5 A - Leadership

I can’t even begin to count the number of times I watched people miss great opportunities due to a poor sense of timing. Not too surprisingly, people who possess a poor sense of timing usually don’t even understand timing is an issue.

How many times have you witnessed someone holding-out for better talent,  a higher valuation, evolving markets, technology advances, or any number of other circumstances that either never transpire, or by the time they do, the opportunistic advantage had disappeared? I’ve observed the risk adverse take due diligence one step too far, the greedy negotiate too long, the impulsive jump the gun, and the plodders move to slow.

As the saying goes “timing is everything.” The following list contains 5 suggestions for how to spot and evaluate opportunity:

Alignment: The opportunity should be in alignment with the overall values, vision and mission of the enterprise. Any new opportunity being evaluated should preferably add value to the core, but if not, it should show a significant enough return on investment to justify the dilutive effect of not keeping the main thing the main thing. The core should be used to align, but not necessarily to exclude.

Advantage: No advantage equals no opportunity. If the opportunity doesn’t provide a unique competitive advantage it should at least fill a void bringing you closer to an even playing field. Be careful however not to fall into the trap of “me too” innovation – don’t copy; create. Instead of leveling the field, think about tilting the field to your advantage, and where possible, the creation of a new field altogether.

Assessment: Is the opportunity affordable, feasible, adoptable, and most importantly, is it actionable? An opportunity which cannot be implemented isn’t really an opportunity – it will likely be just another very costly distraction. Conduct your diligence before you pull the trigger, not afterwards. A ready – fire – aim approach to opportunity management usually fails to hit the target. That said, don’t be guilty of moving to slowly. Be decisive; cautious yes – hesitant no.

Accountability:  Keep in mind great ideas are not always the same thing as great opportunities. Ideas don’t always have a corresponding vision, nor do they always contain a framework of accountability which helps to ensure a certainty of execution. For opportunities to become reality they must be viewed through the lenses of organizational awareness and personal responsibility.

Any new opportunity being considered should contain accountability provisions. Every task should be assigned and managed according to a plan and in the light of day. Any opportunity being adopted must be measurable. Deliverables, benchmarks, deadlines, and success metrics must be incorporated into the plan. The opportunity must be detailed and deliverable on a schedule – it needs to have a beginning, middle and end. Any opportunity not subjected to sound principles of leadership will likely fail.

Achievement: Opportunities are great, but achievements are better. If any of the four items above are missing the outcome will be unrealized opportunity, or opportunity squandered and lost. The smart game is not played for what could have been, or should have been, but for what was achieved.
The proverbial window closes on every opportunity at some point in time. As you approach each day I would challenge you to consistently evaluate the landscape and seize the opportunities that come your way. Better to be the one who catches the fish than the one who tells the story of the big one who got away…

Life Insurance Is Different

The sole objective of insurance is protection of your loved ones in case anything untoward happens to you. Insurance can also help you in meeting the expenses that come along with life’s milestones like children’s education and marriage. It can also come to your rescue in times of illness and during your post-retirement years.

Let us see how life insurance scores over popular investment avenues like Emloyee Provident Fund (PPF), Fixed Deposits (FD) and  mutual funds (MF):

Life insurance versus EPF:

In a life insurance policy if the policyholder dies after paying even just one premium, the nominee will receive the entire sum assured. However, in case of a EPF account, the nominee will only get the amount that is deposited in the account along with interest. 

EPF is a long-term investment. When it comes to an insurance policy, you can choose either a long-term one or a short-term one depending on your needs.

Life insurance policy is more liquid as compared to EPF given that you can opt for partial withdrawals, policy loans or even surrender a policy in case of an emergency and take the surrender value.                                                                               

Life insurance versus FD:

The only purpose a Fixed Deposit serves is that of investment. FDs do not provide life cover and protection, whereas this is the primary function of a life insurance policy. A fixed deposit helps you fulfill life’s short-term goals. Insurance too can help you in doing this (depending on the policy you choose) and at the same time also provide for your family’s financial security. Depending on your financial objectives, insurance can work for you in the long term too.

Life insurance versus Mutual Fund:

Investment in MF is made either in debt or equity and only in one fund. In life insurance, the investment is made in a bouquet of funds.

Just like EPF and FD, MFs don’t offer the benefits of life cover and protection. Life insurance offers protection while at the same time also works as an investment tool. It all depends on the type of policy you select.

As compared to life insurance policies, mutual funds are considered to be short-term investment avenues.

Insurance Fraud

Fraud is one of the only offences which are not considered offences against the State which still fall under the realm of criminal liability. There are many ways to commit fraud and one of the most lucrative is insurance fraud. It's not difficult to see why.

 

The insurance industry is a multi-billion dollar industry worldwide and criminals are just swooning at the thought of a piece of that pie.

 

In Malaysia, white collar criminals hit an estimated RM1.775 billion in 2013. Today, fraud schemes are getting more aggressive and more sophisticated than ever - which is exactly why we need to arm ourselves with the necessary knowledge to avoid becoming a victim.

What is Insurance Fraud?

Insurance or takaful fraud refers to any deliberate deception or dishonesty committed against (or by) an insurance company, insurance agent or consumer for unjustified financial gain.

Insurance fraud can basically be broken into two main categories:

Insurance Scams

When someone provides false information to an insurance company in order to gain something of value that he or she would not have received if the truth had been told.

 

Examples include:

1. Creating a fraudulent claim. For example, staging an accident or faking a death to collect the benefits from your insurance policy.

 

2. Overstating the amount of loss. For example, inflating the value of items stolen during a burglary or theft.

Fake Agents

This typically occurs when a fake insurance agent deceives consumers by selling fake policies to them.

 

Examples include:

1. An unlicensed insurance agent issuing fake insurance policies.

 

2. Insurance agents keeping the money paid by policy holders, instead of sending it to the insurance company.

How do I protect myself against Insurance Fraud?

As a consumer, there are several common, and some not-so-common-sense steps you can take to help reduce your risk of becoming a victim of fraud:

Step 1: Make sure your insurance company is registered

Before purchasing insurance, contact your insurance company or Persatuan Insuran Am Malaysia (PIAM), the Life Insurance Association of Malaysia (LIAM) orthe Malaysian Takaful Association (MTA) to ensure the agent is an authorised agent.

