Thursday, December 24, 2009

Personal Accident Insurance

What is Personal Accident Insurance?
Personal Accident Insurance protects the insured against accidental death and any form of disablement.

Why should one opt for Personal Accident Insurance?
Take any statistic on accidents (motor vehicle related or otherwise) in the country. With every passing year, all indicators are alarming and consistently in the red. Personal Accident Insurance provides adequate cover against any such accident.

Thursday, December 17, 2009

Heads who wins? Tails who wins?

"Heads you win. Tails you win" - said the brochure of SBI's Smart ULIP, handed over by a marketing executive.

I knew that the current status of ULIPs in India is not that good and that one should always apply caution when opting for one. I never came across a decent online illustration of  ULIPs until today. This illustration in SBI's website details the plan for the customary 6% and 10% returns. It saved me the trouble in decoding various charges deducted at different points in time, in different denominations and at different rates.

Friday, December 11, 2009

Working with PDF files

For those who work on PDF documents, here are some useful tips. Creating PDF files or converting files of almost any extension to PDF files can be easily done with freely download-able tools or even using free online tools. Also refer my earlier post on "Extracting text from scanned documents and copy protected pdfs".

Sunday, November 29, 2009

Creating a Portfolio Tracker

Here is a simple way to create an automated, simple and real-time stock portfolio tracker on the cloud, using Google Spreadsheet.

Have a look at this spreadsheet. It has two worksheets - Summary sheet gives an overview of the portfolio and Data sheet is used to obtain real time data.

Tuesday, November 24, 2009

The Student’s Prayer

I had earlier posted a TED talk by Sir Ken Robinson - Schools kill creativity!! Now here is an article in The Hindu on the same topic - Need for creativity in classroom.

Former Indian President Dr. A.P.J Abdul Kalam has quoted a young Chilean student's poem in the article. The boy, Umberto Maturana, became unhappy at school because he felt his teachers were making it impossible for him to learn. They wanted to teach him what they knew, rather than drawing out what he needed to learn. This beautiful poem reflects the young mind's thoughts. A must read for all parents.

Saturday, November 14, 2009

Jeevan Nishchay - A Review

Jeevan Nischay is the latest product from India's largest insurance company - Life Insurance Corporation (LIC) of India. It is a single premium closed ended plan falling under the special plans category and similar to the very successful Jeevan Astha. This new policy will be sold to ‘existing‘ customers of LIC and will be sold for a limited period until end of March 2010. Here is a critical review of Jeevan Nishchay.

Sunday, November 08, 2009

5 Must-have Insurance Policies

I am back to my favourite topic of insurance again. I have written in the past about the importance of insurance and reviewed some of the common insurance policies. This post would be about what all insurance policies should one take?

I would categorize insurance policies under two categories - Policies that offer protection to (1) Self and (2) Valuables.

Wednesday, November 04, 2009


Courtesy -> Mail Forward

Tuesday, October 27, 2009

Panoramio: My copyrighted photos

Some of my copy righted photos (posted at Panoramio):

Monday, October 26, 2009

Chitty: Self-help financing

Chitty or kurie is a local form of self-help financing. To put in simple terms, the scheme (run by a trustworthy person or financial institute) pools money from a group of people and provides the lumpsum amount to a chosen person in the group (based on a bid or lot), after deducting commissions and charges.

Sunday, October 11, 2009

Women’s Insurance

This post was prompted by my better half. She was going through an issue of Vanitha (a leading Malayalam fortnightly for women) and it carried an article on women centric financial products – savings accounts, insurance schemes, etc. LIC’s Jeevan Bharathi caught her attention - insurance schemes with money back options looks really impressive. The following tries to decode a typical women’s scheme - Jeevan Bharathi.

Wednesday, October 07, 2009

Wealth: Division vs Multiplication

Dr. Adrian Pierce Rogers (September 12, 1931 – November 15, 2005) of Love Worth Finding Ministries, Pastor Emeritus of Bellevue Baptist Church.

