HOME         WEBSITE         SUBSCRIBE           E-GREETINGS   
                               

Wednesday, November 06, 2013

Go online for cheaper term insurance plans

Due to lower premiums and ease of buying, life insurance policies are being bought through the internet. Buying life insurance online is fast emerging as a preferred medium for buying and selling pure protection term insurance products. Most online insurance buyers are relatively young, urban and tech-savvy insurance-seekers, say market observers. "We typically see men aged between 30 years and 44 years opting for online term covers," says TR Ramachandran, managing director and CEO, Aviva India, adding that the median age of the company’s customers is 34. "Online term insurance seekers are financially sophisticated customers whose insurance awareness level is very high.

They are usually executives who have liabilities in the form of loans or wish to protect their families against the life uncertainties," says Sunil Sharma, chief actuary of Kotak Life. Industry estimates for average cover bought by policyholders range from 50 lakh to 75 lakh. Sensing a growing demand for online term plans, almost all private life insurers are focussing on this segment. Its contribution to their overall business remains low at around 3-5%, but corners a huge chunk of the protection portfolio. For instance, in case of Aegon Religare Life Insurance, it accounts for 95% of the protection portfolio.

Similarly, around 85% of Kotak Life’s term business comes from online products. According to Aegon Religare’s marketing director Harshal Shah, the claim experience, too, is better from the company’s perspective. "Due to high awareness levels, the disclosures are better. In case of offline plans, there is a possibility that the insured has merely signed the form, with the agent entering the responses. Therefore, the information could be sketchy or inaccurate. In case of online, the policyholder is likely to have completed the form herself, resulting in better quality of information," he says.

The Advantages
Pricing is the key differentiator as other features of online and offline term plans are largely similar. That is, both promise to hand out the chosen sum assured, or life cover, to the nominee in case of the policyholder’s demise. "Online term life insurance policies are 30-40% cheaper when compared with their off line counterparts," says Sanjay Tiwari, vice-president - products, HDFC Life. Absence of distribution costs and low transaction costs are passed on to the customers by charging lower premium, he adds.

The Procedure
To buy a product online, you need to complete the proposal form which requires you to disclose your health, income, liabilities and family details. Next, you will get a premium estimate that needs to be paid. Remember, the premium that you have to actually pay may vary from what the insurer’s premium calculator tool indicated during your research. "The preliminary premium is determined after taking into account the insurance-seeker’s responses to our questions, age and the sum assured chosen," says Shah. If you are not happy with the amount charged to you, you need not proceed. If you decide to accept the offering, you can go ahead and make the payment using your cards or Internet banking.

If the company, based on the amount of cover, age and disclosed health history, feels that you need not undergo medical tests, the underwriting process will come to an end. In case medical tests seem necessary, you will have to go through the same. The insurer will foot the bill for such tests. After making adjustments in the premium amount, if required, the policy will be issued to you. You will also have to submit the documents asked for - they can either be sent to the insurer’s branch offices or uploaded online, if the option is provided on the portal.

The Flipside
The positives clearly outweigh the negatives for the life assured, but for nominees, the technology-driven edge might prove to be counter-productive, if they are unaware of the cover or the claim-filing procedure. With no friendly neighbourhood acquaintance-cum-agent to assist with the paperwork, the nominees might have to hunt for documents and make trips to the company’s office. "The help of an agent who is conversant with the procedures and formalities would definitely help the claimant," says consumer activist Jehangir Gai. Insurers, though, say that their call centres are equipped to handle claim queries.

Besides, if your agent happens to be unscrupulous, mis-selling is a distinct possibility. Many insurance agents, particularly those working with private insurers, quit their profession very soon. So, there is no certainty on the agent being available to render his service after death of the life assured. Instead, you should focus on the quality of services offered by the insurer," says certified financial planner Pankaj Mathpal, CEO of Optima Money Managers. Since 2010, the number of individual agents exiting the profession has shot up. On their part, online term policyholders can keep their nominees informed about the cover and the location of the policy contract. 


Source: ET

General Insurers can double their exposure to liquid mutual funds: IRDA

India’s insurance regulator has decided to double the investment limit in liquid mutual funds for general insurers. At present, general insurance companies are allowed to invest 1.5% of assets into liquid mutual funds under the approved investment category where the size of the fund is above Rs 2,000 crore. Now, they will be allowed to invest an additional 1.5% or Rs 3,500 crore. "It is a temporary relaxation," a senior official at the Insurance Regulatory and Development Authority (Irda) said, adding that the decision followed repeated representations from the mutual fund association.

