Nine Ways to Cover the Cost of Life Insurance

Many people may they think they have a good understanding of life insurance. Often, this may not be the case. When asked how much they thought life insurance would cost for a year, 80 percent of those who answered a recent survey overestimated the cost of term insurance 1 by more than twice what it really costs.

The primary reason many people hesitate to purchase life insurance is the belief that it’s too expensive. That’s unfortunate considering that life insurance can help protect the financial future of your family should something happen to you. When you look at the numbers, the cost of coverage should not be a barrier for many people.

For example, a healthy 30-year-old man can get $250,000 of term coverage from Farmers New World Life Insurance Company for $22.68 a month 2. With the average monthly cost of $613 for a cell phone, or $644 for a cable subscription, life insurance is a relative bargain. As you can see, life insurance can be affordable.

Here are some money-saving ideas to consider that can benefit many areas of your life in addition to helping cover the cost of life insurance:

Create a budget. Track your expenses: knowing where your money is going may help you identify areas where you can easily reduce your spending. There are many free money management tools and apps that can assist you with this.

Quit smoking. It benefits your health, and a pack-a-day smoker can save over $2,000 per year based on the average cost of a pack of cigarettes 5. Non-smokers can also expect lower Life Insurance in India rates – all other factors being equal – than smokers.

Bring your lunch to work. By not spending just $5 a day you are looking at saving about $1,200 a year. You don’t have to bring your lunch every day: even bringing your lunch every other day can result in savings that can help cover the cost of a life insurance policy, and possibly even more.

Eat out one less time per month. If it costs you about $30 on average each time you go out, reducing this number by once a month will allow you to save over $300 a year.

Bring coffee from home.  Do you spend $3 a day on coffee during the work week? If so, this can add up to $720 per year. Cutting this number in half can result in significant savings.

Save your loose change. It may not sound like much, but setting aside fifty cents a day over the course of a year will allow you to save more than $180.

Take advantage of all company benefits and discounts. Your company may offer corporate discounts on gym memberships, cell-phone data plans, hotels, concerts, etc. that can help you save.

Organize your closet. This can have a number of advantages. You can save time in the long run knowing where everything is located, and you may find forgotten items, reducing the need to purchase new ones. Consider consignment for items you no longer want to keep.

Research major purchases. Check product reviews, price comparisons, features, and other aspects of any product you are looking to purchase. Wait for sales for additional savings and discounts. A little research and timing can save big $$$ on a purchase.

Start small to save big
Starting with some small steps, you can easily find the money to pay for life insurance. The hardest part of any change is getting started. Once you do, things usually start to fall into place, the process becomes much easier, and you can begin to recognize the positive impact it has on your life.

Life Insurance can positively impact your life by providing you comfort in knowing that it will help support your family financially in what may be a distressing and uncertain time. While no one likes to think about a time when they can no longer care for their family, your family’s needs will still be there even if you are not. Contact me today to discuss your options regarding life insurance and how it can help you and your family.

1 Data from the 2015 Insurance Barometer Study by Life Happens and LIMRA.

2 Policy form 2000-230 or applicable state variation. Rate is based on a 20-year Farmers Value Term, 30-year-old male, non-nicotine Platinum Elite underwriting class. Electronic Funds Transfer required. Issuance of a policy and rates are subject to underwriting guidelines and approval. Premiums are subject to change after the initial term period.

3 New Street Research, The Wall Street Journal, March 9, 2014

4 Report on Cable Industry Prices, Federal Communications Commission, May 16, 2014

Farmers New World Life Insurance Company is not licensed to sell life insurance, accident and health insurance, or annuities in the state of New York.

Life insurance issued by Farmers New World Life Insurance Company, 3003 77th Ave. SE, Mercer Island, WA 98040.

[Source: https://bloglifeinsurance.wordpress.com/2015/08/29/nine-ways-to-cover-the-cost-of-life-insurance/]

Demystifying ‘Return’ on Life Insurance

Demystifying ‘Return’ on Life Insurance from Mihir Shah

Life insurance in India has major growth potential

The Indian insurance industry has undergone transformational changes since 2000 when the industry was liberalised. With a one-player market to 24 in 13 years, the industry has witnessed phases of rapid growth along with extent of growth moderation and intensifying competition.

