Twelve Secrets and Tricks to Buying Life Insurance

Secret #1: Don’t spend too much time on a life insurance quote.

Do not be fooled by the low price quotes you get online – they don’t apply to you unless you are extremely healthy. Statistically only 10% of people who apply actually get the lowest priced policy. The premium you end up paying has nothing to do with the initial quote you get online or from an agent. It is amazing to me how often I see people getting duped by an agent who quotes company X at a lower price than another agent.

Life insurance policies are the same price no matter who you buy from! One agent or website quoting a lower premium means nothing. Prices for any given policy is based on your age and health. There are a few exceptions to this but that is beyond the breadth of this article.

Most life insurance companies have 10-20 different health/price ratings and no agent or website can assure you the quote they give you is accurate. You have to apply, do a health check, and then go through underwriting (meaning you complete a mini-exam with a nurse in your home and then the company checks you doctor records and reviews and ‘rates’ your health) to get the real price of the policy. Remember that a health rating also factors in your family history, driving record, and the type of occupation you have. Only use quotes to help narrow down your choices to the top companies. You may want to consider a no load or low policy. The more that you save on commissions the more money builds up in your policy. You can even buy term insurance no load, and save a lot on premiums. You will not get the help of an agent, which may be worth something if they are very good.

The most important factor determining price is matching your particular health history with the company best suited for that niche. For instance company X might be best for smokers, company Y for cancer survivors, Company Z for people with high blood pressure, etc.

Secret #2: Ignore the hype on term versus cash value permanent insurance.

You can go crazy reading what everyone has to say on buying term insurance versus a whole or universal life policy. Big name websites give advice that I think borders on fraudulent. Simply put there is NO simple answer on whether you should buy permanent cash value policies or term insurance.

But I do think there is a simple rule of thumb – buy term for your temporary insurance needs and cash value insurance for your permanent needs. I have read in various journals and run mathematical equations myself which basically show that if you have a need for insurance beyond 20 years that you should consider some amount of permanent insurance. This is due to the tax advantage of the growth of the cash value within in a permanent policy. I am divorced and have taken care of my children should I die. I probably no longer need as much insurance as I now have. I have earned a great return on my policies and have paid no taxes. I no longer pay the premiums, because there is so much cash in the policies. I let the policies pay themselves. I would not call most life insurance a good investment. Because I bought my policies correctly, and paid almost no sales commissions my policies are probably my best investments. I no longer own them, so when I die my beneficiaries will get the money both tax free, and estate tax free.

Since most people have short term needs like a mortgage or kids at home they should get some term. Additionally most people want some life insurance in place for their whole life to pay for burial, help with unpaid medical bills and estate taxes and so a permanent policy should be purchased along with the term policy.

Secret #3: Consider applying with two companies at once.

Life insurance companies really don’t like this “trick” because it gives them competition and increases their underwriting costs.

Secret #4: Avoid captive life insurance agents.

Look for a life insurance agent who represents at least fifty life insurance companies and ask them for a multi company quote showing the best prices side by side. Some people try to cut the agent out and just apply online. Just remember that you don’t save any money that way because the commissions normally earned by the agent are just kept by the insurance company or the website insurance company without having your premium lowered.

Plus a good agent can help you maneuver through some of the complexities of filling out the application, setting up your beneficiaries, avoiding mistakes on selecting who should be the owner, the best way to pay your premium, and also will be there to deliver the check and assist your loved ones if the life insurance is ever used.

Secret #5: Consider refinancing old life policies.

Most companies won’t tell you but the price you pay on your old policies has probably come down dramatically if you are in good health. In the last few years life insurance companies have updated their predictions on how long people will live. Since we are living longer they are reducing their rates rather dramatically. Beware the agent may be doing this to obtain a new commission, so make sure it really makes sense.

I really am amazed at how often we find that our client’s old policies are twice as expensive as a new one. If you need new life insurance consider “refinancing” your old policies and using the savings on the old policies to pay for the new policy – that way there is no extra out-of-pocket costs. We like to think of this process as “refinancing your life insurance” – just like you refinance your mortgage.

Secret #6: Realize life insurance companies have target niches that constantly change.

One day company ‘X’ is giving good rates to people who are a little overweight and the next month they are super strict. Company ‘Y’ might be lenient on people with diabetes because they don’t have many diabetics on the books – meaning they will give good rates to diabetics. At the same time company ‘W’ might be very strict on diabetics because they are insuring lots of diabetics and are afraid they have too big of a risk in that area – meaning they will give a bad rate to new diabetics who apply.

Unfortunately when you are applying a life insurance company will not tell you, “Hey, we just raised our rates in diabetics.” They will just happily take your money if you were not smart enough to shop around. This is the number one area a smart agent can come in handy. Since a good multi-company agent is constantly applying with multiple companies he or she will have a good handle on who is currently the most lenient on underwriting for you particular situation. The problem is that this is hard work and many agents are either too busy or not set up to efficiently shop around directly to different underwriters and see who would make you the best offer. This is a lot harder than just running you a quote online.

Secret #7: Don’t forget customer service.

Most people shopping for insurance focus on companies with the lowest price and the best financial rating. Unfortunately I know of some A+ rated companies with low rates who I would not touch with a ten foot pole simply because it’s easier to give birth to a porcupine backwards then it is to get customer service from them.

Before I understood this I used a life insurance company that gave a client a great rate but 2 years later the client called me and said, “I have mailed in all my payments on time but just got a notice saying my policy lapsed.” It turned out the company had been making lots of back office mistakes and had lost the premium payment!

We were able to fix it because we caught the problem so early. But if the client happened to have died during the short period the policy had lapsed, his family might have had a hard time proving that the premium had been paid on time and they might not have received the life insurance money – a loss of hundreds of thousands of dollars in that case.

Secret #8: Apply 3-6 months ahead of the time you need the insurance if possible.

Don’t be in a hurry to get a policy if you already have some coverage in force. But go ahead and apply right away knowing that you might need months to shop around if the first company does not give you a good rate. Even though the life insurance industry is getting more automated your application will still often be held up for weeks or months while the insurance company waits on your doctor’s office to mail them a copy of you medical records.