"Eventually, it supports the borrowing programme of the government with the enhanced liquidity," said Deven Choksey, managing director at Choksey Shares and Securities. "From the equity market perspective, it remains neutral." Non-life industry manages assets worth Rs 2.5 lakh crore. The regulator has decided to allow life insurance companies to invest in fixed deposit schemes of promoter group banks within the group exposure limit of 5%. General Insurers can double their exposure to liquid mutual funds: IRDA "Considering the representations from the industry and the life council, it is decided to permit FDs, as stated in the regulations, in promoter group scheduled banks within the 5% limit prescribed for promoter group," Irda said. As per the norms, insurers can invest not more than 3% of the controlled fund in one bank.

"This will help a company like SBI Life get flexibility in investment and improve return on its portfolio," said Abhijit Gulanikar, chief investment officer at SBI Life. Exposure to promoter group companies is capped at 5% of investment assets of the insurance company. Irda has brought down the limit gradually from 12.5% to 5% in February 2013. According to estimates, private life insurance industry can invest Rs 15,000 crore in FDs of promoter group companies. State-owned Life Insurance Corporation of India, which manages assets worth Rs 13 lakh crore, will see no change in investment portfolio.

In April, the regulator had banned companies from investing in fixed deposits and credit default swaps of the promoter group company. In addition, insurers can increase investment in information technology and industrial sector to up to 20% from the existing 15% after the approval of the board. "We note that the industrial weightage on the benchmark indices is dynamic and presently IT industry contributes more than 15% on the benchmark indices," Irda said. "As the weightage keeps on changing from time to time, it is decided to give general permission to have exposure of further 5% in one industrial sector." 


Source: ET

UTI MF Launches UTI – FTIF – Series XVI – X (369 Days)

NFO Period from 5 November to 12 November 2013 

UTI Mutual Fund has launched a new fund named as UTI - Fixed Term Income Fund – Series XVI –X (369 Days), a close ended income scheme. The duration of the scheme is 369 days from the date of allotment. The New Fund Offer (NFO) price for the schemes is Rs 10 per unit. The new issue which is open for subscription from 5 November will close on 12 November 2013. 

The investment objective of the scheme is to generate returns by investing in a portfolio of fixed income securities maturing on or before the date of maturity of the scheme. 

The scheme offers growth option, quarterly dividend option with payout and reinvestment facility, flexi dividend option with payout and reinvestment facility, annual dividend option with payout and reinvestment facility and maturity dividend option with payout facility. 

The scheme will allocate upto 100% of assets in debt including securitized debt with low to medium risk profile and upto 100% of assets would be allocated to money market instruments with low risk profile. 

The minimum application amount is Rs 5000 and in multiples of Rs 10 under all the options. 

The fund seeks to collect a minimum subscription (minimum target) amount of Rs 20 crore under the scheme during the NFO period. 

Entry and exit load charge will be nil for the scheme. 

Benchmark Index for the scheme is CRISIL Short Term Bond Fund Index. 

The scheme will be managed by Manish Joshi.

SBI Debt Fund Series - 18 Months – 13 Floats On

NFO period from 13 November to 18 November 2013 

SBI Mutual Fund has unveiled a new fund named as SBI Debt Fund Series – 18 Months - 13, a close ended debt scheme with the duration of 18 months. The New Fund Offer (NFO) price for the scheme is Rs 10 per unit. The new issue will be open for subscription from 13 November and close on 18 November 2013. 

The investment objective of the scheme is to provide regular income, liquidity and returns to the investors through investments in a portfolio comprising of debt instruments such as Government Securities, PSU & Corporate Bonds and Money Market Instruments maturing on or before the maturity of the scheme. 

The scheme offers regular and direct plan. Both the plans will have growth and dividend option. 

The scheme will invest 60% to 100% of assets in debt securities and upto 40% of assets in money market securities. Exposure to domestic securitized debt October be to the extent of 40% of the net assets. 

The minimum application amount is Rs 5000 and in multiples of Rs 1 thereafter. 

Entry and exit load charge will be nil for the scheme. The units of the scheme will be listed on BSE in order to provide liquidity. 

Benchmark Index for the scheme is CRISIL Short Term Bond Fund Index. 

The scheme will be managed by Rajeev Radhakrishnan.

SBI Debt Fund Series-90 Days-77 announces dividend

Record date for dividend is 11 November 2013 

SBI Mutual Fund has announced 11 November 2013 as the record date for declaration of dividend under dividend option of SBI Debt Fund Series-90 Days-77. The rate of dividend (Rs per unit) will be entire distributable surplus as on the record date on the face value of Rs 10 per unit. 

