Month: July 2021

It is essential that in the event of your unfortunate demise, the financial concerns of your dependents, be they familial or professional are looked after.

That is why it is recommended that every individual and family avail a life insurance policy that can help safeguard their futures and provide some much-needed peace of mind. However, one must consider that while a life insurance policy is a universal recommendation for all, the particulars of each policy differs from person to person.

A great way to help and protect your loved ones, is with Life Insurance which can be a huge investment as well. A lower premium paid can yield to a good amount of savings over a period of few years. Life insurance premiums are based on a number of factors, and it can be quite tedious for a few people to understand why and what the charges are, and why they pay a rate that may not be the same as another.

The Individual Policy:

Lastly but most importantly, a major factor in your life insurance premiums is the insurer from whom you opt to avail your policy in the first place. It is recommended to opt for an insurer that provides you extensive coverage at the most economical premium amounts.

Gender:

Another factor that determines the amount of your premiums is your gender. This factor is rooted in scientific and statistical evidence which states that women are likely to live an average of 5 years more than men . This translates to women availing their policies for a longer tenure than men, and hence, as mentioned above, this means they can avail lower life insurance premiums.

Medical Records:

Life insurance policies typically come with an underwriting process that includes conducting a thorough medical exam of the policyholder. The findings of this medical exam shed light on the status of your physical health and raise flags about potential illnesses you might contract in the future. Therefore, these medical records and their results also play a key part in determining the exact premium amount you will pay for your life insurance.

Tobacco Use:

An important factor that most people might not consider when thinking about life insurance premiums, is an individual’s smoking habits. According to research, people who smoke are more likely to contract various illnesses and have a higher mortality rate as well. Hence, the term insurance premiums for smokers reflect these risk factors and tend to be higher than for their non-smoker counterparts.

Family History:

It is widely known that certain diseases are considered hereditary, which means that they have a tendency to run in the family. Other types of diseases might not be considered hereditary, but might have a higher chance of affecting members of a family due to common lifestyle choices. All of these risks are reflected in your family medical history, and also play a part in determining your life insurance premium amounts.

Age:

The primary factor influencing the life insurance premiums of a policyholder is his or her age. From the perspective of the insurer, a young individual has a higher chance of continuing the life insurance policy for years to come. He or she is also less likely to suffer from an age-related disease and pass away prematurely. This makes them less of a liability for the insurer and hence, more likely to be eligible for low premiums. Hence, as a general rule, it is preferable to avail a life insurance policy as early on in your career as possible to avail the lowest premiums possible for you.

Underwriting has to do with the selection of subjects for insurance in such a manner that general company objectives are met. The main objective of underwriting is to see that the risk accepted by the insurer corresponds to that assumed in the rating structure. There is often a tendency toward adverse selection, which the underwriter must try to prevent. Adverse selection occurs when those most likely to suffer loss are covered in greater proportion than others. The insurer must decide upon certain standards, terms, and conditions for applicants, project estimated losses and expenses through the anticipated period of coverage, and calculate reasonably accurate rates to cover these losses and expenses. Since many factors affect losses and expenses, the underwriting task is complex and uncertain. Bad underwriting has resulted in the failure of many insurers.

The primary purpose of careful selection is to avoid adverse selection, to reject those insurance applicants who are posing as a standard risk, even though they are actually a higher risk.

The 2nd underwriting principle is to have proper balance within each rate classification, meaning that those with higher than expected losses should be offset by those with lower than expected losses. Insurance applicants with similar loss-producing characteristics are grouped together.

Each member of the class is charged the same rate, but not all will have the same actual losses. Therefore, the basis for establishing the premium will not be valid unless those with higher actual losses are offset by those with lower actual losses.

The final underwriting principle is that there must be equity among policy owners, where the same rate should be charged for each insurance applicant that has the same expected losses. Otherwise, charging the same rate to a group where the individuals have a different expected loss would create a situation where those with lower losses or subsidizing those with higher losses. Eventually, the overcharged subgroup will eventually find lower insurance rates offered by other companies, leaving the individuals with higher expected losses in the subsidized group, which will create losses for the insurance company.