If you are in a hurry and buy a quickie ‘no-underwriting’ policy without going through the full health checks and underwriting that a mainstream life insurance company requires, you will end up paying 20%-50% more because the insurance company will automatically charge you higher rates because they don’t know whether you are healthy or about to die the next day.

Secret #9: Avoid buying extra life insurance through work if you are healthy.

I am sure there are exceptions to this “trick” but I have rarely found one. By all means keep the free life insurance your employer provides. But if you are healthy and you are paying for supplemental life insurance through payroll deduction you are almost certainly paying too much. What is happening is that your ‘overpayments’ ends up subsidizing the unhealthy people in your company who are buying life insurance through payroll deduction.

Usually the life insurance company has cut a deal with your employer and will waive the required health exam for all employees – instead they just average the price for all the employees and offer one or two rates for males or females at any given age. Life insurance companies know they will pick up lots of unhealthy clients this way so they jack up the price on everyone so that the healthy people end up overpaying so that the unhealthy employees get a cheaper policy. Also, unlike the guaranteed term policies which we recommend, most life insurance you buy through work will get more expensive as you get older.

Also group life insurance is generally not portable when you retire or change jobs meaning that when you retire or change jobs you might have to apply all over again even though you will be older and probably not as healthy and risk being turned down for a policy. If the group plan does allow portability they generally limit your conversion choices and force you to go into expensive cash value plans.

I remember helping someone evaluate his supplemental life insurance. He was sure it was a better deal than any policy I could find him. Little did he know that the price of his group plan would go up every year? By the time he retired his premium would have risen to over $10,000/year. I found him a policy for around $1000/year that would never go up. Also, unlike his old group life policy, he could take the individual policy with him when he changed jobs or retired.

Secret #10: Do a trial application on a COD payment basis.

Only send money with the application if you need the life insurance coverage right away. Sending a check with the application is a traditional practice agents used to do – I think mostly because it got them their commissions faster. If you send money with an application you usually get temporary coverage immediately but if you already have plenty of coverage and are just trying to get better rates ask your agent to do a trial application on a COD basis so you only pay once the policy is approved. If you do not send money, and you die before paying for the policy there is no coverage.

Secret #11: Wear your shoes when the nurse measures your height.

When the insurance company sends out the nurse to do your health check try to be as tall as possible if you are overweight? In most states you are allowed to wear shoes and if you are a little overweight your taller height/weight ratio will look a little better to the underwriter who is determining your health rating and policy price. Also do your exam early in the morning with no food in you – this will make your cholesterol count and various health ratios look the best.

Secret #12: Be careful with extra perks and riders.

Most policies come with options like accidental death benefit, child riders, disability riders, return of premium etc. If you do the math on most of these “extras” they usually don’t make smart financial sense. Life insurance companies are out to make money and these riders are usually profitable because they either cover something that rarely happens or they are so stringent that the benefit never gets paid out. Keep things simple and focus mainly on getting a life policy to cover your life without many strings attached. Again a good agent can help you weigh the benefits of the extra riders. But be wary of an agent who tries to tack on every possible extra rider.

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Difference Between Employers’ Liability Insurance (ELI) and Workers Compensation Insurance (WCI)

Employers’ Liability Insurance (ELI) and Workers Compensation Insurance (WCI) are two important insurance covers to protect the interests of employees, as well as employers. There are, however, certain differences between the two. Due to these differences, it may result in wrongful litigation and consequently anxiety to parties involved. The differences between ELI and WCI are relating to where they apply and what they cover. We will discuss about them here briefly.

Where they apply

Employers’ liability insurance

As an employer, it is mandatory for you in UK to purchase employers’ liability insurance. Not purchasing attracts penalty under law. In certain situations your employees may feel that you are liable for job related illness/injury which they may sustain and they sue for this. If it is really a case, it may bring in expenses such as hospitalization, financial compensation and the like. ELI helps you under such circumstances.

While it is mandatory for you as an employer to have ELI, your employees need to prove that the job related injury/illness is because of your negligence. Imagine yours is a lumber business. While working, your employees should have the necessary equipment, training and skills to operate them. If you employ them without teaching the safety norms, imparting the training and checking the fitness, and they sustain injuries, it will amount to your negligence as per rules framed under Employers’ Liability Insurance Act and employees are likely to feel appropriate to sue you, because you are liable.

Workers compensation insurance

On the other hand, workers compensation insurance is a cover for the welfare of the employees. It depends on the circumstances that are the tone of relation between employer and employees. Thus, if you are more concerned about employees’ health and safety, you need to purchase this insurance. It does not matter whether it was your fault or your employees’ fault that resulted illness, accident or death, this insurance comes to your help.

Coverage

Employers’ liability insurance

As an employer, you have to go to court of law if the affected employee sues you. You need to pay financial compensation and bear the hospitalization and medication. ELI covers all these expenses.

Likewise, for employees ELI covers the permanent and temporary disability, injury and wrongful death at workplace. It covers the cost of litigation as well.

Workers compensation insurance

For employers, WCI is a Good Samaritan. In most cases, it ensures that your employees do not resort to litigation. However, in such unfortunate event, WCI covers the expenses because of litigation. It covers the financial expenses to be given to the affected employee for work-related injury, illness or even death.

Employees when inured at workplace, under WCI, are guaranteed to get compensation from the employer to cover medical and hospitalization expenses and certain portion of wages. In most cases, it is two-thirds or more. WCI covers the expenses on litigation, by the employee. In general, WCI takes care of the situation and makes sure that litigation on the part of employees is avoided.

WCI covers compensation (wages) in case of a temporary disability for the period of absence. If the individual got permanent disability, and not fit for employment in current occupation, WCI covers the expenses of vocational training and rehabilitation and cost of searching a job, if he wants.

Despite both ELI and WCI are meant to protect the interests of employees and employers, there are differences in the way they apply. You need to understand them and purchase a cover according to the need of your business.

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What Makes London a Lively and Appealing City for Travelers?

It is petrifying to move to a new town especially when you do not know anyone. However, there is a different story to London because it is always busting with travelers and this makes it easy for those visiting to feel at home quickly.

London has a traveller's community that enterprises of individuals from New Zealand, Australia and South Africa. There is also special consideration for Europeans, Canadians and Australians citizens who wish to travel to London.