"You cannot legislate the poor into freedom by legislating the wealthy out of freedom. What one person receives without working for, another person must work for without receiving. The government cannot give to anybody anything that the government does not first take from somebody else. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that, my dear friend, is about the end of any nation. You cannot multiply wealth by dividing it."

Tuesday, October 06, 2009


Arthur Benjamin does "Mathemagic".. another good one from TED.

Direct Link

Wednesday, September 30, 2009

Time Pass!

Please move your cursor across the picture..

Courtesy ->

Monday, September 28, 2009

Happy Life or Bad Insurance?

One more example of how lack of knowledge on part of investors is exploited by insurance companies.

As an example, let us look at Jeevan Anand, an insurance policy by LIC. Jeevan Anand, like many other endowment insurance policies, provides life cover for the term as well as returns at the end of term. It guarantees a certain sum in case of death/ maturity, plus there is a variable component, which depends on number of factors including future investment performance of LIC. For illustration purposes, and as specified by IRDA, LIC has given a table assuming 6% and 10% returns. The statutory warning in the site also says that these assumed rates of return are not guaranteed and they are not upper or lower limits of what the insured might get back.

Thursday, September 24, 2009

Sufficient Life Cover

This would be my third blog on the topic - Insurance. This is in continuation to my earlier posts on the importance of term insurance and on how one needs to be careful and cautious on bundled insurance products. It is a sincere attempt to increase awareness on the importance of insurance.

Before I start, let me tell you a bit of history. I took my first life insurance policy almost 10 years back. My objective was two fold: to save tax and to get a handsome amount at the end of the term. And I had two vital questions before I opted for the policy: what was the premium (mine was around Rs.8500 per year) and how much money will I get back (I was told that I would get around 1.25 lakhs + bonus + some other profit share). With a wide grin on my face and without much further thinking, I became a proud insured person. And one had very little option at that time.

Ten years later and having gained some basic understanding of insurance, I keep asking people whether they have their life insured. Nowadays most have. And when I ask what is the sum assured, the most likely answers are either that they don't know or that they pay Rs. X as quarterly/ monthly premium. Some go on to say that they will get Rs. Y lakhs at the end of "n" years. In another instance, I was laughed upon by an insurance agent when I said that I need to know the premium amount for a “term insurance” of 20 lakhs. Why on earth would someone want to spend Rs.6500 per year for a policy that gives zero returns at the end of policy term! The agent seemed genuinely confused!!

Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for a premium, and can be thought of as a guaranteed and known small loss to prevent a large, possibly devastating loss. So if I have a car worth 5 lakhs, I can prevent the monetary impact of loss (by accident/ theft) of my car (valued at 5 lakhs) by paying a relatively smaller premium (of say Rs.12,000). So an insurance policy hedges the risk of loss of a valuable asset for a small price. Mind you, motor insurance is mandated by law. Any vehicle plying on public roads needs to have at least third party coverage, where if the vehicle meets with an accident, the policy can cover damages to the third party. Even though insurance is a matter of solicitation, law mandates it to cover the risk for third parties! If one wants to cover own damages, then the premium to be paid is higher (comprehensive vehicle insurance).

Given below are some basic facts about insurance:
  • Insurance is important
  • Insurance has a cost and it needs to treated as an expense
  • Insurance is not an investment
  • More the insurance cover, the more the premium
  • More the risk, more the premium
Let us get back to some basic questions: Do you have life insurance? Do you have sufficient life cover?

Take half an hour from your schedule and assess your insurance portfolio. For each policy, verify how much insurance cover you have. If in doubt, get in touch with your agent or life insurer – it may be spread across LIC policies, ULIPs and similar products. But take stock of what is the total “sum assured” for all your policies. The result can be very disturbing. “Sum assured” is that amount that your family may have for livelihood, education and expenses, in case something happens to you – Is that sufficient? Do you have that comfort feeling?

The sum assured should be sufficient and comfortable for the purpose of insurance – monetary assurance to your dependents in case, god forbid, of your loss of life. Most people fall well short of this “sufficient and comfortable” life cover because of two reasons – they are not aware of the importance of life insurance or they already have one or more high premium policies due to which they cannot afford another one. I have tried to cover the first reason till now. The second one need some real thought.

