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Tuesday, March 29, 2011
Thursday, March 24, 2011
Health sector hails ’misery tax’ withdrawal
23-Mar-2011
Source : SME Times
The roll back of the proposed five percent service tax for private hospitals was Tuesday welcomed with open arms by health institutions and the public.
"This is a welcome decision by finance minister (Pranab Mukherjee). Access to healthcare to all and that of the highest standards has been the driving force for all of us who constitute healthcare sector in India. The imposition of this service tax would have been a huge deterrent to this vision," Prathap C. Reddy, chairman of Apollo group of hospitals, said in a statement.
In the federal budget for 2011-12, the finance minister had proposed to levy five percent tax on services provided by hospitals with 25 or more beds, facility of central air-conditioning and diagnostic tests of all kinds.
"After the progressive move, the country will see our renewed efforts to serve the nation and we will relentlessly persevere to keep all Indians in good health," Reddy added.
Renowned cardiac surgeon from Bangalore-based Narayana Hrudayalaya group of hospitals Devi Shetty, who had earlier termed the hike as "misery tax for patients", termed the move "a victory for the common man".
"It’s a great victory for the aam aadmi. I had told the finance minister that the hike will have an impact on the poor people who are borrowing money even for basic health care," Shetty told reporters here.
The decision was also welcomed by the public.
"Private hospitals would have only increased the cost of treatment...to incur the cost from the patient. This was much needed," said Ambika Goswami, a government employee.
"Government hospitals are always packed, one cannot think of depending on them in the hour of crisis," added Goswami.
Druv Dhall, 38, a private banker, said: "The government should have thought before imposing the tax hike. The cost of treatment at air conditioned hospitals is already very expensive, and another five percent would have meant a lot to the people.
Source : SME Times
The roll back of the proposed five percent service tax for private hospitals was Tuesday welcomed with open arms by health institutions and the public.
"This is a welcome decision by finance minister (Pranab Mukherjee). Access to healthcare to all and that of the highest standards has been the driving force for all of us who constitute healthcare sector in India. The imposition of this service tax would have been a huge deterrent to this vision," Prathap C. Reddy, chairman of Apollo group of hospitals, said in a statement.
In the federal budget for 2011-12, the finance minister had proposed to levy five percent tax on services provided by hospitals with 25 or more beds, facility of central air-conditioning and diagnostic tests of all kinds.
"After the progressive move, the country will see our renewed efforts to serve the nation and we will relentlessly persevere to keep all Indians in good health," Reddy added.
Renowned cardiac surgeon from Bangalore-based Narayana Hrudayalaya group of hospitals Devi Shetty, who had earlier termed the hike as "misery tax for patients", termed the move "a victory for the common man".
"It’s a great victory for the aam aadmi. I had told the finance minister that the hike will have an impact on the poor people who are borrowing money even for basic health care," Shetty told reporters here.
The decision was also welcomed by the public.
"Private hospitals would have only increased the cost of treatment...to incur the cost from the patient. This was much needed," said Ambika Goswami, a government employee.
"Government hospitals are always packed, one cannot think of depending on them in the hour of crisis," added Goswami.
Druv Dhall, 38, a private banker, said: "The government should have thought before imposing the tax hike. The cost of treatment at air conditioned hospitals is already very expensive, and another five percent would have meant a lot to the people.
LIC WINS OUT LOOK MONEY AWARD
Life Insurance Corporation of India continues to occupy the top slot in this category. Among a total of 23 companies, it had a market share of 72 percent in first premium income and policies, as on 31st July 2010. It has already solved over 10 million new policies in the fiscal year with a first premium income of Rs.15,917 Crore, registering a 100 percent growth.It has a customer base of about 280 million policy holders. Its asset figure has now risen to a mammoth.
Rs.11,52,057 crore as an 1st September 2010, an increase of 32 percent over the previous year. It last declared a valuation surplus of Rs.23,478 crore of which Rs.1,029 crore was given to the Central Government as Dividend.
Rs.11,52,057 crore as an 1st September 2010, an increase of 32 percent over the previous year. It last declared a valuation surplus of Rs.23,478 crore of which Rs.1,029 crore was given to the Central Government as Dividend.
