AI Driven Personalized Life Insurance Premiums; Aye Or Nay ?


wealthymttersThe mortality risk is not the same across different sections of the population.So one of the ways in which life insurance companies have traditionally competed is by restricting their offerings to people who have lower risks of dying early and thus keeping premiums lower and/or bonuses higher.The classic example is the Postal Life Insurance plans of the past that were offered exclusively to government servants vs similar plans of the LIC that were open to all. In more  recent times,insurance companies target the more educated, affluent, urban ,financially successful professional/managerial class with better living standards and access to world-class healthcare.

Insurtech powered by AI can increase the ability of life insurance companies to make fine distinctions in mortality risks, resulting in more risk classes .So one of the merging trends in life insurance is the increasing number of risk classes as insurers seek to better match risk with premiums.Thus in theory, rather than dozens of risk classes, thousands of risk classes or even lakhs of risk classes are possible. In fact if the AI is astute at risk classification, its possible that each policyholder would be in his/her own risk class. In other words, we would have personalized premiums,designed and calculated on a custom basis for each insured person. Read more of this post

Jugaad And Wealth


This ad from Exide Life got me thinking about Jugaad.

When you’re just starting out with next to nothing in hand, there is nothing like jugaad to take you ahead in the money game. With a bit of jugaad you can stretch the money you have to do more,save money to put together capital and use whatever resources you have at hand or lay hands on to get started on doing what you wish to be doing to start making money. Its sort of like Jugaadulal wearing his helmet to cut onions comfortably. Its pretty sensible, if soaking onions in water before cutting them doesn’t work. Read more of this post

Online ULIPs


wealthymattersLife insurers like HDFC Life, Aviva India and Bajaj Allianz have started focussing heavily on the online platform for selling ULIPS (unit-linked insurance plan), promoting them as low-cost products, in the last few months.These policies are cheaper than their offline counterparts, as the savings made on agents’ commissions are passed on to policyholders in the form of lower premium allocation charges.

Insurers are launching these online Ulips to counter distributors’ reluctance to promote ULIPS . Over the last four years (post September 2010, when IRDA imposed a cap on ULIP charges), many agents and brokers have stopped selling ULIPS.

While the broad structure of a lowcost ULIP sold online is similar to a regular ULIP, slashing of premium allocation charges is the key differentiating feature. HDFC Life’s online ULIP has completely done away with allocation charges.It only charges fund management fee and a risk premium for mortality cover and on this aspect, directly competes with ELSS Mutual funds. The entire premium paid by the customer gets invested. Aviva’s product levies a premium allocation fee of 4-5%, compared to its offline counterpart that charges 8-9%. Bajaj Allianz’s online ULIP levies premium allocation charges ranging from 0-5.5% in the first five years, depending on the premium amount and year. Read more of this post

The Difference Between Life Insurance And Life Assurance


Wealthymatters.comThe average person thinks that Life Insurance and Life Assurance are different names for the same thing. Many financial commentators too fail to note the difference.Life Insurance and Life Assurance perform different financial roles and are poles apart in cost – so it helps to buy the correct product.

Life Insurance provides you with insurance cover for a specific period of time (known as the policy’s “term”). Then, if you were to die whilst the policy is in force, the insurance company pays out a tax-free sum. If you survive to the end of the term, the policy is finished and has no residual value whatsoever. It only has a value if there is a claim – in that context it’s just like your car insurance!So Term Insurance is a Life Insurance product. Read more of this post

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