Every parent has a version of the same worry sitting quietly at the back of their mind. Will there be enough money when it actually matters? When the school fees jump in Class 11. When college admissions open up. When the engineering or medical seat needs to be confirmed with a large payment within days. Most parents save something. But saving without a structure means the money is either not enough at the right time or tied up somewhere it cannot be reached when needed. That is the gap a proper goal-based savings approach fills. Combining a money-back plan with a child plan is one of the more practical ways to build that structure. Each product does something different. Together, they cover the full picture. What Each Plan Actually Does Before getting into how they work together, a quick explanation of each. A money-back plan is a life insurance product Continue reading
Insurance Investments
Difference Between Defined Benefit and Defined Contribution Pension Schemes
Pension is a fund that is built during the working life of the employee and then used to secure the income after retirement. These funds can be operated by employer (occupational pension) who invests over time or alternatively employee can invest in a fund of their choice (private pension scheme). Both of these schemes generate income after retirement. Pension schemes are of two major types: Defined Benefit Scheme Defined Contribution Scheme 1. Defined Benefit Scheme Defined benefit scheme is a type of pension scheme which ensures a particular level of income/benefit after retirement. Most of the cost of the benefit and risk of the investment is borne by the employer however in the contributory define benefit scheme employees also make compulsory contributions. The pension amount is either calculated on the bases of the final salary of the employee or depend upon the average earnings of the employee throughout his employment Continue reading
Life Insurance – Definition, Need and Benefits
Human life is subject to risks of death and disability due to natural and accidental causes. When human life is lost or a person is disabled permanently or temporarily, there is a loss of income to the household. The family is put to hardship. Sometimes, survival itself is at stake for the dependents. Risks are unpredictable. Death/disability may occur when one least expects it. An individual can protect himself or herself against such contingencies through life insurance. Though Human life cannot be valued, a monetary sum could be determined which is based on loss of income in future years. Hence in life insurance, the Sum Assured (or the amount guaranteed to be paid in the event of a loss) is by way of a ‘benefit’ in the case of life insurance. It is the uncertainty that is risk, which gives rise to the necessity for some form of protection against Continue reading
Types of Life Insurance Claims
Claims Management Department The claims department is one of the key departments in an insurance company. The claims department has the following functions to perform: To provide the customers of insurance and reinsurance companies with high quality of service. This role gives a long-term edge to the company and hence is referred to as the strategic role. To monitor the claims and see that whether the benefits of insurance exceed the costs of claims. This role is referred to as the cost-monitoring role of the claims department. To see that the expectations of the customers are met with regard to speed, manner and efficiency of the service. This is called the customer service role of the claims department. To meet the standard of service, to keep up to the customers expectations and still operate within the budget. This is the managerial role of the claims department. Both the quality of Continue reading
Introduction to Insurance Sector in India
Insurance in its basic form is defined as “A contract between two parties whereby one party called insurer undertakes in exchange for a fixed sum called premiums, to pay the other party called insured a fixed amount of money on the happening of a certain event.” Insurance sector in India The insurance sector in India has come a full circle from being an open competitive market to nationalisation and back to a liberalised market again. Tracing the developments in the Indian insurance sector reveals the 360-degree turn witnessed over a period of almost two centuries. Today Insurance Companies in India have grown manifold. The insurance sector in India has shown immense growth potential. Even today a giant share of Indian population nearly 80% is not under life insurance coverage, let alone health and non-life insurance policies. This clearly indicates the potential for insurance companies to grow their market Continue reading
Bancassurance – Meaning, Need and Advantages
With the opening up of the insurance sector and with so many players entering the Indian insurance industry, it is required by the insurance companies to come up with innovative products, create more consumer awareness about their products and offer them at a competitive price. New entrants in the insurance sector had no difficulty in matching their products with the customers’ needs and offering them at a price acceptable to the customer. But, insurance not being an off the shelf product and one which requiring personal counseling and persuasion, distribution posed a major challenge for the insurance companies. Further insurable population of over one billion spread all over the country has made the traditional channels of the insurance companies costlier. Also due to heavy competition, insurers do not enjoy the flexibility of incurring heavy distribution expenses and passing them to the customer in the form of high prices. With these Continue reading