9/23/2011 Risk Planning  A simple way to invest in equity and create wealthINDEX  Origins of Insurance  Life insurance Ind...
9/23/2011  Risks and uncertainties are part of lifes great adventure --  accident, illness, theft, natural disaster - they...
9/23/2011COMMON RISKS FACED BY US Death (Loss of Income) Disability (Loss of Income temporarily) Critical Illness (High tr...
9/23/2011 LIFE INSURANCE INDUSTRY                                                          1999-      Life Insurance Indus...
9/23/2011FAQS ON LIFE INSURANCE What is Life Insurance? Do you need life insurance? How much does life insurance cost? How...
9/23/2011TERM INSURANCE POLICY  Provides cover for a specific period only  Premium is very low.  No returns/refund of prem...
9/23/2011ENDOWMENT POLICY Most popular insurance policy in India Combines Investment + Risk Cover Sum assured paid on deat...
9/23/2011ANNUITIES AND PENSION Immediate Annuity Policy    Single Premium    Monthly Pension    Meant for Retirees investi...
9/23/2011UNIT LINKED INSURANCE PLANS (ULIPS) Market linked investment where the premium paid is invested in funds Differen...
9/23/2011LIC SAMRIDHI PLUS Premium Allocation Charge    First Year – 27.5%    Second & Third Year – 7.5%    Thereafter 5% ...
9/23/2011Policy date:December 28, 2010                          11
9/23/2011        Sum Assured: Rs        5,00,000        Highest NAV        guaranteed       Various Charges   Premium Allo...
9/23/2011                                      Highest NAV Charge : 0.5%                                      Additional S...
9/23/2011HAPPY ENDING !!!!                          14
9/23/2011                          The name                        inspires trustA ULIP CUSTOMER & HIS AGENT              ...
9/23/2011TERM PLANS COMPARISON CHART                     Sum Assured: Rs 5,00,000.00                    Annual Premium: Rs...
9/23/2011Sum Assured: Rs 100,00,000.00Annual Premium: Rs 22,500.00Sum Assured: Rs 100,00,000.00Annual Premium: Rs 15,111.0...
9/23/2011Sum Assured: Rs 2,50,00,000.00Annual Premium: Rs 22,600.00Sum Assured: Rs 1,50,00,000.00Annual Premium: Rs 11,300...
9/23/2011      19
9/23/2011LIC ASHA DEEP II – ENDOWMENT PLAN     ICICI I-PROTECT – TERM PLAN Sum Assured - Rs 5,00,000          Sum Assured ...
9/23/2011ASHA (NIRASHA) DEEP Continue to pay annual premium    Surrender value: Rs 79,271 Maturity value after 25 years – ...
9/23/2011LIC ASHA DEEP SURRENDER CHEQUEASHA DEEP INVESTED INTO MUTUAL FUND                                            22
9/23/2011INVESTMENT BY LIFE INSURANCE COMPANIES                      Parameter                                   FY 09-10 ...
9/23/2011      24
9/23/2011MYTH BUSTERS Myth 1: Insurance is for tax saving Myth 2: Insurance is Investment Myth 3: I don’t need Insurance.5...
9/23/201110 COMMANDMENTS OF LIFE INSURANCE Thou shall buy insurance only for risk cover Thou shall not consider insurance ...
9/23/2011WHERE TO BUY LIFE INSURANCE? Individual Agents - Corporate Agents - Bancassurance - Insurance Brokers Directly fr...
9/23/20115 COMMON LIFE INSURANCE MISTAKES  Treating life insurance as a savings avenue  Trusting your life insurance agent...
9/23/2011PROTECTION OF POLICY HOLDERS INTEREST                        Grievance Redressal Mechanism                  Regis...
9/23/2011                          GENERAL INSURANCETYPES OF GENERAL INSURANCE Motor Insurance Health Insurance Fire Insur...
