retired teachers and retired bank officers with a service of at least 10 years, and other similar persons (such as Bank correspondents) as may be notified by AMFI/ AMC from time to time, has been allowed to sell units of simple and performing mutual fund schemes. This has been done with a view to expand Distributor base for distribution of Mutual Fund products.
With a view taking this initiative forward, it has been decided as under :
A. To include the following persons in the new cadre of distributors :
Intermediaries/ Agents engaged in distribution of financial products e.g. insurance agent, FD agent, National Savings Scheme products, PPF, etc. registered with any other Financial Services Regulator, with at least 5 years of experience.
Business correspondents appointed by banks having at least 5 years of experience.
B. To waive registration fees for all the distributors registering for the first time in the categories of Individuals (including Senior Citizen) and new cadre of Distributors during the period from 1st February, 2013 to 30th June, 2013subject to fulfilling the following conditions:
Senior Citizens are Individuals who qualify under the criteria stipulated by SEBI vide its Circular no. Cir/ MFD/DF/5/2010 dated June 24, 2010 i.e. a person who has attained age of 50 years as on May 31, 2010 OR a person who has at least 10 years experience in the securities market as on May 31, 2010 AND/ OR a person who has at least 10 years experience in distribution in Mutual Fund products as on May 31, 2010.
New cadre of Distributors should be compliant with the criteria mentioned in the SEBI Circular no. CIR/IMD/DF/21/2012 dated September 13, 2012 or as mentioned at point no. ‘A’ above.
Individuals, Sr. Citizens and new cadre of Distributors should have valid Certificate as per the details mentioned below :
Category of the applicant Certification requirement
Individual Passing certificate of 'NISM Series V-A : Mutual Fund Distributors Certification Examination'
Senior Citizen Certificate of having attended “Two days NISM CPE Programme”
New cadre of Distributors Passing certificate of “NISM-Series-V-B: Mutual Fund Foundation Certification Examination” or Certificate of having attended “one day NISM Mutual Fund Foundation CPE Program, as specified by NISM”
ARN Card issued shall be valid up to the validity date mentioned on NISM passing certificate/ CPE certificate. However, renewal of ARN after 3 years shall be subject to payment of prescribed fees, as applicable at the time of renewal.
The application made for registration under this scheme should be accompanied with all other stipulated documents specified in the Registration Form.
vinay mohanty
Insurer and not TPA to settle health insurance claims
At a high court hearing of a public interest litigation filed by Gaurang Damani, IRDA member (non-life) stated that health insurance draft guidelines accept that the insurer and not TPA will settle or reject health insurance claims
An Insurance Regulatory and Development Authority (IRDA) member (non-life) confirmed that health insurance draft guidelines limit the TPA’s (third party administrator) role to claims processing and not settlement. The insurance company will make direct payments to the hospital and policyholder (not through the TPA). Cheques will have to be written by the insurance company and sent to the hospital (for cashless) and to the policyholder (for reimbursement). It means that cheques cannot be held by TPAs as a float.
According to Gaurang Damani, a social activist, who has filed the public interest litigation (PIL), “TPAs are supposed to process claims, instead they’re settling claims. There are no standard guidelines to settle claims and it is left to the whims and fancies of the TPAs who are in fact not entitled to settle claims but are found to be doing so in several cases.”
Interestingly, at the hearing IRDA member (non-life) M Ramaprasad admitted that even veterinarians are appointed by the TPAs in addition to ayurvedics and homeopaths to assess cases. There have been cases where specialist doctors were not able to convince the need of specific procedure to TPA doctors, who may be well qualified in their respective field but not in the specialised allopathic stream.
Another point which was agreed by IRDA at the hearing was to make the TPA send scanned claims electronically to the insurance company to speed up the process. This is followed by LIC and hence it may well be implemented by TPAs working for general insurance companies.
Moneylife had reported that United India and New India Assurance have an incentive clause in the TPA agreement to keep claims ratio within a certain range. This is completely detrimental to the interest of the policyholder whose genuine claims can also be partially paid or rejected just so that the TPA is able to get incentives from the insurance company.
Read - United India Insurance doles out incentives to TPAs to reduce claims ratio!
At the hearing, Mr Ramaprasad said it was logically not correct for TPAs to be paid incentives. “If we find such instances, we shall take such companies to task.'” He will be taking the issue to the General Insurance Council to decide further steps.
Gaurang Damani's petition says that in addition to the incentive clause, there is discrimination in settling insurance claims of individuals and that of corporate clients. Group claims have better negotiation power with insurance companies due to the volume of business.
According to Mr Damani, “If mediclaim policies indicated the amount an insured was eligible for specific ailments, it will ensure that they have clarity on which hospitals to go; the hospitals too would know how much they would get.” The advocate for Association of Medical Consultants (AMC) agreed to indicate the amounts for 42 standard ailments. HC has directed the petitioner to send a notice to Association of Hospitals (AOH) and Bombay Nursing Homes Association to get the range of package rates for the 42 standard ailments.