Most people come to London for fun or work. It is easy to get to London. You can apply through the British Embassy through several Visas. Most individuals who travel to London on a two year working holiday visa end up staying for the full two years. That way, they get a chance to know people, create relationships and have lasting memories.

Although London is busy, it is rich with all the remarkable sceneries that you could hope for. There are amazing places to visit. Any activity you want is available and you can enjoy art, education and sports, just to mention a few. Each and every day of your stay can be filled with so much entertainment.

If you treasure some quiet time, you can go to the local pubs for a drink or to watch football. The activities do not needarily have to be costly. There will always be something to keep you entertained.

In addition, London is easy to adjust to. It is a large city with a huge number of people. Despite this, it is a quiet and pleasant place. You get to enjoy the scenery and the outdoor experience more.

London has magnificent buildings. The buildings are unique and have fine architecture. The grandeur is pleasing enough to those in creative design and adds to their artistry. It is simply an inspiring town.

It is also amazing that you get to go to the museum for free. London has beautiful museums. They are also public and allow everyone to appreciate history and culture. Additionally, they hold art that has inserted for centers and do not restrict visitors.

Traveling to London is there before an experience worth taking. Another one of its appealing, notable and relaxing features are its green areas. The city is well planned and includes parks such as the hike parks and wild parks. As much as this may come as a surprise, there are also wild animals within some of these parks. The variety of parks is breath-taking. In addition, they are very accessible and are located at the heart of London.

This city is convenient and it is easy to get housing that is close to important amenities. That way, you can walk to work, the grocery store, bank, social joints and many other locations. The public transport system is also convenient and even if you do not have a car, getting around is not going to be a problem. You can also use your bike around the city. They have double buses that are like a free tour of London. You are further not limited on the taxis and will find a range of affordable ones.

Travel to London to also experience the abundance of culture. It is the city that attracts diverse nationalities and people. It is a great city for studies, work or business. It provides the opportunity to interact with interesting people from around the world.

The people are friendly and it is easier to form bonding relationships. The people are also more fun and outgoing.

What is a city without a cuisine? London is not left behind when it comes to amazing dishes. You will find a variety of quality meals. The food is fresh and delicious. Furthermore, you will easily find organic food in the stores.

London easily connects you to other towns and countries in Europe. It is convenient to travel. Moreover, regulation allows all workers to have at least 20 days of leave. It is made much more convenient with affordable flights.

Communication will not be an issue because internet and phone services are affordable. The plan is not only cheaper in London but also in other parts of Europe and America while roaming.

After all the good is spelt out, there is a compromise to make. London is an expensive town. So many people are moving to London and this is making it expensive in terms of rent and other amenities. Demand is increasing day by day.

All in all, London feels more like home and is a great place to tip travel to. It further makes you more of who you are and is an inclusive city.

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Insurance Law – An Indian Perspective

INTRODUCTION

"Insurance should be bought to protect you against a calamity that would otherwise be financially devastating."

In simple terms, insurance allows someone who suffers a loss or accident to be compensated for the effects of their misfortune. It lets you protect yourself against everyday risks to your health, home and financial situation.

Insurance in India started without any regulation in the Nineteenth Century. It was a typical story of a colonial epoch: few British insurance companies dominating the market serving mostly large urban centers. After the independence, it took a theatrical turn. Insurance was nationalized. First, the life insurance companies were nationalized in 1956, and then the general insurance business was nationalized in 1972. It was only in 1999 that the private insurance companies had been allowed back into the business of insurance with a maximum of 26% of foreign holding .

"The insurance industry is awful and can be quite intimidating." Insurance is being sold for almost anything and everything you can imagine.

Concepts of insurance have been extended beyond the coverage of tangible asset. Now the risk of losses due to sudden changes in currency exchange rates, political disturbance, negligence and liability for the damages can also be covered.

But if a person thoughtfully invests in insurance for his property prior to any unexpected contingency then he will be suitably compensated for his loss as soon as the amount of damage is ascertained.

The entry of the State Bank of India with its proposal of bank assurance brings a new dynamics in the game. The collective experience of the other countries in Asia has already deregulated their markets and has allowed foreign companies to participate. If the experience of the other countries is any guide, the dominance of the Life Insurance Corporation and the General Insurance Corporation is not going to disappear any time soon.
The aim of all insurance is to compensate the owner against loss arising from a variety of risks, which he anticipates, to his life, property and business. Insurance is primarily of two types: life insurance and general insurance. General insurance means Fire, Marine and Miscellaneous insurance which includes insurance against burglary or theft, fidelity guarantee, insurance for employer's liability, and insurance of motor vehicles, livestock and crops.

LIFE INSURANCE IN INDIA

"Life insurance is the heartfelt love letter ever written.

It calms down the crying of a hungry baby at night. It relieves the heart of a bereaved widow.

It is the comforting whisper in the dark silent hours of the night. "

Life insurance made its debut in India well over 100 years ago. Its salient features are not as widely understood in our country as they bought to be. There is no statistical definition of life insurance, but it has been defined as a contract of insurance wheree the insured agreements to pay certain sums called premiums, at specified time, and in consideration thereof the insurer agreed to pay certain sums of money on certain condition Sand in specified way upon happening of a particular event contingent upon the duration of human life.

Life insurance is superior to other forms of savings!

"There is no death. Life Insurance exalts life and defeats death.

It is the premium we pay for the freedom of living after death. "

Savings through life insurance guarantee full protection against risk of death of the saver. In life insurance, on death, the full sum secured is payable (with bonuses wherever applicable) whereas in other savings schemes, only the amount saved (with interest) is payable.

The essential features of life insurance are a) it is a contract relating to human life, which b) provides for payment of lump-sum amount, and c) the amount is paid after the expiration of certain period or on the death of the secured . The very purpose and object of the assured in taking policies from life insurance companies is to safeguard the interest of his dependents viz., Wife and children as the case may be, in the even of premature death of the secured as a result of the happening In any contingency. A life insurance policy is also generally accepted as security for even a commercial loan.

NON-LIFE INSURANCE

"Every asset has a value and the business of general insurance is related to the protection of economic value of assets."