9/23/2011HEALTH INSURANCEWhy is Health Insurance important?  Rising medical costs  Uncertain hospital bills  Expensive / q...
9/23/2011EVERY FAMILY HAS ONE……..HOW MUCH HEALTH INSURANCE COSTS?Source: www.icicilombard.com                             ...
9/23/2011HEALTH INSURANCE Hospitalization Expenses over 24 hours Room charges, Medicine & Test Charges, Operation, doctor ...
9/23/2011          A grim reminder…. Before its too lateIS THIS THE TREND???Mr Raghu Pillai,                         Mr Ra...
9/23/2011CRITICAL ILLNESS CHARGESSTEPS TO BUY A HEALTH INSURANCE Pay attention to policy conditions Read the exclusions an...
9/23/2011GET WELL SOON !!!                          36
9/23/2011      37
9/23/2011LICENSE TO GOOD HEALTH….                                 38
9/23/2011             Last but not the least……..   If you have both knowledge & time, then you do not   require a financia...
9/23/2011SOURCE    Life Insurance Council, India    IRDA Annual Report    Valueresearchonline.com    Rediff.com    Outlook...
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Etica Wealth Management - Insurance Presentation

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Insurance Planning and Risk Planning, Life Insurance and General Insurance, Health Insurance, Term Plans and its benefits,

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Etica Wealth Management - Insurance Presentation

  1. 1. 9/23/2011 Risk Planning A simple way to invest in equity and create wealthINDEX Origins of Insurance Life insurance Industry in India Types of Life Insurance Policies Term Insurance Policy Whole Life Policy Endowment Policy Money Back Policy Unit-Linked Insurance Plans (ULIPS) Annuities & Pension Plan Riders Term Plan Comparison FAQs on Life Insurance Myth Busters General Insurance Industry 1
  2. 2. 9/23/2011 Risks and uncertainties are part of lifes great adventure -- accident, illness, theft, natural disaster - theyre all built into happen. the working of the universe, waiting to happen. Insurance then is mans answer to the vagaries of life. If you life. cannot beat man-made and natural calamities, well, at man- least be prepared for them and their aftermath. aftermath.PROCESS OF ANALYSING INSURANCE NEED Identifications of Risks Assessing Risk Manage & Control the risk Risk avoidance Risk Reduction Risk Retention Risk transfer Monitor & Review 2
  3. 3. 9/23/2011COMMON RISKS FACED BY US Death (Loss of Income) Disability (Loss of Income temporarily) Critical Illness (High treatment charges) Illness & injuries (Hospitalization expenses) House: Fire, theft, calamity Motor: Accidents, theft, calamityORIGINS OF INSURANCE Insurance in India can be traced back to the Vedas. For instance, yogakshema, Vedas. the name of Life Insurance Corporation of Indias corporate headquarters, is Veda. derived from the Rig Veda. The term suggests that a form of "community insurance" was prevalent around 1000 BC and practised by the Aryans. Aryans. Life insurance had its origins in ancient Rome, where citizens formed burial clubs that would meet the funeral expenses of its members as well as help survivors by payments. making some payments. Marine Insurance (Europe) / Fire Insurance (London fire) The government decided to nationalize the life assurance business in India. As a India. result, The Life Insurance Corporation of India was set up in 1956 to take over companies. around 250 life companies. The Insurance Regulatory & Development Authority, an autonomous insurance regulator set up in 2000 3
