The latest Ernst & Young Insurance index shows that life insurance confidence remained at the maximum level in the fourth quarter of 2007. This strong confidence was measured despite slower premium and investment income growth. Even so, despite the tapering off in growth, both categories of income remain nevertheless, strong.
This is the 18th quarterly survey conducted to measure confidence in the life insurance industry. Life insurance confidence leads that of the banking industry (96 points), and investment management confidence (98 index points).
Comments Tim Rutherford (Pictured right), insurance industry spokesperson at Ernst & Young; ‘The perception of an industry under siege has passed. Life insurers fared well in 2007, and we expect the reporting season for the year to be solid. The interim results for the half-year to June were already buoyant, and indications are that operations were generally in better shape in the second half of 2007 for most life insurers.’
Continues Tim Rutherford, ‘ Investment income remained strong in the fourth quarter. This is despite more volatile equity markets, and is reflective of strong investment income stemming from commercial and retail property rentals, higher interest income earnings, and other realisations on investments.’
‘However’, cautions Rutherford, ‘ Life insurers are not expecting the strong investment returns to hold into 2008. The outlook is that investment income will contract in the first quarter of the year, and although they have proved to be pessimistic about investment income earnings, it is most likely that investment income growth will at least taper sharply downwards in the quarters ahead.’
Also supporting higher confidence is:
* an improvement in lapse rates,
* continued improvements in efficiencies,
* a stemming in outflows from the life book, and
* improving risk profitability business.
Comments Tim Rutherford again, ‘ Operationally, the life insurers have been working at improving their processes and ways of conducting business. This has happened over a number of years, and is an ongoing exercise. I think we are starting to see the benefits from those projects paying off."
"Life insurers have not been alone as far as restructuring their businesses, but they probably felt the pressure more readily than most other industries. A few years back, they faced a contracting life book, squeezed profitability on the remaining business, and increasing costs of doing business.’
Continues Rutherford, ‘ It appears that the life book is at the very least not contracting any longer, with growth in inflows exceeding that of outflows for the last three quarters. Whilst it is too early to draw any definite conclusions, it appears that the life book is at least holding stable, after contracting considerably in 2003 and 2004, and more moderately into 2005 and 2006.’
Other findings include a fall in the lapse rate. The overall trend is one of improvement made in reducing lapse rates. Says Rutherford again, ‘ This is one of the areas where life insurers have placed a lot of emphasis on improving. In the past, rising premium income was often offset by sharply increasing lapse rates. Considerable effort has been made to ensure that a larger portion of new premium income was retained by reducing lapses post the sale.
Efficiencies have consistently improved over the last few years, despite higher employee numbers. Rutherford points out that it has been necessary to grow employee numbers to cope with higher capacity requirements.
However, he adds that unlike the banking and investment management sectors, employee growth trends at life insurers have been more erratic. This is most probably due to the aforementioned restructuring of business processes and operations that the industry has experienced.
Concludes Rutherford; ‘In line with the other financial services sectors, life insurance industry confidence remains high. In fact, life insurance confidence is the highest of all the financial services sectors. Life insurers are not as prone to interest rate increases and volatile equity markets as immediately as their banking and investment management peers, respectively are."
"However, slower consumer expenditure is likely to ultimately impact the retail side of their business, particularly in new market segments, where life insurers are playing more and more. For the moment, however, they are benefiting from business restructuring and process re-design. Despite slower profits and premium growth, both remain at high levels.‘
sourcehttp://www.itinews.co.za/companyview.aspx?cocategoryid=89&companyid=21727&itemid=05318001-1E07-416D-88AB-C624CBC66031
Sunday, January 27, 2008
Saturday, January 26, 2008
Credit Cards May Help With 'Life Events'
The two banks, along with some others, are more than happy to help defray some of the cost of your wedding, having a baby, moving, retiring, losing your job, or even a nasty divorce.
Yep, this is your chance to take advantage of one of these banks, just as they did when you were one hour late in making a credit card payment.Now before you ask my editors when they last had me take a drug test, what I am telling you is absolutely true.
But, before you even think about picking up the phone and signing up, you MUST DO EVERYTHING I TELL YOU. Banks and credit card companies that offer debt cancellation or debt deferment plans will make tons of money off you if you fail to dot one "i."
