The insurance landscape is shifting. The days of relying on policies to cover small-ticket items like parking lot fender dings or water damage to attic relics are over. Gone too, for the most part, is the era when patients could expect full medical coverage through insurance. Except for those in a group health insurance plan, claim filers often receive jumps in premiums or notifications of dropped coverage.If insurance has changed into a tool you hesitate to use, why should you bother? Three reasons: you, your family and everything you own. It’s a means to protect yourself against catastrophic damage to your finances. Most people will need all of these five insurance policies at some time in their lives.

1. Life insurance
2. Disability insurance
3. Health insurance
4. Homeowner/renters insurance
5. Auto insurance

1. Do you need life insurance?

Do you need it?
The primary purpose of life insurance is to replace the income that is lost when someone dies. No working person should consider it out of reach — a healthy 40-year-old female can get a half million dollars in term insurance coverage for less than a dollar a day. At the same time, if no one is relying on you financially, you might not need life insurance.

How much coverage?
Your life insurance requirement translates to how much income your family would need if you died. It’s determined by what the ongoing financial needs are or soon may be. The needs are greater if you have to factor in taking care of aging parents or a disabled child.
In single-income families, you should consider how much in costs you’ll need to offset if the nonsalaried spouse is a caregiver, says David F. Woods, president of Life & Health Foundation for Education, a nonprofit organization for public education focusing on life, health, disability and long-term care insurance. Even though the caregiver does not earn an income, in the event of untimely death, his or her work on child or elder care, housekeeping and cooking may need to be replaced by paid help.

A lot of variables must be considered when determining the amount of life insurance to get, including your financial assets, spouse’s income plus any expected inheritance. Bankrate’s insurance calculator can help you determine the amount of life insurance you need.

Which policy?
There are two main choices when it comes to life insurance: term insurance (temporary) or whole life (also called cash value or permanent). Talk to your agent or adviser about which makes the most sense for you.
Once people hit their late 50s, they may drop term insurance because it gets more expensive, but that doesn’t mean they don’t need it, says Woods. The cost of cash-value insurance doesn’t go up as you get older, though premiums are much higher from the start. And although a payment lapse in term insurance means the end of your coverage, with permanent insurance, a portion of your investment, called the cash surrender value, is returned to you. That money can be used to keep coverage in force during times of unemployment or financial difficulty.

Conventional wisdom says that as your dependents become self-sufficient and your mortgage gets paid off, your need for life insurance decreases, but Woods has another take. “Even though the reasons you need it might change, the amount you need might even go up,” he says. “What you buy at 35 might fit your needs then, but as you get older your standard of living increases. And even though the mortgage is paid and the kids are through college, inflation and standard of living changes mean that you’ll want to make sure you leave enough for your spouse.”

Find out how to get the best price.

related/bookmark it/readit

(more…)

Financial markets are generally good at responding to events, but lousy at reckoning with an uncertainty. The collapse of the US sub-prime mortgage market sent ripples into credit markets all over the world, because so many financial institutions had traded in these home loans, and other loans, without being overly concerned about the creditworthiness of the core borrower. The potential number of Americans who may default on their mortgages is at least known, and the potential cost to mortgage lenders, more than $100 billion, is significant. The continuing nervousness in the markets chiefly reflects uncertainty over who was left holding what in the elaborate games of pass-the-parcel-adding-wrapping-each-time that financiers have played avidly for years. We cannot really know how much to worry, until more institutions ’fess up to what is on their books.

The firms that have so far admitted to problems have done so only under duress. The suggestion that Barclays might be liable to pick up some of the tab has been made since one of its clients, a German bank called Sachsen LB, had to be bailed out after suffering heavy losses linked to the US sub-prime market. Barclays is denying that it has significant liabilities. But its involvement in setting up a special investment vehicle for Sachsen only three months before its collapse will concern people who expect such risky manoeuvres from hedge funds, but not from a high street institution. Like many banks, Barclays has something of a split personality: it is part buccaneering dealmaker and part retail bank serving the public. The onus is on it, along with other banks, to explain clearly what has been going on.