Non-life insurance means insurance other than life insurance such as fire, marine, accident, medical, motor vehicle and household insurance. Assets would have been created through the efforts of owner, which can be in the form of building, vehicles, machinery and other tangible properties. Since tangible property has a physical shape and consistency, it is subject to many risks ranging from fire, allied perils to theft and robbery.
Few of the General Insurance policies are:

Property Insurance: The home is most valued possession. The policy is designed to cover the various risks under a single policy. It provides protection for property and interest of the insured and family.

Health Insurance: It provides cover, which takes care of medical expenses following hospitalization from sudden illness or accident.
Personal Accident Insurance: This insurance policy provides compensation for loss of life or injury (partial or permanent) caused by an accident. This includes reimbursements of cost of treatment and the use of hospital facilities for the treatment.

Travel Insurance: The policy covers the insured against various eventualities while traveling abroad. It covers the insured against personal accident, medical expenses and repatriation, loss of checked baggage, passport etc.

Liability Insurance: This policy indemnifies the Directors or Officers or other professionals against loss arising from claims made against them by reason of any wrongful act in their Official capacity.

Motor Insurance: Motor Vehicles Act states that every motor vehicle plying on the road has to be insured, with at least Liability only policy. There are two types of policy one covering the act of liability, while other covers insurers all liability and damage caused to one's vehicles.

JOURNEY FROM AN INFANT TO ADOLESCENCE!

Historical Perspective

The history of life insurance in India dates back to 1818 when it was conceived as a means to provide for English Widows. Interestingly in those days a higher premium was charged for Indian lives than the non-Indian lives as Indian lives were considered more risky for coverage.

The Bombay Mutual Life Insurance Society started its business in 1870. It was the first company to charge same premium for both Indian and non-Indian lives. The Oriental Assurance Company was established in 1880. The General insurance business in India, on the other hand, can trace its roots to the Triton (Tital) Insurance Company Limited, the first general insurance company established in the year 1850 in Calcutta by the British . Till the end of nineteenth century insurance business was almost entirely in the hands of overseas companies.

Insurance regulation form began in India with the passing of the Life Insurance Companies Act of 1912 and the Provident Fund Act of 1912. Several frauds during 20's and 30's desecrated insurance business in India. By 1938 there were 176 insurance companies. The first comprehensive legislation was introduced with the Insurance Act of 1938 that provided strict State Control over insurance business. The insurance business grows at a faster pace after independence. Indian companies strengthened their hold on this business but despite the growth that was witnessed, insurance remained an urban phenomenon.

The Government of India in 1956, brought together over 240 private life insurers and provincial societies under one nationalized monopoly corporation and Life Insurance Corporation (LIC) was born. Nationalization was justified on the grounds that it would create much needed funds for rapid industrialization. This was in conformity with the Government's chosen path of State lead planning and development.

The (non-life) insurance business continued to prosper with the private sector till 1972. Their operations were restricted to organized trade and industry in large cities. The general insurance industry was nationalized in 1972. With this, nearly 107 insurers were amalgamated and grouped into four companies – National Insurance Company, New India Assurance Company, Oriental Insurance Company and United India Insurance Company. These were subsidiaries of the General Insurance Company (GIC).

The life insurance industry was nationalized under the Life Insurance Corporation (LIC) Act of India. In some ways, the LIC has become very flourishing. Regardless of being a monopoly, it has some 60-70 million policyholders. Given that the Indian middle-class is around 250-300 million, the LIC has managed to capture some 30 odd percent of it. Around 48% of the customers of the LIC are from rural and semi-urban areas. This probably would not have happened to the charter of the LIC not specifically set out the goal of serving the rural areas. A high saving rate in India is one of the exogenous factors that have helped the LIC to grow rapidly in recent years. Despite the saving rate being high in India (compared with other countries with a similar level of development), Indians display high degree of risk aversion. Thus, nearly half of the investments are in physical assets (like property and gold). Around twenty three percent are in (low yielding but safe) bank deposits. In addition, some 1.3 percent of the GDP are in life insurance related savings vehicles. This figure has doubled between 1985 and 1995.

A World perspective – Life Insurance in India

In many countries, insurance has been a form of savings. In many developed countries, a significant fraction of domestic saving is in the form of donation insurance plans. This is not surprising. The prominence of some developing countries is more surprising. For example, South Africa features at the number two spot. India is nestled between Chile and Italy. This is even more surprising given the levels of economic development in Chile and Italy. Thus, we can conclude that there is an insurance culture in India since a low per capita income. This promises well for future growth. Specifically, when the income level improvements, insurance (especially life) is likely to grow rapidly.

INSURANCE SECTOR REFORM:

Committee Reports: One Known, One Anonymous!

Although Indian markets were privatized and opened up to foreign companies in a number of sectors in 1991, insurance remained out of bounds on both counts. The government wanted to proceed with caution. With pressure from the opposition, the government (at the time, governed by the Congress Party) decided to set up a committee headed by Mr. RN Malhotra (the then Governor of the Reserve Bank of India).

Malhotra Committee

Liberalization of the Indian insurance market was filed in a report released in 1994 by the Malhotra Committee, indicating that the market should be opened to private-sector competition, and eventually, foreign private-sector competition. It also investigated the level of satisfaction of the customers of the LIC. Inquisitively, the level of customer satisfaction appeared to be high.

In 1993, Malhotra Committee – chaired by former Finance Secretary and RBI Governor RN Malhotra – was formed to evaluate the Indian insurance industry and recommend its future course. The Malhotra committee was set up with the aim of complementing the reforms initiated in the financial sector. The reforms were aimed at creating a more efficient and competitive financial system suitable for the needs of the economy keeping in mind the structural changes currently occurring and recognizing that insurance is an important part of the overall financial system where it was necessary to address the need for Similar reforms. In 1994, the committee submitted the report and some of the key recommendations included:

O Structure

Government bet in the insurance Companies to be bought down to 50%. Government should take over the holdings of GIC and its affiliates so that these affiliates can act as independent corporations. All the insurance companies should be given greater freedom to operate.
Competition

Private Companies with a minimum paid up capital of Rs.1 billion should be allowed to enter the sector. No Company should deal in both Life and General Insurance through a single entity. Foreign companies may be allowed to enter the industry in collaboration with the domestic companies. Postal Life Insurance should be allowed to operate in the rural market. Only one State Level Life Insurance Company should be allowed to operate in each state.

