When you take an insurance company and have it for a number of years, I wonder how many of you actually go through the correspondence you have with the insurance company (especially when they modify some of the conditions of the insurance policy and expect that you will have to abide by these conditions). Well, now a Consumer Redressal Forum has refused to accept the changes in condition made by the insurance policy and awarded compensation to an individual after he was denied the compensation by the insurance company. This was a case where a house was insured with an inclusive clause that included terrorist action (since the house was in terrorist prone Srinagar) and the insurance company had accepted the clause. Later, when the house was damaged, the insurance company claimed that the clause had been deleted and refused to settle the claim, and the person went to the Consumer Redressal Forum for help (link to article):
A Nepean Sea Road resident has some reason to cheer five years after his ancestral home in Srinagar was damaged in a terrorist attack. The South Mumbai District Consumer Disputes Redressal Forum has awarded him Rs 5 lakh as compensation after an insurance firm left him in the lurch by rejecting his claim . The forum also took the firm to task for unilaterally deleting the “terrorism clause” from 66-year-old Sudhir Anant’s policy that covered the complainant’s Srinagar bungalow.
Anant, who originally hails from Kashmir, bought a policy from The New India Assurance Company, in 2000. The policy included the “terrorism clause”. According to Anant, owing to the volatile situation in J&K, he had taken such a policy and in 2003-04 paid an additional premium to get the special clause included. On May 11, 2005, while Anant was in Mumbai, there was a blast on the street adjacent to the bungalow which damaged the structure considerably.
The insurance company used the claim from an earlier Supreme Court judgment that had ruled that a renewed policy is the same as the original policy, and conditions cannot be changed by the insurance company unilaterally.
May 15th, 2010 | Tags: Change, Claim, Clause, Compensation, India, Insurance Company, Judgment, Modification, Penalty | Category: Compensation, Complaint, Consumer, Consumer Court, Finance, Grievance | Leave a comment
There are plenty of risks in this life of ours, and many of them impact our finances. Consider the following example. A couple of years ago (as also in the big stock market crash of 2000-2001), there were a lot of stories of people who ran into huge problems with respect to their finances. Some of the problems that people face when it comes to risks or events that happens in life and its impact on finances is:
- When the stock market is on the rise, people expect the market to keep on rising, and some people make huge financial gambles based on that. So, you get a number of cases where people have a certain amount of money and want to invest in the stock market to meet needs such as marriage of children, or education of children, or retirement goals and so on. With the amount of risk that there is in the market (and we have seen so many ups and downs), that the idea of putting all your bets on a single instrument is ‘crazy’. People suffer when such gambles implode or other problems occur. You need to have a proper investment strategy where you don’t put all your eggs in one basket, if necessary consult with an expert and then prepare a financial plan.
- People invest based on milestones, but those milestones can be interrupted by sudden events. For example, you could have prepared a perfect financial plan with an estimation of your earnings vs. the loans you have taken, and it will work out. However, what happens if you lose your job, or a medical emergency happens, or your death happens. What happens to your family and your dependents in such cases ? They can run into problems. Make sure that you draw a list of possible scenarios, and have a plan for these as much as possible. Plan for items such as: Loss of job (setting aside a corpus for some months of expenses), medical emergencies (medical insurance and plans), death or such events (having insurance policies, including those cover outstanding loans). Make sure that you have these events planned out.
- Plan for when you want to do your retirement (having a retirement plan, including how much you want to invest on an ongoing basis to meet your retirement needs).
- Insurance needs. Make sure that you have enough insurance for the various needs you have. This includes insurance for medical, vehicle (mandatory), life (along with riders), household, and any other items for which you need insurance.
- Ensuring an adequate tracking of your investments and policies. Over a period of time, people take on a number of insurance schemes as well as investments, and there is a good chance of losing track of these. It makes sense to keep a track of all such schemes and investments, so that these can be considered during the case of an emergency (deciding which ones to keep and which ones to jettison), and also if the family needs to consider them in the case of any untoward event.
April 23rd, 2010 | Tags: Emergency, Finance, Insurance, Medical, Personal Finance, Risks, Schemes | Category: Finance | Leave a comment
Mutual Funds offer a great way to invest into the equity market, since they ensure that you can invest into the stock market (and hopefully make the larger returns that are available from the equity market (with associated higher risk though)) without trying to identify the individual scripts into which to invest. When combined with easy ways of investing (the logistics of providing the money to the Mutual Fund are pretty easy now), investing in Mutual Funds can be fairly easy. What makes it somewhat difficult is the huge number of Mutual Funds that are available in the market, along with their differing investment strategies, their level of risk, the sectors in which they focus their investment, and so on. It can get difficult to identify the proper Mutual Fund (and investing in a MF that has provided poorer returns can lead to a much lower increase in the value of your investments). Here are some tips for optimizing your investments in Mutual Funds:
- Determine your level of risk. This helps you in determining whether you want to invest in Debt funds, Equity Funds, or Balanced funds. Equity funds tend to have a higher amount of both risk and reward, while Debt funds tend to be much more conservative and hence have a lower risk as well as lower return.