Step 2: Avoid paying in cash, request for a receipt and check your policy

Always pay your premiums by cheque or money order made payable to the insurance company rather than to your agent.

 

Also, request for a receipt as proof of settlement each time you make a payment. Make sure you receive a written policy after the payment of your first premium. Then, check your policy to ensure the coverage is what you have requested for.

Step 3: Unusually low premiums

Be suspicious of unusually low premiums and extra coverage. If it’s too good to be true, it probably is!

Step 4: Never sign a blank form

Do not sign a blank insurance application or claim form.

Step 5: Install a camera on the dashboard of your car

It’s becoming increasingly common for people to stage accidents by setting you up as the culprit.

 

For example, A vehicle filled with people will stop suddenly in front of you, setting you up as the cause of a rear-end collision, while doctors and lawyers who are participants in the scheme “handle” the subsequent medical claims and lawsuits.

 

In another example, there are also people who purposely “throw” themselves on to your car and then subsequently claim that you knocked them down.

 

Having a camera installed on the dashboard of your vehicle is essential in preventing yourself from becoming a victim and making these scammers look silly - like this guy right here:

 

How do I report a fraud case?

It’s very simple. All fraud cases should be reported immediately to the police.

Following the steps mentioned in this article may not necessarily make you immune to every insurance scam out there, but it will certainly increase your chances dramatically.

Think Before Purchasing

When it comes to making major purchases like a home, many people spend time beforehand preparing. It’s a good idea to think of life insurance the same way. A life insurance policy can help pay off a mortgage loan so beneficiaries can continue to live in the home or to remove the immediate need to sell it.

Debt can be inherited, and life insurance can help ease the burden your debt could put on your family after you pass away.

Life insurance premium rates change with age and health factors, so in general the earlier you buy, the better rates you will likely be offered. If you are ready to buy life insurance, here are three points to keep in mind.

1. Stay Healthy
Developing and maintaining a fit lifestyle is not only good for your physical health, but your financial well-being, too. The less risky an insurance candidate is, the lower their monthly premiums will be.

So do what is in your control. It’s a good idea to eat right, exercise and get regular check-ups so you qualify for life insurance at a lower cost.

Quitting smoking, losing weight and reducing alcohol intake can all improve the rates you receive from insurance companies.

2. Understand Your Options
It is easy to get confused by all the different life insurance options available.

Depending on where you are in life and how much protection you need, you have to determine whether you want permanent or term life insurance. Within those categories, there are specific options which may be better for your individual situation.

As your life changes, your life insurance needs may change. It’s a good idea to think about whether your policy still fits your needs whenever you make major changes such as getting married, having a child or buying a home. You may want to change the type of insurance you have or even just add a new beneficiary.

3. Research Riders
The options aren’t done yet! Riders are add-ons to the policy you choose. It’s a good idea to look at what is available and what may be necessary in your situation.

Each rider will add to the cost of the policy so it’s important you aren’t adding riders that don’t apply to your needs. Some examples of riders include an accidental benefit rider or waiver of premium rider. By knowing the facts about life insurance before you buy, you can help ensure you get the life insurance coverage you want and need.

Suicide - Claim Life Insurance

In the aftermath of a suicide, family members may have financial matters to deal with — namely life insurance — in addition to their grief. In the aftermath of a suicide comes sadness, pain, confusion and even anger. For family members, though, there may eventually be financial matters to deal with as well.

 

I don’t know whether actor Robin Williams, who died by suicide this week, carried life insurance.
For family members in general, two policy clauses can come into play when someone they love dies by his or her own hand. If either clause is invoked by the insurance company, the insured person’s family would receive no death benefit, though they would get back the premiums paid for the policy.

The key rules
* The “suicide clause.” Usually, this clause states that no death benefit will be paid if the insured commits suicide within two years of taking out a policy.

Whenever an insured person replaces an existing life insurance policy with a new one, the time clock for the suicide clause is set back to zero and starts over again.

My friend Professor Joseph Belth, formerly the publisher of The Insurance Forum, wrote about a case in the 1970’s in which an Iowa man replaced four small policies with one policy that had a death benefit of about $60,000. Both the old policies and the new one were issued by Bankers Life Co.

The man committed suicide within two years of the issuance of the new policy. The insurer denied the claim under the suicide clause. A lawsuit followed. Four years later, on the eve of trial, the widow settled for $23,000, and also had to pay substantial legal costs.

* The “incontestability clause”. This clause says that if the insured person made misstatements on the policy application, and dies within two years, the company can decline to pay the death claim. After that, the policy is “incontestable” except in cases of outright fraud.

Just as with the suicide clause, the clock on the incontestability clause is reset whenever someone replaces his or her existing policy with a new one.

Families may have to fight
There are plenty of examples where family members had to go to court to collect insurance benefits. Heath Ledger, who played the Joker in the movie The Dark Knight, died in early 2008, just seven months after he took out a $10 million life insurance policy. The New York Medical Examiner’s office ruled that the death was an “accident, resulting from the abuse of prescribed medications.” This raised two questions. Was the death a suicide? And did Ledger have a drug habit that wasn’t disclosed on his policy application?

The insurer, ReliaStar Life Insurance Co., launched an investigation into these questions, rather than paying the death claim immediately. In response, lawyers for Ledger’s young daughter Matilda filed a lawsuit. The case was settled for an undisclosed amount that was less than the full $10 million.

In a less prominent case, Todd Pierce of Montana, who had been fighting cancer for several years, died in a car crash in 2009. The sheriff’s department called it accidental death, and Pierce’s family filed a claim for $224,000 under an accidental death policy he had received through work.

The insurer, Metropolitan Life, denied the claim on the grounds that Pierce had committed suicide. Jane Pierce, Todd’s widow, sued the following year and the claim was eventually paid.

Life Is Good And Can Be Better

Money has always been an integral part of our lives in supporting the activities we engage in and the goals we base our achievements on. Suffice to say, every facet of our lives is directly or indirectly associated with what money we have, where decisions are to be made primarily for the result of money in hand, maybe in abundance or because of a lack of it. But the question is really about how we can sensibly manage money or financial planning in these modern times.

In a less-than-perfect world, the logical answer would be to manage our money more proficiently, in order to harness greater benefits and advantages than those we are enjoying at the time. Or would more prudent financial planning be required in order to be able to squeeze and stretch the dollars further in our life-long endeavour of ensuring financial stability and safety from every dollar we can acquire?