Now, once in a while I like to play with fire. If you don't have the stomach for it, just enjoy reading this column without taking any action. Live vicariously.
And before taking action, there are two musts. First you need to have, and be VERY familiar, with online banking to keep instantaneous track of your account and be able to make immediate payments. Second, you must READ EVERY WORD in the credit card company's offer. Yes, that includes all the fine print.
So far, these plans have pretty much flown under the public radar. They were originally geared mostly to provide a sort of insurance in case of death, disability, identity theft, and involuntary loss of your job.
My focus is on the more recent features. Neither Consumer Reports editor Charles Fields, nor Justin McHenry, research director of IndexCredit Cards.com, had heard of the "life event" features.
They both cautioned consumers not to take these plans for death and disability benefits because the cost tends to outweigh the benefit. And McHenry, while intrigued with my experience, warned that it's not for average consumers who aren't willing to keep close track of their finances.
To explain how it works, I will tell you my experience. About two weeks before my October wedding, while checking on the status of my Bank of America credit card, the service representative suggested I enroll in its Credit Protection Plus plan.
I asked why I should be interested, as I already have life insurance. She said the plan has many other features, including paying benefits if I get married. Those were the magic words.
So let me get this straight, I said. If I enroll in this plan tonight, and I get married in the next two weeks, Bank of America will make three of my minimum payments on my credit card? And all it costs me is a one-time fee of 95 cents for each $100 of my balance? Yes, she replied.
And, I asked, I can then cancel and not have to pay another fee. Yes, she replied. The fee, if I don't cancel, would then be tacked onto my bill each month, increasing my balance.
Since I was carrying a high-balance, low-interest introductory loan (the maximum the policy covers is $25,000), I quickly calculated that the bank would be paying me about $500 a month in return for less than $250 from me.
I told her to sign me up. I then checked with Chase, where I also have a sizable low-interest credit card loan (did I mention I like to play with fire?), and was told they have a similar, but less generous plan. Chase would waive up to five months of minimum payments, saving me substantial interest, in return for my taking out its plan at 89 cents per $100. Sign me up, I said.
After our wedding, I immediately notified both banks that I wanted to trigger the benefits. They both promised to send me a packet and told me I would have to get proof of marriage.
I mailed the applications and marriage certificates to both banks and waited, while my stomach turned a little as I wondered if I had done something stupid. It would not be the first time.
I consoled myself knowing I would at least get a column out of the experience. I had some doubts, though, that the bean counters in our Chicago headquarters would approve my expenses if I included the payments I had made to purchase the plans.
The first things to appear on my online bank statements were, of course, the charges from the two plans.
source:http://www.courant.com/business/hc-watchdog0127.artjan27,0,2336411.column
Yep, this is your chance to take advantage of one of these banks, just as they did when you were one hour late in making a credit card payment.Now before you ask my editors when they last had me take a drug test, what I am telling you is absolutely true.
But, before you even think about picking up the phone and signing up, you MUST DO EVERYTHING I TELL YOU. Banks and credit card companies that offer debt cancellation or debt deferment plans will make tons of money off you if you fail to dot one "i."
Now, once in a while I like to play with fire. If you don't have the stomach for it, just enjoy reading this column without taking any action. Live vicariously.
And before taking action, there are two musts. First you need to have, and be VERY familiar, with online banking to keep instantaneous track of your account and be able to make immediate payments. Second, you must READ EVERY WORD in the credit card company's offer. Yes, that includes all the fine print.
So far, these plans have pretty much flown under the public radar. They were originally geared mostly to provide a sort of insurance in case of death, disability, identity theft, and involuntary loss of your job.
My focus is on the more recent features. Neither Consumer Reports editor Charles Fields, nor Justin McHenry, research director of IndexCredit Cards.com, had heard of the "life event" features.
They both cautioned consumers not to take these plans for death and disability benefits because the cost tends to outweigh the benefit. And McHenry, while intrigued with my experience, warned that it's not for average consumers who aren't willing to keep close track of their finances.
To explain how it works, I will tell you my experience. About two weeks before my October wedding, while checking on the status of my Bank of America credit card, the service representative suggested I enroll in its Credit Protection Plus plan.
I asked why I should be interested, as I already have life insurance. She said the plan has many other features, including paying benefits if I get married. Those were the magic words.