• Prudent underwriting reduces the chances of Physical, Moral, and Morale hazards.
• To reduce the possibility of adverse selection against the insurer.
• Underwriting helps in determining the expected loss potential of the proposed insured and selecting a price in line with this expected loss.

Principles:

Understanding

People make mistakes. We understand this happens even to the best people. Our task is to identify and forgive the occasional oversight.

Reputation

We look for people who have made a significant investment in their education and career, and are a pillar in their community. This demonstrates a commitment to your future and a desire to keep the promises you make to yourself.

Growth

Reward stability and consistent achievement but also look for personal growth. Every person has a different route to personal and professional success. At Earnest we are not as concerned with which road you choose, only that you are building for your life ahead.

Potential

We believe where you are going is more important than where you have been.

People are unique. Understanding our clients is part of what makes our work a mission, not a job. We love the singular complexity of every Earnest applicant. A single credit score can only tell one part of your financial story. It takes every part of your profile to gain an understanding of who you are. There is no one thing that drives the Earnest process.

Fairness

We believe that financial responsibility, not wealth, should be the primary driver of your access to the tools and resources that enable you to build your life. It is not about your income level, it is about living within your means, putting a little away in savings each month, and working hard to make that next step in life.

Affordability

It makes sense for people to only take out a loan they can afford. We work hard to understand not only your background and future potential but also what will fit into your budget each month. This ensures you are primed for success and protects us all against the dangers of an unstable and over-leveraged financial system.

Trust

Trust is at the heart of all lifelong relationships. We believe trust is built through getting to know one another honestly, which is why we ask so many questions about you. Trust is a two-way street, and at Earnest we believe in being open and transparent about who we are, what we do, and how we do it. If you have any questions, just call and ask. We love hearing from you.

ULIP is an insurance product that combines insurance and investment benefits in a single plan. ULIP, or Unit Linked Insurance Plan, offers life cover which is a major benefit over the traditional wealth creation tools. It not only helps your money grow but also protects your loved ones’ future from life’s unexpected turns.

When you make an investment in ULIP, the insurance company invests part of the premium in shares/bonds etc., and the balance amount is utilized in providing an insurance cover. There are fund managers in the insurance companies who manage the investments and therefore the investor is spared the hassle of tracking the investments. ULIPS allow you to switch your portfolio between debt and equity based on your risk appetite as well as your knowledge of the market’s performance. Benefits like these which offer investors the flexibility of switching is a huge factor contributing to the popularity of these investment instruments.

To get a mix of both of these characteristics of financial planning, ULIP is one of the suitable options. In ULIP investment, a small portion of money is invested towards securing your life and rest is invested in equities.

One of the changes brought about by the Insurance Regulatory and Development Authority of India (IRDAI) in the year 2010 as regards ULIPs, was to increase the lock in a period from 3 years to 5 years. However, insurance being a long-term product, as an investor you may not really reap the benefits of the policy unless you hold it for the entire term of the policy which can range from 10 to 15 years.

Benefits:

Greater Rewards for Staying Invested:

Your money grows further as the insurance company adds to your savings through bonuses/ additions and are available to you in ULIPs in different forms.

Potential for Growth:

There is a potential of earning higher returns from the power of equity and debt funds. This will help you achieve your life-goals such as buying a new home, your dream car, funding your child’s higher education and much more.

Tax Benefits:

Investment in ULIPs is eligible for deduction from taxable income under Section 80C of the Income Tax Act, 1961 up to ₹ 1.5 lakh per annum. The maturity proceeds of the ULIP are also exempt from tax under Section 10(10D) of the Income Tax Act subject to conditions specified therein. If the ULIP investor dies during the term of the ULIP he/she will be entitled to the death benefit specified in the ULIP policy and the amount received on death is exempt from tax u/s 10(10D) of The Income Tax Act 1961. Switching between ULIP funds also does not attract any tax.

Protection:

ULIPs provide the protective benefit of a Life Cover, which keeps your family secure in your absence. ULIPs provide the protective benefit of a Life Cover, which keeps your family secure in your absence.