Planned or not, we crave better lives in the future, and it is this factor that speaks volumes about how prosperous and financially adequate we must be in order to obtain what our hearts desire.

The most common beginning to financial security is the ability to save for a rainy day. However, this would also be called into question as it does require discipline. Life insurance can be a solution for us to build that discipline and habit of saving for the welfare of our beloved family, or for that matter, a real rainy day, if you will.

The benefits of life insurance

There are several advantages that we can get from the habit of saving money through a life-insurance policy.

First, life insurance provides a replacement income for a family if at any time the head of the family dies. In this case, as a form of protection against the premature death of the head of the family, life insurance provides income-replacement guarantees to the assured or the heirs of the deceased.

Second, life insurance provides financial security for specific and special needs in the future such as educational funds and old age.

Third, life insurance provides a reserve for our families in emergencies. When unexpected events arise such as hospitalization or medical care, life insurance can provide the necessary financial aid that we need. Life-insurance policies can also accommodate financial support for health care as a result of serious illness or accidents.

Fourth, life insurance can help us in preparing for financial independence in old age. In this case, the discipline required to maintain a life-insurance policy brings the benefits of the availability of funds in the form of retirement savings to meet our diverse needs.

Simply put, I will give you an illustration of the benefits of the policy and the sum for that assured that is contained in a life-insurance policy.

For example, an insured person with a net worth of 5 million dies. However, the assured had only paid one month’s premium on their policy. Still, the beneficiaries are entitled to the sum of 5million from the life insurance company.

Therefore, the amount of money received by the beneficiaries of the victim has increased exponentially when compared to the amount of premium paid by the assured, or the equivalent of one month’s premium. Upon the death of the assured, the cash benefits received by his beneficiaries are able to sustain those left behind comfortably, wherein lies the true benefit of having a life-insurance policy.

Philosophically, when we protect ourselves with a life-insurance policy, we get into the habit of saving, which is an act that is ‘mandatory’! It is because of our discipline in paying life-insurance premiums on a regular basis.

When we discipline ourselves in paying the premiums, we are also instilling a ‘forced savings’ habit, which we hope could encourage an effective savings culture. It may begin subconsciously, but real consciousness arises in the realization that all benefits could be forfeited when one fails to pay premiums as required.

As policyholders, we also understand that insurance premiums will increase with age. If we terminate the policy that we already have, we are putting ourselves at a disadvantage, or could even incur losses. This is because a higher premium will have to be paid for a new policy later, as opposed to the one we have allowed to lapse or have cancelled. In addition, new medical check-ups might be required.

For these reasons — for cost efficiency and the certainty of protection that we require — it is important that we continue to pay premiums on a regular basis for the welfare and benefit of our families’ future. For maximum benefit and so we can get the insurance coverage later, the discipline of paying premiums is an obligation and a responsibility that we all must embrace!

Understand Life Insurance

MANY of us purchase insurance for the pure reason of having that added protection - should something unfortunate happen. However, how many of us really know what we’re buying into?

Many people are often sold products that are not ideal for them. A lot of times, people don’t purchase insurance policies. Instead, it’s something that’s sold to them.

 Most people also do not read the terms and conditions of the policy. It’s because it’s very daunting. You could spend three hours reading it and still not understand it. There are a lot of jargons that the lay person will not understand.

Knowing what’s right for you
 People looking to buy insurance should look for products that are catered to their needs, affordability and type of coverage. An insurance agent should be able to explain in detail what the policy is about and not just sell it to the customer.

 Insurance industry was a sales-orientated one, with lucrative commissions and attractive incentives. The education level of agents - some are part-timers, housewives or have SPM-level education.
Can they truly understand things like internal rates of return (IRR) and other technical terms?
Generally, Malaysians are not that financially literate and rely on agents to propose plans.

The word “guarantee” was a common word used within the insurance community. The word “guarantee” is a magical word. Insurance is probably one of the only financial tools (besides fixed deposit, of course) where the word is used by agents in some of their proposal plans to clients.

Better education
At the end of the day, efforts need to be made to educate the public when it comes to buying insurance. After all, a person’s livelihood is at stake. Tan says educational talks, public forums and road shows should be organised by financial institutions in collaboration with the regulators for the interest of the general public.

 

Increase Agent Commission

The commission structure for life insurance agents, which is currently capped, could be revised in line with other countries such as Singapore and Hong Kong.

It is learnt that revising up the commission structure was one of the areas that Bank Negara was looking into in its concept paper for an improved framework for the life and takaful insurance sectors.

“Discussions are still ongoing on the matter between the industry and the central bank,” said an industry official.

The current commission structure in Malaysia is capped at 171% payable over six years for traditional insurance plans and 160% payable over the same period for investment-linked insurance products.

Of the 171%, 110% goes to agent as basic commission and the balance for unit and district managers, etc.

At this juncture, it is still unclear by how much the limit on commission would be revised. As of June 30, the total number of agents in the life insurance sector stood at 82,444.

According to industry observers, the move to revise the commission structure of life insurance agents would enable them to move more easily from one company to another without much constraint.

At the moment, an industry player said there was hardly any movement of agents within the industry, adding that this was due to the fear of losing out or foregoing their commission in the event they joined a new company.

In Singapore the authorities have capped the commission of agents to a maximum 150%. This is the figure which has to be paid when an agent joins a new company upon leaving his previous company. The island republic has done this successfully.

Allowing agents to move should be balanced with consumer protection. There should be guidelines to ensure consumers are adequately protected. We are supportive of the move but at the same time by allowing insurance agents to move more easily via revising the commission limit, among others, should not put customers at a disadvantage.

 Singapore and Hong Kong was more liberalised as there were more movement of agents due to greater flexibility in the commission structure and was not regulated unlike Malaysia.

An industry player said he did not foresee any major deviation from the current norm as any major increase in commission terms would invariably result in an increase in price which would render a product to become uncompetitive.

However, flexibility in commission terms would allow insurers to reward good and loyal agents.
Unlike Hong Kong, Singapore and South Korea, which have about 90% full-time agents, Malaysia was a far cry with about 40%.

Understanding Takaful

MAN and his wealth are inseparable. Thus, Islam recognises the human needs to acquire wealth. In relation to this, the religion has outlined a definite set of laws to be followed by man in his interaction with wealth as a mean to enjoy the comforts of life and to achieve taqwa, or the highest devotion to Allah.