So let me get this straight, I said. If I enroll in this plan tonight, and I get married in the next two weeks, Bank of America will make three of my minimum payments on my credit card? And all it costs me is a one-time fee of 95 cents for each $100 of my balance? Yes, she replied.
And, I asked, I can then cancel and not have to pay another fee. Yes, she replied. The fee, if I don't cancel, would then be tacked onto my bill each month, increasing my balance.
Since I was carrying a high-balance, low-interest introductory loan (the maximum the policy covers is $25,000), I quickly calculated that the bank would be paying me about $500 a month in return for less than $250 from me.
I told her to sign me up. I then checked with Chase, where I also have a sizable low-interest credit card loan (did I mention I like to play with fire?), and was told they have a similar, but less generous plan. Chase would waive up to five months of minimum payments, saving me substantial interest, in return for my taking out its plan at 89 cents per $100. Sign me up, I said.
After our wedding, I immediately notified both banks that I wanted to trigger the benefits. They both promised to send me a packet and told me I would have to get proof of marriage.
I mailed the applications and marriage certificates to both banks and waited, while my stomach turned a little as I wondered if I had done something stupid. It would not be the first time.
I consoled myself knowing I would at least get a column out of the experience. I had some doubts, though, that the bean counters in our Chicago headquarters would approve my expenses if I included the payments I had made to purchase the plans.
The first things to appear on my online bank statements were, of course, the charges from the two plans.
source:http://www.courant.com/business/hc-watchdog0127.artjan27,0,2336411.column
Tuesday, January 22, 2008
Life insurance most important policy for consumers
Prudential has conducted research that reveals people would sooner relinquish non-essential goods/services such as mobile phone contracts before surrendering their payment protection or life insurance policies.
Recent fears regarding the credit crunch and rising energy and foods costs has led to people looking for ways to cut back, especially given the new worries about the prospect of a recession in the US.
According to seven out of ten of those surveyed, the first thing to go would be television subscriptions, followed by mobile phone contracts.
Only one in ten would give up their life insurance policy due to a tighter personal budget.
Over a third of respondents cited life insurance as their most important policy.
The second most important policy, ranked highest by a fifth of people, was income protection.
Sammy Rubin, PruProtect’s chief executive officer, explained that as the credit crunch continues and financial turbulence ensues some people will want to reduce their outgoings and look for areas to cut back on.
source:http://www.insurancedaily.co.uk/2008/01/22/life-insurance-most-important-policy-for-consumers/
Recent fears regarding the credit crunch and rising energy and foods costs has led to people looking for ways to cut back, especially given the new worries about the prospect of a recession in the US.
According to seven out of ten of those surveyed, the first thing to go would be television subscriptions, followed by mobile phone contracts.
Only one in ten would give up their life insurance policy due to a tighter personal budget.
Over a third of respondents cited life insurance as their most important policy.
The second most important policy, ranked highest by a fifth of people, was income protection.
Sammy Rubin, PruProtect’s chief executive officer, explained that as the credit crunch continues and financial turbulence ensues some people will want to reduce their outgoings and look for areas to cut back on.
source:http://www.insurancedaily.co.uk/2008/01/22/life-insurance-most-important-policy-for-consumers/
Monday, January 14, 2008
The Convenience of the Online Life Insurance Quote
If you are the breadwinner in the family or not one thing that you should be thinking about is a life insurance policy. What would happen to your family if you were to leave this world? How would your family survive. You need to make this one of your main priorities. Today with the internet access if is quite easy to find a policy online that will meet all of your needs. Online life insurance quotes are right at your fingertips, so take advantage of the opportunity.
If you were to shop around for a life insurance agent to have he or she help you find what you need, you may get pressured into something that you don't really need or want. With online life insurance quotes, there is no pressure. Shop at your convenience, with no pressure and no underwriter pushing you into something that you don't want.
Get Your Quote Online
Before you start looking for your online insurance quote, you need to get your information in order and there are some things that you need to think about before starting. There are a lot of companies out there that will help you find what they think that you need. Now some of these companies are good at figuring out what you need, by the way that you answer there questions. But there are a lot of companies who will just about sell you anything, whether you need it or not.