In terms of SID, SBI Debt Fund Series-366 Days-17 will mature on 08 November 2013 and SBI Debt Fund Series-90 Days-77 will mature on 11 November 2013 and accordingly, units of the schemes shall be suspended from trading on the BSE

ICICI Prudential Mutual Fund announces dividend under various schemes

Record date for dividend is 11 November 2013 

ICICI Prudential Mutual Fund has announced 11 November 2013 as the record date for declaration of dividend under the following schemes. The recommended rate of dividend (Rs per unit) on the face value of Rs 10 per unit will be: 

ICICI Prudential Interval Fund II-Quarterly Interval Plan A: 

Retail Dividend: 0.1271
Direct Plan-Quarterly dividend payout: 0.1300
Direct plan-dividend: 0.1290
Regular plan-dividend: 0.1271
Retail quarterly dividend payout: 0.1337
Institutional quarterly dividend payout: 0.1269 
 
ICICI Prudential Interval Fund-Half Yearly Interval Plan II: 

Retail dividend: 0.3689
Regular plan-dividend: 0.3834
ICICI Prudential Fixed Maturity Plan Series 57-3 Years Plan C-dividend: 0.05
ICICI Prudential Interval Fund-Annual Interval Plan IV:
Retail dividend: 0.05
Regular plan-dividend: 0.05

Ind-Ra Affirms Goldman Sachs Liquid Exchange Traded Scheme at 'IND A1+mfs'

India Ratings & Research (Ind-Ra) has affirmed Goldman Sachs Liquid Exchange Traded Scheme (GS Liquid BeES), a fund managed by Goldman Sachs Asset Management (GSAM), at 'IND A1+mfs'. 

Key Rating Drivers 

The affirmation reflects the fund's overall high credit quality and diversification, minimal exposure to interest rate and spread risks, short maturity profile with high overnight and one-week liquidity and GSAM's strong capabilities and resources as an asset manager.
Consistent with Ind-Ra's 'IND A1+mfs' money market fund rating criteria, the fund maintains a high credit quality by investing exclusively in short-term securities rated 'IND A1+' by the agency or of equivalent credit quality. Also, the fund has limited exposure to individual issuers and counterparties. As of 27 October 2013, the fund had over 98% of its investments in collateralised borrowing and lending obligations (CBLO), which are highly liquid securities. 

The rating also reflects the fund's low portfolio credit factor (PCF), which is a measure of the credit quality and maturity profile of the portfolio securities. PCF has remained between 0.10 and 0.16 over the past one year, signifying a very low risk of loss of net asset value in a stress situation. Also, the fund meets Ind-Ra's ‘IND A1+mfs' rating criterion of PCF being 1.50 or less. 

The rating is also supported by low interest rate and spread risk in the fund as indicated by its low weighted average maturity (WAM) to reset date and weighted average life (WAL), both having remained below 7 days over the past one year. As on 27 October 2013, the fund's WAL was only 4.7 days. 

The fund manages investor redemption risk through investment restrictions that aim to maintain sufficient levels of daily and weekly liquidity. In line with Ind-Ra's rating criteria, the fund seeks to maintain at least 65% of its assets in securities maturing overnight (27 October 2013: 98%) or a variety of other qualifying liquid assets such as CBLOs, T-Bills or government securities. The diversified portfolio of liquid assets comprises short-term money market instruments, to fulfil the fund's objective of capital preservation and liquidity. The fund had assets under management of INR6.4bn as of 27 October 2013. 

Rating Sensitivities 

A rating change could result from a material change in the credit quality or market risk profiles of the fund. A material adverse deviation from Ind-Ra's guidelines for any key rating driver could cause the agency to downgrade the rating.

Mobile Number Portability (MNP) Requests Further Increase and Cross the 102 Million Mark

As per the latest data reported by the service providers, by the end of September 2013 about 102.49 million subscribers have submitted their requests to different service providers for porting their mobile number (MNP requests). In MNP Zone-I (Northern & Western India) maximum number of requests have been received in Rajasthan (about 10.15 million) followed by Gujarat(about 8.86 million) whereas in MNP Zone-II (Southern & Eastern) maximum number of requests have been received in Karnataka (about 11.84 million) followed by Andhra Pradesh Service area (about 9.30 million). In the month of September 2013, total number of subscribers who have submitted their request for MNP is 2.29 million.

Broadband Subscriber Base Further Increases During September 2013

Total Broadband subscriber base in the country has increased from 15.28 million at the end of August 2013 to 15.36 million at the end of September 2013. This is a monthly growth of 0.52%. Yearly growth in broadband subscribers is 1.90% during the last one year (September 2012 to September 2013). 

