Page 45 - DCOM309_INSURANCE_LAWS_AND_PRACTICES

Insurance Laws and Practices

Notes

Caselet Evaluate the Role of Investment-cum-Insurance
Policies in Your Portfolio

mruta Patel, a 45-year old professional, has realised that she owns too many
insurance policies. When she bought them, they looked like the right way to save
Amoney and taxes. There was also the comfort of getting a periodic pay-out as
bonus or as redemptions. However, now she is not sure what she should do going forward.
How should Amruta go about her review?

Amruta must understand that insurance is primarily a protection against unexpected loss
in the value of an asset or the income it can generate. The core insurance product that every
investor should have is a term cover, which protects the income on which a family depends.
She may be one of the many insurance buyers who do not like insurance policies that do
not make any pay-out. Insurance companies have therefore modified this basic product in
several ways and structured products where some pay-out is made to the investor. In such
products, the insurance and investment components can differ.

The simplest way to evaluate is to ask what she is paying and what she would get. If she is
able to work out the return on her premium payments, treating them like an investment,
she would know whether the return she is getting is worthwhile or not. If Amruta wants
to invest in avenues where the money can be kept safe, she should consider investing in
bank deposits, debt funds and bonds.
The amount of insurance a person needs is based on their value as a human asset and the
value of other economic assets they like to protect. Amruta’s evaluation of her insurance
need should be based on this logic, and should be adjusted for other assets and wealth she
may have already created.
Source: http://articles.economictimes.indiatimes.com/2013-11-11/news/43930174_1_policies-
structured-products-insurance-need
3.3.2 Scope of Insurance Professionals in India

You must be well aware that insurance is a booming sector in India. Its growth potential can be
gauged by the fact that it has registered over 100 per cent growth in the past two years. And the
scope remains phenomenal. For instance, barely 8 million people are presently covered under
health insurance in the country. Even LIC’s new business crossed ` 1,00,000 crore by the end of
the third fiscal.
The 19 joint ventures between international giants and Indian companies that are presently
operating in India have got an additional shot in the arm with the 49 per cent foreign direct
investment or FDI provision in the recent budget. Several other global players are ready to
jump on the bandwagon.
While the industry presently employs over 5 lakh people, the anticipated demand for insurance
professionals is pegged at an additional ` 1 lakh in the next two years. Even a quarter of that is
not to be scoffed at. Some head-hunters are already pitting the insurance industry against IT, in
terms of sheer attractiveness and spread.
The insurance market is projected to hit $ 25 bn by 2010. While that remains to be seen, one thing
is for sure: the industry requires professionals in diverse disciplines such as marketing and

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