O Regulatory Body

The Insurance Act should be changed. An Insurance Regulatory body should be set up. Controller of Insurance – a part of the Finance Ministry- should be made Independent.

O Investments

Compulsory Investments of LIC Life Fund in government securities to be reduced from 75% to 50%. GIC and its affiliates are not to hold more than 5% in any company (there current holdings to be brought down to this level over a period of time).

O Customer Service

LIC should pay interest on delays in payments beyond 30 days. Insurance companies must be encouraged to set up unit linked pension plans. Computerization of operations and updating of technology to be carried out in the insurance industry. The committee emphasized that in order to improve the customer services and increase the coverage of insurance policies, industry should be opened up to competition. But at the same time, the committee felt the need to exercise caution as any failure on the part of new competitors could ruin the public confidence in the industry. Here, it was decided to allow competition in a limited way by stipulating the minimum capital requirement of Rs.100 crores.

The committee felt the need to provide greater automation to insurance companies in order to improve their performance and enable them to act as independent companies with economic motives. For this purpose, it had proposed setting up an independent regulatory body – The Insurance Regulatory and Development Authority.

Reforms in the Insurance sector were initiated with the passage of the IRDA Bill in Parliament in December 1999. The IRDA since its incorporation as a statutory body in April 2000 has meticulously stuck to its schedule of framing regulations and registering the private sector insurance companies.

Since being set up as an independent statutory body the IRDA has put in a framework of globally compatible regulations. The other decision taken at the same time to provide the supporting systems to the insurance sector and in particular the life insurance companies was the launch of the IRDA online service for issue and renewal of licenses to agents. The approval of enterprises for attending training to agents has also ensured that the insurance companies would have a trained workforce of insurance agents in place to sell their products.

The Government of India liberalized the insurance sector in March 2000 with the passage of the Insurance Regulatory and Development Authority (IRDA) Bill, lifting all entry restrictions for private players and allowing foreign players to enter the market with some limits on direct foreign ownership. Under the current guidelines, there is a 26 percent equity lid for foreign partners in an insurance company. There is a proposal to increase this limit to 49 percent.

The opening up of the sector is likely to lead to greater spread and deepening of insurance in India and this may also include restructuring and revitalizing of the public sector companies. In the private sector 12 life insurance and 8 general insurance companies have been registered. A host of private insurance companies operating in both life and non-life segments have started selling their insurance policies since 2001

Mukherjee Committee

Immediately after the publication of the Malhotra Committee Report, a new committee, Mukherjee Committee was set up to make concrete plans for the requirements of the newly formed insurance companies. Recommendations of the Mukherjee Committee were never disclosed to the public. But, from the information that filtered out it became clear that the committee recommended the inclusion of certain ratios in insurance company balance sheets to ensure transparency in accounting. But the Finance Minister owed to it and it was argued by him, probably on the advice of some of the potential competitors, that it could affect the prospects of a developing insurance company.

LAW COMMISSION OF INDIA ON REVISION OF THE INSURANCE ACT 1938 – 190th Law Commission Report

The Law Commission on 16th June 2003 released a Consultation Paper on the Revision of the Insurance Act, 1938. The previous exercise to amend the Insurance Act, 1938 was amended in 1999 at the time of enactment of the Insurance Regulatory Development Authority Act, 1999 IRDA Act).

The Commission undertook the present exercise in the context of the changed policy that has permitted private insurance companies both in the life and non-life sectors. A need has been felt to toughen the regulatory mechanism even while streamlining the existing legislation with a view to removing portions that have become superfluous as a consequence of the recent changes.

Among the major areas of changes, the Consultation paper suggested the following:

A. Merging of the provisions of the IRDA Act with the Insurance Act to avoid multiplicity of legislations;

B. Delegation of redundant and transitory provisions in the Insurance Act, 1938;

C. Amendments reflect the modified policy of permitting private insurance companies and strengthening the regulatory mechanism;

D. Providing for stringent norms regarding maintenance of 'solvency margin' and investments by both public sector and private sector insurance companies;

E. Providing for a full-fledged grievance redressal mechanism that includes:

O The constitution of Grievance Redressal Authorizations (GRAs) comprising one judicial and two technical members to deal with complaints / claims of policyholders against insurers (the GRAs are expected to replace the present system of insurer appointed Ombudsman);

O Appointment of adjudicating officers by the IRDA to determine and levy penalies on defaulting insurers, insurance intermediaries and insurance agents;

O Providing for an appeal against the decisions of the IRDA, GRAs and adjudicating officers to an Insurance Appellate Tribunal (IAT) concluding a judge (sitting or retired) of the Supreme Court / Chief Justice of a High Court as presiding officer and two other members Having sufficient experience in insurance matters;

O Providing for a statutory appeal to the Supreme Court against the decisions of the IAT.

LIFE & NON-LIFE INSURANCE – Development and Growth!

The year 2006 turned out to be a momentous year for the insurance sector as regulator the Insurance Regulatory Development Authority Act, laid the foundation for free pricing general insurance from 2007, while many companies announced plans to attack into the sector.

Both domestic and foreign players robustly pursued their long-pending demand for increasing the FDI limit from 26 per cent to 49 per cent and towards the fag end of the year, the Government sent the Comprehensive Insurance Bill to Group of Ministers for consideration amid strong reservation From Left parties. The Bill is likely to be taken up in the Budget session of Parliament.

The infiltration rates of health and other non-life insurances in India are well below the international level. These facts indicate immunity growth potential of the insurance sector. The hike in FDI limit to 49 per cent was proposed by the Government last year. This has not been operationalized as legislative changes are required for such hike. Since opening up of the insurance sector in 1999, foreign investments of Rs. 8.7 billion have tipped into the Indian market and 21 private companies have been granted licenses.