- Evaluate your investment mix. Depending on your age, you should construct a mix of high risk and low risk mutual funds. As you get closer to retirement, the ability to take risks reduces and you should go in for more debt and liquid funds; while if you are younger, you will have a greater ability to go in for higher risk equity funds.
- Know the sectors in which the funds you are investing are invested in. Sometimes if you are not careful, you might up end up with multiple funds that are invested in the same sector, leading your investment mix to become heavy in a specific sector
- Evaluate the number of funds you are invested in. I know people who end up with 20-30 funds, and many of them are not capable of tracking the performance of so many funds, leaving to a situation where their funds are not generating as much return as they could if they were more focused
- Set a specific time period of evaluation of the performance of your funds, and do not hesitate to switch between funds when required. If a fund has not been generating good returns as opposed to other funds with a similar profile, it could be because of multiple reasons such as a change in fund manager, or a change in the investing strategy of the fund. You should be able to catch funds that are not performing and make a decision about whether to change or not.
- Check your tax profile. If you are able to take some tax-avoidance benefits of investing in some Equity Linked Savings Schemes (ELSS), then that is additional return that you are getting from your investments in Mutual Funds. Further, some of these long term funds are able to make better investment purposes.
- Investing in Mutual Funds typically makes sense when you are investing for the long term, since it does take some time for the funds to start generating value.
April 20th, 2010 | Tags: Equity Market, India, Investment, Mutual Fund, NAV, SIP, Stock Market, Systematic Investment Plan, Units | Category: Finance, Investing, Mutual Funds | Leave a comment
A lot of people route their investment into the stock market through the route of using Mutual Funds, with the promise that experts are running the investment policies of the Mutual Fund, and that these Fund Managers will be able to take a better informed decision and will have more inputs than they would have as regards to investments in Mutual Funds. However, you should not just sit back and relax when investing in a Mutual Fund, consider the following tips in order to make your investments do better for you.
- Use a Systematic Investment Plan. This ensures that you don’t have to try to time the market for your Mutual Fund Investments, instead, you make regular payments for the purpose of buying units and end up averaging your investments. You will end up buying when the market is high, but with regular investments, you will also end up buying when the market is low. This ensures that your money eventually gets you a better return than if you had tried to time the market yourself
- Not all funds offer a SIP. It is typically equity (long-term investment) funds that offer a SIP for investment purposes. Funds that are more liquid such as liquid funds, money market funds, do not offer a SIP (since their investments are made into short term investments). Debt funds do offer a SIP, as do balanced funds.
- What is the tax treatment of a SIP investment ? If you investing in equity market funds, then you will be charged as per the time on which the SIP was made. So, if you sell out within an year, then you will be charged the short-term rate of tax. This is worked out on a scheme of FIFO (First In First Out, where if units are sold, they are charged against the earlier units that were bought).
- Minimum investments on SIP’s (the amount that is invested at each regular interval) depend on the specific Mutual Fund. Some can be very low, in the hundreds. Others can have a much higher minimum SIP amount required.
- How to make the investment. This depends. If you are buying Mutual Funds through an online broker, they will ask you to specify the amount per interval and on the specified date, they will deduct the amount from your linked account. If you are doing it through a Mutual Fund directly, they can do it through ECS or through post-dated checks.
- Period of a SIP. When taking the SIP, you need to specify the time period for which you are subscribed to the SIP and can extend it when you get close to the end time of the selected period.
April 17th, 2010 | Tags: Equity Market, India, Investment, Mutual Fund, NAV, SIP, Stock Market, Systematic Investment Plan, Units | Category: Equity, Finance, Investing | Leave a comment
Big Bazaar is a huge retailer, expanding its network in a number of cities. It also comes out with a number of offers and schemes over a period of time which entices a large number of people to come to their stores. I had a recent experience in a store which was pretty shocking, and showed me the level of customer service that the store managers were showing to their shoppers. Now, when we have to do some shopping in Big Bazaar, we hesitate and wonder whether we really need to go there for the stuff that we need. This was a recent exchange offer that had come out for a period of 15-20 days where people could get their old stuff to the store, get coupons for the exchange, and then exercise those coupons against stuff. Here were some matters that really bit hard to consumers:
- The coupons after exchange were valid for a period of only 10-15 days. So, you give your old stuff, and then realize after reading the fine print on the coupons that they are only valid for a short time. This was not mentioned in all the advertisements.
- The staff was not totally aware. So, you had somebody buying stuff over there after talking to the salesman, and then the clerk at the billing refused to accept the coupons for some of the items because it was not in his system. This naturally angered the customer.
- There were a total of around 12 billing counters, but for several hours, there were only 3 of those counters manned. As a result, the queues were very long, and yet even when people were shouting for more counters to be open, there was no reaction from the store. It took each person as much as 20-30 minutes at the billing counter.
- Delhi has implemented a no-plastic bag policy. But the big department stores have not really caught onto this and have not come up with a solution; in this particular case, they had some fabric bags available that were provided free if you bought upto Rs. 500. However, these bags were unavailable, so we had the strange sight of all our items being kept in a shopping cart without any bag and then taking these items back to the vehicle just like that. Felt very strange.
April 11th, 2010 | Tags: Big Bazaar, Complaints, Consumer, Queue, Service, Shopping, Staffing | Category: Consumer, Shopping | Comments (1)