Wednesday, March 23, 2011
Tuesday, March 22, 2011
Traditional life insurance or ULIPs?
21-Mar-2011
Source : The Financial Express
By V Viswanand.
What are traditional life insurance plans? Why should I buy a traditional plan? How will I benefit from it? And how is it relevant in today’s environment? How are these different from the more popular ULIPs?
These are some of the questions you would generally ask before making a purchase decision.
Traditional insurance plans, which include term, endowment and whole life policies, offer multiple benefits in terms of risk cover, return, safety and tax benefit. Traditional policies are considered risk-free, as they provide fixed income returns in case of death or maturity of the policy. Investment guidelines also ensure safety of funds with a cap on equity investment.
Here are some of the reasons why traditional life insurance plans are the answer to the apprehensions and challenges faced by consumers and the Life Insurance industry.
1.The interest of the company and the customer are aligned: In participating products the life insurance company can make margins only when the customer makes margins and to that extent the interest of the company and the customer are aligned. As per the insurance law, the company can retain only 1/10th of the profits with 9/10th of the profits shared with the customers. This is colloquially known as the “90/10” rule in the industry. Put simply if the company makes Rs 100 as profits, Rs 90 ( approximately) has to be given to the customer first.
2. Investment risk is managed better in Traditional products: In Unit Linked products the investment risk lies with the customer. But most customers do not fully appreciate the risks involved in such products. In traditional participating products the investments are managed by the company in a prudent manner. This works out to the advantage of a passive investor as there are investment guarantees built into the product design. Not only are investments done in a more conservative manner, the dividends are also ’smoothed’ and declared in a steady fashion.
3. Traditional Insurance is closer to Protection: Right from the sale when the premium is a function of the sum assured to the bonus declaration which also adds to increased growth of protection component within the policy, traditional insurance is closer to protection than ULIPs wherein protection element of the policy, in most cases is more or less constant or subject to vagaries of the market and fund value.
4. The chances of mis-selling are much lower: Traditional participating plans offer in-built guaranteed benefits hence the ’give and get’ equation is fairly simple to comprehend which significantly reduces the risk of mis-selling. Unlike ULIPs these products are sum assured based and not market linked products leaving much less scope for speculative selling and buying behaviour.
In a nut shell
World over Traditional Par Insurance is much more popular than ULIPs and its variants. Customers in western markets who have seen market swings empty out retirement funds have come to appreciate the ’risk-return spectrum’ of insurance plans as well as the difference between investment and savings.
Traditional plans provide the dual advantage of guaranteed returns and protection for long term savings to consumers. This is why traditional participating products are recognised as ideal vehicles for long term savings and protection, even in the Indian context.
— Author is, Director & Head - Products and Persistency Management, Max New York Life Insurance
Source : The Financial Express
By V Viswanand.
What are traditional life insurance plans? Why should I buy a traditional plan? How will I benefit from it? And how is it relevant in today’s environment? How are these different from the more popular ULIPs?
These are some of the questions you would generally ask before making a purchase decision.
Traditional insurance plans, which include term, endowment and whole life policies, offer multiple benefits in terms of risk cover, return, safety and tax benefit. Traditional policies are considered risk-free, as they provide fixed income returns in case of death or maturity of the policy. Investment guidelines also ensure safety of funds with a cap on equity investment.
Here are some of the reasons why traditional life insurance plans are the answer to the apprehensions and challenges faced by consumers and the Life Insurance industry.
1.The interest of the company and the customer are aligned: In participating products the life insurance company can make margins only when the customer makes margins and to that extent the interest of the company and the customer are aligned. As per the insurance law, the company can retain only 1/10th of the profits with 9/10th of the profits shared with the customers. This is colloquially known as the “90/10” rule in the industry. Put simply if the company makes Rs 100 as profits, Rs 90 ( approximately) has to be given to the customer first.