  4. 4. 9/23/2011 LIFE INSURANCE INDUSTRY 1999- Life Insurance Industry was liberalized in the year 1999-2000. Currently there are 24 players in the Life Insurance Industry. 22 Insurance companies have JV’s with foreign partners. LIC and Sahara Life Insurance company do not have JV’s. All the major international players are present in the Indian Insurance market. A high capital intensive industry - Rs.31,437 Cr deployed Foreign partners have brought in capital of around Rs.5,053 Cr as FDI. in- India has the largest in-force policies in the world. SNAPSHOT OF INDIAN LIFE INSURANCE INDUSTRY Parameter FY 99-00 FY 06-07 FY 07-08 FY 09-10 FY 10-11 (provisional)Number of players 1 16 18 23 24Capital Deployed (Rs. Cr) 5 9,485 16,692 28,943 31437Branches 2,048 5,373 8,913 12,018 11465Employees (in Lacs) 1.23 1.87 2.54 2.70 2.42Individual Agents (in Lacs) 7.14 19.93 25.20 29.78 26.47New Business Policies (In Cr) 1.69 4.61 5.08 5.32 4.81In force Policies (In Cr) 10.14 22.70 25.76 30.40 32.54India’s share of world premium 0.50% 1.53% 1.83% NA NAPenetration as % of GDP 1.39% 4.1% 4.0% 4.90* NATotal Death Benefit paid(Rs.Cr) NA 4,794 5,288 8,385 10,270Total Maturity claim paid(Rs. Cr) NA 34,356 34,543 NA NA Over 70% of the branches are located in Class C cities or lowerSource: IRDA, Life Insurance Council 4
  5. 5. 9/23/2011FAQS ON LIFE INSURANCE What is Life Insurance? Do you need life insurance? How much does life insurance cost? How much do I insure myself for? What will I receive on maturity of my policy? Are there any advantages in buying insurance at an early age? How do I buy a policy? Where can I get all the relevant information?TYPES OF LIFE INSURANCE POLICIES Term Insurance Policy Whole Life Policy Endowment Policy Money Back Policy Unit-Linked Insurance Plans (ULIPS) Unit- Annuities & Pension Plan Riders 5
  6. 6. 9/23/2011TERM INSURANCE POLICY Provides cover for a specific period only Premium is very low. No returns/refund of premium No investment element 100% Risk Cover Sum assured paid on death Best policy for adequate life cover Buy based on life insurance need analysisWHOLE LIFE POLICY Pays either at death or maturity Maturity usually 100 years age. Premium paid for life time Works for estate planning as benefits are generally enjoyed by family Very High Commission (upto 35%) Not Very flexible 6
  7. 7. 9/23/2011ENDOWMENT POLICY Most popular insurance policy in India Combines Investment + Risk Cover Sum assured paid on death or survival at maturity Bonus paid along with Sum Assured on maturity Premiums are higher than term plan due to a savings component Very High Commission (upto 40%) Not FlexibleMONEY BACK POLICY Covers death & survival benefits Lump sum paid periodically. 20% + 20% + 20% + 40% of SA at predefined intervals Full sum assured paid on death Popular for planning Children’s Education & Marriage (upto Very High Commission (upto 40%) 7
  8. 8. 9/23/2011ANNUITIES AND PENSION Immediate Annuity Policy Single Premium Monthly Pension Meant for Retirees investing Retirement Proceeds Deferred Annuity Policy Invest regularly for some years Monthly pension starts at retirement age Can commute upto 1/3 of accumulationWHAT ARE RIDERS? Accidental Death Additional Sum Assured if death Critical Illness If critical illness diagnosed Waiver of Premium Waives off premium if something happens to person who is paying premium Used mainly in Children’s Policies 8