It is not sufficient that you have insurance (one or more, from different insurance companies/ agents), you must have adequate cover. People usually become “under insured” because they opted for money back policies, endowment plans and ULIPs. These are expensive forms of life insurance – one pay higher premium for lower sum assured (of course one get “returns” from that). But remember that investment is not the primary purpose of an insurance policy. It is insurance. Period. And the primary evaluation criteria while taking a policy should be the cover (sum assured) associated with it. Other criteria of importance are the premium (cost involved) and the policy term (coverage period).

If you do not have sufficient insurance, please bear in mind that life insurance is not very expensive. When I say life insurance, I mean pure term insurance. Term insurance is the most economical and effective form of life insurance. One can add a fresh term plan to the insurance portfolio by buying a new policy. Make sure that it has sufficient cover and extends to a term of your needs. Since term plans are “less profitable” for insurance companies, they offer lower commissions to agents and they in turn never promote term plans. So it is up to us to ensure that our most basic insurance needs are met in the most effective and economical way. Make sure that you have adequate life cover and then, and only then, think about end of term returns and annual premiums.

Disclaimer: The views posted in this blog are my own and are based purely on my own way of assessments. Readers are  requested to consult with their financial/ insurance advisers before making any investment/ insurance decision, do their own due diligence and validate factual information.

Thursday, September 10, 2009

Simple Investment/ Insurance?!

Here is a perfect example of insurance products taking investors for a grand ride.

Go to for a chart of various investment/ insurance options:

For example, consider the Retirement Plan. For a 30 year old male, with an investment of Rs.2000 per month for 30 years, the plan with an optimistic 10% per annum growth rate will give a pension of Rs.15,315 per month for life from the 31st year onwards.

But are these plans good investment options?

Now here is the catch. All of these plans are unit linked. Any unit linked plan is confusing - with a variety a charges (asset allocation charge, fund management charge, mortality charge, etc.) deducted differently (either in terms units or deducting directly from the investment) at different times (at the beginning of the investment, monthly or yearly) and unpredictable growth rates (which are limited by the IRDA to 6% and 10% for illustration purposes). So each of these plans need to be evaluated in terms of their overall attractiveness.

How can these plans be evaluated?

The best way to evaluate investment/ insurance plans is by separating the insurance (if bundled) and investment components. Compare the investment returns with that of a fixed deposit after adjusting best available rates for the bundled insurance (if any).

The Rs.15,315 pension per month for the Retirement Plan looks impressive on a cursory glance, especially for an outlay of just Rs.2,000 per month. The IRDA specified 6% and 10% returns are jacked up to 15% (or more) by the agents and last minute tax planning pressure gives in for most to opt for this plan.

But let's have a closer look. Let us put the Rs.2,000 per month in a bank fixed deposit (FD) at a nominal 8% interest compounded annually. That makes Rs.24,000 annual investment in FD. For the next 30 years, let us assume that the interest rate remains constant at 8%. The Rs.24,000 per annum investment at 8% will accumulate to Rs.29.36 lakhs.

This amount (Rs.29.36 lakhs) if reinvested again in FD at 8% interest will give annual interest of Rs.2.35 lakhs or a monthly interest of Rs.19,575 for life. Now compare with this the Rs.15,315 per month by the Retirement Plan. The FD comprehensively beats the returns of the Retirement Plan by a massive Rs.4,260 per month (21.8% more). And don't forget that the FD return is more or less guaranteed where as Retirement Plan's 10% return in risky and market dependent (it could be less, or more). Also, the accumulated Rs.29.36 lakhs is preserved for passing on to the next generation.

The case becomes even more compelling if we consider an SIP investment of Rs.2000 in a well diversified large cap mutual fund for 30 years (which can give returns in excess of 10% per annum) and then putting the cumulative amount in an FD to draw pension for life!

Click here to view an excel sheet with the above calculations.

So what's the verdict?

Isn't it obivious? In the above example a simple FD or a PPF (or mutual fund) would work much better than the pension plan. The situation is not very different for the other plans either.