Flexibility of Investment:

You will have flexibility and control of your money through the following ways:

• Fund Switch: An option to move your money between equity, balanced and debt funds
• Premium Redirection: An option to invest your future premium in a different fund of your choice
• Partial Withdrawal: An option that allows you to withdraw a part of your money
• Top-up: An option to invest additional money to your existing savings

Protection:

ULIPs provide the protective benefit of a Life Cover, which keeps your family secure in your absence. ULIPs provide the protective benefit of a Life Cover, which keeps your family secure in your absence.

Regular Savings:

ULIPs inculcate the habit of regular and disciplined savings, which is the key to successful long-term financial planning. With regular premium payments, you can enjoy the benefits of wealth creation for your loved ones.

Funds that ULIPs invest in

Equity Funds: Where the premium paid is invested in the equity market and thereby is subject to higher risk.

Debt Funds: Where the premium is invested in debt instruments which carry a lower risk but in turn also offer a lower return.

Balanced funds: Where the premium paid is balanced between the debt and the equity market to minimise the risk for investors.

Consideration for Investing:

Compare ULIP offerings: Once you have determined your financial goal and the type of ULIP that will help you achieve it, the next step would be to compare the ULIP offerings in the market. Look for a comparison in the form of background expenses, premium payments, ULIP performance, etc. Also, investigate the nature of funds that the ULIP invests in to ascertain the returns from investments in the particular ULIP.

Personal financial goals: If your financial goal is about wealth creation and you want to save money for retirement, ULIP is one of the best options available.

Risk factor: Since ULIP investment is not as diversified as compared to ELSS, the risk in ULIP is probably a bit high compared to schemes like ELSS.

Investment horizon: ULIPs have a lock-in period of 5 years. If a ULIP is surrendered in the first three years, the insurance cover would cease immediately. However, the surrender value can be paid only after three years.

Underwriting requires the following skills:

• Knowledge of individual risk peculiarities.
• Assessing how the risk & a peril produce potential losses.
• Estimating magnitude of losses – peril-wise.
• Estimating insured‘s systems & capabilities for prevention.
• minimization of losses.
• Prescribing rates, terms & conditions.
• Deciding on retention & risk transfer.

Consideration of application.

The Board shall take into account for considering the grant of a certificate, all matters which are relevant to or relating to underwriting and in particular the following, namely, whether the applicant:

(a) Has the necessary infrastructure, like adequate office space, equipment’s and manpower to effectively discharge his activities

(b) Has any past experience in the underwriting or has in his employment minimum two persons who had the experience in underwriting;

(c) Any person, directly or indirectly connected with the applicant has not been granted registration by the Board under the Act.

(d)  Fulfils the capital adequacy requirements specified in regulation 7.

(e) Any of its director, partner or principal officer is or has at any time been convicted for any offence involving moral turpitude or has been found guilty of any economic offence.

General responsibilities of an underwriter.

(1)  The  underwriter  shall  not  derive  any  direct  or  indirect  benefit  from  underwriting the issue other than the commission or brokerage payable under an agreement for underwriting.

(2)  The total underwriting obligations under all the agreements referred to in clause (b) of rule 4 shall not exceed twenty times the net worth referred to in regulation 7.

(3) Every underwriter, in the event of being called upon to subscribe for securities of a body corporate pursuant to an agreement referred to in clause (b) of sub-regulation (1) of regulation 9A] shall subscribe to such securities within 45 days of the receipt of such intimation from such body corporate.

Financial Planning refers to a comprehensive plan of your long term or short-term objectives for financial security. The purpose of financial planning is to form the foundation for a specific goal or destination in your life.

Life insurance is still a nascent idea and most people do not think about it until a major life change causes them to consider what might happen to their loved ones in case of any unforeseen circumstances. While the main objective of buying a life insurance policy is to protect oneself from unforeseen circumstances, it can also help in wealth accumulation, preservation, and give access to liquidity at the right time, if added as a component of financial planning.

Most of us usually get confused on how much to invest and where to invest; stocks, bonds, real estate and many others. Life insurance is a good investment tool, which is comparatively simpler, more affordable and most importantly caters to the different stages of the individual’s lifecycle.