  9. 9. 9/23/2011UNIT LINKED INSURANCE PLANS (ULIPS) Market linked investment where the premium paid is invested in funds Different Options - Equity, Balanced, Debt. Switch facility available Greater flexibility in policy structure Sold as “Investment” Plans Higher of the SA or Fund value is paid at death / maturity Higher Liquidity Mis- Highest Mis-selling as earlier commission was very high SEBI- Recent SEBI-IRDA spat and subsequent IRDA clampdown on ULIPS Highest NAV guaranteed - A big fraudVARIOUS COSTS - ULIPS Mortality charges Cost of insurance coverage Premium allocation charges Usually goes towards agents commission Fund management charges To manage investment component like MFs Policy administration charges To cover operational costs Surrender charges Higher charges for early surrender 9
  10. 10. 9/23/2011LIC SAMRIDHI PLUS Premium Allocation Charge First Year – 27.5% Second & Third Year – 7.5% Thereafter 5% Mortality Charge – 0.5% Policy Administration Charge – Rs 360 p.a Fund Management Charge – 0.40% Surrender Charge – 1st year 6% Guarantee Charge – 0.40% Miscellaneous Charges Dark side of insurance mis-selling 10
  11. 11. 9/23/2011Policy date:December 28, 2010 11
  12. 12. 9/23/2011 Sum Assured: Rs 5,00,000 Highest NAV guaranteed Various Charges Premium Allocation Charge : 4%Premium Administration Charge : 3.6%Fund Management Charge : 1.35%Mortality Charge : As ApplicableSurrender Charge : 6% 12
  13. 13. 9/23/2011 Highest NAV Charge : 0.5% Additional Service Charge : Rs 250Total First year Charges : 9.45% Surrendered on January 5th, 2011 13
  14. 14. 9/23/2011HAPPY ENDING !!!! 14
  15. 15. 9/23/2011 The name inspires trustA ULIP CUSTOMER & HIS AGENT 15
  16. 16. 9/23/2011TERM PLANS COMPARISON CHART Sum Assured: Rs 5,00,000.00 Annual Premium: Rs 19,603.00 16
  17. 17. 9/23/2011Sum Assured: Rs 100,00,000.00Annual Premium: Rs 22,500.00Sum Assured: Rs 100,00,000.00Annual Premium: Rs 15,111.00 17
  18. 18. 9/23/2011Sum Assured: Rs 2,50,00,000.00Annual Premium: Rs 22,600.00Sum Assured: Rs 1,50,00,000.00Annual Premium: Rs 11,300.00 18
  19. 19. 9/23/2011 19
  20. 20. 9/23/2011LIC ASHA DEEP II – ENDOWMENT PLAN ICICI I-PROTECT – TERM PLAN Sum Assured - Rs 5,00,000 Sum Assured - Rs 100,00,000 Annual premium - Rs 19,603 Annual premium - Rs 8,300 Value at maturity based on LIC’s Difference in Premium - Rs 11,303 projection chart - Rs 13,27,500 Invested in Mutual Funds - @12% - Rs 18,80,073 @15% - Rs 31,38,062 @20% - Rs 74,80,026ITS UPTO YOU TO DECIDE !!!!!LIC ASHA DEEP 20
  21. 21. 9/23/2011ASHA (NIRASHA) DEEP Continue to pay annual premium Surrender value: Rs 79,271 Maturity value after 25 years – Annual Premium: Rs 19,603 Rs 13,27,500 Remaining Tenure: 18 years Invests in Mutual Funds - @12% - Rs 18,33,596 @15% - Rs 26,90,627 @20% - Rs 51,24,223LIC ASHA DEEP SURRENDER 21
  22. 22. 9/23/2011LIC ASHA DEEP SURRENDER CHEQUEASHA DEEP INVESTED INTO MUTUAL FUND 22
  23. 23. 9/23/2011INVESTMENT BY LIFE INSURANCE COMPANIES Parameter FY 09-10 % ageCentral Government Securities 3,61,520 57%State Government and other approved securities 1,36,998 21.5%Investment in Infrastructure Sector 1,39,710 21.5% Instruments FY 2009-10 FY 2010-11Equity 4,46,881 5,06,895 (34%)Fixed Income (Debt) 8,10,904 9,52,993 (64%)Others 32,161 20,425 (2%)Total 12,89,946 14,80,313 (100%)LIFE INSURANCE DEATH CLAIMS LIC Private Kotak Aegon Religare ICICI PruAmount inRs crs 4,799.55 1,158.58 55.91 1.08 218.04No of Policies 6,53,909 72,200 1,983 24 14,479Avg Amount 73,397.83 1,60,468.1 2,81,946.5 4,50,000 1,50,590.5per policy Sum Assured: More than 6 times Tenure of LIC - Avg 15 years ; Private - 2 to 5 yrs Agent / RM Mis-selling Vs Claims settled by Claims department 23
  24. 24. 9/23/2011 24