Investors need to be extremely cautious while selecting investment options. Insurance companies trick the investor emotions with children plans and retirement plans and misleading returns. They have devised clever ways to disguise costs and still work within the regulatory framework to (mis) sell insurance products. Deviating from their fundamental purpose (and duty) of selling insurance, most of these companies (including nationalised ones) have aggressively marketed and promoted bundled and complicated products. The profit sucked out of the investor's money goes as profit to the insurance company and as hefty commissions to insurance agents.

Courtesy - Deepak Shenoy (@deepakshenoy)

Disclaimer: The views posted in this blog are my own and are based purely on my own way of assessments. Readers are  requested to consult with their financial/ insurance advisers before making any investment/ insurance decision, do their own due diligence and validate factual information.

Saturday, August 29, 2009

A performing artist

A performing artist..
Watch and listen till end.. the fun starts from the 46th sec!!

Some F1 statistics:
  1. Formula 1 engines typically produce power in excess of 300 BHP at engine speeds in the range of 20,000 rpm (almost 3 times normal road cars) and road speeds crossing 350 kmph
  2. The gearbox can reach temperatures of 150°C during a race and the brake discs can exceed temperatures of 1,000°C. Tyres can reach temperatures of 160°C.
  3. An F1 race car can do: 0 – 60mph in 2.3 seconds; 0 - 100mph in 3.8 seconds; 0mph - 100mph and back to 0mph again in 5.5 seconds; Top speed back to 0mph in 3 seconds
  4. The energy required to slow a car from 315kph to 185kph is the same amount needed to make an elephant jump 10 metres in the air!
  5. The F1 car can generate lateral accelerations of 5G during cornering
  6. A Formula One engine weighs just 95kg
  7. A Formula One driver burns approximately 600 calories per Grand Prix and loses on average two kilograms in weight. The drivers' heart rates reach peaks of 190 beats per minute during a Grand Prix
  8. On an average, the F1 drivers will typically change gear up to 2,800 times per Grand Prix

Thursday, August 27, 2009

Sitting in my office

Here i am sitting in my office @ night..
Thinking hard about life
How it changed from a maverick college life to strict professional life..
How tiny pocket money changed to huge monthly paychecks
but then why it gives less happiness..
How a few local denim jeans changed to new branded wardrobe
but then why there are less people to use them
How a single plate of samosa changed to a full Pizza or burger
But then why there is less hunger..

Here i am sitting in my office @ night..
Thinking hard about life
How it changed..

How a bike always in reserve changed to bike always on
but then why there are less places to go on..
How a small coffee shop changed to cafe coffee day
but then why its feels like shop is far away..
How a limited prepaid card changed to postpaid package
but then why there is not time for messages or calls..

Here i am sitting in my office @ night..
Thinking hard about life
How it changed..

How a general class journey changed to Flight journey
But then why there are less vacations for enjoyment..
How a old assembled desktop changed to new branded laptop
but then why there is less time to put it on..
How a small bunch of friends changed to office mate
But then why we always feel lonely n miss those college frnz..

Here i am sitting in my office @ night..
Thinking hard about life
How it changed.. How it changed..

Courtesy -> Mail forward

Monday, August 24, 2009

Schools kill creativity!!

Must watch/ listen for every parent, or anyone for that matter.. thought provoking indeed!

Sunday, August 23, 2009

Music or Noise?

You will only know if you are an F1 (Ferrari) fan..

Friday, August 21, 2009

Wednesday, August 19, 2009

Bittersweet Symphony

Amazing song..

Date picker in Excel

Ever wondered if you could put a date in an Excel spreadsheet using a date picker? Similar to the one available on online forms, date pickers can come quite handy when one needs to enter dates in a cell. No more worry about the date format and confusions about the date itself.

