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Cholamandalam MS General Insurance launched Chola Total Home Protect

Posted on August 8, 2011 by
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Cholamandalam MS General insurance company has launched an insurance scheme for houses by the name Chola Total Home Protect.

As per the company this scheme is meant for both house owners and tenants; according to the company this scheme is simple, convenient and cost-effective insurance for the home structure, contents which includes jewellery and valuables-inhabitants.

Customers can choose from various kinds of covers and sum insured amount as per their needs; it also provides additional cover for baggage loss, personal accident, public liability, plate glass cover and workmen’s compensation.

Customer will not require providing additional document at the time of purchase of the policy; premium for the policy can be as low as Rs 10-15 a day.

Policy covers the building structure, covers contents against fire and allied perils such as theft, earthquake and terrorism; and it also includes cover for appliances, jewellery, baggage loss for travel within India; it also covers people including additional rent for alternative accommodation, family floater hospitalization for accidents and third party liability.

Cholamandalam MS General Insurance is a joint venture between Murugappa group and Mitsui Sumitomo insurance group.

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ING Market Shield – a unique highest NAV guaranteed plan

Posted on July 25, 2011 by
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ING Life has a unique product by the name ING Market Shield which is the Type-I of Unit-Linked Insurance Plan (ULIP) that offers a Net Asset Value (NAV) guarantee on a daily basis over seven years.

It is different from other highest NAV guaranteed plans as it guarantees only 80% of the NAV take for instance if the NAV of the plan rises to Rs 20 from Rs 10 than only Rs 16 is guaranteed

The feature which make ING Market Shield unique from other highest NAV guarantee plans is that as other highest NAV guarantee products that are available in the market offers guarantee on the maturity in the case of surrender or the death of the policyholder they just pay the accumulated fund value; but ING Market Shield offers the benefit of guarantee on the death, surrender and partial withdrawal.

ING Life has offered only one investment option to the investors under NAV guarantee scheme; it is open ended scheme that means that a investor can invest in it at any time i.e. investors do not need to wait for the scheme to restart to invest; the scheme has also tenure of 10-15 years as compared to the tenure of maximum 10 years of its peers.

However the performance of the fund has been impacted by the volatile market. The face value of the fund was Rs 10 which has declined by 2.3% to Rs 9.77 currently the guarantee stands at Rs 8.1 due to the 80% guarantee; if the guarantee would be at 100% than guarantee would be at Rs 10.13.

But still the existing customers should stick to the scheme as in the long term the scheme is likely to do well as scheme has high exposure to the equities however keeping in mind the cycle of the capital market one must shorten the tenure to 7-10 years.

Those who are willing to enter the scheme now they can enter the scheme as they are getting it at Rs 9.72 with the guarantee of Rs 8.1.

However investors should also keep in mind that the cost structure of the plan is high and investors with high risk-return apatite should not invest in it as its most of the investments are in debt. If you have inadequate insurance than for it you should buy the term plan.

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Divergent features of different ULIPs

Posted on June 15, 2011 by
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Max New York Life has launched a new Unit-Linked Insurance Plan (ULIP) by the name Fast Track; catering to the people between the age of 35-45 years however people with the age of 60 years are also allowed to enter with maximum coverage upto 70 years.

The minimum premium for the plan is Rs. 1 lakh with the maximum tenure of 20 years however a person can choose the shorter term of ten years. Plan offers accident and dread disease riders.

Fast track offers the sum assured of 1.25-20 times of the annual premium; plan also offers different premium options, a person can opt for single, five or ten premiums.

Plan offers 7 investment funds and all funds will follow the Systemic Transfer Plan according to which it will release the policy holder’s funds in 12 equal installments; the policy holder can withdraw the fund value after 5 years as plan offers a partial withdrawal feature.

Comparison with other products

Premium

If you compare Fast track with other similar products available in the market such as ICICI Prudential’s Lifetime premier and Kotak’s Ace investment than other two products have lower minimum premium requirement of Rs. 50,000 but they don’t have single premium option.

Fund value

Let us compare Fast track on the basis of fund performance that it offers in comparison of its similar products; assuming 10% return on the investments; a 35 years old man with 20 years policy term and 10 years payment term will get fund value of Rs. 32,69,540 whereas a person who will buy a ICICI Prudential stage wealth II will get fund value of Rs. 33,59,189 and a policy holder of Star Union Dai-chi Dhan Suraksha premium 3 will rise to Rs. 34,02,986 on same premium hence Fast track offers a low fund value.

Charge structure

Comparing the fund management fee we see that Fast track charges 1.25% for equity funds while ICICI Prudential stage wealth II charges 1.35% whereas Star Union Dhan Suraksha charges just 1%.

A person can look for mutual funds or equities for investments and term plan for insurance. But if taken mutual funds in isolation, ULIPs are better.

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Max New York Life launches FLEXI Fortune

Posted on January 19, 2011 by
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Max New York Life launched a unit-linked customized insurance plan “FLEXI Fortune”, on 18th Jan 2011.

Company’s CEO and MD, Mr. Rajesh Sud said in a statement that this plan is designed keeping in mind the various needs of the people.

