Insurance: Should you buy from your banker or your agent?

BELIEVE it or not, cream made me realise I might be being taken for a ride with my investments. Here's what happened. I was at my local grocer's, buying cream to make Risotto, a traditional Italian rice dish. The grocer asked me not to buy packaged cream and that fresh cream was now available a short walk away. I was touched. This man had given up a sale at his shop in my best interest! Back home, while relating the incident to my mother, I was given a small dose of reality. She said the new shop was, in fact, owned by the grocer's brother. My lesson for the day: There is a vested interest in everything you are asked to buy. So when my relationship manager told me interest rates on deposits might fall and I should quickly shift to mutual funds, the new cynical me was suspicious. Why was the relationship manager recommending another product in favour of his own? Sure enough, I learnt that banks have now morphed into Jacks of all trades. When they sell products other than their own, they earn a fat commission. They make more money through commissions than on deposits. So the next time your relationship manager praises a new insurance policy, you would best take it with a pinch of salt. But then, since your agent also earns commission on your purchase and there is no cost change for you, why not just buy from your bank? We list some pros and cons if you want to buy insurance from your bank. The downside Service: Your banker will not pamper you with doorstep services like your agent. But if you are a priority customer for your bank, you can expect the works. Trust: If you have a child, an agent is more likely than your banker to know about and advise you how to invest for the little one. Your agent and you are likely to share a closer relationship of trust. Variety: Sometimes, your bank may not offer you all the policies that an insurance company has in its portfolio. Insurance expert Rajesh Relan says, "Some banks select a few products from the product basket, depending on the needs and suitability of their customer segments." Decide whether the policy the bank offers fits your requirements. If it doesn't, you are better off with your agent. The upside Simplicity: A transactional relationship already exists between you and the bank, so paperwork and payment processing will be simple. One-stop shop: Your bank can offer you the entire range of financial products instead of buying from multiple places. This gives you a single window view to your investments. Specialised products: Some life insurance companies design a special product to be sold through a bank which does not involve too many formalities or medical tests. You can opt for this policy only through a bank, and not through other channels. (You will be asked for many medical declarations.) Banks are slowly replacing agents worldwide because they are a one-stop destination in today's time-crunched world. My lesson for the day: Even if recommendations are made with vested interests, they might not be totally wrong for you. The fresh cream did, in fact, make all the difference to the Risotto I made! Source: ttp://wealth.moneycontrol.com/features/planning/insurance-should-you-buy-from-your-banker-or-your-agent-/5833/0 Disclaimer: While we have made efforts to ensure the accuracy of our content (consisting of articles and information), neither this website nor the author shall be held responsible for any losses/ incidents suffered by people accessing, using or is supplied with the content.

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Some advice on choosing money advisors

Rajeswari Venkatesh, 26, a software professional, was looking to invest Rs 50,000. And while friends and colleagues suggested a plethora of stocks or mutual fund schemes, she wasn't feeling very confident about taking a decision on their advice.

While hunting for professional financial advisors on the Net, she came across several names. On approaching one, she was handed a big list of MF schemes and returns. "You can invest in any one of them," the advisor said.

Once she had selected a scheme, the advisor invested the entire Rs 50,000 in it. When she sought to divide the money between two-three schemes, the advice was that the money was too little to be split.

Three months later, the advisor called her to say there was a new fund offering (NFO), which was rather promising. And since Rs 50,000 had grown to Rs 60,000, she could invest some part of it in this scheme. "You will get more units, as the net asset value (NAV) is only Rs 10," the advisor said. Six months later, he again asked her to invest in another NFO.

At the end of the year, while Venkatesh's money was divided in three schemes, it had grown by only 25 per cent. In comparison, the stock market had risen more than 50 per cent during the year. On enquiring, she was told that she had to pay a short-term capital gains tax of 15 per cent twice, while moving money from one scheme to another.

Venkatesh's case is not isolated. Many financial advisors hurt your finances by misleading you. Making you move money several times during the year is one way. They do it because they are paid higher commissions for promoting these schemes.

"If the advisor asks you to exit an existing infrastructure scheme for a new one, it is clear that he is taking you for a ride, because the new scheme will also invest in the same companies," said Mukesh Dedhia, director, Ghalla Bhansali Stock Brokers.

Similarly, many sell unit-linked insurance plans when you are looking to buy a term plan or MF. The tell-tale signals are when a financial advisor offers to pay the first premium for an insurance plan or gives you money back for investing in a particular scheme.

"In such cases, be sure that he is getting an exorbitant commission, and it is from your investment only," said Kartik Varma, co-founder, iTrust Financial Advisor. In other words, the recommendations are being made to earn the commission, and your needs are not being addressed.

Also, if the stock or entire portfolio is being churned too often (three-four times a year) under the guise of 'rebalancing', it means your tax outgo is becoming higher. So, how does one select a financial advisor? "There is no clear answer," said Sandeep Shanbhag, director, Wonderland Investments.

But having basic knowledge before investing is important. At least, it helps to ask the right questions. To start, check the advisor's qualifications. The advisors should preferably be certified by Association of Mutual Fund Industry (Amfi) or Insurance Regulatory and Development Authority (Irda). "These certifications ensure the advisor knows about products and is in a position to meet the client's needs," said Shanbhag.

Also, rely on well-known advisory companies, compliant with regulatory norms. Advisors who have experienced at least two market cycles are likely to have reliable perspective.