  25. 25. 9/23/2011MYTH BUSTERS Myth 1: Insurance is for tax saving Myth 2: Insurance is Investment Myth 3: I don’t need Insurance.5 EASY STEPS TO BUYING A POLICY Initially, calculate the exact amount of insurance that you need; need; Decide which product suits you best based on your life stage and need Calculate the premium Once you have decided on all the above parameters, get in touch with a Life Advisor The Life Advisor will assist you in filling up a proposal form. In addition to a proposal form, you need to submit some financial documents that are required in order to buy a policy. The Life Advisor will notify the list of financial documents required for the same. 25
  26. 26. 9/23/201110 COMMANDMENTS OF LIFE INSURANCE Thou shall buy insurance only for risk cover Thou shall not consider insurance as an investment option Thou shall preferably buy only a term policy Thou shall not trust his agent blindly Thou shall be wary of the hype (advertisements) Thou shall not buy ULIP at any cost Thou shall not insure yourself if you a lone bird Thou shall not insure if you are wealthy Thou shall not buy a child insurance plan or a plan for a non-earning member Thou shall read the fine print carefullyHOW TO BUY LIFE INSURANCE Buy insurance only from a licensed agent / intermediary Shop around Understand the scope of cover, terms and conditions of the policy Fill in your application carefully – Never sign blank proposals Health related particulars should be true Age and Address Proof should be correct Ensure premiums are paid to your insurance company Read your policy when you receive it 15 day free look up period 26
  27. 27. 9/23/2011WHERE TO BUY LIFE INSURANCE? Individual Agents - Corporate Agents - Bancassurance - Insurance Brokers Directly from companies Branches Online from websitesINFORMATION FOR EXISTING POLICY HOLDERS Always remember your premium due dates to avoid a policy lapse. Always insist on a premium receipt as a proof of payment. Ensure your age is stated correctly in the proposal. If it is incorrect, get it rectified at the earliest Keep your policy in a safe place until the life insurance policy money is received. Always keep the nomination under your policy alive and he/she should be aware about it. Always intimate change in address to insurance company immediately Always clarify any doubts you have about your policy with the life insurance company / insurance advisor. 27
  28. 28. 9/23/20115 COMMON LIFE INSURANCE MISTAKES Treating life insurance as a savings avenue Trusting your life insurance agent / advisor completely Considering life insurance as a one time activity Buying the wrong product (99% are victim of this) - Child plan, Life insurance for non-earning spouse Buy Life insurance purely to save TaxFILING A LIFE INSURANCE CLAIM Maturity claim Fill the claim form Original policy bond Death claim Claim intimation/notification Contact the respective life insurance branch office. Contact your insurance advisor Call the respective Customer Helpline Documents required for claim processing Original policy document, Death certificate, Police FIR and post mortem exam report (for accidental death), Certificate and records from the treating doctor/hospital (for death due to illness) Settlement of Claim (within 30 days of receipt of all documents) 28
  29. 29. 9/23/2011PROTECTION OF POLICY HOLDERS INTEREST Grievance Redressal Mechanism Register a Complaint with the Toll free number / helpline of the Company Complaint to the Grievance officer of the company Complaint to Council / IRDA / Ombudsman Note:- There are 12 ombudsman Centres in India. The companies cannot challenge the decision of the ombudsmanNo timeAgent’s Job 29
  30. 30. 9/23/2011 GENERAL INSURANCETYPES OF GENERAL INSURANCE Motor Insurance Health Insurance Fire Insurance Travel Insurance Home Insurance Critical Illness cover 30