Having wealth alone, without it being managed and developed for the goodness of mankind, is contrary to what is demanded by Islam. Islam decrees that such wealth to be developed and prohibits one from freezing it.

Nowadays, some people begin to turn to investments as an alternative form of income to achieve their future objectives. Yet today, our society is overwhelmed by various investment methods, both legal and illegal, including get-rich-quick schemes.

It is undeniable that the awareness for investing among the community today is very encouraging. However, such enthusiasm should not make one fail to distinguish between the real investment methods and the bogus ones, for it may produce catastrophic results in the future instead of success.
Therefore, every member of the society has to get hold of the basic knowledge related to the investments before deciding to invest.

With rapid growth and development of the takaful industry at present, takaful operators are also offering many innovative products that meet the needs of the society.

To fulfil the customers’ needs, not only in term of takaful coverage, but also to reap profits from the investment activities of takaful handlers. Takaful Ikhlas is offering a product that combines the elements of takaful coverage with elements of investment, known as “investment-linked”.

Subscriptions to these investment-linked products are expected to continue to escalate, in line with the increasing income of Malaysians.

The investment-linked takaful plan is a long-term savings plan based on the method of investing in a group of shares that are divided into several units, something akin to unit trusts and combined with takaful protection benefits.

The significant distinction between the takaful investment-linked compared to other investment methods is the element of protection. A participant will not only reap the benefits of investment profits, but will also enjoy the elements of protection should the participant suffer any of the risks covered under the plan.

Takaful Ikhlas offers the Ikhlas Premier Investment-linked Takaful and Ikhlas Capital Investment-linked Takaful.

Ikhlas Premier Investment-linked Takaful provides a peace of mind to potential investors with sufficient financial protection through investments in any of these investment funds, namely the growth funds, balanced funds and fixed-income funds.

Under the premier investment-linked takaful, participants have the opportunity to make a more lucrative income with only RM100 per month contribution, and they are actually equipping their future with financial protection, should any disaster befallen them that can lead to death or total & permanent disability (TPD).

As for benefits in the case of death or TPD, 100 per cent of the total coverage plus the outstanding amount in all share units will be paid to the participant or his immediate family.

On the other hand, through Ikhlas Capital Investment-linked Takaful, a single contribution is enough to give the participants the opportunity to get a more lucrative return on forthcoming investments. It is a plan that provides added value, both to the capital and protection simultaneously.

Under this plan, participants can enjoy the highest return and protection on the investments they make. For example, with a one-time payment of RM5,000, participants will enjoy a lucrative
investment return and takaful coverage required in the event of a disaster that leads to death or TPD.

A participant or his next of kin can enjoy (subject to the terms and conditions) 100 per cent of the total coverage (equivalent to 125 per cent of the single contribution) in case of death or TPD.

Investment-linked takaful plan is not only unique in terms of worldly benefits to be enjoyed by the participants, but it also provides benefits for the hereafter. This benefit can be enjoyed by the participants through the application of “Tabarru” (donation), which is the core of the takaful system.

In the takaful system, implementation of Tabarru is bound to the principles of takaful (mutual help), which is to create a mutual atmosphere of helping one another. As a simple analogy, participant A would make a contribution to help participant B, and participant B would donate to help participant A, this would create a helping environment known as takaful. These are among the advantages and beauty of the takaful system that is not found in conventional insurance system, to enjoy the benefits of the hereafter together with the worldly returns.

Participants need not feel apprehensive because the responsible bodies in the takaful industry in Malaysia, such as Bank Negara Malaysia, have established a robust and efficient regulatory framework of syariah compliance. Takaful Act 1984 also has allocated several provisions that require takaful operators to ensure that all their activities comply with syariah, and this is accompanied by circulars issued from time to time by Bank Negara.

Power Of Dream

Never underestimate the power of dreams and the influence of the human spirit. We are all the same in this notion: The potential for greatness lives within each of us.
- Wilma Rudolph
From the smallest atoms and molecules invisible to the human eye, to the bricks and cement that construct our buildings.

From the tiniest structure of our neocortex, to the many inventions that we have brought to life.

We live in a world surrounded by man-made creations, so what makes us think that we are not capable of building a future that we want?

We live in a world of possibilities. Take a second to think about it. The world that we live in are filled with inventions that were once thought to be impossible: 3D printing a house, visiting Louvre Museum from home via a virtual tour, sharing your idea with the potential to reach tens and thousands of others within seconds, having your personal digital assistant to keep you on schedule, building websites and apps by writing codes — which of these are not once a concept or idea that reside in the brain of some amazingly talented being?

We experienced exponential change with the introduction of the Internet. We are entering a time of unprecedented change in technology and the way we live and work. For the first time in the recent history, people and I mean people at the bottom of the hierarchy — the mass, are more empowered than ever.

Thanks to the internet, an underdog will have a greater chance to flip his or her life for the better. There are now tons of platforms that will help a talented being to be discovered: from the early days of Blogger, YouTube and Twitter, to Instagram, Kickstarter and Medium. We have come to a time where, if we have the skills (and the will to succeed) there is a platform that is readily available for us to showcase our capabilities. Similarly, if we are highly motivated and have the will to succeed, there are a number of options that enable us to enhance and acquire new skills.

I believe that the few who have succeeded, are the ones who gave themselves a chance by taking an additional step forward when most people won’t. They are the ones who go to places where most people won’t. More importantly, while they are at it, they give it their best shot.

When we march into uncharted territories (environment and experiences that are new to us), even if we failed, it is still an accomplishment in itself for we challenged ourselves to step away from comfort zones. We are opening up doors to new possibilities when we make a conscious choice to challenge ourselves.

Everything in our lives are made of building blocks.

Keyman Insurance Defined

"Key Man" insurance is a life and/or disability policy taken out by the business as a beneficiary in the event of death or disability to a particular key employee. This type of policy is also called: key executive coverage, key person coverage and key employee coverage.
The policy works by paying the business in the event of the death or disability of a person who is so important to the business that their loss could destroy the business. The policy is a cheaper option than standard life or disability policies because the policy can be purchased with a "first to die" provision and cover multiple key employees. For example:

A software company founded by three software engineers could take out a key policy on all three of the founders with a "first to die" provision. Upon the death or disability of one of these founders, the policy would pay benefits to the company. The policy would no longer apply to the two remaining founders. The policy payment would be used to replace the efforts of the first founder (hiring personnel, covering loss of sales, etcetera).

