Term Insurance

Liked this article on Term Insurance:

http://economictimes.indiatimes.com/Features/Investors-Guide/A-pure-term-plan-ideal-for-insurance-cover/articleshow/4302978.cms

A pure term plan ideal for insurance cover
23 Mar 2009, 0533 hrs IST, Bakul Chugan Tongia, ET Bureau

Investment and insurance should never be a part of a single basket. While an investor has a plethora of options to choose from when it comes to investments, a pure term plan is an ideal play for buying an insurance cover. Low premiums and high insurance cover is what defines an ideal insurance plan. And a term plan gives just that.

But even within the basket of term plans, choosing the right scheme is no longer easy. Given the increasing number of insurance players in the country today and their habit of launching schemes aplenty, investors are often left scratching their heads in confusion. If not, the decisions are left to the whims and fancies of the insurance agents who would suggest a plan that earns them the highest commission.

There are many criteria that may be considered for selecting a term plan. However, premium charges are the predominant factor. Different insurers have different premium charges for their policies and one has to select the one which is most economical to the pocket. Moreover, most insurers have the option to pay premiums either periodically - throughout the term of the policy or for a limited period, as the case may be - or a single premium at the time of taking the policy. While a single premium may, prima facie, appear more economical in absolute terms, an analysis on the basis of the current value of total premiums paid under a regular plan reveals otherwise. Not all single premium plans are healthy to the pocket. A regular plan may turn out to be a far more economical deal for some insurers. (See Table) (For the detailed version, log on to www.etintelligence.com)

Investors may however do well to note that the most economical insurer at a particular age bracket may not be as economical in some other age bracket. It is therefore advisable to check the premium rates of insurers for different age brackets before zeroing in on the right scheme.

Term plans are designed to financially support the family of the insured. They simply cover the life of the policy holder (insured) and do not provide any maturity or survival benefits. Nor do these schemes participate in the profits of the insurance company. The sum for which the life cover is taken (sum assured) is payable only to the nominee of the insured in case of unfortunate demise of the insured during the term of the policy. Where the insurer survives the policy term, he/she is not entitled to any benefits from the insurance company. The premiums paid throughout the policy term may thus be treated as a cost to cover one’s life. It is for this reason that the premiums charged by a pure term plan are far lower vis-à-vis any endowment or money back policy.

It is advisable to start a term plan early in life. At the same time, it is important to ensure that it covers life for as long a period as possible. Most insurers provide life cover for a maximum period of 25 to 30 years. The maximum age at maturity is usually pegged at 60-65 years. However, some insurers provide cover for a larger number of years and others have a higher maturity age. Kotak Mahindra, for example, has a maximum maturity age of 70 years, while ING has pegged its maximum maturity age at 75 years. Bajaj Allianz, on the other hand, provides life cover for a maximum of 40 years, while Sahara has the lowest term cover of 20 years.

The minimum sum assured (MSA) is also an important criterion. The amount of MSA ranges from a low of Rs 50,000 to as high as Rs 10 lakh. The investor has the option of choosing the insurer whose policy conveniently fits the bill.

While the term plans do not provide any maturity benefits per se, insurance companies do offer term plans that promise to return the premiums paid at the end of the policy term. These policies are in fact just like any other money-back plans with relatively higher premium charges vis-à-vis pure term plans. Investors may therefore do well to invest their money in profitable ventures rather than pay high premiums for insuring their lives, which can be done rather economically through pure term plans.

B2B or B2C

Recently came across an advertisement on TV, by Tetra Pak, promoting the use of milk sold in Tetra Pak packagings. It was a generic ad, show-casing the different milk brands like Nestle, Paras, etc. available in Tetra Pak packaging in the market.

It attracted my attention for the reason, that come to think of it, Tetra Pak is a B2B company, whose customers are the various milk-producer brands listed above; but instead Tetra Pak here is trying to promote directly to the end consumers. This would basically create a win-win situation for Tetra Pak as well as for its ‘customers’; as even the Processing Director of the company agrees: “if they fail we fail”…Interesting!!

By the way, on a google search, got this link to the Hindu Business Line
http://www.thehindubusinessline.com/2006/09/14/stories/2006091402040200.htm
Seems I had been over-looking this ad for more than 2 yrs then :-)

Iceland Bankruptcy

The link to an artile that was published in the 'VanityFair' magazine, about the story of Iceland, which shifted from Fishing to Investment Banking to Bankruptcy (& hence maybe, to Fishing again)...a full circle...

Debt @ 850% of the Nation's GDP
Curency (krona) with hardly any value left

http://www.vanityfair.com/politics/features/2009/04/iceland200904

Alternative Energy Sources

Summary of an article published in the ‘Economist’ magazine in June 2008:

The next technology boom may well be based on alternative energy

Oil:
High fuel prices may fall as new sources of supply are exploited to fill rising demand from Asia. There is oil aplenty of other sorts (tar sands, liquefied coal and so on), so the stuff is unlikely to run out for a long time yet. But it will get more expensive to produce, putting a floor on the price that is way above todays. For both of these reasons, any transition from an economy based on fossil fuels to one based on renewable, alternative, green energy—call it what you will—is likely to be slow, as similar changes have been in the past.

