Leadership & Communication

Leadership and communication go hand in hand.



“Innovation distinguishes between a leader and a follower” - Steve Jobs

“Leadership is the art of getting someone else to do something you want done because he wants to do it” - Dwight Eisenhower

“I must follow the people. Am I not their leader?” - Benjamin Disraeli

“It is better to lead from behind and to put others in front, especially when you celebrate victory when nice things occur. You take the front line when there is danger. Then people will appreciate your leadership” - Nelson Mandela

“A leader is a dealer in hope” - Napoleon Bonaparte

“A leader is best when people barely know he exists, when his work is done, his aim fulfilled, they will say: we did it ourselves.” - Lao-tsu

“The strength of the group is the strength of the leaders.” - Vince Lombardi

“If your actions inspire others to dream more, learn more, do more and become more, you are a leader.” - John Quincy Adams

“I suppose leadership at one time meant muscles; but today it means getting along with people” - Mahatma Gandhi

“People are persuaded by reason, but moved by emotion; [the leader] must both persuade them and move them.” - Richard M. Nixon

Direction, Alignment & Commitment

Do you “know” leadership when you see it? Can you tell it’s happening in a team, in a workgroup, on a task force or across the organization? If you are not looking for three important outcomes – direction, alignment and commitment – then you’re missing something big.

These three outcomes (DAC for short) make it possible for individuals to work together willingly and effectively to realize collective achievements. In fact, at CCL, we think the only way to know if leadership has happened is to look for the presence of these three outcomes.

Direction is agreement on what the group is trying to achieve togetherWhat does DAC look like? Evidence of direction includes:
• There is a vision, a desired future, or a set of goals that everyone buys into.
• Members of the collective easily articulate how what they are trying to achieve together is worthwhile.
• People agree on what collective success looks like.

Alignment is effective coordination and integration of the different aspects of the work so that it fits together in service of the shared direction. Alignment is happening when:
• Everyone is clear about each other’s roles and responsibilities.
• The work of each individual/group fits well with the work of other individuals/groups.
• There’s a sense of organization, coordination, and synchronization.

Commitment is when people are making the success of the collective (not just their individual success) a personal priority.Signs of commitment include:
• People give the extra effort needed for the group to succeed.
• There’s a sense of trust and mutual responsibility for the work.
• People express considerable passion and motivation for the work.

Conversely, you can look for evidence that DAC is lacking. You can tell that DAC is not happening in your group, team or organization when:
• There is lack of agreement on priorities.
• People feel as if they are being pulled in different directions.
• There’s inertia; people may be busy, but they aren’t making progress.
• Things are in disarray: deadlines are missed, rework is required, there’s duplication of effort.
• People feel isolated from one another.
• Groups compete with one another.
• Only the easy things get done.
• Everyone is just asking “what’s in it for me?”
• People are not “walking the talk.”

As you look for evidence of DAC, you’ll notice that there isn’t “a” leader making leadership happen (or not happen). The actions, interactions, reactions and exchanges of multiple people are producing the DAC.

Sometimes a single individual plays a major role. Sometimes it simply emerges in the conversations and interactions among people working together. Different people can also play different roles to create DAC. Both formal and informal processes can make it happen. What brings it about in one situation may not bring it about in another situation.

There are no easy formulas. By looking at leadership from a whole-system, DAC perspective, you not only better see the multiple people involved, you also start to see how some actions that haven’t typically been part of the concept of “leading” are indeed contributing to the production of leadership. As a result, you have many more options when it comes to improving leadership.

Mindful Coaching

Mindful coaches perfect a form of conscious and comfortable simultaneous attention to themselves, their coachee, the relationship between them, and the mental, emotional, and relational dynamics occurring in the moment. There are three aspects of mindfulness that have particular pertinence to leadership coaching:

An empty mind. For the coach, mindfulness is characterized by an empty mind, a stilling of the persistent chatter and the cognitive ticker-tape of commentary. This is a challenge for most Westerners because of our devotion to activity and terror of being alone with ourselves. An empty mind is key to letting something happen in someone else. It is the essence of coaching. Like falling in love or falling asleep, it can’t be achieved through greater effort or more action.

As coaches, a busy mind sabotages our efforts to let others express themselves. Think about your conversations with co-workers or with family. How often have you had the feeling that someone was not really hearing you, not really attending to you? You may have told someone about the challenge you were facing, only to find that they couldn’t keep themselves from telling you how you should think about it, or that it shouldn’t bother you so much, or how they have had similar experiences.

Alternatively, when someone hears us with an open, empty mind, we sense our own substance and value. No matter how ‘helpful’ someone wants to be, advice or correction always implies that we lack something. We have to persuade ourselves that someone cares when they give us the impression that they think we can’t figure it out for ourselves. Unfortunately, more than a few coaches enter the profession because they’ve never been heard themselves. They picture themselves giving important advice to powerful people and receiving their gratitude. That guiding image will never benefit the coachee.

