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The last year has indeed been transformational from the political, social as well as the economic perspective. After nearly three decades, a party has managed to secure absolute majority in Parliament on the back of two focus areas – "Growth" and "Good Governance". Financial inclusion via the '"Jan Dhan Yojana" and the proposed Social Security System symbolised the commitment of the Indian government towards creating a healthy social infrastructure. On the economic front, reform measures are expected to establish India as a growth-leader among major economies as forecasted by various domestic and global agencies.
The financial year 2014-15 has proved to be a good year in terms of returns for both equity and fixed income investments. Investor sentiments were revived with the mining and insurance bill being passed in the Parliament and the expectation of implementing GST along with transparency in the process of resource allocation like auctioning of coal blocks. The Government has also introduced various measures aimed at "Ease of doing Business" including tax rationalisation in the Union Budget. The declining interest rate environment, low crude oil prices and a benign global liquidity scenario would help in rekindling the animal spirits which is key in achieving a double digit growth for our economy.
In a welcome development for the Insurance industry, the much awaited Insurance Amendment Bill was passed in the Parliament thus making 49% FDI in insurance a reality. Apart from the country getting additional foreign inflow, all stakeholders in this sector will benefit due to value creation as a result of the FDI boost. We, at Future Generali India Life Insurance, will continue to strive towards achieving sustained excellence by ensuring best-in-class services.
I am happy to inform you that both our Traditional and ULIP funds have generated competitive returns over the years. We have been declaring good bonuses to our Traditional Policyholders. Our Future Income Fund (Debt Fund) has delivered a CAGR Return of 10.89% (Annualised return 14.84%) since inception, which is one of the best in the market. Also, our equity funds have given competitive returns over the past one year. The volatility and risk are inherent elements of the financial markets. It is advisable to remain invested for medium to long term and complete the term of the policy to optimise your return.
Overall reaction to Budget
The finance minister has presented a forward looking growth-oriented Budget. Focus on 'ease of doing business' has been demonstrated by streamlining of project approval process, composite cap for foreign investment, rationalisation of corporate tax structure, comprehensive bankruptcy law and dispute resolution mechanism. The focus on creating a social safety net, housing, employment and agricultural productivity will lead to inclusive growth. At the same time, increasing public spending by keeping higher than estimated Fiscal Deficit for the next year augurs well for GDP growth. Monetization of gold by creating a Sovereign gold fund and channelisation of savings by increasing the limit in Pension schemes will lead to higher capital flow in productive sectors. Overall, we consider the maiden full-fledged Budget by the present government as pragmatic and credible which shows a lot of promise towards taking the Indian economy towards a double digit growth in next couple of years.
In the Budget, the government has taken various measures to promote inclusive growth by creating a functional social security system. While Pradhan Mantri Suraksha Bima Yojna is designed to cover accidental death risk of Rs 2 lakh, Pradhan Mantri Jeevan Jyoti Bima Yojna shall cover both natural and accidental death risk of Rs 2 lakh. Higher tax incentives will boost usage of health insurance. Also, limit on deduction on account of contribution to pension fund and the new pension scheme has been increased from Rs 1 lakh to Rs 1.5 lakh. These measures will surely help higher insurance penetration and aims at providing a safety net of pension scheme to all Indians.
Munish Sharda, Managing Director & CEO, Future Generali Life Insurance
Your friend bought a life insurance policy and told you about it. It is at that time when you realised it was missing from your financial plan and decided to get one too. The decision has been made but you don't know where to begin? Most of the insurance prospects are not sure about which policy would be most appropriate for them. Here are a few easy steps to begin your search process to find one that best suits your needs:
Step 1: What do I need?
Life Insurance products offer various choices that will cater to your needs. You need to identify the kind of unforeseen events that can deprive your family of their financial well-being. This would include events like death, disability or any major illness etc. The decision to choose your life insurance product depends on the financial needs of your family. Your decision will be influenced by the following:
Addressing the above questions will help you analyse and identify your insurance requirements.
Step 2: What type of product is suitable for me?
Life insurance products offer financial security in a more structured and disciplined way. These products can help an individual meet the dual needs of saving for the future as well as protection during unforeseen circumstances. These products offer more than just pure risk cover, as it also provides options which give you market linked returns or guaranteed returns or money backs on key milestones. Many policies will offer you options which can be customised as per your current requirement, for eg: few traditional plans are unique as they offer you benefit payouts which are timed to suit your needs so that you get money at the right time to meet your financial objectives. However, it is important to understand the type of policy you need and there are three simple steps to it.
While you decide what the best option for you is, do also look at options to enhance your cover with additional riders for disability due to accident or critical illnesses. These riders can be added at a nominal cost along with such plans.
Step 3: Short-list and Select
Once you have selected the type of policy, the next step is to choose the product which falls within your identified list of policies.
These simple steps will help you buy the right life insurance policy with ease. Self-assessment of your needs, researching various plans and taking professional advice are the three key 'mantras' for selecting the correct life insurance plan.
Munish Sharda, Managing Director & CEO, Future Generali India Life Insurance
The insurance landscape in India has undergone significant transformational changes during the last decade, and we often come across the common complaints from a stressed customer such as 'I am conned by my agent//broker or misinformed about my life insurance policy.'
Who is to be blamed if a life insurance policy does not work for you? Is it completely the fault of your agent/broker for pushing a policy which didn't meet your needs? Or should the customer share the blame for buying without understanding or reading the terms and conditions? The most common concern that the customer faces is whether it is a single premium policy or not; or whether there are guaranteed returns or does it come with an investment risk?
Being in the life insurance industry for almost two decades, I believe that while selling is an act of persuasion; buying is an act of making an 'informed decision' of choosing a product which meets one's requirements. Simply buying a life insurance policy to please our relatives and friends or just to save taxes or blindly do what the agent says without understanding is called buying with eyes closed or 'mis-buying'.
There is a strong possibility of mis-buying a life insurance policy if the customer does not pay closer attention to details. One can argue that mis-buying is a result of mis-selling, but if the investor evaluates the options thoroughly and goes through fine prints, it is nearly impossible to buy the wrong product. Here are 10 simple steps that the investor can take to ensure that you don't fall in the 'mis-buying' trap.
The very reason for the existence of insurance companies is to ensure the welfare of the customer and their families and make them financially secure. As a buyer, you can make an informed choice by following the above steps and understanding policy nuances before committing to it. This would make life much simpler for you as well as your life insurance provider and ensure financial security as a tool towards optimizing health, wealth and happiness.