The next hearing would be on 12th February. It is understood that the IRDA chairman wants to finalize the health insurance guidelines before he demits the office in mid-February.
vinay mohanty
Govt. Lines Up Tax Breaks for Insurance
In a bid to give a fillip to the insurance sector, in the union budget, the government is planning to reduce service tax on premiums, protect existing policies from future tax changes and relax rules on Tax Deducted at Source (TDS) to encourage households into buying more insurance cover.
Government is also likely to propose additional tax breaks for pension products, in addition to the current Rs.1 lakh savings cap. Government may create a separate window for pension products including the National Pension Scheme (NPS) and those issued by insurance companies.
The revenue department has accepted most of the proposals that the insurance industry had suggested during their meeting with Finance Minister P. Chidambaram couple a months ago.
Insurers had demanded a reduction in service tax on first-year regular premium as well as single premium policies, and a complete waiver in social security insurance schemes such as the Aam Admi Bima Yojana. Insurers had also asked for grandfathering of insurance policies and relaxation in the clause that insurance companies have to deduct TDS on payment of agent commission above Rs 20,000.
Most of the demands don’t have large revenue implications, but they will provide a huge push to the insurance sector in terms of cost savings and making administration easier.
These steps will be a part of the government’s efforts to mobilize household savings into the long term savings instruments such as insurance and mutual funds.
Insurers say that grandfathering of an insurance policy is important to retain the confidence of the policyholders. It should not happen that because of changes in tax laws they have to pay tax on the maturity of the insurance policy, when at the time of the buying the policy there was no such tax.
Creation of separate window for insurance policies will channelise long term funds into insurance industry and provide a big boost to the sector.
At present, under section 80C of income tax act, investments in provident fund and insurance premiums, among others, are eligible for tax deductions up to a limit of Rs.1 lakh.
It is likely that now insurance companies have to deduct TDS only if cumulative payments exceed a particular amount.vinay mohanty
Insurers Can’t Reduce Compensation on Ground of Non-Possession of Driving License
Non-possession of driving license at the fatal point of time is not fatal to claim of full insurance compensation from the insurance company, Madras High Court observed this while hearing the case of Krishnaveni and another vs. Manokaran and others.
Insurance company paid only half of the amount of Rs 6,48,000 assessed as dependency loss on the ground that there was contributory negligence on the part of the deceased, in that he was not in possession of driving license at the fatal point of time.
The HC dismissed this stand of the insurance company saying that non-possession of driving license can by no stretch of imagination be said to have contributed to the accident and the resulted death.
While traffic enforcement authorities can penalize a driver for non-possession of driving license, the insurer cannot, unless it can prove that the deceased did not have a valid driving license at all at the fatal point of time. In other words, if the driving license was left at the place of work or residence or anywhere else, such a lapse is not fatal to entertainment of full insurance compensation and the insurance company cannot wriggle out by adducing contributory negligence as the reason for halving the compensation amount.vinay mohanty
Happy AGENCY profetion protection day 24th Jan
DEV mudBidri and ali faunder leaders of our association selute them in this occation
Vinaymohanty
Insurance Claims Not Time-Bound: State Commission
Posted on January 15, 2013 by Akanksha
The Maharashtra state consumer disputes redressal Commission has held that filing a insurance claim late cannot be the reason for rejecting it. The commission, while upholding a district forum’s order, directed the Oriental Insurance Company to pay the widow of a man who died in a 2006 accident the entire claim of Rs 1 lakh plus a compensation of Rs 46,000 even though the claim had been filed well past the one-month deadline.
The commission held that deadline was not a mandatory condition but, a kind of directive and hence, breach of this condition does not empower the appellant insurance company to forfeit or foreclose the insurance claim required to be duly settled.
Shri Vitthal Sahakari Sakhar Kharkhana Ltd had subscribed to a Group Janata Personal Accident Insurance Policy to provide insurance cover to members in their factory.
During the term of the policy, one of the members, Vitthal Gavande, died in a road accident on 31 December 2006. The insurance claim was filed on 18 January 2008.
The insurance company repudiated the claim on the ground of non-compliance of terms and conditions mentioned in the policy document.
Aggrieved with the repudiation, in 2009, Shri Vitthal Sahakari Sakhar Kharkhana along with Gavande’s wife Rani Gavande filed a consumer complaint before the district forum in Solapur. On 7 December 2010, district forum passed order in their favour.
Aggrieved, the insurance company filed an appeal in the state commission. According to the state commission, the only point challenged by the insurance company was that the terms and conditions were violated by the complainants as intimation of the claim was not received within the stipulated period but after almost 13 months.
The insurance company said that as per the terms and conditions a claim under the Group Janata Personal Accident Insurance Policy was required to be brought to the notice of the insurance company within one month of the date of the incident leading to the claim.
The commission observed that during the arguments, the insurance company did not point out the penal provisions for non-compliance of the policy condition.
vinay mohanty
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