Banks have become increasingly sophisticated at parcelling up mortgages and other kinds of debt, and selling them on to a wide range of buyers as collaterised debt obligations (CDOs) and loan obligations (CLOs). By spreading the risk between pension funds, hedge funds, banks and insurers, this process has probably lessened the dangers to the financial system and to the “real” economy. But because this process is utterly opaque, it is impossible to gauge how weakened some companies are. The lack of transparency is not helped by so few people really understanding the complex financial instruments that have been involved: a CDO may sound confusing enough, but try getting your head around a CDO “squared”: the CDO of CDOs. The picture is complicated even further because so many banks have been playing similar games to the hedge funds and private equity houses they have been content to see reviled. Banks’ proprietary trading desks have made bets on the market and their corporate finance departments have made huge fees out of raising extraordinary amounts of debt for private equity deals.

related/bookmark it/readit

(more…)

* Mutual funds are NOT guaranteed or insured by any bank or government agency. Even if you buy through a bank and the fund carries the bank’s name, there is no guarantee. You can lose money. (see Part IV “Kinds of Mutual Funds”)

* Mutual funds ALWAYS carry investment risks. Some types carry more risk than others. (see Part IV “Kinds of Mutual Funds”)

* Understand that a higher rate of return typically involves a higher risk of loss. (see Part IV “Kinds of Mutual Funds”)

* Past performance is not a reliable indicator of future performance. Beware of dazzling performance claims. (see Part V “Comparing Different Funds”)

* ALL mutual funds have costs that lower your investment returns. (see Part V “Comparing Different Funds”)

* You can buy some mutual funds by contacting them directly. Others are sold mainly through brokers, banks, financial planners, or insurance agents. If you buy through these financial professionals, you generally will pay an extra sales charge for the benefit of their advice.

* Shop around. Compare a mutual fund with others of the same type before you buy.

WHY MUTUAL FUNDS?

Mutual funds can be a good way for people to invest in stocks, bonds, and other securities. Why?

* Mutual funds are managed by professional money managers.

* By owning shares in a mutual fund instead of buying individual stocks or bonds directly, your investment risk is spread out.

* Because your mutual fund buys and sells large amounts of securities at a time, its costs are often lower than what you would pay on your own.

This document explains the basics of mutual fund investing — how a mutual fund works, what factors to consider before investing, and how to avoid common pitfalls.

There are sources of information that you should consult before you invest in mutual funds. The most important of these is the prospectus of any fund you are considering. The prospectus is the fund’s selling document and contains information about costs, risks, past performance, and the fund’s investment goals. Request a prospectus from a fund, or from a financial professional if you are using one. Read the prospectus before you invest.

Before you buy a mutual fund, make sure it is right for you.

related/bookmark it/readit

(more…)

Service oriented architectures and web services can provide real benefits to the finance industry says Julian Dobbins, senior marketing development manager at Micro Focus.

The reported increased profitability in the US and Europe suggests that retail banks are meeting the challenges of recent years.

They appear to have avoided the worst effects of major corporate collapses and increased regulatory demands, as well as the challenges posed by a more demanding and cost aware consumer.

Yet the ongoing and repercussive effect of these and other issues is changing the nature of the competitive landscape for good. The result will be a banking industry that has to be quicker, smarter and far more cost efficient in order to survive.

Paper transactions are being replaced by low margin electronic traffic. Key initiatives favour real time or T+1 transfer and settlement, necessary to aid liquidity and meet consumer demand. Those who can afford the investment have become revenue-generating hubs for second and third tier banks.

By achieving technological supremacy in transaction processing, they have leveraged their financial strength and considerable scale to enhance their competitive standing.

Sarbanes-Oxley insists that all US organizations have visibility and control of key functions. To enable this, a major operator must maintain fast and efficient global connectivity, and re-align business reporting and approval processes to successfully monitor enterprise risk, ideally from a centralized point.