Caring for a special needs child or aging parents

Life insurance plays a critical role in a financial plan if you have a special needs child or ageing parents that depend on your for financial support. Without the resources to provide for their continual care, family members will be forced to take on a stressful and lifelong financial burden. Life insurance proceeds can provide the financial support needed for these special individuals in your life.

Paying off a mortgage

Payments, taxes, insurance and interest. For most people, a mortgage is one of their largest expenses. For this reason, most couples shoulder this long-term financial commitment together. But if you were gone tomorrow, could your family afford such a large expense without your income? A life insurance policy can help provide your family with a lump sum of money to pay off mortgage debt, eliminating this large financial stress, as well as the possibility of a loan default or eventual foreclosure.

While the basic premise of life insurance has always been ‘protection’ , certain insurance products also provide the flexibility of it being used as a long term savings and wealth creation tool. These products allow the individual to systematically save over the long run and generate returns to create a corpus that can be used to fund different milestones such as child’s education, marriage or retirement. However, an oversight which many households typically make is that they benchmark the returns from life insurance products with other forms of investing options. In doing so, what they completely fail to comprehend is that the primary purpose of insurance is protection followed by returns and not the other way round.

• Income replacement for your survivors
• Investment/forced savings for you
• Reduced income and transfer tax liability
• A ready source of cash at a time when it’s likely to be needed most
• Funding of small business buy/sell agreements

The top 10 competitors in LIC’s competitive set are HDFC Life, SBI Life, ICICI Prudential Life Insurance, IDBI Federal, Bajaj Allianz, Tata AIA, Max Life insurance, PNB MetLife, Exide Life Insurance, Aegon Life. Together they have raised over 1.3B between their estimated 139.2K employees. LIC’s revenue is the ranked 1st among it’s top 10 competitors. The top 10 competitors average 7.8B. LIC has 114,498 employees and is ranked 1st among it’s top 10 competitors. The top 10 competitors average 15,855.

LIC has for a long period of time has enjoyed a dominant market of life insurance and the fact cannot be denied that LIC has a pre accomplished market leadership which makes it difficult for the new players to compete. While the new players struggle to increase their market in India, LIC continue to leverage advantage of its old establishment and government support for maintaining its growth. Life Insurance is the fastest growing sector in India since 2000 as Government allowed Private players and FDI up to 26%. Life Insurance in India was nationalised by incorporating Life Insurance Corporation (LIC) in 1956. All private life insurance companies at that time were taken over by LIC.

LIC enjoys this dominance because it is obvious that investors want a guarantee of their money irrespective of cycles of market. They know that it would be a safe play to invest in LIC as the government guarantee to bail out in case of any mishap. This denies the life insurance market from a level playing field to the competitors. The private players have been in the market for 10 years now but could not bring a big change in market share of life insurance. People ‘s trust is build up with LIC due to such sovereign guarantee. The fact that LIC has not used this benefit of sovereign guarantee but this definitely helps them grow their market size because of the faith people lay in them being a state-owned enterprise.

Investments and Recent Developments

The following are some of the major investments and developments in the Indian insurance sector.

Companies are trying to leverage strategic partnership to offer various services as follows:

• In FY21 (until March 2021), premium from new business of life insurance companies in India stood at US$ 31.9 billion.
• In FY21, LIC achieved a record first-year premium income of Rs. 56,406 crore (US$ 7.75 billion) under individual assurance business with a 10.11% growth over last year.
• In India, gross premiums written of non-life insurers reached US$ 26.52 billion in FY21 (between April 2020 and March 2021), from US$ 26.49 billion in FY20 (between April 2019 and March 2020), driven by strong growth from general insurance companies.
• In May 2021, Max Life Insurance Co. Ltd. launched ‘Max Life Saral Pension’, a non-linked, individual immediate annuity plan.
• In March 2021, health insurance companies in the non-life insurance sector increased by 41%, driven by rising demand for health insurance products amid COVID-19 surge.
• In February 2021, Bharti AXA General Insurance launched its ‘Health AdvantEDGE’ health insurance scheme to provide holistic cover against accelerating costs associated with medical requirements and other healthcare facilities.
• In February 2021, ICICI Lombard General Insurance, a non-life insurance firm in the private sector, has been authorised by the International Financial Services Centre (IFSC) to establish an IFSC Insurance Office (IIO) in GIFT City in Gandhinagar, Gujarat.