The key benefits of this plan are:

  • Flexibility to choose policy tenure and protection, multiple to the consumers.
  • Comprehensive protection through high sum assured multiples.
  • Systematic Transfer Plan to protect against market volatility and to get benefit of rupees cost averaging.
  • Progressively increasing sum assured for increasing liabilities without additional underwriting.
  • Choice of premium payment options to suit cash flow patterns.
  • Choice of seven well managed funds for investors of different risk profiles.
  • Flexibility to make partial withdrawals to meet unplanned expenses.
  • Flexibility to opt for Personal Accidental Benefit and Dread Disease rider.
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Medical insurance may cover Ayurveda, Unani, Siddha

Posted on November 12, 2010 by
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The General Insurance council formed a three-member committee to study the scope of covering non-allopathic treatment. The council has been approached by the department of Ayush to look into the possibilities of covering claims for non-allopathic treatment.

The committee formed comprises CEOs from Apollo Munich, Star Health and Max Bupa. The committee will examine the details and analyze the advantages disadvantages if the proposal can be accepted or not. The department of Ayush made a presentation before the council arguing that allopathic treatment is costly and many people in rural go for alternative treatment. The committee will give it recommendation to the council and then IRDA will take the final call.

Presently there is one product from Iffco Tokio, Swasthya Kavach, which covers ayurvedic treatment.

We think more products can be designed to cover the alternative treatment but the experience data is not readily available in the usable form and also there is no proper system to establish the proof of treatment. We believe that this kind of product if made cannot be clubbed with the one covering allopathic treatment. Allopathic treatment is costly and so the premium. There is natural disadvantage of paying premium for costlier treatment and going for the cheaper one. A separate product can undertake this issue but then the admin cost and distribution cost should also be tackled properly to make the product viable.

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Long term cover for 2-wheelers in consideration

Posted on January 29, 2010 by
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The Economic Times has reported that General Insurance Council, in association with non-life companies, is working on developing a long-term cover for two-wheelers. The proposed idea is that this cover will range between 3 and 10 years and bike owners will have the option of paying premiums at one go.

Presently all non-life insurers in India offer cover for a year and it lapses if not renewed at the end of the year.

We at PolicyMantra, feel that the pricing of this product is very critical and may have adverse effect if not done properly. If the product is priced high then it will not attract bike-owners even if it is relieving them from the burden of remembering policy renewal date. And if it is priced low it will result in more claims to the insurer. Presently policyholder gets discounts on premium if they have not made any claim in the previous year. This is the incentive that prevents them from claiming small amounts. But if they have already paid for long term, say 3 years, they don’t have any such incentives and would go for reporting claims even for any small amount in excess of compulsory deductible. Claim experience from the existing products may not give a good basis to estimate price for the long-term cover. So getting up to a correct price will be a challenging task for the actuaries working on this. We also feels that factors affecting insurance premium should include age and gender of the rider to price the long-term product efficiently. Any claim data should be recorded properly and considered while selling other motor insurance policy to the same owner. At present the motor insurance premium in India is based only on make and model of the vehicle.

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Health plus Life Combi Products

Posted on December 24, 2009 by
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The Insurance Regulatory and Development Authority (IRDA) released the guidelines for insurers to bring out Health plus Life Combi Products through a tie-up between a life insurer and non-life insurer.

Health plus Life Combi Product is a policy that would provide life cover along with health insurance to policyholder. Combi Products will be the combination Pure Term Life Insurance cover offered by life insurance companies and Health Insurance cover offered by non-life companies exclusively providing sickness benefits or medical, surgical or hospital expense benefits, whether in-patient or out-patient, on an indemnity or reimbursement basis.

So what this product is aiming at? Authority believes that this product class will enhances the penetration of personal lines of insurance business and give policyholders a wider choice of product. Also the proposed product innovation is expected to facilitate policyholders to choose an integrated product of their choice under a single roof without shopping around the market for two different insurance coverages from two different insurers. And the Combi Product is expected to come at lower price than the two separate products with same features and coverage from two different insurers. The product will come with the option to discontinue either portion of risk while continuing with the other option. For any claim under this product policyholder only need to deal with the lead insurer and rest is taken care by them.

But before coming out with any such kind of product it is mandatory for the insurance companies offering the ‘Combi Product’ to have in place a Memorandum of Understanding covering the modus operandi of marketing, policy service and sharing of common expenses. Also the tie-up need to obtain a prior approval of IRDA by duly filing the copy of the agreement entered in this regard. All in all it is going to take some time for this product to hit the market, let’s see how warmly market welcomes this.

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IRDA to allow Insurance companies to invest in Derivatives

Posted on November 16, 2009 by
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The Insurance Regulatory and Development Authority (IRDA) is working on the guidelines to allow insurers to invest up to 5% of their equity portfolio in derivatives, futures and options (F&O). At present they have been allowed to invest only in the cash market. The guidelines are expected to be ready within a month.

Till date, for traditional policies, life insurers are allowed to invest 50% of their funds in government securities, 15% in infrastructure-related projects, and the balance 35% in so-called other-than-approved instruments, comprising of equities, mutual funds and other money market instruments. For unit-linked insurance products (ULIPs), insurers can invest their entire fund in equities. This implies that insurer can invest up to 5% of other-than-approved instruments in F&O in case of traditional policies, i.e. 1.75% of total fund. For ULIPs, 5% of entire fund can be invested into F&O.

This will help insurer to hedge the risk in equity investments. This will also help in reducing the volatility in F&O market and will improve the trading volumes. The total turnover of equity derivatives on NSE was Rs13.8 trillion during October. The investment in equities for all life insurers’ together account for more than Rs.2.6 trillion

This will result in more innovative policies with higher guaranteed/loyalties additions, and better return on investments for the policyholders. Policyholders can park more money in equity related fund with mitigated downfall risk.

We are very hopeful with this move of IRDA in not only getting better return on policyholders’ money but also in improvement in F&O market.

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