There have also been a number of product and operational innovations necessitated by consumer need and increased competition among the players. Changes in the regulatory environment also had a path-breaking impact on the development of the industry. While the insurance industry still struggles to move out of the shadows cast by the challenges posed by economic uncertainties of the last few years, the strong fundamentals of the industry augur well for a roadmap to be drawn for sustainable long-term growth.

The decade 2001-10 was characterised by a period of high growth (compound annual growth rate of 31 percent in new business premium) and a flat growth (CAGR of around two percent in new business premium between 2010-12), according to KPMG.

There was exponential growth in the first decade of insurance industry liberalization. Backed by innovative products and aggressive expansion of distribution, the life insurance industry grew at jet speed. However, this frenzied growth also brought in its wake issues related to product design, market conduct, complaints of management and the necessity to make course correction for the long term health of the industry.

Regulatory changes were introduced during the past two years and life insurance companies adopted many new customer-centric practices in this period. Product-related changes, first in ULIPs (Unit Linked Insurance Plans) in September 2011 and now in traditional products, will have the biggest impact on the industry.

NEW PRODUCT GUIDELINES

The new guidelines for both linked and non-linked products will now come into force from the beginning of year 2014, an extension of three months from earlier specified date. This additional period will ensure that life insurers enter the crucial quarter of Jan-March with a full bouquet of products and the sellers are well trained in the nuances of all these new products.

These product guidelines are in line with the IRDA's regulatory theme of customer orientation and long-term nature of the life insurance in India business. The guidelines follow two overarching themes of providing Guarantee and enhancing Transparency. The major changes introduced include - Higher Death Benefit, Guaranteed Surrender Value and mandatory Benefit Illustration for all life insurance products.

The changes related to death benefit and surrender value may marginally reduce the customers' overall maturity benefit, i.e., policy IRR, especially at higher ages but will ensure that life insurance serves the purpose of providing life cover which no other financial instrument offers.

All ULIPs are currently sold mandatorily with a personalised Benefit Illustration. This requirement is now being extended to other product forms. The new guidelines have also provided for setting up a "With Profit Committee" at the board level.

While personalized benefit illustration will provide for greater transparency in the pre-sales discussion, the With Profit Committee is likely to lead to greater governance in the administration of Participating policies. Premium paying term linked distributors' commission will promote the long-term nature of insurance products.

FUTURE LOOKS GOOD

India continues to be a country of savers though we have witnessed a decline in the household savings rate in the past couple of years. In India, the problem lies in household savings lying idle or getting invested in saving instruments that do not help them achieve their life stage goals. There is a worrying trend of larger portion of household savings getting into non-productive physical assets such as real estate and gold.

But even then, the future looks interesting for the life insurance industry with several changes in regulatory framework which will lead to further change in the way the industry conducts its business and engages with its customers. World over it has been observed that the life insurance industry does behave in a counter cyclical manner in many cases, e.g., in a situation where the economic growth is slowing down, due to other factors such as high current account and fiscal deficits, currency depreciation, high interest rates, savings rate will continue to be high, leading to higher demand for life insurance.

Life insurance is a big savings vehicle along with banking in such uncertain economic environment and so we expect the industry to fare reasonably well. Demographic factors such as growing middle class, young insurable population and growing awareness of the need for protection and retirement planning will also support the growth of Indian life insurance.

For life insurance, it is time to re-commit itself to customer-centric behaviour, product solutions based on consumer needs, ethical market conduct, transparency and governance. The growth will be the natural outcome for now and years to come.

[Source: https://bloglifeinsurance.wordpress.com/2015/08/25/life-insurance-in-india-has-major-growth-potential/]

Life Insurance & Telecom – the journey and the divergence

Success of life insurance industry is generally measured by its penetration which is a percentage of GDP over premium income. In India, life insurance penetration increased from less than 2% in 2001 to 4.6% in 2010. However, it dropped to 3.5 per cent in FY13. The industry witnessed rapid growth when it was opened up for private and foreign investment and helped the industry players to double the penetration within a decade. Despite a growth, life insurance’s penetration dipped over the past few years. The question of the hour: What will the life insurance industry have to do to be on the growth trajectory?

The dynamics and landscape of life insurance sector have changed dramatically with a series of regulatory changes in 2010 and 2013, especially on the products and distribution side. Amid challenges, the macroeconomic indicators look promising and India’s growth story is intact. Comparatively higher GDP growth (although declining in recent past), very high savings rate (mid-thirties), high proportion of financial savings (apart from real estate and gold), demographic dividend from younger population are the encouraging factors for life insurance sector to grow in future. We should look forward to tap these opportunities.