Here is a simple way to put date picker in MS Excel.
  1. Download the Date Picker Add-in
  2. Paste the file (samradDatePicker.xla/ xls) in the XLSTART folder (In Office 2007, XLSTART folder is typically found at C:\Program Files\Microsoft Office\OFFICE12\XLSTART. In Office 2003, it may be located at C:\Program Files\Microsoft Office\OFFICE11\XLSTART)
  3. Restart Excel
  4. Right click on any cell and there will be "Pick from Calendar Option" from where the date can be selected
  5. Format/ resize the cell to display the date as per your preferences
Further details on the add-in at Microsoft Excel Blog, Sam Radakovitz

Saturday, August 08, 2009

The best form of Life Insurance

Let me write something this time, which I wanted to for a long time, but haven’t yet (my apologies for being lazy). It was not that I haven’t tried to promote this, but believe me, it is not very easy to convince people on this (be it friends or family). So here it is, and the topic is Term Insurance.

Before I even start on this, let me tell you (you can treat this as a disclaimer) that I am not a financial expert and nor an insurance agent. I don’t work for any insurance or mutual fund firm.
I was on train from Trivandrum (where I live) to Chennai (where I wanted to attend a workshop on software maintenance). To pass time during the 12 hour journey, I bought a book on money matters (perhaps because I didn’t find any better magazine then) and ever since that time, I have not had any doubts on what is the meaning Term Insurance, why it is important and why it should not be compromised (or mixed or confused with any form of investment).

What is Term Insurance?

  • The one and only “true” form of life insurance
  • Simplest and purest form – the insurer pays the premium for the coverage period and his/ her life is covered for the value of sum assured
  • The most cost effective (read as: “cheapest”) form of life insurance
  • As an added benefit, provides tax benefits under section 80C
Why is Term Insurance so important?

Let us consider a case study: There is a sole bread winner of a small family (let us say, a husband – his family comprising of his wife and child). Whatever be the income of the husband, his family is dependent on him (and his income). Now god forbid, if something happens to him, what will happen to his family? This is a situation where life insurance (especially term insurance) assumes a lot of significance. If the husband was insured, for lets say 5 lakhs, his bereaved family would have received that amount for their immediate livelihood. Will it cover the loss of a human life – the life of a husband? the life of a father? No. Hell No. But what a term insurance will do in this case is - it will definitely cover the loss of financial security due to the loss of that human life. The loss of human life is an unfortunate incident, one in which no body has any control of. But we can make the right choices in our living lives that, in case something happens to our lives, our dear and near are taken care of, at least financially. A term insurance is such an option available to all, where one can ensure such a comfort (not that it means comfort in the literal sense!)

Why isn’t Term Insurance very popular?

One has to blame primarily blame India’s national insurance agencies for this in the first place. The have diluted continuously diluted the meaning of “life insurance” for decades, earning profits by selling endowment and money back policies. When Indian opened up financially, they started selling ULIPs along with the private companies (who can be perhaps forgiven for doing so). The bottom line - if some one wants life insurance, term insurance is the most effective option. If someone wants to sell life insurance, term insurance is the least preferred option (read as: less commission for agents, less profitability for insurance companies)

Car – Life Insurance Analogy

The simplest way to understand term insurance is when one compares term insurance with motor insurance. Let me try to explain this:
If I have a four wheeler (or two wheeler), I am required by law to have a motor insurance (at least a third party insurance). The logic is: if there is an accident, the insurance company will cover for all the losses arising out of that accident (losses for the other vehicle only in case of third party insurance). If the market value (maximum sum assured) of the four wheeler is 3 lakhs, the premium to be paid for comprehensive insurance of the vehicle is around Rs.8000. No one talks about money back or endowment or unit linking here.
The premium for life cover of around 20 lakhs in the case of term insurance is only around Rs.6500 (much much cheaper than car insurance in the above example). The question here is: if you value your car for 3 lakhs (for covering damages to your car), shouldn’t you value your own life for a much higher amount (for covering damages to your life – to benefit your dependent family)?