  31. 31. 9/23/2011HEALTH INSURANCEWhy is Health Insurance important? Rising medical costs Uncertain hospital bills Expensive / quality health care services Family health insurance at a lesser premium Tax benefit Changing lifestyle – Most Important reasonPOOR EATING HABITS RESULTING IN POOR HEALTH Acidity, Diabetes, High Cholestrol, Obesity and the list goes on……… 31
  32. 32. 9/23/2011EVERY FAMILY HAS ONE……..HOW MUCH HEALTH INSURANCE COSTS?Source: www.icicilombard.com 32
  33. 33. 9/23/2011HEALTH INSURANCE Hospitalization Expenses over 24 hours Room charges, Medicine & Test Charges, Operation, doctor fees etc covered Family floaters available Group mediclaim policy Eligible for tax benefits under 80D Rs 1 to 5 lakhs cover recommended based on affordabilityCRITICAL ILLNESS COVER Benefit paid immediately on first diagnosis of the covered Major Medical Illnesses and Procedure, Accidental Death /Permanent Total Disablement (PTD) due to accident Choose between a cover of 3 Lakh, 6 Lakh or 12 Lakh sum insured and policy duration between 1 year, 3 years or 5 years. Major Medical Illness & Procedures : Cancer Coronary Artery Bypass Graft Surgery Myocardial Infarction (Heart Attack) End Stage Renal Failure Major Organ Transplant Stroke Paralysis Heart Valve Replacement Surgery Multiple Sclerosis 33
  34. 34. 9/23/2011 A grim reminder…. Before its too lateIS THIS THE TREND???Mr Raghu Pillai, Mr Ranjan Das,CEO, Future Group CEO, SAP IndiaAge - 54 yrs, Heart Attack Age - 42 yrs, Cardiac Arrest Some reasons Blackberry’s Mr R Ravimohan, Excessive Travelling Former CEO, Crisil Peer Pressure Age - 52 yrs, Heart Attack Easy Lifestyle 34
  35. 35. 9/23/2011CRITICAL ILLNESS CHARGESSTEPS TO BUY A HEALTH INSURANCE Pay attention to policy conditions Read the exclusions and limitations very carefully co- Compare premium costs, deductibles, co-payments Take an informed decision 35
  36. 36. 9/23/2011GET WELL SOON !!! 36
  37. 37. 9/23/2011 37
  38. 38. 9/23/2011LICENSE TO GOOD HEALTH…. 38
  39. 39. 9/23/2011 Last but not the least…….. If you have both knowledge & time, then you do not require a financial advisor. However, if you donot have any one of these, then hire someone to do it for you - and be willing to pay for the service. Most of us at some point have something in our body that needs fixing and we happily pay a doctor to do so, but we hesitate to pay someone to help fix the financial mismatch most of us are born with.QUESTIONS TO ASK A FINANCIAL PLANNER OR ADVISOR What experience do you have? What are your qualifications? What services do you offer? Are you independent of financial product sponsors? How much do you typically charge? How will I pay for your services? Are you licensed by SEBI / IRDA / FPSB ? Have you ever been publicly disciplined for any unlawful or unethical actions in your professional career? 39
  40. 40. 9/23/2011SOURCE Life Insurance Council, India IRDA Annual Report Valueresearchonline.com Rediff.com Outlook Money Respective company websites Special Thanks to: Mr Virendra Kothari, Etica Wealth Management Pvt Ltd Mr Nikhil Kothari, Axis Securities Ltd THANK YOUFor any further information, please contact:Mr. Gajendra Kothari, CFA, CAIA, ICFAM:+91 98678 24321E: gajendra.kothari @eticawealth.comÉtica Wealth Management Private Limited501, T-39 Sunshine Building,Shastri Nagar, Lokhandwala Complex Road,Andheri West, Mumbai - 400 053Landmark: Suburban Diagnostics, Near Lokhandwala CircleT: +91 22 2632 9644 +91 22 4264 8740E: info@eticawealth.com 40

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