Wind:
The future price of these resources—zero—is known. That certainty has economic value as a hedge, even if the capital cost of wind and solar power stations is, at the moment, higher than that of coal-fired ones.
Wind power is no illusion. World capacity is growing at 30% a year and will exceed 100 gigawatts this year.
Wind currently provides only about 1% of America’s electricity, but by 2020 that figure may have risen to 15%.
Victor Abate, General Electric’s vice-president of renewables, is so convinced that by 2012 half of the new generating capacity built in America will be wind-powered that he is basing his business plan on that assumption.
The one part of the United States that has something approximating a proper free market in electricity, Texas, is also keener than any other state on deploying the turbines. In May, T. Boone Pickens, one of the state’s most famous oil tycoons, announced a deal with GE to build a one-gigawatt wind farm—the world’s largest—at a cost of $2 billion.
Ten years ago wind turbines were marginal. Now they are taken seriously, and in another decade they may contribute as much as a fifth of the world’s electricity.

Solar:
The future price of these resources—zero—is known. That certainty has economic value as a hedge, even if the capital cost of wind and solar power stations is, at the moment, higher than that of coal-fired ones.
The most iconic form of solar power, the photovoltaic cell, is currently the fastest-growing type of alternative energy, increasing by 50% a year.
The price of the electricity it produces is falling, too. According to Cambridge Energy Research Associates (CERA), an American consultancy run by Daniel Yergin, a kWh of photovoltaic electricity cost 50 cents in 1995. That had fallen to 20 cents in 2005 and is still dropping. Not 'RE less than C', but heading in the right direction. Dr Sachs says that these innovations will bring the capital cost of solar cells below $2 a watt. That is closing in on the cost of a coal-fired power station: a gigawatt (one billion watt) plant costs about $1 billion to build.
Greener-than-thou Californians who wish to fall in with their governor’s plan for a million solar roofs, announced in 2006
With the power-hungry markets of Europe to its north, across the Mediterranean, and a lot of sunshine going to waste in the Sahara desert to its south, Algeria’s government is looking for ways to connect the two. It is now building an experimental solar-thermal power station at Hassi R’mel, about 400km south of Algiers, which if all goes well will open next year. In April work started on a similar project at Aïn Béni Mathar, in Morocco, and others are in the pipeline elsewhere in north Africa. Fortunately for people like Mr Woolsey, the ex-CIA man, America has deserts of it own which are about to bloom with mirror-farms too.
Robert Fishman, the boss of Ausra, an Australian-American company based in Palo Alto, California, reckons that his firm’s Fresnel arrays combined with its proprietary heat-storage system can produce electricity for 8 cents a kWh. That matches GE’s wind turbines, and mass production should bring it down further. It is not cheaper than “naked” coal
At the moment it contributes a mere 0.01% to the world’s output of electricity, but just over a decade of 50% annual growth would bring that to 1%, which is where wind is at the moment.
Ten years ago wind turbines were marginal. Now they are taken seriously, and in another decade they may contribute as much as a fifth of the world’s electricity. The same could happen to solar energy, which is ten years behind wind, and geothermal, with a 20-year lag.

Biofuel:
It was that Amyris was going into partnership with Crystalsev, a Brazilian firm, to make car fuel out of cane sugar. Not ethanol (though Brazil already has a thriving market for ethanol-powered cars),
All parts of this chain are currently the subjects of avid research and development. Some biofuels were already competitive with oil products even at 2006 oil prices (see table 5). The R&D effort will bring more of them into line, as will any long-term rise in the price of crude oil.

Geothermal:
Ten years ago wind turbines were marginal. Now they are taken seriously, and in another decade they may contribute as much as a fifth of the world’s electricity. The same could happen to solar energy, which is ten years behind wind, and geothermal, with a 20-year lag.
The Philippines are not generally associated with the cutting edge of technological change. In one respect, though, the country is ahead of its time: around a quarter of its electricity is generated from underground heat. Such heat is free, inexhaustible and available day and night.
Dr Tester reckons that spending about $1 billion on demonstration projects over the next 15 years would change that. It would provide enough information to allow 100 gigawatts-worth of EGSs to be created in America by 2050, at a commercially acceptable price.

Nuclear:
An American industry body, puts the cost of nuclear electricity at 6.5 cents a kWh.

Overall Initiatives:
Larry Page and Sergey Brin, the founders of Google, have started an outfit called Google.org that is searching for a way to make renewable energy truly cheaper than coal ,Vinod Khosla, one of the founders of Sun Microsystems, is turning his considerable skills as a venture capitalist towards renewable energy, as are Robert Metcalfe, who invented the ethernet system used to connect computers together in local networks, and Mr Doerr, who works at Kleiner Perkins Caufield & Byers, one of Silicon Valley’s best-known venture-capital firms. Sir Richard Branson, too, is getting in on the act with his Virgin Green Fund.
It is true that China is building coal-fired power stations at a blazing rate. But it also has a large wind-generation capacity, which is expected to grow by two-thirds this year, and is the world’s second-largest manufacturer of solar panels—not to mention having the largest number of solar-heated rooftop hot-water systems in its buildings. Brazil, meanwhile, has the world’s second-largest (just behind America) and most economically honest biofuel industry, which already provides 40% of the fuel consumed by its cars and should soon supply 15% of its electricity, too (through the burning of sugarcane waste). South Africa is leading the effort to develop a new class of safe and simple nuclear reactor—not renewable energy in the strict sense, but carbon-free and thus increasingly welcome. Spain one of the leading producers of wind-based electricity in Europe.
Initially, the Google project to create renewable energy cheaper than coal will focus on advanced solar thermal power, wind power technologies, and enhanced geothermal systems – but we’ll explore other potential breakthrough technologies, too.

Giant Robot :-)

Giant Robot....my favourite childhood show :-)

http://vishalpatel.com/features/giantrobot/giantrobot.htm