The involvement of the private insurers in various industry segments has increased on account of both their capturing a part of the business which was earlier underwritten by the public sector insurers and also creating additional business boulevards. To this effect, the public sector insurers have been unable to draw upon their inherent strengths to capture additional premium. Of the growth in premium in 2004-05, 66.27 per cent has been captured by the private insurers despite having 20 per cent market share.

The life insurance industry recorded a premium income of Rs.82854.80 crore during the financial year 2004-05 as against Rs.66653.75 crore in the previous financial year, recording a growth of 24.31 per cent. The contribution of first year premium, single premium and renewal premium to the total premium was Rs.15881.33 crore (19.16 per cent); Rs.10336.30 crore (12.47 per cent); And Rs.56637.16 crore (68.36 per cent), respectively. In the year 2000-01, when the industry was opened up to the private players, the life insurance premium was Rs.34,898.48 crore which constituted of Rs. 6996.95 crore of first year premium, Rs. 25191.07 crore of renewal premium and Rs. 2740.45 crore of single premium. Post opening up, single premium had declined from Rs.9, 194.07 crore in the year 2001-02 to Rs.5674.14 crore in 2002-03 with the withdrawal of the guaranteed return policies. Although it went up marginally in 2003-04 to Rs.5936.50 crore (4.62 per cent growth) 2004-05, however, witnessed a significant shift with the single premium income rising to Rs. 10336.30 crore showing 74.11 per cent growth over 2003-04.

The size of life insurance market increased on the strength of growth in the economy and concomitant increase in per capita income. This resulted in a favorable growth in total premium both for LIC (18.25 per cent) and to the new insurers (147.65 per cent) in 2004-05. The higher growth for the new insurers is to be viewed in the context of a low base in 2003- 04. However, the new insurers have improved their market share from 4.68 in 2003-04 to 9.33 in 2004-05.

The segment wise break up of fire, marine and miscellaneous segments in case of the public sector insurers was Rs.2411.38 crore, Rs.982.99 crore and Rs.10578.59 crore, ie, a growth of (-) 1.43 per cent, 1.81 per cent And 6.58 per cent. The public sector insurers reported growth in Motor and Health segments (9 and 24 per cent). These segments accounted for 45 and 10 per cent of the business underwritten by the public sector insurers. Fire and "Others" accounted for 17.26 and 11 per cent of the premium underwritten. Aviation, Liability, "Others" and Fire recorded negative growth of 29, 21, 3.58 and 1.43 per cent. In no other country that opened at the same time as India have foreign companies been able to grab a 22 per cent market share in the life segment and about 20 per cent in the general insurance segment. The share of foreign insurers in other competitive Asian markets is not more than 5 to 10 per cent.

The life insurance sector grew new premium at a rate not seen before while the general insurance sector grew at a faster rate. Two new players entered into life insurance – Shriram Life and Bharti Axa Life – taking the total number of life players to 16. There was one new entrant to the non-life sector in the form of a standard health insurance company – Star Health and Allied Insurance, taking the non-life players to 14.

A large number of companies, mostly nationalized banks (about 14) such as Bank of India and Punjab National Bank, have announced plans to enter the insurance sector and some of them have also formed joint ventures.

The proposed change in FDI cap is part of the comprehensive amendments to insurance laws – The Insurance Act of 1999, LIC Act, 1956 and IRDA Act, 1999. After the proposed amendments in the insurance laws LIC would be able to maintain reserves while insurance companies Would be able to raise resources other than equity.

About 14 banks are in queue to enter insurance sector and the year 2006 saw several joint venture announcements while others scout partners. Bank of India has teamed up with Union Bank and Japanese insurance major Dai-ichi Mutual Life while PNB tied up with Vijaya Bank and Principal for foraying into life insurance. Allaabad Bank, Karnataka Bank, Indian Overseas Bank, Dabur Investment Corporation and Sompo Japan Insurance Inc have tied up for forming a non-life insurance company while Bank of Maharashtra has tied up with Shriram Group and South Africa's Sanlam group for non-life insurance venture .

CONCLUSION

It seems cynical that the LIC and the GIC will wither and die within the next decade or two. The IRDA has taken "at a snail's pace" approach. It has been very cautious in granting licenses. It has set up fairly strict standards for all aspects of the insurance business (with the probable exception of the disclosure requirements). The regulators always walk a fine line. Too many regulations kill the motivation of the newcomers; Too relaxed regulations may admit failure and fraud that led to nationalization in the first place. India is not unique among the developing countries where the insurance business has been opened up to foreign competitors.

The insurance business is at a critical stage in India. Over the next couple of decades we are likely to witness high growth in the insurance sector for two reasons namely; Financial deregulation always speeds up the development of the insurance sector and growth in per capita GDP also helps the insurance business to grow.

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The Relationship Between Insurance and Finance

Insurance and finance are closely interwoven fields of business, not least because they both involve money. They also often both involve speculation and risk, and often where one goes, the other will follow. Take property investment for example, it involves a large amount of capital out lay, swiftly followed by insurance to protect the capital investment. It would be ridiculous to spend such a vast sum of money on a venture and not protect it against possible damage. It therefore makes sense to store information on these two subjects together, as the relationship is so logical.

Insurance is a form of risk management used to protect the insured against the risk of a loss. It is defined as the equitable transfer of the risk of a loss from one entity to another in exchange for a premium. There are different kinds of insurance for just about every conceivable event. The most common insurance is probably life insurance, which provides a monetary benefit to a decedent’s family or other designated beneficiary.

It can cover funeral or burial costs and can be paid out to the beneficiary in either a lump sum or as an annuity. Property insurance is one of the more necessary insurances as property is extremely expensive and if it is lost or damaged for some reason (fire, earthquake, flood) it can be very difficult to replace without adequate reimbursement. Travel insurance used to be seen as an unnecessary expense and is still viewed as such by many. Its importance is, however, being increasingly recognised by the public at large. It is cover taken by those who travel abroad and covers certain unforeseen events such as medical expenses, loss of personal belongings, travel delays etc. There are numerous other types of insurance, too many to mention, all vital if you want to protect something of particular importance to you or another.

In the world of finance there are many sub-categories, also too numerous to mention but a few will be included here. Forex, or the foreign exchange market wherever one currency is traded for another. It includes trading between banks, speculators, institutions, corporations, governments, and other financial markets. The average daily trade in the global forex is over US$ 3 trillion.