Government Initiatives

The Government of India has taken number of initiatives to boost the insurance industry. Some of them are as follows:

• Union Budget 2021 increased FDI limit in insurance from 49% to 74%. India’s Insurance Regulatory and Development Authority (IRDAI) has announced the issuance, through Digilocker, of digital insurance policies by insurance firms.
• Under the Union Budget 2021, Finance Minister Nirmala Sitharaman announced that the initial public offering (IPO) of LIC will be implemented in FY22, as part of the consolidation in the banking and insurance sector.Though no formal market valuation has been undertaken, LIC’s IPO has the potential to raise Rs. 1 lakh crore (US$ 13.62 billion).
• In February 2021, the Finance Ministry announced to infuse Rs. 3,000 crore (US$ 413.13 million) into state-owned general insurance companies to improve the overall financial health of companies.
• Under Union Budget 2021, fund of Rs. 16,000 crore (US$ 2.20 billion) has been allocated for crop insurance scheme.

A life insurance plan is an effective financial tool to secure your loved ones’ future financial interests. It helps you safeguard your family at a time when you are not physically present to do so yourself. You can choose a sum assured and premium as per your income and expenditure and add suitable riders to enjoy an enhanced cover.

The surrender value is the actual sum of money a policyholder will receive if they try to access the cash value of a policy. Other names include the surrender cash value or, in the case of annuities, annuity surrender value. Often there will be a penalty assessed for early withdrawal of cash from a policy.

The process through which you access your cash surrender value varies based on the policy you have, but many require that you cancel the policy before accessing the funds. Even if this is the case, it may be possible to take a loan out against the cash value in your policy.

Cash surrender value is defined as the internal value of an insurance policy at any point that is equal to the value of the accumulation account minus a surrender charge. Surrender charges gradually reduce to zero after a specified time, such as after the first 10 years of the policy’s life. Cash surrender value is the sum of money an insurance company pays to a policyholder or an annuity contract owner if their policy is voluntarily terminated before its maturity or an insured event occurs. This cash value is the savings component of most permanent life insurance policies, particularly whole life insurance policies. It is also known as “cash value” or “policyholder’s equity.”

Types:

Special surrender value: The special surrender value largely depends on the paid-up value and the surrender value factor of an insurance plan. The paid value refers to the reduced sum assured of your plan. This happens if you stop paying your premiums after 2 years, and you can continue the policy with a sum assured that is reduced. This reduced value is paid value. The paid-up value is calculated with the following formula:

Paid-up value = Sum assured x (Total number of premiums paid/Total number of premiums payable)

Guaranteed surrender value: As the name suggests, this is the guaranteed amount of money that the insurance company pays you when you surrender your plan. The guaranteed surrender value is specified on the policy document signed by you and the insurer at the time of purchasing the policy. The guaranteed surrender value can increase with the number of years you stay invested in the plan. So, the closer you surrender towards the maturity date, the more money you can get back.

Surrendering your policy can have consequences in both the short and long term, such as:

You lose your invested money: Although you are paid the cash surrender value, the money that you invested is lost. The surrender value is calculated depending on the premiums you have paid to the insurer and the bonus accrued till the time of surrender. This is less than the sum assured or maturity benefit that you would have received at the time of maturity.

You lose the death benefit: If you choose to surrender your insurance plan, the death benefit will be removed. This means that in the unfortunate event of your demise, your family will not be able to claim a settlement from the insurance provider.

You lose out on tax benefits: A life insurance plan does not only support your loved ones in their hour of need but also helps you save money by offering you tax benefits. If you surrender your policy, you can no longer enjoy these tax benefits.

You pay discontinuation charges in ULIPs: In the case of a ULIP, if you surrender your plan before the lock-in period is over, you will also have to pay a discontinuation charge to the insurance provider. However, if you surrender the plan after the lock-in period, the surrender value will be the same as the fund value at the time of surrender.