Insurance purchased in this manner would be much cheaper than three individual life policies and three individual disability policies.

Why Purchase Key Man Coverage?

You should consider "Key Man" coverage as a part of your business insurance program. Specifically, you should consider the coverage when any of the following apply to your business:

• Your business is a professional services business and key employees cannot be replaced expeditiously because of legal or ethical restraints.For example, a law firm or medical office cannot replace a twenty-year veteran with a new graduate.


• The business cannot continue in the event of a loss of particular people.Imagine "The Dog Whisperer" without Cesar Millan. The fact is that some businesses are simply not a business without a particular person in the operation.


• Business continuity is a concern.Look at your partner's children, wife and other heirs. Do they know the business? Do they care? Are they in the same profession? Your partner's share of the business will be inherited by someone and the business may need to buy out that person's share or dissolve the business.


• Future growth or financing is possible.Most financiers and banks will require this coverage to be in place before extending any financing or credit to the company. If the company merges or goes public, this coverage will be required on top executives and board members.


• The key persons are between the ages of 30 and 55.Young key people are more likely to be disabled than die. Young key people are also the least likely to have adequately planned for their death. Thus, if your business has young key people consider this coverage because it is human nature for young people to ignore their mortality and the business may be hurt by the lack of planning.

The cost of this coverage can often be defrayed as a business expense on company taxes (see your tax professional). The cost is often cheaper because it is sold as a term product usually for fifteen to twenty years and often corresponding to the most productive work years of the employee or officer. Your company may not need this coverage, but even engaging in the analysis of whether this coverage is necessary is often helpful. Do the analysis and consider what you would if Employee X was not able to work tomorrow.

Keyman Insurance & Treatments

What Is Keyman Insurance
There is no legal definition. In general, it has the following features. An employer takes out an insurance policy insuring against loss of profits arising from the death, sickness or injury of a key employee. The beneficiary is the employer. In the case of a life insurance policy, it is a term insurance, covering the life of the employee within the term of the policy, with no other benefits. The term does not extend beyond the period of the employee's usefulness to the employer. The purpose of taking out the insurance is to compensate the employer for the loss of trading income that may result from the loss of the service of the key employee in case of death, sickness or injury

Is Premium Deductible

Are the premiums paid on the policy by the employer deductible for profits tax purpose? Are the proceeds from the policy taxable?

The premiums are deductible (provided the policy has the features as mentioned in A1). The proceeds are taxable as trading receipts of the employer, being compensation for loss of profits.

Is Proceed Taxable – Sole Proprietor or Partner
If the employer is a sole proprietor or a partnership and the insured person is the sole proprietor or a partner, are the premiums paid on the policy by the employer deductible? Are the proceeds from the policy taxable?

No, the premiums are not deductible. Even though the policy may be named as a 'keyman policy', the Department would not accept that it is a real keyman policy as described in A1 above. This is because a keyman policy is applicable only in the case of an employer and employee relationship. A sole proprietor or partner is not an employee. The premiums are regarded as private expenses.

The proceeds are not taxable

Is Proceed Taxable – Limited Company

If the employer is a limited company and the insured person is a director who owns substantial shares in the company, are the premiums paid on the policy by the employer deductible? Are the proceeds from the policy taxable?

No, the premiums are not deductible. The situation is, in substance, similar to the case where the insured keyman is the sole proprietor or a partner. The Department considers that the purpose of the policy is to protect the value of the shares because the life or well-being of the director, being the keyman, would significantly affect the value of the shares. The premiums are of a capital nature. In this connection, generally a shareholding of 20% would be regarded as substantial.

The proceeds are not taxable

Is Proceed Taxable – If Paid To Family Members

If the proceeds of a "keyman insurance policy" are payable to the family members of the employee or the employer is contractually required to pay the proceeds to the family members of the employee, are the premiums paid on the policy by the employer deductible? Are the proceeds from the policy taxable?

No, the premiums are not deductible. The purpose of the policy is not to compensate the employer's loss of profits, but to protect the family of the employee.

The proceeds received by the employee's family are not taxable

Premiums With Cash Value

If the policy is not a term policy, but is a life policy carrying a surrender value or an endowment policy, are the premiums paid on the policy by the employer deductible? Are the proceeds from the policy taxable?

No, the premiums are not deductible. They are regarded as expenditure of a capital nature.

The proceeds are not taxable.

 Rider – Premium and Proceed Treatment

Sometimes, the policy may have an add-on element. For example, the employer pays extra premiums on top of the normal premiums so that on the death of the employee certain benefits (e.g. one year salary) would be paid to the family members of the employee. Are the whole premiums paid on the policy by the employer deductible? Are the proceeds from the policy taxable?

Only the normal premiums are deductible (provided the policy has the features as mentioned in A1). The extra premiums are not deductible.

The proceeds received by the employer are taxable. The proceeds received by the family members are not taxable.

Investment-linked Policy

If the policy is an investment-link policy, are the premiums paid on the policy by the employer deductible? Are the proceeds from the policy taxable?

The premiums for the investment portion are not deductible because they are of a capital nature. Only the premiums for the risk portion are deductible (provided the policy has the features as mentioned in A1). An apportionment of the premiums is necessary.

The proceeds relating to the investment portion are not taxable. The proceeds relating to the risk portion are taxable.

Employee Insurance
If the employer is required under the law to pay compensation to the employee on injury or death etc. and the employer takes out an insurance policy to cover such legal obligation (e.g. workers' compensation under the Employment Ordinance), are the premiums paid on such policy deductible? Are the proceeds from the policy taxable?

Yes, the premiums are deductible, being normal business expenses. Such policy is not a keyman policy.

The proceeds are not taxable.

Partnership Insurance

If the employer paid premiums on an insurance policy taken out for the purpose of providing funds to any person (e.g. one of the partners), in the event of death of an insured person (e.g. the other partner), to acquire partnership interests or shares of a limited company, are the premiums paid on such policy deductible? Are the proceeds from such policy taxable? (Note: Normally, the main purpose of such insurance arrangement is to prevent cessation of business by reason of the death of an owner of the business.)