Tax consulting usually involves CPAs and tax lawyers in addressing any tax issues that you may have. There may also be Professional Strategic Tax Planners and Enrolled Agents, depending on the company that you hire. They will help you reduce your tax debt, eliminate tax penalties, an innocent spouse claim, tax liens, bank levies, and preparing unfilled tax returns, as well as any other tax resolution problem that you might have.

Property investment is usually when an investor buys property with an eye to generate profit and not to occupy it. It is an asset that has been purchased and held for future appreciation, income or portfolio purposes. In some instances an investment property does not have to be held for profit, as some landlords in New York lease office buildings to non-profit organisations for tax purposes. Homeowners consider their homes to be investments but they aren’t classified as investment properties. Perhaps if you’re buying your second or third home, it can be considered an investment property, especially if you plan to rent it out to help pay off the home loan.

Business networking is a marketing method, which is as old as business itself. It’s been around since ever since people learned to hold a glass of whiskey and schmooze. In fact, its probably been around a lot longer, Cro-Magnon man probably gathered around the newly discovered fire and showed each other their collection of animal teeth and traded them. Creating networks of crocodile teeth owners and sabre toothed tiger owners, who tried a take over bid against the sabre toothed leopard owners. Business networking is designed to create business opportunities through social networks. It helps if the people involved are of the same frame of mind.

These days a very handy way of business networking is via the Internet on the various social media available. But it must be said that very little can beat the intimacy and trust created by face-to-face relationships. Also, where would our businessmen be without their whiskeys and weekly schmooze?

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Know About the Consequences of Not Having Public Liability Insurance Coverage

Public liability insurance is an important insurance policy that protects your business during the time of adversities. Especially, if your business handles risky activities like construction, plumbing, etc., or if the public enters into your business premises like in retailing, then this insurance plan is a must have. Owing to the uncertainty of accidents and the huge costs of legal claims, your business may run into crisis if you are not properly guarded by the right insurance plan, i.e. public liability insurance.

This article gives you a little insight into the consequences your business might face, if you do not have public liability insurance coverage.

Financial burden: Depending on the damage or loss caused to the third-party, the amount claimed may vary. But the third parties generally sue the company for heavy amounts as small amounts do not matter for both company and the sufferers. These claims will add up to the company’s existing costs and become a financial burden to the company. Managing the finances between the company’s needs and legal claims is not wise as it halts the business operations.

Legal battles: Apart from the amount to be reimbursed, a company has to face legal battles which occur as a result of lawsuits filed against the business by the third parties. The legal costs and expenses are generally high. You need to deal legal authorities with utmost care. These legal battles are hectic. The time and effort required to fight these legal battles is also high. It diverts you from your core business. But if you have a public liability policy, the insurance company assists you and takes charge in fighting these legal battles till the case is closed, besides paying the legal expenses.

Chances of bankruptcy: Inability to pay the outstanding charges claimed by the third parties may lead the business to go bankrupt. Unless a business has outstanding capital, it cannot afford to pay these legal expenses. Moreover, you are needed to provide additional financial assistance in the form of medical aid as in case of accidents and repairing charges in case of property damage, besides paying the lump sum amount and the legal costs.

Investment at risk: In case your business is facing a third-party legal claim, and if you are in a position where you cannot pay the claimed amount instantly, then, the bank or the court gives permission to seize your various monetary investments or fixed assets such as land, furniture or machinery to cover the legal expenses and the claimed amount.

Lack of mental peace: With the all the above issues, you will surely lose mental peace. These legal claims not only eat away the business’ time and effort but in some cases may ruin the business’ existence. Legal claims should be dealt instantly; any delay will only aggravate the tension and loss.

A good business will always be prepared for the future crisis. Having a public liability insurance policy is a wise decision. It provides timely financial help to pay the claimed amount and the legal costs without putting the business at stake.

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The Pros And Cons Of Funeral Insurance

Funeral insurance, also known as burial insurance is a type of insurance created to pay for the costs of memorial and internment services. Nowadays, many people especially those who are not getting any younger are getting funeral insurance to deal with the costs of burial and funeral services when they die.

Most of these people do not want to leave any type of burden, especially financial burden, to their loved ones. Some of the costs covered by insurance policies are cremation, burial, plots, music, flowers, taxes and even medical costs. Before purchasing funeral insurance, an interested person must consider things such as the location of the cemetery, arrangement and expenses of the funeral, cost of cremating and buying caskets or urns.

Aside from these considerations, he must also determine the advantages and disadvantages of this kind of insurance:

Cash to Shoulder the Funeral Arrangements. The insurance company will give the grieving loved ones lump sum cash that they can use for funeral arrangements. The amount of cash usually depends on the type of funeral insurance policy that the dead relative has purchased.

A Car to Make Funeral Arrangements. While the family members are on the verge of arranging matters of his funeral, the insurance company will provide a car to make sure that they still feel comfortable while dealing with his death and getting ready for his interment at the same time.

Bonus Monthly Payout. The family members who the insured person has left will be receiving monthly bonus cash from the insurance company. This amount of money is expected to help pay out for bills covering food and utility.

Chosen Funeral and Burial. A good thing about having a contract with an insurance company is that when he dies, he will have the memorial and interment services according to his will. He will have a funeral and burial that he thinks he describes.

Get A Tombstone. With the services that the company covers, the family members can choose a tombstone that will serve as its memory.

The disadvantages of purchasing funeral insurance are:

Insurance Policy May not Pay in Full. There are some companies offering funeral insurance that have waiting periods. These periods can reduce the benefits of the insured person. There can also be times when there can be no benefits at all. Some insurance policies can decrease in value as time passes by.

Insurance Policy May not be an investment. A person who chooses to have funeral insurance will have no control on how his money will be endowed. Another thing is that some companies offer very little interest rate. And lastly, some insurance policies are overpriced. This means that some of these policies cost more than the cost of funeral coverage. A person planning to get one must remember that by purchasing one means he is paying more premiumss than collecting insurance claims.

With the advantages and disadvantages of funeral insurance, a person can see that it will be highly recommended to apply for a funeral insurance policy that will fit his needs and requirements.