2. Investment risk is managed better in Traditional products: In Unit Linked products the investment risk lies with the customer. But most customers do not fully appreciate the risks involved in such products. In traditional participating products the investments are managed by the company in a prudent manner. This works out to the advantage of a passive investor as there are investment guarantees built into the product design. Not only are investments done in a more conservative manner, the dividends are also ’smoothed’ and declared in a steady fashion.
3. Traditional Insurance is closer to Protection: Right from the sale when the premium is a function of the sum assured to the bonus declaration which also adds to increased growth of protection component within the policy, traditional insurance is closer to protection than ULIPs wherein protection element of the policy, in most cases is more or less constant or subject to vagaries of the market and fund value.
4. The chances of mis-selling are much lower: Traditional participating plans offer in-built guaranteed benefits hence the ’give and get’ equation is fairly simple to comprehend which significantly reduces the risk of mis-selling. Unlike ULIPs these products are sum assured based and not market linked products leaving much less scope for speculative selling and buying behaviour.
In a nut shell
World over Traditional Par Insurance is much more popular than ULIPs and its variants. Customers in western markets who have seen market swings empty out retirement funds have come to appreciate the ’risk-return spectrum’ of insurance plans as well as the difference between investment and savings.
Traditional plans provide the dual advantage of guaranteed returns and protection for long term savings to consumers. This is why traditional participating products are recognised as ideal vehicles for long term savings and protection, even in the Indian context.
— Author is, Director & Head - Products and Persistency Management, Max New York Life Insurance
LIC collections make up for other’s slack
20-Mar-2011
Source : Business Standard
On the back of a surge from the Life Insurance Corporation of India (LIC), the first-year premium collection by life insurance companies increased by 23.8 per cent to Rs 1,03,878 crore in the April-February period of the current financial year.
In this period, LIC collected Rs 73,122 crore by selling new policies, up 34.6 per cent compared to Rs 54,320 crore collected in the corresponding period last year.
During April-February 2009-10, the total first-year premium collected by the industry was Rs 83,891 crore.
According to data collected by the Insurance Regulatory and Development Authority (Irda), during the first 11 months of this financial year, private insurers posted a marginal four per cent rise in premium collection to Rs 30,756 crore, compared to Rs 29,571 crore in the corresponding period last year.
The industry recorded seven per cent growth in premium collection on a month-on-month basis in February to Rs 8,344 crore, compared to Rs 8,301 crore collected in January 2011.
Industry sales took a hit after new norms were introduced in September and most of the growth in terms of premium income happened in the first six months of 2010-11.
The premium collection in January was down by 14.5 per cent, compared to Rs 9,709 crore in December. The new business income in November 2010 was Rs 7,282 crore.
In February, LIC’s new premium collection was up by 12.9 per cent on a year-on-year basis, whereas for its private peers the collection dipped by five per cent.
SBI Life, the largest private life insurer in terms of new business premium income, collected premiums worth Rs 5,845 crore during the first 11 months of 2010-11, up by 1.9 per cent compared to Rs 5,267 crore collected in the corresponding period a year earlier.
Source : Business Standard
On the back of a surge from the Life Insurance Corporation of India (LIC), the first-year premium collection by life insurance companies increased by 23.8 per cent to Rs 1,03,878 crore in the April-February period of the current financial year.
In this period, LIC collected Rs 73,122 crore by selling new policies, up 34.6 per cent compared to Rs 54,320 crore collected in the corresponding period last year.
During April-February 2009-10, the total first-year premium collected by the industry was Rs 83,891 crore.
According to data collected by the Insurance Regulatory and Development Authority (Irda), during the first 11 months of this financial year, private insurers posted a marginal four per cent rise in premium collection to Rs 30,756 crore, compared to Rs 29,571 crore in the corresponding period last year.
The industry recorded seven per cent growth in premium collection on a month-on-month basis in February to Rs 8,344 crore, compared to Rs 8,301 crore collected in January 2011.
Industry sales took a hit after new norms were introduced in September and most of the growth in terms of premium income happened in the first six months of 2010-11.
The premium collection in January was down by 14.5 per cent, compared to Rs 9,709 crore in December. The new business income in November 2010 was Rs 7,282 crore.