Assess Your Current Situation
One of the first things that you need to do before going online looking for coverage is to make an assessment of your finances are what your present situation is. One thing that you must realize is, even though you know that you need to get your family some assurance for yourself, it does mean that you have the spare income to make the payments. For people who are on a tight budget, the best policy for you would probably be a term life insurance policy. What you don't want to do is to get some policy that the price of the premium is to high. You don't want the insurance bill to just pile up on your desk and you know that you can't afford the policy, even though you know you need it. Term life insurance is the cheapest policy around. But make sure that is the one for you. Read the other articles that I have explaining what the differences are.
Don't become miserable after you purchase the policy because the premium is to big. Make sure you evaluate you situation before starting. Consider this before you start your search for online life insurance quote. The purpose of the policy is to get coverage for your family after your death. Know how much money they are going to need to life the life that they currently live. Make sure that you know this information. Bills, mortgage, rent, etc. should all be added up to determine this amount. In fact this should be the basis when asking for a quote online. How much does my family need to live comfortably after I have left this world.
Source:http://ezinearticles.com/?The-Convenience-of-the-Online-Life-Insurance-Quote&id=836029
If you were to shop around for a life insurance agent to have he or she help you find what you need, you may get pressured into something that you don't really need or want. With online life insurance quotes, there is no pressure. Shop at your convenience, with no pressure and no underwriter pushing you into something that you don't want.
Get Your Quote Online
Before you start looking for your online insurance quote, you need to get your information in order and there are some things that you need to think about before starting. There are a lot of companies out there that will help you find what they think that you need. Now some of these companies are good at figuring out what you need, by the way that you answer there questions. But there are a lot of companies who will just about sell you anything, whether you need it or not.
Assess Your Current Situation
One of the first things that you need to do before going online looking for coverage is to make an assessment of your finances are what your present situation is. One thing that you must realize is, even though you know that you need to get your family some assurance for yourself, it does mean that you have the spare income to make the payments. For people who are on a tight budget, the best policy for you would probably be a term life insurance policy. What you don't want to do is to get some policy that the price of the premium is to high. You don't want the insurance bill to just pile up on your desk and you know that you can't afford the policy, even though you know you need it. Term life insurance is the cheapest policy around. But make sure that is the one for you. Read the other articles that I have explaining what the differences are.
Don't become miserable after you purchase the policy because the premium is to big. Make sure you evaluate you situation before starting. Consider this before you start your search for online life insurance quote. The purpose of the policy is to get coverage for your family after your death. Know how much money they are going to need to life the life that they currently live. Make sure that you know this information. Bills, mortgage, rent, etc. should all be added up to determine this amount. In fact this should be the basis when asking for a quote online. How much does my family need to live comfortably after I have left this world.
Source:http://ezinearticles.com/?The-Convenience-of-the-Online-Life-Insurance-Quote&id=836029
Thursday, January 10, 2008
Insurance rates yet to catch up with reform
Just 32 homeowner's insurance companies have lowered their premiums to the standard imposed by the Florida Legislature last spring.
A presentation made to the Senate Banking and Insurance Committee by the Florida Office of Insurance Regulation shows those rates apply to 17.6 percent of the market -- or about 717,706 homeowners' policies. Those rates were cut by an average of nearly 22 percent, but exclude several companies -- including State Farm, the state's second-largest insurer behind the state-run Citizens Property Insurance Corp.
The report said no rate increases have been approved.
However, 24 companies still have final rate cuts pending, 31 have been disapproved or received notice of intent to disapprove and five have withdrawn their requests.
Some of the rejected insurers plan to refile. Others asked for an administrative hearing.
The companies with pending filings insure nearly 46 percent of the market, or 1.89 million policies, and proposed an average rate decrease of 11.1 percent. The companies with rejected filings cover 32.5 percent of the market, or 1.33 million policies, and requested an average 12.8 percent increase.
source:http://www.bizjournals.com/tampabay/stories/2008/01/07/daily36.html
A presentation made to the Senate Banking and Insurance Committee by the Florida Office of Insurance Regulation shows those rates apply to 17.6 percent of the market -- or about 717,706 homeowners' policies. Those rates were cut by an average of nearly 22 percent, but exclude several companies -- including State Farm, the state's second-largest insurer behind the state-run Citizens Property Insurance Corp.
The report said no rate increases have been approved.