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Thermal Mugs: Plastic Vs Stainless Steel

The basic design of thermal mugs, whether they are plastic or stainless steel is the same – double wall insulation with a lid to seal the top. But even though stainless steel versions cost more than plastic versions, in the long run, they are the best deal for travelers. They can also be made of ceramic or glass, but those are generally designed for household use and not for travel due to the possibility of breakage.

The main benefits of a stainless steel mug are durability and better insulation. Steel is tough, and although plastic mugs can take a beating, a steel mug can last much longer. This is especially true when compared to the more brittle, hard plastic mugs that are sometimes used to display stylish designs and finishes. Although messy, dropping a steel mug of coffee will not generally cause any damage.

There are three basic types of insulation used; Air, foam or vacuum between double walls. Plastic versions usually use either air or foam. Both work acceptably, but air or foam is not as effective as vacuum insulation. More often than not, steel mugs use vacuum insulation which can keep beverages hot for a longer period of time. This can be quite important especially on long (and cold!) Morning commutes.

Beyond the two primary benefits, there are a few other benefits that stainless steel thermal mugs have when compared to plastic mugs. Plastic, being slightly softer, is more difficult to clean. You can use tough cleansers (making sure they're non-toxic!) On steel, but the same cleansers will scratch and damage plastic. For the same reason, plastic mugs tend to retain the flavors of the beverages that have been in them. This is not really a problem if you just drink regular generic coffee every day, but if you use the mug for different beverages, it can be.

When you look at all the factors, durability, ease of cleaning, effective insulation and better flavor, the stainless steel thermal mug is by far the best choice, even though it can be a bit more expensive. The only real benefits of plastic mugs are the lower price in the short run (which can be a big benefit if you lose your mug frequently!) And that they are slightly lighter than stainless steel mugs.

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The “Contents Pack-out” Trap and How to Escape It

“Contents Pack-out” is a term used by water and fire restoration contractors, and insurance companies. It is the process in which the contractor sends trucks, boxes and workers to your home. They pack up all of the damaged personal property in your home or business and transport it back to their warehouse. Once the personal property is at the warehouse, the contractor begins the cleaning and restoration process.

Insurance companies do not like to replace personal property. They would rather clean or repair it and give it back to you. That drastically slashes their claims cost, which makes them happy.

I’ve been an insurance adjuster for over 16 years, and in the insurance business for over 35 years. I’ve seen very few instances where seriously damaged personal property can be just cleaned or repaired successfully. Most fires burn or infuse toxic chemicals into personal property, like wood or textiles. Same goes for a flood loss. My personal opinion is that replacement of damaged personal property is better than repair or cleaning.

So, what is the trap?

Insurance adjusters like to swoop in with their favorite approved restoration contractor and do a “pack-out.” But your insurance policy has a limit on Personal Property. All of the money that the insurance adjuster authorizes to have your contents cleaned is paid against the policy limit. So, if the restoration contractor cleans a bunch of your damaged property, but you reject it as damaged, the contractor still gets paid. But you have less money now to replace your damaged personal property.

The trap is that a pack-out can penalize you when you are submitting your insurance claim!

Here’s the Escape Strategy

1. You own the personal property…not the insurance company and not the restoration contractor. It is YOUR DECISION what gets repaired and what gets replaced, not the adjuster.

2. Call in your own restoration contractor for a second opinion. It shouldn’t cost you anything, but even if it did, it would be money well spent.

3. Make sure every single item that gets removed from your home is listed on an inventory sheet.

4. Based upon your contractor’s opinion, negotiate the replacements with the adjuster and settle the claim.

If you have experienced a property loss, whether fire, wind, flood or other, you need to know winning insurance claim strategies. The insurance company will not tell you the claims process, but I will. I will show you how to take control of your insurance claim, and add hundreds or even thousands more dollars to your claim settlement. For more information, go to the website listed below.

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Five Reasons Why You Should Work For the Travel and Tourism Industry

The travel and tourism industry is a massive global industry that caters for the needs of those who have to travel away from home in terms of providing facilities and services like hotel accommodation, air and road transport. Close to a billion people are involved in international travel in this industry which generates billions of dollars every year. Sometimes making a decision on which industry to work for can be quite hard given the many options available today across the globe. Below are five reasons why you should consider working in the travel and tourism industry.

1. There are lots of work opportunities. The travel and tourism industry has a lot of opportunities employment for those seeking employment. You can work in the aviation sector, road, rail and water transport, accommodation providers like hotels and lodges, leisure and business travel agents and tour guides. It is now also possible to work from home thanks to technology which is convenient for some people like mums who have a child or children and do not want to be far away from home.

2. The perks are good. The travel industry provides rewards that not many other industries do. For example those working in the airline industry can get free tickets for themselves and immediate family members to fly to any destination that the airline they work for flies to. Those who work as travel agents can get reduced travel fares and even pay reduced accommodation rates. Then there are the familiarization trips that those who work in the industry have the opportunity to take. Just think of an all expenses paid trip to places like the Seychelles, France, the Kenyan coast of Mombasa to name just a few.

3. It is a growing industry. In spite of the recent downturn because of the threat of terrorism and the world recession, travel industry players are optimistic about its growth. In good times and bad times people always get the urge to move. And with more and more places becoming accessible because of air travel and with both air travel and hotel rates coming down in order to accommodate peoples pocket there is reason to believe that the travel industry will continue to grow and more markets will be reached which is good news for service providers. Furthermore technology like the internet has made it possible to access markets anywhere in the world, at any time of the day.

4. It is never boring. Working in the industry almost means that you will meet new people from time to time. This is especially true for those who work as frontline staff in travel agencies, airline offices or hotels. Those who work in the airline industry as flight attendants have the opportunity to travel to different parts of the world, visit different towns and cities and see and experience different cultures. That can never be a boring job.

5. You do not need years of studying to work in the industry. You may love a certain profession but because of the years of studying involved in learning it you may be discouraged from joining it. Not so with the travel and tourism industry. Three to six months may be enough depending on what qualification you are studying for to get you started working for this exciting industry. Some people because of their love for the work and experience gained in certain areas of the industry have even started working and studied for the paper qualifications later.

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