The challenge for all banks, large and small, is not only to create a centre of excellence with established international standards of communication, but also to reconstruct and automate their business processes to maximize efficiency.

related/bookmark it/readit

(more…)

The banking sector will grow significantly faster than GDP in the ‘E7’ emerging economies of China, India, Brazil, Russia, Indonesia, Mexico and Turkey, according to new projections in a PricewaterhouseCoopers’ report ‘Banking in 2050: How big will the emerging markets get?’ Total profits from domestic banking in the E7 could be around half those in the G7 (US, Japan, Germany, UK, France, Italy and Canada) by 2025 and larger than in the G7 before 2050.

China and India show the greatest growth potential in thecoming decades. Both economies are projected to lead the rise of the E7 through organic growth and M&A activity. The new projections for the banking market, using projected market exchange rates, suggest that total domestic credit in China could overtake the UK and Germany by 2010, Japan by 2025 and the US before 2050. India could also rise from relatively low levels today to emerge as the third largest domestic banking market in the world by 2040 and, in the long run, could grow faster than China.

Commented Dominic Nixon, Asia Financial Services Leader of PwC, “The E7 banking markets will become ever more important in the global banking sector. Institutions that do not develop strong positions in these markets will find it difficult to maintain the same growth rates of assets and profits as those that do.

“We expect to see continued high levels of deal activity in the E7 markets, albeit with the normal short-to-medium-term cyclical variations over time. M&A will encompass consolidation activity ‘in-market’ as local banks acquire one another, foreign banks enter the E7 markets, and banks from the E7 expand internationally through acquisitions.”

related/bookmark it

(more…)

Life insurance claims make many people cringe - the paperwork, repeated visits to the insurers office, delays. But the onus is also on life cover buyers and claimants to make the claim process easy.

The pain of losing a dear one can be aggravated by complications while seeking an insurance claim. The task of making life insurance claims easier for nominees begins at the time of buying the policy itself.

Joydeep Roy, chief distribution officer, Tata AIG Life Insurance, says that non-disclosure and fraud are the most significant reasons for repudiation of claims. The other area where claims can go wrong is the claim form. Nominees should ensure that it is filled correctly.

Saji George, head, operations and underwriting, Bajaj Allianz Life Insurance, adds that the claimant should cooperate with the insurers representatives in the procurement of documents from institutions or individuals like hospitals and doctors.

Here are five ways to make the claim process hassle-free.

Material facts

Problem: The insurer may reject your claim if you had provided wrong, misleading or incorrect information relating to your financials, health, occupation or family history.

Solution: This issue is an important one as it may make the entire claim null and void.
The other issues mentioned here, on the other hand, may prolong the process of claim but will not lead to its denial. So, ensure that all the information furnished while buying the policy is correct.

Nomination

Problem: Legal heirs will have to prove their status to claim insurance after the death of the insured if he had not named nominees. Faulty estate planning can also lead to delays. Nominees may not be able to trace the policy document if the insured had failed to inform them about his policy or kept it a secret. Nominees may be unaware of the policy.

Solution: Inform your nominees about the policy and where you keep the policy document. You can highlight the contact details of the insurer.

           
           
Payment of premiums

Problem: The insurer is not liable to pay the claim if the policy has lapsed. By paying premiums on time make sure that the plan does not lapse.

Solution: Pay premiums before the due dates through electronic transfer from your bank. Otherwise, pay religiously before the due dates. Insurers give a grace period of 15 or 30 days if premium is not on time, but try not to stretch it that far. If the policy lapses, you will need to fulfil various formalities to revive it.

           
           
Filling up claim form

Problem: Nominees should fill claim form completely and correctly. A wrong entry, say, of date of birth of the deceased, could lead to a probe and prolong the claim settlement process.

Solution: Keep a copy of the proof of date of birth along with the policy document for easy access by the nominees. Nominees should check with the insurers claim officer if the right entries have been made in the claim form, including the signatures of witnesses.

Documentation

Problem: Nominees should attach all the necessary documents to their claim application. Among these documents are the death certificate, proof of identity, policy document, and FIR report, if required.

Solution: Nomin-ees should get the list of documents required by the insurer in writing to prevent delays and repeated trips to his office.

           
           
           
related/bookmark it/readit
           
Source…..