Let’s judge the life insurance industry by the same yardsticks of penetration of telecom. The telecom industry invested heavily over the last one-and-a-half decade for setting up infrastructure. As a result, it was able to increasethe density substantially and lower tariffs over a short span. Now, it offers value-added services to its customers.

The telecom sector is also currently undergoing growth challenges right now. Similar is the scenario in the life insurance industry as ever since the private insurers started making inroads during early 2000, Insurance Regulatory and Development Authority (IRDA) has brought in many changes to ensure lowering of insurance cost and value addition.

However there exist some basic differences between the life insurance and telecom industry. Unlike a mobile phone, a life insurance can reap benefits only over a longer period. A life insurance cannot give you an offer like a two month’s free 3G pack activated in four hours. Life insurance is and will remain a long-term benefit and risk management plan. Value and benefits of a service package for mobile phone is so current and visible. But, an insurance plan will assist somebody in planning for retirement or children’s education.

The dissimilarity don’t end there as interestingly, unlike in case of a mobile service plan, the customer expects to get refund of the entire premium amount when he or she cancels a life insurance plans. But, it should not be looked at as an investment plan, but a protection plan.

However the industry has lessons to learn from the telecom revolution and the biggest lesson is that more you reach close to the customer, the more you gain. It will be a win-win situation, when a life insurer gains its customer’s trust by extending a helping hand in his or her distress. Hence the life insurance industry needs to create a customer-centric network with widely spread points of contact for transactions and financial literacy, alongside its dependency on intermediary channels. Improved information technology is always a boon.

But then what’s the level of our customers’ financial literacy. Many other countries have framed regulations to encourage financial services companies to invest in customers’ education by providing tax incentives.

Above all, like telecom, simplification of products and a better distribution model for the rural population shall drive the growth. The regulator is encouraging the products under micro-insurance regulations and very recently launched the Common Service Centres (CSC) model. This could provide access to over 130,000 centres. The ability to connect them to insurance companies’ servers electronically and service policyholders is a tremendous opportunity.

The IRDA (draft) guidelines on insurance marketing firms are also out and can be expected to streamline the distribution channel with more accountability. The idea to introduce a mechanism to redress grievances will help in increasing sales.

Finally, in the era of instant gratification and customer expectations, life insurance industry needs to become ready to meet customer expectations. Cost rationalization should improve returns to policyholders and make the value proposition more attractive.

Source: http://lifeinsights.bajajallianz.com/life-insurance-telecom-journey-divergence/

Life Insurance

Life insurance from Mihir Shah

Ready to Access e-Insurance Policy

·         Documents of insurance policy will become paperless and digital just like shares in the new year and efforts of insured people would be saved from preserving the physical copies of their insurance plans.

·         From April, insurance policy documents would available in electronic form for all the new insurance policies sold. More than around 25 crore insured people holding nearly 37 crore policies would receive their e-insurance in phased system.

·         The Insurance Regulatory and Development Authority i.e. IRDA is likely to declare the exact manner to make it compulsory, by which insurers would have to mandatorily issue insurance products to their clients on in electronic form.

·         As per estimation, the existing cost to insurance company in India to service policies is more than Rs 600 per year per policy. With insurance repository, the first incidental cost would reduce to less than Rs 100 per year per policy.

·         It shall benefit both insured people as well as insurance companies in India in terms of cost and convenience both. CAMS Repository Services, CEO, S V Ramanan said that they have started various levels programs for educating insured people on e-insurance all over India leveraging their wide network of around 390 branches and their domain expertise in insurance.

·         Insured would have the choice to access their policies online by signing in to an insurance account in the electronic form at completely zero cost.

·         The insurance policy benefits for insured person with e-insurance account is convenience, single KYC, safety, aggregate view of all plans and service on demand.

·         Policyholders can maintain policies in electronic form with the help of Life Insurance Plans repository system and also undertake changes and revision in the plan with accuracy and speed. Policyholder will also get details about his Indian insurance policy rider with just one click.

 [Source: https://bloglifeinsurance.wordpress.com/2015/08/11/ready-to-access-e-insurance-policy/]