As on 30th September 2013, there are 158 Internet Service Providers (ISPs) which are providing broadband services in the country. Out of these, 95 ISPs have provided broadband subscription data for the month of September 2013, for the rest of the ISPs data from previous month has been retained. Top five ISPs in terms of market share (based on subscriber base) are: BSNL (9.98 million), Bharti Airtel (1.44 million), MTNL (1.10 million), Hathway (0.37 million) and You Broadband (0.33 million).

HDFC Bank and SBI revises base rate by 20 bps

Interest rate on home and auto loans to get dearer 

State Bank of India (SBI) has revised base rate by 20 bps from 9.80% p.a. to 10% p.a. with effect from 07 November 2013. This will translate into dearer interest rate on home loans and auto loans. The revision came immediately after the RBI announced the hike in key policy rate, repo rate by 25 bps to curb inflation and inflationary expectations, though also eased liquidity in the system by reducing Marginal Standing Facility (MSF) rate by 25 bps.
A hike in repo rate means the cost of sourcing the loan for the banks increases, and this effect is usually countered with them passing on the hike to consumers. 

The SBI also revised the Benchmark Prime Lending Rate (BPLR) by 20 bps from 14.55% p.a. to 14.75% p.a. 

HDFC Bank has also revised the base rate to 10% and BPLR to 18.50% with effect from 02 November 2013.

Blog Archive

____________________________________________________________________________________________

Disclaimer - All investments in Mutual Funds and securities are subject to market risks and uncertainty of dividend distributions and the NAV of schemes may go up or down depending upon factors and forces affecting securities markets generally. The past performance of the schemes is not necessarily indicative of the future performance and may not necessarily provide a basis for comparison with other investments. Investors are advised to go through the respective offer documents before making any investment decisions. Prospective client(s) are advised to go through all comparable products in offer before taking any investment decisions. Mutual Funds and securities investments are subject to market risks and there is no assurance or guarantee that the objectives of the fund will be achieved. Information gathered & material used in this document is believed to be from reliable sources. Decisions based on the information provided on this newsletter/document are for your own account and risk.


In the preparation of the material contained in this document, Varun Vaid has used information that is publicly available, including information developed in-house. Some of the material used in the document may have been obtained from members/persons other than the Varun Vaid and which may have been made available to Varun Vaid. Information gathered & material used in this document is believed to be from reliable sources. Varun Vaid however does not warrant the accuracy, reasonableness and/or completeness of any information. For data reference to any third party in this material no such party will assume any liability for the same. Varun Vaid does not in any way through this material solicit any offer for purchase, sale or any financial transaction/commodities/products of any financial instrument dealt in this material. All recipients of this material should before dealing and or transacting in any of the products referred to in this material make their own investigation, seek appropriate professional advice.


Varun Vaid, shall not liable for any loss, damage of any nature, including but not limited to direct, indirect, punitive, special, exemplary, consequential, as also any loss of profit in any way arising from the use of this material in any manner. The recipient alone shall be fully responsible/are liable for any decision taken on the basis of this material. All recipients of this material should before dealing and/or transacting in any of the products referred to in this material make their own investigation, seek appropriate professional advice. The investments discussed in this material may not be suitable for all investors. Any person subscribing to or investigating in any product/financial instruments should do soon the basis of and after verifying the terms attached to such product/financial instrument. Financial products and instruments are subject to market risks and yields may fluctuate depending on various factors affecting capital/debt markets. Please note that past performance of the financial products and instruments does not necessarily indicate the future prospects and performance there of. Such past performance may or may not be sustained in future. Varun Vaid, including persons involved in the preparation or issuance of this material may; (a) from time to time, have long or short positions in, and buy or sell the securities mentioned herein or (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation in the financial instruments/products/commodities discussed here in or act as advisor or lender / borrower in respect of such securities/financial instruments/products/commodities or have other potential conflict of interest with respect to any recommendation and related information and opinions. The said person may have acted upon and/or in a manner contradictory with the information contained here. No part of this material may be duplicated in whole or in part in any form and or redistributed without the prior written consent of Varun Vaid. This material is strictly confidential to the recipient and should not be reproduced or disseminated to anyone else.


Varun Vaid also does not take any responsibility for the contents of the advertisements published. Readers are advised to verify the contents on their own before acting there upon.


Published Credits goes to following sources & all the mentioned sources as footer below the published material- Bloomberg, Valueresearch Online, Capital Market, Navindia, Franklin Templeton, Kitco, SBI AMC, LIC AMC, JM Financial AMC, HDFC AMC, The Hindu, Business Line, Personal FN, Economic Times, Reuters, Outlook Money, Business Standard, Times of India etc.