No, the premiums are not deductible. The premiums are regarded as private expenses or capital expenditure. Such policy is not a keyman policy referred to in Q1.

The proceeds are not taxable.

Quality Agents

If you have ever contemplated becoming an insurance agent or wondered whether this career path could be right for you, then there are several qualities that you will need to possess, at least to some degree. All good insurance agents share some of the following core qualities in one way or another.

People Skills
1. Puts the needs of the client first - An agent who is only out to earn a commission, regardless of the needs of the client, is not likely to last long in the business. Agents and brokers who listen carefully to what their clients and prospects say will be able to earn their trust, which is the hardest part of their job. Those who are willing to put their clients into a product that pays a lower commission because it better fits their needs are much more likely to be successful.

2. Good customer service - Customers who are able to get a hold of their agents when they need them are much more likely to stay happy and reassured. A timely response to inquiries and phone calls is a must, and you must be able to do what you say you will do, when you say you will do it - or at least have a good reason as to why you can't. One of the major complaints of those who buy life insurance policies is that there is no one around to answer their questions after they have purchased the policy.

3. Emotional intelligence - This includes the ability to listen and empathize with clients on a deeper level in order to discern what they really want and need. A good agent is tactful and knows how to help a client see financial reality clearly, even when the client is dead set against it.

Strong Personality
1. High energy level - One of the most important traits of a good insurance agent is that they appear to be excited and eager at all times. A worn-down or dreary disposition will immediately rub off on clients and discourage them from buying anything.
2. Persistence - This is perhaps the most vital quality of any good insurance agent. Those who work in this field absolutely must be able to handle rejection on a daily basis over the course of their careers, and do it with a smile. Good insurance agents understand that each "no" only brings them closer to someone who will say "yes."

3. Honesty - Insurance agents who use deception to close business seldom stay with the same company for very long - and can end up behind bars in some cases. A good agent knows that telling the truth up front will win them clients' respect and trust and is likely to lead to repeat business over time.

General Knowledge
1. Wide array of products - As the old saying goes, if all you have to work with is a hammer, then everything in the world looks like a nail. A good insurance agent will be able to offer a comprehensive selection of products and services that can meet any reasonable need a client might have.

2. Technical knowledge - A good insurance agent knows much more than how to sell a policy. The agent must understand the tax and legal aspects of the products he or she sells and how they are designed to fit into a client's overall financial situation. Many agents earn financial planning designations such as the Certified Financial Planner®, Chartered Financial Counselor or other credential. Some agents practice financial planning, income tax preparation or some other avenue of financial service as their primary profession and then write insurance business when it becomes necessary.

The Bottom Line
These are just some of the qualities that life insurance agents must possess in order to be successful. The life insurance business can be very challenging and immensely rewarding for those who are willing to learn the necessary skills to build their business. For more information on how to become a successful insurance agent, contact the recruiting offices of a few different agencies or a headhunter who works with insurance agents.

Centre Of Influence

Getting clients to cross your doorstep is often one of the most challenging tasks in any business, but in financial consulting, it can be even more difficult. Careers in financial services, similar to lawyers and doctors, are professions that require the trust of the client. Potential clients don't simply choose one out of the phone book (or, at least, they shouldn't.) They talk to their friends, their co-workers and their existing advisor network to get recommendations. This means that attracting clients isn't as simple as placing some ads and handing out business cards. It means working through your own networks to encourage them to recommend you to potential new business. The three main groups of referral sources are existing clients, your circles of influence and even competitors.

Existing Clients
Your current client base is the most authoritative source for referrals. Happy customers are often pleased to be able to pass your name along to their friends and family. They speak from experience and can explain your services and answer questions from potential clients. Think about referrals you have asked for in the past. For example, if you're looking for a new lawyer, wouldn't you be most interested in hearing from someone you know and trust, who has used the lawyer in the past?

Remember to ask your client base to pass your name along to people they think might need your services. Make it easy for them by giving them a half-dozen business cards for them to keep on hand. If you don't let your clients know that you are actively seeking new business, they may assume that you are busy enough and don't really want to take on new people.
Circles of InfluenceOne of my best sources of new clients has always been the professionals I know who work in connected businesses, including lawyers, accountants and bookkeepers. These people connect with potential clients every day and most are happy to have your name on the tip of their tongues, when asked by their own clients who they should see for financial services. It makes the advisor look good to have connections with other professionals.

Make a list of those professionals you deal with on an ongoing basis and be sure to remind them regularly that you are looking for new business. Don't forget to reciprocate and send business their way, whenever you can.

Competitors
It may seem odd to consider your competitors as sources for new clients, but they can be an important piece of your overall referral strategy. Competitors may be at their client limit or they may not offer the exact same services that you do. Talk to your competition on a regular basis and let them know what you can offer potential clients that they can't service. Also, just as with your circles of influence, be sure to send business their way, too.

Should You Pay for Referrals?
A question that I'm asked frequently by new financial professionals is whether they should pay for referrals or not. The answer is, it depends. I would never recommend that you pay for services that give you marketing lists. You have no idea where the lists came from and how aligned the people are on the list, with what you have to offer.

There is a benefit, however, to offering a referral fee to clients and acquaintances for referrals that end up becoming clients. It keeps people motivated to refer you to others and it will boost your bottom line. Calculate the average lifetime revenue from a client and you will quickly see the benefit of offering a referral fee to obtain that new stream of income.

The Bottom Line
As a financial services advisor, you will attract new clients from many sources, but referrals from others will likely be your main fountainhead. Develop relationships with those around you who have the ability to send business your way and, most importantly, give your current clients world-class service so that they can't help but recommend you.

How To Be A Successful Agent

Looking for a career that offers a big potential financial upside, a wealth of job opportunity and the lure of self-employment? If you enjoy forging relationships and are committed to client service (and can handle plenty of rejection), insurance sales could well be for you.

The dirty little secret of capitalism is that many — if not most — white-collar jobs require little more than showing up and going through the motions. (Thousands of people in middle management just nodded their heads, aware of the irony of reading that sentence in an Investopedia article while ostensibly working.) Not so for insurance sales. It’s the ultimate commission gig, its practitioners fully dependent on their customers’ premium payments. Convert more prospects, get correspondingly richer. 