However, 24 companies still have final rate cuts pending, 31 have been disapproved or received notice of intent to disapprove and five have withdrawn their requests.
Some of the rejected insurers plan to refile. Others asked for an administrative hearing.
The companies with pending filings insure nearly 46 percent of the market, or 1.89 million policies, and proposed an average rate decrease of 11.1 percent. The companies with rejected filings cover 32.5 percent of the market, or 1.33 million policies, and requested an average 12.8 percent increase.
source:http://www.bizjournals.com/tampabay/stories/2008/01/07/daily36.html
New rules aim to cut rejected insurance claims
Fewer insurance claims will be turned down from now on, after the insurance industry signed up to new rules.
Trade body the Association of British Insurers (ABI) said people would benefit from a new industry commitment to pay out on protection policies even where medical information has not been disclosed, unless the claimant deliberately withheld it.
Thousands of claims on critical illness, income protection and life insurance policies are rejected every year because holders have failed to give relevant medical information.
The ABI said, from now on, in cases where such information has inadvertently not been provided, insurers would pay out a "fair sum, reflecting risk and premiums paid".
In a small number of exceptional cases, premiums will be refunded if the insurer decides it would not have taken on the policy had it known the full facts.
Stephen Haddrill, the ABI's director-general, said: "Customers want to know that their insurance claim will always be assessed fairly and paid without fuss.
"The industry wants customers to be able to take out insurance with confidence.
"Today, insurers have signed up to ensuring both of these happen; the number of protection claims that are turned down will fall."
The new rules follow improvements in application forms and communications with customers, designed to cut the number of claims rejected due to "non-disclosure".
source:http://uk.reuters.com/article/personalFinanceNews/idUKHIL96088820080110
Trade body the Association of British Insurers (ABI) said people would benefit from a new industry commitment to pay out on protection policies even where medical information has not been disclosed, unless the claimant deliberately withheld it.
Thousands of claims on critical illness, income protection and life insurance policies are rejected every year because holders have failed to give relevant medical information.
The ABI said, from now on, in cases where such information has inadvertently not been provided, insurers would pay out a "fair sum, reflecting risk and premiums paid".
In a small number of exceptional cases, premiums will be refunded if the insurer decides it would not have taken on the policy had it known the full facts.
Stephen Haddrill, the ABI's director-general, said: "Customers want to know that their insurance claim will always be assessed fairly and paid without fuss.
"The industry wants customers to be able to take out insurance with confidence.
"Today, insurers have signed up to ensuring both of these happen; the number of protection claims that are turned down will fall."
The new rules follow improvements in application forms and communications with customers, designed to cut the number of claims rejected due to "non-disclosure".
source:http://uk.reuters.com/article/personalFinanceNews/idUKHIL96088820080110
Sunday, January 6, 2008
Which insurance product should you buy?
The life insurance industry has come a long way since 2000, when private companies were allowed in. Today, there are over 500 products (over 3,000 with customisation options), and 16 companies to choose from. So how do you pick the one that suits you best?
Typically, your needs would be any or all of protection, wealth accumulation, wealth maintenance and retirement. A few basic products meet these needs.
Pure Term Insurance. In this, an amount is paid out in the event of the death of the insured within a specific term, say 20 years. This is the most basic and cheapest life insurance.
Endowment Insurance. In this, an amount is paid out in the event of the death of the insured within a specific term, say 20 years. If the insured survives the policy term, an amount is also paid to him.
Whole Life Insurance. This is similar to endowment, except that the term is whole life.
Riders. These are options that can be taken along with the product you buy and provide protection against additional contingencies such as disability or dreaded diseases for a nominal extra charge.
So, how can these products help you plan for your needs?
Protection needs include protection against death, disability, and dreaded diseases. Products that are suitable for this need are term or whole life insurance with riders like critical illness, waiver of premium (WOP) or accidental death benefit (ADB). Wealth accumulation needs include saving for children's education, marriage and/or getting them settled. It also includes saving for one's retirement. Suitable products in this category are endowment, money back and whole-life plans.
Wealth maintenance need arises when you have accumulated some money and want to protect and grow it in a tax-favoured manner. Short-pay endowments, pensions, single premium policies or dump-ins cater to such a need.
