Per capital income of Inida

Per capital income of India has jumped over two-folds between 2004-05 and 2010-11 to touch Rs 54,835 per annum (Approx 1227.2829 USD), minister of state for statistics and programme implementation Srikant Jena informed Parliament.

Dual rates for diesel

The government may introduce dual rates for diesel — with the price of the fuel higher in cars and commercial power compared with the price for truckers and farmers — to prevent its misuse.

During a parliamentary debate on the price rise, Opposition leaders asked finance minister Pranab Mukherjee if the government would withdraw subsidy benefits on diesel used by premium cars and commercial users such as telecom tower companies, malls and restaurants.

“We can accept your suggestion and work out a mechanism so that the (privileged) sections are not subsidised,” Mukherjee said.

Of the total diesel sold, passenger cars, 8 per cent by power plants, 12 per cent by agriculture and 37 per cent by trucks used 15 per cent.

On Sunday, Mukherjee said the government was keen to free the prices of diesel and cooking gas (LPG) to keep its finances under control.

Diesel is the main transport fuel used by trucks and buses. While petrol rates have recently been linked to market prices, the government gives a subsidy of Rs 6.08 per litre on diesel.

Subsidised diesel is also used in irrigation pumps, agriculture equipment and power generators at malls and telecom towers.

Recently, automakers such as Maruti Suzuki and General Motors and even premium carmakers such as Audi and BMW have introduced diesel variants to meet growing demand from consumers.

Mukherjee’s comments on the dual pricing of diesel affected the Mahindra & Mahindra (M&M) counter, shares of which plummeted 4.45 per cent, or Rs 31.65, to Rs 679.25.

“M&M may be impacted the most if this were to happen as most of its utility vehicles are run on diesel,” an auto analyst said.

However, as per Pawan Goenka, president, automotive and farm equipment sector at M&M, the company would not be affected significantly in terms of demand, as customers were unlikely to shift to petrol vehicles in a hurry.

He, however, admitted that a hike in excise duties on diesel cars might impact sales.

Manage your Insurance Portfolios properly

While many individuals believe they are on a firm wicket about their investments (like mutual funds, fixed deposits, small savings schemes, etc), they are usually tentative about their insurance needs.

For one, insurance has many options often confusing the individual.

Secondly, 'insurance awareness' among individuals is very low, which when combined with wrong selling leaves them even more confused.

At a level, managing your insurance portfolio is a relatively straightforward task. It is all about breaking the process down into simpler steps.

Once you have the measure of these steps, you are home. Broadly, managing your insurance portfolio involves four steps:

Identify your needs:

Like with shopping when a well-defined list helps you focus on the task at hand and avoid venturing into unrelated avenues, drawing up an insurance list can have the same effect.

To avoid being swayed by the plethora of insurance options, determine at the outset what you are looking for.

Broadly, the insurance seeker can have one of two needs----

a) Life cover (through a term plan) or

b) Investment combined with life cover (through traditional endowment or a unit linked insurance plan).

Although the latter sounds like the convenient option, we recommend against it.

Going for this option will deprive you of the benefits of selecting the two options i.e. insurance and investment in isolation.

In other words selecting life cover or investment separately is more prudent than selecting a combination of both.

It is advisable to maintain that over the long-term, you will be better off separating these two objectives.

Quantify your needs:

Once you have decided why you need insurance it’s time to answer the question - how much insurance do I need?

Of course, the answer to this question will depend on whether you wish to opt for a life cover or an investment plan.

The reason is that these two questions will have very different answers.

To understand this better let us take the first scenario i.e. you want a life cover. Typically, this will involve planning for all future liabilities and commitments as also setting up a contingency fund.

Those familiar with the jargon know that we are referring to the Human Life Value over here.

On the other hand, if instead of a pure risk cover, you want to opt for an investment plan, then you will first have to identify the investment objective like retirement or child's education for instance.

Once you have done that, then you will have to quantify the investment amount to answer the question - how much money do I want to save for my retirement?

Alternatively - how much money do I want to save for my child's education?

Selecting your insurance advisor:

As we mentioned at the beginning, one reason why insurance has turned out to be more complicated than necessary is because of the quality of insurance advice.

Selling insurance, as you are aware can be very remunerative. Not surprisingly, the advisor is often biased in favor of insurance products that garner the highest commissions.

Therefore, you have to be sure that your insurance advisor is honest and competent.

If you cannot ascertain this easily, insist on references whenever possible.

Check his recommendations by asking for comparisons across insurance companies over various parameters.

Understand why he is recommending one insurance plan over another. In addition, if he is making claims that seem outlandish to you, do not hesitate to either take it down in writing from him or get a confirmation from a company official.

Another problem with insurance advisors is that many of them are mutual fund agents on the side.

While, this by itself does not pose a problem, clients often complain of how their insurance advisor is at times not keen on selling life insurance and invariably makes a pitch for mutual funds.

The solution to this problem lies in identifying your needs. If you have decided to opt for a life cover for instance, make sure your insurance advisor gets the point.

If he still insists on selling other products then it is time to re-evaluate whether he is the right insurance advisor for you.

At times, having sold an insurance policy, the insurance advisor is no longer interested in servicing the same.

References can play a critical role in weeding out such advisors.

Conduct a review regularly:

Like all other long-term activities, you must monitor your insurance portfolio closely to ensure that you are on track to achieve your objectives.

For instance, if you have opted for a life cover (in line with your Human Life Value), then you will have to keep a close eye on your liabilities and financial commitments.

If there is a discernible upward revision, then your existing life cover may not prove sufficient and you may have to consider taking additional cover.

The solution to this problem is to opt for a slightly higher cover at the outset; since pure risk plans are relatively cheap, it will not prove to be expensive.

On the same lines, if you have opted for an investment plan for your child's education for instance, then at periodic intervals (e.g. annually) ensure that your investment plan is on course to achieving the desired result.

 Again, if there is a discernible deviation, it is time to re-evaluate your investment.

By now, hope you have realized that managing your insurance portfolio is not as difficult as it appears.

 Like any other activity it involves taking decisions, implementing them and monitoring the results closely.

Of course, your insurance advisor will play a key role over here, which is why it is important to ensure that he is honest and competent.