Citizens' Issues
Public Interest Exclusive
India advertises tobacco products on field during Australia cricket tour

The Indian High Commissioner had claimed that the high commission simply provided a literal translation in English of two short artworks in Hindi. However, Cricket Australia faced a fine for violating the anti-tobacco ban

India put up a more embarrassing show on field in the recently concluded Australian cricket tour than what was apparent.

India put up advertising placards featuring two tobacco-based “mouth fresheners”, which did not go down well with the Australians. However, when the Indian High Commission was contacted by the Australian authorities, the former simply provided a literal translation of the product names and washed its hands off the matter. However, Cricket Australia received a warning from the country’s health ministry and the advertisements had to be pulled down.

A response to a query submitted by RTI activist Subhash Chandra Aggrawal shows that on 14th December in Canberra, the high commission received a letter from Stadia Media asking for the translations of the text on placards that advertised ‘Chaini Chaini’ and ‘Kamla Pasand’. The Indian High Commissioner provided the translation respectively: “fragrant Chaini Chaini mouth freshener” and “Kamla likes” or “Kamla liking”.

However, on 12th February, anti-tobacco organisation Action on Smoking and Health (Australia)—ASH—contacted the high commissioner, seeking clarification on the issue. The high commissioner replied, “At no point of time (the high commission) may assert about the product per se. The high commissioner had simply provided a literal translation in English of two short artworks in Hindi… at no stage the ostensible objective of these artworks was made known to the high commission.”

The unimpressive response was rejected by the anti-tobacco organisation. However, Cricket Australia soon received a warning from the health ministry and it faced fines of up to Aus$66,000 (US$70,000) for each breach of the 1992 tobacco advertising ban. The advertisements were then pulled down.

ASH head Anne Jones said in a media statement that these advertising ploys are like “brand stretching”; i.e. advertising non-tobacco products by tobacco brands for getting exposure.

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Personal Finance Exclusive
Immediate annuity products getting competitive, but choose carefully

More annuity products are coming to the market. Customers will benefit, especially with IRDA specifying that the annuity phase should be from the same insurance company that sells the pension product. Some existing annuity products offer low return, so buyers beware

Annuity is not a product that insurance companies have hard sold till now. Since many insurers offer annuity rates which are much below Life Insurance Corporation of India’s (LIC) annuity rates, LIC sells 95% of the annuities in India. This could soon be changing as competitive annuity products having started entering the market. SBI Life Annuity Plus was recently launched with annuity rates competing with LIC Jeevan Akshay VI. Star Union Dai-ichi (SUD) Life will soon come out with a product offering higher rates than LIC.

According to Kamalji Sahay, managing director and chief executive officer, SUD Life, “We have filed for a revised annuity product which will offer better rates. It will compete with annuity products from LIC. In the past, for some age brackets, LIC offered higher rates. The revised product will offer higher rates than LIC.”

Competitive annuity products will help customers as Insurance Regulatory and Development Authority (IRDA) guidelines on pension plans state that at the time of vesting, the annuity shall be provided by the same insurer who contracted the original pension policy. It means that the insurance company which did the accumulation phase of the pension plan should continue with the annuity phase, too. If the annuity product rates are not competitive, the policyholder will lose as there is no option to change an insurer for the annuity phase.

You can also buy immediate annuity which has no accumulation phase. Pension products offer deferred annuity (after accumulation phase) or immediate annuity (no accumulation phase). Based on the lump-sum amount the policyholder invests at prevailing annuity rates, the insurance company guarantees a fixed yearly payout for lifetime. You can choose an option wherein on death; the nominee gets back the invested lump-sum. Like deferred annuity, there are other options to choose such as getting higher annual payment with no return of the purchase price.
 

Age in years

Tata AIG

LIC

Max New York Life

SBI Life

21

7.086

-

-

-

30

7.103

-

-

-

40

7.12

6.93

-

6.947

45

7.125

6.96

-

6.996

50

7.128

7

3.609

7.045

55

7.126

7.05

3.568

7.082

60

7.119

7.11

3.502

7.118

65

7.099

7.18

3.39

7.143

70

7.059

7.26

3.209

7.155

75

6.995

7.36

-

7.131

80

6.902

-

-

7.082

Source – Moneylife research. Immediate annuity rates of select insurance companies. Rates for annuity option wherein purchase price is returned to the nominee on death of the Annuitant

 

SBI Life’s website and product brochure lacks proper details on annuity rates for different age groups and annuity options. This prevents proper comparison of SBI Life Annuity Plus with other immediate annuity products in the market. The website has premium calculator which can be used to calculate the annuity rate based on your situation.


Unlike LIC, which offers immediate annuity from age 40, Tata AIG Life Easy Retire offers immediate annuity from age 21 and that too with better rates. LIC has slightly better rates for age above 60 years. Tata AIG Life Easy Retire offers 7.128% against 7% on LIC’s Jeevan Akshay VI for a 50-year-old person with return of purchase price to the nominee. Tata AIG’s annuity rate for a 21-year-old person is 7.086%. If customer pays Rs5 lakh (and above), the rate rises to 7.336%. With average age expectancy of 66 years today, Tata AIG agrees to pay annuity for at least 45 years, in this case. It is a huge interest rate risk that Tata AIG Life is taking. It is a good immediate annuity product for you.

Max New York Life’s Immediate Annuity plan offers rate of 3.61% as against LIC’s Jeevan Akshay VI offer of 7% for a 50-year-old person with return of purchase price to the nominee. This is almost half of what LIC is offering! Imagine a customer buying a pension product and getting stuck with annuity rate being half of what another insurance company offers—it will be a lifelong regret. The new IRDA regulatory changes which force the customer to tie up with the same insurer for the annuity phase of pension product will, in fact, worsen this very situation.