Slow-Going...At First
Like retail, customer service, and similar lines of work with high attrition rates, insurance sales typically doesn’t pay all that well at the onset of one’s career. However, unlike those other occupations, the longer you stick around in insurance, the easier and more remunerative it gets, thanks to referrals and residuals.

It’s sticking around that’s the hard part. A 2010 study by the Life Insurance and Market Research Association claimed that the median salary for second-year agents is somewhere south of $30,000. Also, the median salary for those same agents two years later is…well, technically zero, because four out of every five agents have quit by then.

But Plenty Of Opportunity
If you’re serious about selling life insurance for a living, here’s one positive. It’s a job-seeker’s market. Major insurers have watched their workforces dwindle from their late 20th century zeniths. Some agencies going from having tens of thousands of agents on the payroll to having merely a couple of thousand. (A little thing called the internet is largely responsible for this. Incredibly, there was a time not that long ago when you couldn’t buy a simple term policy at the click of a button. Today’s life insurance agents, though far fewer in number than they were a generation ago, thus have to specialize more than ever.)

There might not be any sign in the window, but trust us, the agencies are hiring, and will consider you regardless of what line of work you were in before. And why not? It costs money for an insurance firm to train an agent, but that’s still cheaper than paying a salary for what is, again, a position that relies almost exclusively on commission once the training period ends. The work is mentally grueling, not because of its complexity, but because of the sheer and unwavering persistence it demands.

While the U.S. Bureau of Labor Statistics proudly announces that the median annual salary for all agents is over $48,000, it takes a little more digging to discover that the average agent is 56 years old. For the 20-something aspiring underwriter, at least you won’t be dealing with the same demographic competition you’d be facing if you were pursuing work in the digital media industry. Another advantage: within a decade your average co-worker will be retired.

Be Prepared For Rejection
The actual execution of the job of life insurance agent can be disheartening, at least at the start. The first lead you contact is going to say no. The second lead is going to say no. Eventually, after you’ve shadowed the established agents in the office long enough (and have learned the stark differences among whole, term and universal policies), you make your first sale. And garner the majority of the premium for yourself, maybe as much as 70%.

70% commission? The writer buried the lede! Life insurance sounds like the greatest career ever!

Not quite. The returns diminish. After the first year, the commissions trickle. Expect to earn 3-5% commission throughout each of the policy’s remaining years. Of course, by that time the idea is to have sold enough policies that such a small percentage represents a comfortable dollar figure. But the rejection a rookie agent has to deal with is overwhelming. The agents who have the wherewithal, the patience and the resources to ride out the unproductive stretches are the successful ones, without exception.

Hitting The Books
The job can be thankless, at least until that first 70% commission check clears. The best agents are the ones with the most and most respected designations – Chartered Life Underwriter; Fellow, Life Management Institute; Certified Insurance Counselor. Dozens of hours of study and instruction, followed by an exam, separate the less committed and less ambitious life insurance agents from the ones truly devoted to the career. Combine flawless ethics with real-world education – and a healthy dose of that persistence that’s a prerequisite for the job – and there’s no reason why you shouldn’t flourish.

What NOT To Do
While there might be a code of conduct that registered agents are obligated to honor, occasionally it brushes up against the limits of common decency. Take Adriana’s Insurance, based in California’s San Bernardino County. (Aside: As a rule, insurance companies command confidence among their customers by selecting names that are bland and serious; Allstate Corp. (ALL); Aflac Inc. (AFL) (a.k.a. American Family Life Assurance Co.); Metropolitan Life Insurance Co. (MET), for example.) 76-year-old Andres Carrasco sued the company in 2012, claiming that he’d been assaulted by an employee while trying to buy insurance. Adriana’s settled the case for $21,000, which several of the company’s employees then hand-delivered in the form of coins to Carrasco’s lawyer’s office. Proving, yet again, that there indeed is such a thing as bad publicity. And that even insurance agents who’ve managed to make a career out of the business can fall victim to negativity.

The Bottom Line
If entrepreneurship is your goal, there is plenty of opportunity for someone seeking a career in insurance sales. That said, it'll be tough going, especially at first. Agents have to have a thick skin and handle rejection. After all, they're all selling the same products, for the most part. So if client service and building relationships isn't your thing, you might want to pass.

10 Myths Of Life Insurance

Life insurance must be a part of every individual’s financial planning but one needs to debunk various age old myths attached in order to buy adequate life cover. Let us take a look at the top 10 popular myths associated with life insurance.

1. Life insurance is for older people: Many youngsters have a feeling that they may require a life insurance policy in the middle age or after 40 only. The fact that death is the ultimate reality of life and can happen to anyone irrespective of age, caste, creed or gender. The earlier one gets a life insurance cover; not only it is light on the purse but also increases the overall protective range for the individual.

2. I am single, so I do not need life insurance: If you have no family or dependant you may want to still consider life insurance policy. Life insurance policies usually expire at the age of 60-65 years offering substantial returns to the insurer at their retirement period. With increasing life expectancy, life begins at 60 for a large number of people. Investing in life insurance can mean an added financial cushion for your retirement years and also saves you from tax burden during the earning years.

3. Life insurance is a tax saving instrument: Many people buy life insurance simply as a tax saving instrument. While it is true that life insurance offers tax benefits under section 80c of the Income Tax Act, the sole purpose of life insurance is to provide a protective cover in case of sudden death. Tax incentives and investment returns provided by life insurance policies must be considered as an add-on benefit, while one should also consider the cover, returns and other factors associated with it.

4. Company’s group insurance is good enough: Many salaried individuals do not look beyond the group insurance provided to them by their employer. Group insurance is good only as long as the individual is working with the company. In case of a change of job or a sudden red slip, the individual is completely devoid of any life insurance. Also in case a salaried individual plans to leave the job for self employment in his mid age, taking a life insurance in the 40’s can be an expensive proposition.

5. Term insurance offers no returns: A lot of people consider term insurance as a bad product and waste of money since they get no returns at the end of the tenure. What most of the people forget is that term insurance offers life insurance round the year at nominal prices bringing peace of mind to the individual and his or her family. The growing popularity of term insurance as a life insurance product is testimony to the fact that it is one of the better life insurance products available in the market today.

6. Insurance agent knows best: Many people think the life insurance agent in their best friend and can advise them to choose the best product for their case. The fact is that a large number of insurance agents are poorly trained and try to sell the most lucrative product which offers them a chance to compete their monthly targets than anything. As a customer for life insurance, one must do some homework about various insurance plans and schemes and not reply only on the advice of the insurance agent.