Always question the advisor's recommendations, because it is important to know how a product will benefit you, based on your goals and risk profile. "A need-based analysis and risk profile are very important, because they are highly personalised. An advisor cannot recommend a one-size, all-fit product to each client," added Varma.

Check the fees of the product being sold and compare with others. Importantly, visit several advisors before zeroing on one.

Neha Pandey / Mumbai December 11, 2009, 0:22 IST

Source: http://www.business-standard.com/india/news/some-advicechoosing-money-advisors/379173/

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Sebi asks MFs not to ask for NOCs

Making it easier for mutual fund investors to switch distributors, market regulator Securities and Exchange Board of India (Sebi) today said it is doing away with the practice of obtaining a no objection certificate (NOC) from existing distributors.

In a circular to all mutual funds and asset management companies (AMCs) the market regulator said: "You are advised to ensure compliance with the instruction of the investor informing his desire to change his distributor and/or go direct without complleing that investor to obtain an NOC from the existing distributor."

Sebi said Association of Mutual Funds of India (AMFI), had in 2007, asked AMCs to act on instruction of the investors if they desire to change their distributor....

"It appears this mandate is not being followed by the mutual fund industry...Some AMCs are insisting on the investor procuring an NoC from the existing distribtuor for this switch over," Sebi said.

 

--- PTI

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AEGON Religare Star Child Plan

 

Your dream has always been to see your children outshine your dreams. To be able to meet their needs and aspirations is what you always strive towards. Life, if systematically managed, can keep changing for the better leading to a more secure future for your children. AEGON Religare Star Child Plan aims to help you in doing just that. It not only makes provisions for your children's future but also ensures that their future remains secured. With the help of our Life Agent, fill out the Life Planner that will help you take the steps to having your own plan.   Waiver of Premium In the event of your unfortunate demise we assure a lump sum payment and waive off all future premiums till maturity.   Other Features and Benefits   Invest Protect Option If you opt for Invest Protect option, it will not only help you gain from your investment but also minimize the risk of returns as your policy nears maturity. It aims to protect your money by systematically shifting the Fund from the Enhanced Equity Fund to the Secure Fund during the last 3 policy years.    Auto-rebalancing At the end of every policy year, this feature automatically rebalances the allocation of your investments in various funds to the original proportions you had chosen.   Special Units You will earn additional special units if your policy term is 15 years or more. The special units will be added to your account at the end of 10th year and every 3rd year thereafter. The value of special unit would be equal to 1.50% of the average fund value of the last 36 months before the allotment of special units.   Premium Re-direction Premium Re-direction feature allows you to alter the premium allocation made by you in different funds.   Switch This feature helps you shift your investments from one fund to another. Four switches are free in a policy year.    Maturity On maturity, you receive the fund value existing on maturity. If you do not wish to take the entire maturity amount at one go, you can avail of the Settlement Option.   4 Fund Options You have the option of choosing from 4 funds – Secure, Debt, Balanced and Enhanced Equity Fund.   Partial Withdrawal You or the nominee after death of the Life Assured can partially withdraw your money after first 3 policy years. The maximum amount of partial withdrawal in any policy year is 50% of the fund value at the beginning of that policy year. You can also avail of AEGON Religare Star Child Plan's Systematic Partial Withdrawal facility by which we redeem units periodically from your unit account and credit the money to your bank account. You can opt for systematic partial withdrawal frequency, say monthly or quarterly for the duration you choose.   Settlement Option Under this option, you or the nominee after death of the Life Assured, receive maturity proceeds in instalments over a period you choose (not exceeding 5 years). Investment risk during the settlement period is borne by you.   Surrender You can surrender the policy anytime after the first 3 policy years. Surrender value is fund value minus the surrender charges. The charges will depend up on the period for which you have paid your premiums. The policy can not be surrendered after death of the Life Assured.    Death In case of your unfortunate demise during the term of the policy, the nominee will receive the Sum Assured. On payment of Sum Assured, the units in the policy account remains invested but, the base cover and other covers under all riders attached with the policy will stop. However, all future premiums due after death of the assured parent, will be waived and paid by the Company into the policy unit account on their respective due dates. For polices lapsed in first 3 years, the death benefit will be the fund value.   In case of child's or nominee's death: If the child or nominee die after the assured parent's death, the policy continues and the future premiums will be paid by the Company.   Tax Benefits Section 80C, 10 (10D) of the Income Tax Act, 1961 would apply. Premiums paid for AEGON Religare CI Rider may qualify for a deduction under Section 80D of the Income Tax Act, 1961. Consult your tax advisor for confirmation.

 

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AEGON Religare iTerm Plan

 

No one has control over uncertainties of life. Will your loved ones be able to sustain the same lifestyle even in your absence? In order to ease some worries and give your family the best, we offer you AEGON Religare iTerm Plan, which ensures protection for your loved ones - at a fraction of the cost.   Benefits   Death - In case of your unfortunate demise, the Sum Assured is payable to your nominee.   Other Features   Free Look Cancellation - In case, you are not satisfied, you may choose to cancel the policy within 15 days of receiving the policy documents. Upon such cancellation, you will be paid back the premiums, minus the cost of stamp duty, medical reports and proportionate premium for the period for which the risk was covered.   Eligibility   Sum Assured Minimum - Rs. 10,00,000 (in Multiple of Rs. 1,000) Maximum - No limit (subject to underwriting requirements) Entry Age* Minimum - 18 years Maximum - 60 years Maturity Age Maximum - 65 years Policy Term Minimum - 5 years; Maximum - 25 years Premium Pay Term Equal to the policy term Premium Payment Frequency Yearly

 

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