In February, LIC’s new premium collection was up by 12.9 per cent on a year-on-year basis, whereas for its private peers the collection dipped by five per cent.
SBI Life, the largest private life insurer in terms of new business premium income, collected premiums worth Rs 5,845 crore during the first 11 months of 2010-11, up by 1.9 per cent compared to Rs 5,267 crore collected in the corresponding period a year earlier.
More options soon in unit-linked pension plans
20-Mar-2011
Source : Business Line
If you are planning to invest in a unit-linked pension plan, you will soon have more choice of products with a possibility of higher yields.
“We want to expand the portfolio of pension plans. Every product will continue to have a minimum guarantee for the policyholders,” Mr Hari Narayan, Chairman, Insurance Regulatory and Development Authority (IRDA), told Business Line.
Since the new regulatory regime for Unit Linked Insurance Plans (ULIPs) from September 1, 2010, there is only one pension product with a minimum guaranteed annualised return of 4.5 per cent on maturity as of now.
According to industry feedback, the existing product is attracting neither policyholders nor insurers.
To offer a minimum guarantee, the insurers are setting aside 5-6 per cent of every premium as a reserve and are only investing the rest, mostly in the government instruments which offer not higher than 8-9 per cent interest, to play safe.
From a policyholder perspective, this kind of traditional investment pattern may not be attractive over a long period of time in view of the lesser returns.
As per IRDA data, since September 2010 till date, the sales of unit-linked pension plans have been less than a lakh, which explains lack of interest both from the policyholder and the insurer in this segment.
“The set of products we are planning to bring in will have more flexible guarantee options in the place of existing one on maturity,” the IRDA Chairman said.
There could as well be a combination of guarantees to suit varied perspectives of customers on risk and returns from a long-term product.
Choice-based exposure
Once introduced, the new norms on pension products would allow a pension plan policyholder to have a choice-based exposure to equity market in the expectation of a higher return.
The trade-off however would be a minimum guarantee of 4.5 per cent on maturity (which also is linked to the reverse repo rate as insurers should offer 50 extra basis points over this as return), as the minimum guarantee clause is likely to be ‘tweaked’ by the IRDA.
“Whatever may the product, there will be minimum guarantee on the capital to ensure policyholder protection,” Mr Hari Narayan said, while not sharing exact details.
Source : Business Line
If you are planning to invest in a unit-linked pension plan, you will soon have more choice of products with a possibility of higher yields.
“We want to expand the portfolio of pension plans. Every product will continue to have a minimum guarantee for the policyholders,” Mr Hari Narayan, Chairman, Insurance Regulatory and Development Authority (IRDA), told Business Line.
Since the new regulatory regime for Unit Linked Insurance Plans (ULIPs) from September 1, 2010, there is only one pension product with a minimum guaranteed annualised return of 4.5 per cent on maturity as of now.
According to industry feedback, the existing product is attracting neither policyholders nor insurers.
To offer a minimum guarantee, the insurers are setting aside 5-6 per cent of every premium as a reserve and are only investing the rest, mostly in the government instruments which offer not higher than 8-9 per cent interest, to play safe.
From a policyholder perspective, this kind of traditional investment pattern may not be attractive over a long period of time in view of the lesser returns.
As per IRDA data, since September 2010 till date, the sales of unit-linked pension plans have been less than a lakh, which explains lack of interest both from the policyholder and the insurer in this segment.
“The set of products we are planning to bring in will have more flexible guarantee options in the place of existing one on maturity,” the IRDA Chairman said.
There could as well be a combination of guarantees to suit varied perspectives of customers on risk and returns from a long-term product.
Choice-based exposure
Once introduced, the new norms on pension products would allow a pension plan policyholder to have a choice-based exposure to equity market in the expectation of a higher return.
The trade-off however would be a minimum guarantee of 4.5 per cent on maturity (which also is linked to the reverse repo rate as insurers should offer 50 extra basis points over this as return), as the minimum guarantee clause is likely to be ‘tweaked’ by the IRDA.
“Whatever may the product, there will be minimum guarantee on the capital to ensure policyholder protection,” Mr Hari Narayan said, while not sharing exact details.
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