Paid up value

Paid-up value is the reduced sum assured paid by the insurance company if a policyholder fails to pay premiums after a certain period. Paidup value is the reduced amount of sum assured paid by the insurer in case of discontinuation of the payment of premiums after paying the full premiums for the first three years. Typically, endowment plans acquire paid-up value if the premiums are paid for three years. The paid-up value increases if the policyholder continues to pay the premiums. If for some reason the policyholder fails to pay the premium after the first three years, the paid-up value will remain the same. If the premiums are not paid, no further bonus would be added to the policy. If the policyholder dies, the insurer will pay only the paid-up value of the policy as death claim. If the policyholder continues to hold the policy, he will get the paid-up value at the end of the term. The policyholder also have the option of surrendering the policy before that. If you do not want to continue the policy, it is always better to surrender the policy.

Paid-Up Value = [ (No. of paid premium X Sum Assured) / Total No. of premium]

Consumer evaluation, also called consumer testing or consumer research, is the process of assessing the properties or performance of existing or new products or services as perceived by the consumers. Many methods have been developed over the past decades with the growth of the consumer goods’ industry. Each section of this chapter describes the methodology (small-scale qualitative, large-scale quantitative and in-depth ethnographic approaches) as well as the important points to consider and pitfalls to avoid for each. It includes concrete and pragmatic case examples (tables, graphs) with types of deliverables covering different types of product categories.

Customer insight (consumer insight)

Customer insight, also known as consumer insight, is the understanding and interpretation of customer data, behaviors and feedback into conclusions that can be used to improve product development and customer support.

Agile marketing

Agile marketing is an iterative approach to marketing strategies that models methodologies used in agile software development. With agile marketing, teams identify and focus their collective efforts on high value projects, complete those projects cooperatively, measure their impact, and then continuously and incrementally improve results over time.

360-degree customer view

The 360-degree customer view is the idea that companies can get a complete view of customers by aggregating data from the various touch points in which consumers interact with companies.

Actionable intelligence

Actionable intelligence is information that can be followed up on, with the further implication that a strategic plan should be undertaken to make positive use of the information gathered.

Age of the customer

Age of the customer is the concept that consumers are more empowered than ever because they can access information about products and services over the Internet in real time.

Policy Evaluation in insurance

Ease of service

Customer is the everything and it is this age-old business mantra that still doesn’t fail to dictate the shots, even in the realm of insurance. Private insurance companies have a lot to offer to their customers, vis-à-vis their erstwhile counterparts.

It is normal for you to want a website that’s rich in information, a toll-free helpline number that’s truly round-the-clock operational, assistance with claims support and a company interface that’s resourceful and effective. If your insurance company ticks all the relevant boxes, you can be rest assured that your insurance is in the right hands.

Online purchase and Renewal of policy

In present times, most experts would swear against visiting an insurer’s brick and mortar outlet in order to purchase an insurance policy. Online policy purchase, besides being a no-hassle approach, offers you extra in terms of comparing various policies, being thorough with the fine print, paying the premiums and submitting documents at ease.

It is this sheer ease that should also take precedence once you decide to move ahead with policy evaluation.

Claim settlement ratio

One of the better indicators of an insurance provider’s efficacy (in terms of settling claims), probing into your insurer’s claim settlement record will give you an idea about your own chances, if and when the need arises to file a claim. A claim settlement ratio, in simple terms, is the number of claims settled out of the total pile of claims filed.

Make sure your preferred insurance company boasts of a good claim settlement ratio so that it doesn’t drag its feet when it is your time to get the proceeds from a claim.

Premium outgoes

Here, you will have to strike a delicate balance between the cost of the policy and the sum insured you would be eligible to. Putting it in perspective, on-boarding the most expensive insurance policy might not make sense, particularly if you aren’t sure about your finances.

On the other hand, landing the cheapest insurance policy around might not be all that helpful, considering you may have to compromise on the coverage.