7. Savings bank account or credit card offers me life insurance: Some banks are offering free life insurance to their savings bank customers as well as credit card clients. Considering such life insurance as a protective cover is a big mistake and must be considered only as an added advantage of using the core banking services.

8. Buying life insurance in my kids name is a good idea: Many people think that since the life insurance policy would eventually help their dependent children or their spouse, they are better off taking the insurance in their name directly. Life insurance is an individual centric product and must be taken in the name of the earning member of the household always. Of course children and non working members of the family can be nominees and have independent life insurance policies as well.

9. Non liquidity of money doesn’t suit for me:  Some people try to keep away from life insurance policies due to the fact that money invested in policies are locked n for a certain period of time. They think that life insurance doesn’t suit them as they don’t have the freedom to use the money when they have an emergency situation, It is true that there is lack of liquidity in life insurance, but consider the long term benefits and advantages of a life insurance policy, especially during times of an unforeseen mishap. 

10. Expectation of high returns: Some people have an unrealistic expectation of doubling up the invested money during maturity period, thinking life insurance policies are high return investment vehicle. This is wrong as many policy plans are not as attractive as equity investments or real estate investments. You cannot expect huge returns from your invested premiums, but the fact that helping and terms of unexpected mishaps, or retirement benefits is the main attraction of life insurance policies.

Fitch - Rate Up Malaysia Life Insurance

The ratings agency said today that both the conventional and takaful sectors – a type of insurance system devised to comply with sharia law – are expected to grow steadily as the level of private consumption and consumer risk appetite increases.

‘Higher distribution coverage and product offerings by insurers will continue to support these sectors,’ said Fitch’s Malaysia insurance market dashboard 1H14.

It added that 2013 regulatory changes could prompt smaller scale insurers that are facing pressure on capital to exit or merge with larger rivals in the short term.

‘The tightened regulations after the enactment of the Financial Services Act (FSA) and Islamic FSA 2013 could also lead to more capital-pressured insurers to merge or divest insurance arms with poor economies of scale.

‘Some M&A transactions have already occurred in 1H14, and Fitch expects more consolidations to follow in 2H14.’

The agency also noted that industry performance is also likely to be stable, driven by favourable underwriting gains from non-motor classes and investment-link products.

It stated that premium growth in the general and life insurance sector would remain stable, with increased private consumption for personal product lines, while growth in the middle-income population would drive demand for wealth accumulation and health protection products.

Wisdom Leadership

Companies, Families and Inside Sales Teams, would be a bit better off if leaders would follow these six principles.

Leadership Wisdom is PURE – Simply put, the leader’s motives and actions must be pure and without hypocrisy or self-centeredness. Their inner most thoughts and intentions must be for the betterment of the group they lead and serve. Their values they espouse should be transparent and honest to the team. The team will feel a sense of trust due to their leader’s honesty in intention and deed. This does not mean that everyone on the team will always agree with the leader’s actions and decisions, yet it will form a trust which is the bedrock for a successful and high-performing inside sales organization.

Leadership Wisdom is PEACE LOVING – This type of wisdom for the inside sales leader seeks to sooth, unite and promote harmony and collaboration instead of causing alienation, contention, division and strife. By nature, the strong inside sales leader has to justify their existence… they often end up battling with others even luring them into fights. They feel they have to prove their existence and will sometimes come to blows with those within their own organization. Rather, the Peace Loving Leader takes the sting out of arguments instead of causing them. They seek to find common ground and work as a team with other groups to find success. Is this you?

Leadership Wisdom is GENTLE – The word gentle here can be translated to mean forbearing, reasonable, and courteous. In the Septuagint (Greek version of the Old Testament) this word was often used to describe kindness towards those that didn’t deserve it. How often as leaders do we exercise this trait? Aren’t we more often found calling out individuals for falling short of metrics and other goals? Don’t we insist on our every legal right and our fair share as a profession that is still driving to climb the ladder and take its rightful place in the sales pecking order? Leaders, consider your approach and make sure it’s often sprinkled with kind forbearance of others.

Leadership Wisdom is SUBMISSIVE – Really? You’d think the last thing a strong leader should be is submissive. Yet, this trait to me is at the very cornerstone of a strong leader who has the respect and confidence of those the lead. This word takes on a meaning of openness to reason, yielding to persuasion and willingness to consider others opinions. It means that the leader know they don’t have all the answers, and that they are open to learning. The team knows their concerns will be heard and that the leader is not afraid to admit when they were wrong and open to change, even if it’s a change in direction from an earlier decision they made. Submissive does NOT mean the leader is a “doormat” or that they do not hold firm to their own set of values and convictions…. As this too is the mark of a strong and well-respected leader. All leaders would do well to as ask themselves how well they do in this area.

Leadership Wisdom is Full of MERCY and GOOD DEEDS – On the surface, the term Mercy may seem like having pity on someone or taking it easy on someone who did something wrong. But in actuality it can be interpreted as compassion which takes specific, positive actions. Mercy is the compassion, and Good Deeds is the action part. Inside sales leaders who manage a team should be careful not to accuse others. Rather, they should be slow to anger having compassion on those they may have even brought trouble on themselves. Where reps clearly have violated policy, missed goals, or done something wrong, the manager will naturally be upset and “angry”, yet they should not harbor these feelings for long. Instead, they should take the necessary action to correct the individual out of concern for them. Team members view leaders who show Mercy as those who are fair, compassionate, yet just in how they deal with people and performance issues.

Leadership Wisdom is IMPARTIAL – Impartiality means that the inside sales leader treats everyone the same. They are consistent in how they approach and communicate with all employees and all level of individuals regardless of title. They do not take one position with more senior staff, and a different one with those under their leadership. It certainly does not show favoritism. The leader who is IMPARTIAL may not always make the best decisions, but they will be highly respected for their consistency in treating all others.

I hope one or more of these traits resonated with you as they did me. Often, the hardest things to do well as a leader are not necessarily the day-to-day reporting, performance reviews, coaching, training, etc. Rather, they are the deeply ingrained attitudes, values and traits which we display and demonstrate in our thoughts and actions to those we serve. I trust each leader will become just a little but more “Wise” by embracing the above traits.