The truth

Let us accept one fact. In the current scenario, there is gross under selling of term insurance. The so called insurance advisors combine (read as: confuse the customer) life insurance with investment and sell (because of the obvious attractiveness of commission of other insurance products) money back policies, endowment policies and ULIPs. The soft spot: when one is asked, would you like to have money back or lose it, the answer is obviously money back. But the price that one pays for such options is huge.
For example: I have an endowment policy where I pay Rs.9000 for a sum assured of about Rs.1.3 lakhs (I get a portion of this back when the policy matures). I also have a term insurance where I pay Rs.6500 for a sum assured of Rs.20 lakhs!! If I consider a term insurance of Rs.1.3 lakhs, the premium would be peanuts and if invest the remaining in a decent mutual fund, it will easily give me a return higher than that offered by the endowment policy!!
But why is no one aware of this? The reason is simple – the greed of customer fully utilized by commission hungry agents and happily promoted by insurance companies.

How to ensure sufficient life cover?

  1. For life insurance, the total sum assured should be approximately 5 – 8 times the annual salary of the insured
  2. Take a term insurance to cover majority of this and the rest , if required, can be ULIPs, money back policies and endowment policies
  3. Be bothered about what is the sum assured of your insurance policy and NOT just the yearly premium (the agent will surely be bothered about the latter one, as his commission depends on that)
  4. Never trust an insurance advisor/ agent who talks only about tax saving and not talks existing/ sufficient life cover
  5. Always try to keep life insurance separate from investments – both have their own purpose, meaning and benefit – for you as well as for your agent (and both are, and should/ would be very selfish)
Inspiration - Deepak Shenoy, Smart Investor, Outlook Money

Disclaimer: The views posted in this blog are my own and are based purely on my own way of assessments. Readers are  requested to consult with their financial/ insurance advisers before making any investment/ insurance decision, do their own due diligence and validate factual information.

Thursday, August 06, 2009

Magic in Water!

Please move your cursor across the picture..

Courtesy -> Artists In Devon
More at -> Water

Friday, July 31, 2009

Public pays and public suffers!!

This one clearly shows the careless attitude of the governments and wastage of tax payer's money.. public pays and public suffers!!

Tuesday, July 28, 2009

Monday, July 27, 2009

Sixth Sense - Crazy!!

And an Indian behind the whole thing!! It's crazy..

Courtesy -> @greatbong

Wednesday, July 22, 2009

An Obituary Note - Common Sense

Today we mourn the passing of a beloved old friend, Common Sense, who has been with us for many years. No one knows for sure how old he was ,since his birth records were long ago lost in bureaucratic red tape. He will be remembered as having cultivated such valuable lessons as: Knowing when to come in out of the rain; Why the early bird gets the worm; Life isn't always fair; and maybe it was my fault. Common Sense lived by simple, sound financial policies (don't spend more than you can earn) and reliable strategies (adults, not children, are in charge).

His health began to deteriorate rapidly when well-intentioned but overbearing regulations were set in place. Reports of a 6-year-old boy charged with sexual harassment for kissing a classmate; teens suspended from school for using mouthwash after lunch; and a teacher fired for reprimanding an unruly student, only worsened his condition. Common Sense lost ground when parents attacked teachers for doing the job that they themselves had failed to do in disciplining their unruly children. It declined even further when schools were required to get parental consent to administer sun lotion or an Aspirin to a student but could not inform parents when a student became pregnant and wanted to have an abortion. Common Sense lost the will to live as the churches became businesses and criminals received better treatment than their victims. Common Sense took a beating when you couldn't defend yourself from a burglar in your own home and the burglar could sue you for assault. Common Sense finally gave up the will to live, after a woman failed to realize that a steaming cup of coffee was hot. She spilled a little in her lap, and was promptly awarded a huge settlement.

Common Sense was preceded in death by his parents, Truth and Trust, his wife, Discretion, his daughter, Responsibility, and his son, Reason. He is survived by his 4 stepbrothers; I Know My Rights, I Want It Now, Someone Else Is To Blame, and I'm A Victim.

Not many attended his funeral because so few realized he was gone.

Courtesy -> Mail Forward (An internet search reveals that the original version belongs to Lori Borgman. So i guess the credit should go to Lori)

Monday, July 20, 2009


Courtesy -> Mail forward