Coverage

Probably the most commonly heard buzz word whenever someone talks about an insurance policy, checking the coverage is certainly of utmost importance once you start evaluating insurance policies. Check whether the sum insured is adequate so that you don’t have to press the panic button in case of damages and losses caused to your home, vehicle or health, for that matter.

Evaluating life insurance policies consideration:

Cost: Being cost effective is good, however, the cheapest does not mean the best.

Convenience: The ease of buying is very important. The facility to learn, compare and pay online is an added advantage.

Company Credentials: The insurer’s ability to honour a claim is based on its financial position. Do your research about the fundamentals of the insurance provider before buying a policy. The IRDAI has enough safeguards to ensure that the insurers are adequately funded. Rating agencies like ICRA and CRISIL also rate insurance companies on factors like claim-settlement ratio, financials, etc.

Claim Settlement Record:

This is a key indicator of the insurance company’s efficiency while processing claims. The Insurance Regulatory and Development Authority of India(IRDAI) has stipulated that for cases where an investigation is not required, insurers are expected to settle a claim within 30 days of submission of complete documents. However, with increasing instances of frauds, insurance companies have become extra cautious while examining each claim.

Customer Service: This is the key differentiator between erstwhile life insurance companies and some of the private insurance providers in India. A highly resourceful website, a 24×7 helpline, a relationship manager and comprehensive email support are the key touch points you should look for.

Coverage: A healthy base sum assured and the availability of popular riders is desirable.

Review Existing Policies

• Analyze alternative scenarios. Determine what the policy premium will be and the time over which it must be paid using scenarios of falling interest rates and rising mortality rates. Make sure clients can afford the higher premiums and continue to pay them for longer periods.
• Compare “re-projected” policies. When the agent prepares a new projection for one of the client’s existing policies, be sure the policy terms are identical to the policy as originally written. Otherwise, you’re comparing apples and oranges.
• Compare illustrations. Check the assumptions the insurance company uses in its policy illustration such as interest rates, mortality rates and expected longevity. Compare results such as premiums, length of time they must be paid and benefits the policy provides. Make sure to look at carrier ratings and financial stability.
• Make sure the client gets the best deal. Some companies offer better policies for new buyers. Find out if the client’s carrier or another carrier offers lower premiums, higher cash values or larger death benefits to new buyers than the current policy offers. If so, cancel the old policy and buy a new one.
• Continue to assess carrier ratings and financial stability. Like any business, insurance carriers’ fortunes change. Be certain the carrier’s situation has not exceeded your client’s risk tolerance. If it has, change carriers.

Gratuity is a compulsory benefit to be provided to employees as per the Gratuity Act, 1972. It is a lump sum amount paid out to employees, once they are no longer a part of the company. An employee is eligible for payment of gratuity only if he or she fulfills the conditions specified under the Gratuity Act.

Every growing organization has some financial and legal responsibilities towards its employees. Gratuity is one such significant liability paid to employees after successful 5 years completion in the company. In a way, it is a retention tool encouraging employees to stay in the organization for a longer duration. Every company has to have sufficient funds to fulfill the gratuity needs of their employees at the right time. As employee strength increases, managing gratuity payments become more expensive and unmanageable. Getting an effective gratuity plan is imperative to retain employees.

For managing your group Gratuity, you can choose from the following products:

Group Suraksha Plus: This is a Non-participating Endowment plan which provides a minimum floor rate and additional interest rate every quarter

Group Unit Linked Employee Benefit Plan: This is a Unit Linked investment plan that offers various fund options of equity and debt

Tax benefits

As an employer, annual contribution is allowed as expenditure/deduction in computing taxable income. However, maximum contribution cannot exceed 8.33% of an employee’s salary each year.

Gratuity received by the employee is tax-free up to the limit specified and subject to conditions under Section 10(10) *

The tax benefits are as per Income Tax Act, 1961 and Income Tax Rules, 1962. Please consult your Legal/ Tax expert for details. ICICI Prudential Life Insurance Company Limited shall not be held responsible in any manner in case you do not get the above stated tax benefits. Please note that the prevailing and applicable tax laws shall be final, conclusive and binding on both the parties.