Retirement need arises when an individual reaches a stage in life when he does not anticipate future inflows, but has to provide for a regular inflow out of the funds he has accumulated, without any worry. You could consider single pay/short pay pensions or immediate annuities for this. A flexible unit-linked endowment, structured with regular partial withdrawals could also be suitable.
Once you understand your need and the suitable products on offer, you have to decide whether to buy a unit-linked or a traditional policy. Traditional plans would generally have guarantees over the long term and, hence, are unique among financial products. Instead of working with projections or illustrations, you would have assured cash flows in your financial plan. Unit-linked plans are also an effective mechanism to plan for your financial freedom as they give you the option to decide where you want to invest your moneyequity or debt. However, they usually do not have any significant guarantee.
So, once you have decided on the need, the product and the mechanism, ensure the following before you sign on the dotted line:
1. Understand clearly how the suggested product fits your need.
2. Understand which part of the amount is guaranteed and which is not. This is required to be illustrated as per the regulator.
3. Do not accept illustrations based on historical returns of a fund; they do not guarantee future returns. The regulator has prescribed that the illustrations be shown at 6 per cent and 10 per cent annual rate of return and though, in reality, the return could be much more than this, it is best to use these figures as guides for your financial plan.
A.R. Rahman is one of my favourite composers because he knows when to use Daler Mehndi and when to use Yesudas. He goes by the need of the song and hence the melody has longevity. So, don't buy a cover because your neighbour, whose needs are different from yours, has bought it. Buy only according to your own need.
Source:http://inhome.rediff.com/money/2008/jan/03insure.htm
Typically, your needs would be any or all of protection, wealth accumulation, wealth maintenance and retirement. A few basic products meet these needs.
Pure Term Insurance. In this, an amount is paid out in the event of the death of the insured within a specific term, say 20 years. This is the most basic and cheapest life insurance.
Endowment Insurance. In this, an amount is paid out in the event of the death of the insured within a specific term, say 20 years. If the insured survives the policy term, an amount is also paid to him.
Whole Life Insurance. This is similar to endowment, except that the term is whole life.
Riders. These are options that can be taken along with the product you buy and provide protection against additional contingencies such as disability or dreaded diseases for a nominal extra charge.
So, how can these products help you plan for your needs?
Protection needs include protection against death, disability, and dreaded diseases. Products that are suitable for this need are term or whole life insurance with riders like critical illness, waiver of premium (WOP) or accidental death benefit (ADB). Wealth accumulation needs include saving for children's education, marriage and/or getting them settled. It also includes saving for one's retirement. Suitable products in this category are endowment, money back and whole-life plans.
Wealth maintenance need arises when you have accumulated some money and want to protect and grow it in a tax-favoured manner. Short-pay endowments, pensions, single premium policies or dump-ins cater to such a need.
Retirement need arises when an individual reaches a stage in life when he does not anticipate future inflows, but has to provide for a regular inflow out of the funds he has accumulated, without any worry. You could consider single pay/short pay pensions or immediate annuities for this. A flexible unit-linked endowment, structured with regular partial withdrawals could also be suitable.
Once you understand your need and the suitable products on offer, you have to decide whether to buy a unit-linked or a traditional policy. Traditional plans would generally have guarantees over the long term and, hence, are unique among financial products. Instead of working with projections or illustrations, you would have assured cash flows in your financial plan. Unit-linked plans are also an effective mechanism to plan for your financial freedom as they give you the option to decide where you want to invest your moneyequity or debt. However, they usually do not have any significant guarantee.
So, once you have decided on the need, the product and the mechanism, ensure the following before you sign on the dotted line:
1. Understand clearly how the suggested product fits your need.
2. Understand which part of the amount is guaranteed and which is not. This is required to be illustrated as per the regulator.
3. Do not accept illustrations based on historical returns of a fund; they do not guarantee future returns. The regulator has prescribed that the illustrations be shown at 6 per cent and 10 per cent annual rate of return and though, in reality, the return could be much more than this, it is best to use these figures as guides for your financial plan.
A.R. Rahman is one of my favourite composers because he knows when to use Daler Mehndi and when to use Yesudas. He goes by the need of the song and hence the melody has longevity. So, don't buy a cover because your neighbour, whose needs are different from yours, has bought it. Buy only according to your own need.
Source:http://inhome.rediff.com/money/2008/jan/03insure.htm
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