Life Insurance at Rs20 per Month: Is It Worth It?
Mobikwik, a phone-based digital payments company, recently announced the launch of digital term life insurance on its app. The company, in association with ICICI Prudential Life Insurance Company, is providing instant life insurance of Rs1 lakh for only Rs20 per month. 
 
This is not the first time an app-based company has ventured into selling insurance. However, the rise in...
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Toxic IL&FS Bond Exposure Hits 4.7 Million Postal Life Insurance-holders
The IL&FS bond toxicity contagion is spreading rapidly. The virus has now spread to a rather large body of savers, in this case insured, which coming as it does just before the general election is not good news for the government. With a concerned Trinamool Congress top gun and West Bengal chief minister Mamata Banerjee and Communist Party of India-Marxist (CPI-M) leader Brinda Karat both expressing their displeasure over the exposure of 1.5 million salaried employees to these highly toxic bonds in IL&FS, the emergence of Postal Life Insurance (PLI) policyholders being exposed to the same bonds directly will lead to soul searching by the government.
 
It is imperative for the government to take congnisance of this terminal decline in these bonds and to look at an immediate corrective strategy to arrest the growing panic. What is worrisome is that at the end of 2016-17, 213,323 new policies were added to the PLI policyholders' list with a sum assured of Rs11,096.67 crore. For the total number of 4.68 million policies at the end of the FY 2016-17, the aggregate sum of Rs1,13,084.31 crore was involved which is humongous by itself. The fund balance at the end of FY 2016-17 was Rs55,058.61 crore while premium income for that year was Rs7233.89 crore. 
 
Given that this is life insurance business, its exposure to the toxic bonds is direct, unlike salaried employees of private and PSU companies which is indirect through EPFO and pension funds. 
 
Top of the line private and public sector companies as exposed by IANS are part of this myriad list. The ever burgeoning community of salaried employees is concerned about its money deposited with the Employees Provident Fund Organisation (EPFO). At the cutting edge of the ever burgeoning IL&FS crisis, these employees are exposed to toxic investments. Most of these Employee Provident Funds and Employee Pension Funds have already stated that the IL&FS resolution plan must provide repayment before secured creditors as the resolution framework proposed by the company doesn't provide for any payment to secured creditors.
 
PLI is the oldest insurance company in India which was formed on 1 February 1884 under British India. The insurance company was initially set up for the welfare of postal employees. Their plans are exclusive to public sector employees. As far back as in 1894, it became the first insurance company to cover female employees of the P&T Department. It is enormously popular because it is the only insurer in the Indian Life Insurance market today which gives the highest return (bonus) with the lowest premium charged for any product in the market. 
 
PLI has grown substantially from a few hundred policies in 1884 to more than 4.6 million policies as of 31 March 2017.
 
It now covers employees of Central and state governments, Central and state public sector undertakings, universities, government-aided educational institutions, nationalised banks, local bodies, autonomous bodies, joint ventures having a minimum of 10% government/PSU stake, credit cooperative societies, etc. PLI also extends the facility of insurance to the officers and staff of the defence services and paramilitary forces. 
 
Apart from single insurance policies, PLI also manages a group insurance scheme for the extra departmental employees (gramin dak sevaks) of the department of posts. PLI is an exempted insurer under Section 118 (c) of the Insurance Act of 1938. It is also exempted under Section 44 (d) of LIC Act, 1956.
 
If one adds a vast number of 4.68 million  policies which are now exposed to this new bug, then the number of salaried and other types of government employees rises to close to 61 lakh. The company enjoys a vast network spread across the country with around 1,55,669 branches making it India's largest and also the most trusted retail and financial services provider. When contacted on the new expose, IL&FS declined to comment. 
 
The types of policies vary and are essentially five in number—whole life assurance (Suraksha), edowment assurance (Santosh), convertible whole life assurance (Suvidha), anticipated endowment assurance (Sumangal), joint life assurance (Yugal Suraksha) and children policy (Bal Jeevan Bima).
 