There are some valid reasons for Max New York Life’s conservative approach to annuity rates. Rajesh Sud, chief executive office and managing director, Max New York Life, says “Annuity is essentially the opposite of insurance. There is interest rate risk and longevity risk. Interest rates in the past decade itself have gone down from 12% to 6% and risen again to 10%. There is a lack of very long-term debt instruments to lock-in the rates and offer annuity at low risk to the company. As long as the policyholder lives, the insurer will continue making the payments. There is lack of research on the annuity market. Many international companies have gone bankrupt by not managing annuity risk properly.” To his credit, Mr Sud is also of the opinion that customers should be given a choice regarding the insurance company for administering the annuity phase of the pension.

 

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COMMENTS

Parmanand N Jethani

1 year ago

I HAVE ICICI PRUDENTIAL LIFE INSURANCE POLICY LIFETIME SUPER PENSION Plan.
I HAVE PAID TOTAL PREMIUM AMOUNT Rs 300000/- MATURITY DATE IS 13/03/2017.
I MAY GET ABOUT RS 750000/-AT THE TIME OF MATURITY.
1/3RD AMOUNT WILL BE GIVEN TO ACCOUNT HOLDER IMMMIDIATELY AND REMAINING 2/3RD AMOUNT WILL BE INVESTED IN ANNUITY.
MY DOB IS 05/11/1942.I WANT TO KNOW WHICH IS BEST SCHEME FOR ME & WHICH COMPANY WILL BE BETTER
SUCH AS NPS, LIC,ICICI,HDFC, AVIVA INDIA LTD., ETC.
PLEASE INFORM HOW MUCH APPROXIMATE AMOUNT I WILL GET AS A PENSION at the present rate.
THANKING YOU
REGARDS,
PARMANAND JETHANI

gg

4 years ago

I feel that all current annuity products in India are a scam. They offer 7 to 7.5% annual rate WITHOUT return of corpus. These guys can comfortably invest the money in long-term debt products - which historically have yielded between 5% to 7%. so at most, there is 2 to 2.5% deficit which is reduced from the corpus - and in some years there is bound to be a surplus. Even if we take "average" interest loss of 1% a year - it will take over 750 years from the corpus to get "wiped out" and no one lives for 75 years post retirement age.
So it seems to be that these companies offer pitiful yields and get to hold on to a large part of the original corpus.

It would be best to opt for plans that provide for "return of corpus" after death of beneficiary, even at the cost of 2% or 3% lower yield during your lifetime.. At least your hard earned savings will not revert to the PF manager.

Its high time PFRDA allowed investors to change the PF manager after accumulation phase - else they are creating a natural monopoly in favour of the managers.

REPLY

gg

In Reply to gg 4 years ago

couple of typos in my above comment:
1. Long-term debt products have historically yielded 5% to 8% (some years even more)
2. Meant to say an average interest deficit of 1% a year will take about 75 years (not 750 years)

Saurav kumar khandelwal

5 years ago

Annuities are something which you plan for your retirement.And once you purchase an annuity from any insurance company ,you cann't change the insurance company.So think twice before you choose for an insurance company for annuity.
Saurav khandelwal
Mba-insurance

Comviva to lead MasterCard’s worldwide mobile money partnership program

The mobile money partnership program will address the need of consumers in developing markets through a readily accessible device, the mobile phone.

Comviva announced a strategic partnership with MasterCard to launch a first-of-its-kind open loop mobile money partnership program. Working together, Comviva and MasterCard will help the more than 2.5 billion financially underserved consumers globally to gain access to mainstream financial services – via their mobile phone.

Building upon its leadership in technology, Comviva has created a solid ecosystem of trusted business relationships and symbiotic partnerships. This has enabled Comviva to deploy a large number of Mobile commerce solutions across the globe. Comviva’s mobile money and recharge is a multi award winning mobile financial solution that has already crossed over 55 deployments, 490 million subscribers in 38 countries. With this service mobile users can quickly, easily and safely access a range of financial payment services. It also provides multiple proven integrations – including payment, banking, credit card and ATM switches and systems.

Commenting on this strategic partnership with MasterCard, Manoranjan Mohapatra, CEO, Comviva said, “With our established leadership in empowering technology across geographies, we are thrilled to support MasterCard’s first-of-its-kind open loop mobile money partnership program. In emerging markets we are a partner of choice for MasterCard to cater to under-banked segments with intuitive financial services. With mobile financial services turning into a key business strategy for banks and telecom vendors, this program will also give the right impetus to financial and social inclusion.”

“With about five billion mobile phone users worldwide, this partnership program provides powerful, smart and convenient new payment options to people through a device that’s already in the palm of their hands today. To ensure success of this program, MasterCard has partnered with the leading players in the mobile money ecosystem. Comviva was a key partner of choice to empower billions of underserved segments in the developing market,” said Mung Ki Woo, group executive, mobile, MasterCard Worldwide.

The mobile money partnership program will address the need of consumers in developing markets through a readily accessible device, the mobile phone. Comviva will work with MasterCard to enable global consumers to purchase goods and services via their mobile phone at millions of physical and online merchants, as well as transfer funds and pay bills. According to Juniper Research, the combined market for all types of mobile payments is expected to reach more than USD 600 billion globally by 2013, which is double the current figure.

Stored value accounts, primarily managed by mobile network operators and supported by banks, offer basic services such as mobile top-up, bill payments and P2P payments within the network. Through this partnership, Comviva and MasterCard aim to help mobile network operators and financial institutions to accelerate the development of their financial services offerings to their customers.

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