Some of the affected entities have filed an intervening petition with the tribunal (NCLAT), thereby impleading themselves in this gargantuan case on how to run a corporate into the ground, include Apco Infratech, Apco, Titan, Asian Paints PF, Asian Paints Management Cadre Superannuation scheme, Aditya Birla Sun Life MF, Thomas Cook PF, Titan Watches, Hindustan Unilever (HUL), M & M PF, Himami, Bajaj Finance, Hindalco EPF, Max Financial Services PF Trust, IDBI Trusteeship Services Ltd, IndusInd Bank, Hudco Employees CPF, MMTC CPF, 63 Moons, Nayara Energy EPF, Indian Oil Corp, ITPO, CIDCO, SBI PF, GUVNL PF, Ambuja Cement, HDFC AMC, IREDA among others. 
 
The employee provident funds of various companies and other entities had invested in IL&FS bonds and bond-holders are unsecured and may or may not get paid in the ongoing crisis at IL&FS. In any case, they are seen pretty much last on the priority list.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
 
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Behind the Scenes, Health Insurers Use Cash and Gifts to Sway Which Benefits Employers Choose
The insurance industry gives lucrative commissions and bonuses — from six-figure payouts to a chance to bat against Mariano Rivera — to the independent brokers who advise employers. Critics call the payments a “classic conflict of interest” that drive up costs.
 
The pitches to the health insurance brokers are tantalizing.
 
“Set sail for Bermuda,” says insurance giant Cigna, offering top-selling brokers five days at one of the island’s luxury resorts.
 
Health Net of California’s pitch is not subtle: A smiling woman in a business suit rides a giant $100 bill like it’s a surfboard. “Sell more, enroll more, get paid more!” In some cases, its ad says, a broker can “power up” the bonus to $150,000 per employer group.
 
Not to be outdone, New York’s EmblemHealth promises top-selling brokers “the chance of a lifetime”: going to bat against the retired legendary New York Yankees pitcher Mariano Rivera. In another offer, the company, which bills itself as the state’s largest nonprofit plan, focuses on cash: “The more subscribers you enroll … the bigger the payout.” Bonuses, it says, top out at $100,000 per group, and “there’s no limit to the number of bonuses you can earn.
 
Such incentives sound like typical business tactics, until you understand who ends up paying for them: the employers who sign up with the insurers — and, of course, their employees.
 
Human resource directors often rely on independent health insurance brokers to guide them through the thicket of costly and confusing benefit options offered by insurance companies. But what many don’t fully realize is how the health insurance industry steers the process through lucrative financial incentives and commissions. Those enticements, critics say, don’t reward brokers for finding their clients the most cost-effective options.
 
Here’s how it typically works: Insurers pay brokers a commission for the employers they sign up. That fee is usually a healthy 3 to 6 percent of the total premium. That could be about $50,000 a year on the premiums of a company with 100 people, payable for as long as the plan is in place. That’s $50,000 a year for a single client. And as the client pays more in premiums, the broker’s commission increases.
 
Commissions can be even higher, up to 40 or 50 percent of the premium, on supplemental plans that employers can buy to cover employees’ dental costs, cancer care or long-term hospitalization.
Those commissions come from the insurers. But the cost is built into the premiums the employer and employees pay for the benefit plan.
 
Now, layer on top of that the additional bonuses that brokers can earn from some insurers. The offers, some marked “confidential,” are easy to find on the websites of insurance companies and broker agencies. But many brokers say the bonuses are not disclosed to employers unless they ask. These bonuses, too, are indirectly included in the overall cost of health plans.
 
These industry payments can’t help but influence which plans brokers highlight for employers, said Eric Campbell, director of research at the University of Colorado Center for Bioethics and Humanities.
 
“It’s a classic conflict of interest,” Campbell said. Continue Reading
 
This story was co-published with NPR’s Shots blog.
 
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