Non-reactivity. Meditation and quiet thoughtfulness help coaches sense that, as they work, they are operating in a vast mental and emotional space with clients. No reaction is required, no matter what the provocation. Instead, coaches are free to perceive the needs of their clients and respond – without escalating the emotional content or misinterpreting any intent. Still, fostering a non-judgmental attitude as a coach does not mean surrendering judgment. Mindfulness in fact leads to wiser judgment about what’s important and what is not. A coach who practices mindfulness doesn’t make things worse Non-reactivity on the part of the coach gives the person being coached room to roam from perspective to perspective, from one incomplete thought to another until they begin to become whole thoughts and the basis for growth.

Oddly, non-reactivity is often experienced quite positively by people who are being coached. I say, “oddly” because so much energy is expended in our culture in empty encouragement that does not actually encourage. Coachees often find that space to think and feel and explore while staying in relationship is invigorating. In addition, this dynamic makes true collaboration possible. The mindful coach creates an emotional space without land mines, where the coachee isn’t worried about being manipulated or controlled.

Permissive attention. A brilliant – and almost pathologically internally-focused – engineer was sent to me for coaching. In the first session, he assured me that he could never benefit from coaching because he couldn’t tolerate a conversation with someone longer than a couple minutes. When he predicted the demise of our session, I let on that I was quite curious to see that, and that we could both be watching for it. “Do you suppose you will see this change as it is coming along, or do think you are likely to be surprised by its sudden dramatic entrance?” I asked. He was made curious by my curiosity and new possibilities were suddenly available to him. I call it permissive attention because I chose to draw our attention to his certainty of this coming disaster as a matter for discovery rather than trauma. He went on to a productive and long-lasting coaching engagement because the spotlight was never on him, but on his growth.

A mindful coach can draw a person into a moment of connection in which all distractions disappear. It doesn’t matter whether the distractions are in the room or in the street outside or in unbidden thoughts or feelings from within the coachee. The ultimate challenge for most leaders is staying focused for more than a moment on any serious line of thinking, perceiving, judging or acting. The coach is repeatedly able to draw the attention of the coachee to those things of importance to him and return the attention to it without coercion.

Modern brain research has shown that we move in and out of various states of focused or unfocused attention throughout our day. Coaching allows someone to stay on a line of thought until it yields new perspectives and answers. It proves especially powerful when these are questions that might have stymied us for a long time. The coach wants to create an encounter in which the two people are in synchronized attention and vast amounts of mental and emotional energy can be directed at the development of the person being coached. This is a kind of mutual trance state, along the lines of being “in the zone” in sports, and most people have experienced it only briefly. The mindful coach can elicit this state and maintain it for the growth of the coachee.

As coaches, we are privileged to serve as midwives to human change – and can impact the performance of entire organizations. How do we contribute to the possibility of change? How do we serve as catalysts for turning experience and reflection into more effective, meaningful lives? Mindfulness offers a powerful alternative to the coercive and linear assumptions that have dominated our thinking. It might be that individual change is not so much driven as permitted. The question for the coach is this: how can I prepare myself to create a mental, emotional, and relational space in which someone may grow and develop? Mindfulness practices prepare coaches to really help instead of just trying to be helpful.

Leadership Is A Process

1. Think “process,” not “position.” Leadership is a process, not a title. It’s about leading with others in ways that establish direction, create alignment and build commitment. Rather than looking for someone else to be a leader, individual contributors need to ask themselves: “What am I bringing to the leadership process?” “How can I better facilitate the process of effective leadership in my group or in my project team?”

2. Understand your leadership brand. Your leadership brand is created by the ways you behave, react and interact. It affects your network, and it is linked to your effectiveness. You have a reputation based on how you get things done and how you interact with others. To leverage your leadership brand or to steer it in a different direction, you need to get a clear picture of how others perceive you today. Start paying attention to how you work — not just what you know or what you accomplish. How do you learn? How do you share information, make decisions and influence others? How do you build and nurture both day-to-day and strategic relationships?

3. Take control. You are in charge of your leadership brand, so invest in your learning and development as a leader. Your boss or your organization may not always tell you exactly what is needed or hand you the tools and experiences that will boost your effectiveness. Take time to think about your current job and future career. Begin by focusing on your number one workplace challenge. How does your leadership brand support your work today? What would happen if you could be more effective? How could improving your own leadership ability help get you there? What do you need to learn or change to improve your leadership skills and hone your leadership brand?

4. You are seen, heard and valued. The company needs you to be as effective as you can be. Your co-workers do, too. Even though you don’t have “manager” in your job title … or don’t have direct reports … or are new to your career, your leadership abilities are critical both to your own success as well as your company’s. When you send these messages — clearly and consistently — the people in your organization will see that they can contribute to something bigger than themselves: the process of leadership.

Income Replacement Insurance

Half of all adult Kiwis have life insurance. They can imagine the catastrophe if the family breadwinner died. Yet we face a much bigger risk financially than death. That is losing the breadwinner's income through "disability" from illness or accident.

Kiwis are much more likely to be prevented from working through illness. Just look at the people in hospital beds - most are there through illness. Online research by insurer last year found that 87 per cent of us have car insurance, 50 per cent life insurance and only 11 per cent income protection insurance.

A 47-year-old customer who suffered a stroke while playing Pictionary. The man couldn't return to work in his profession as a rock driller for the rest of his life. Thankfully his income protection insurance will support him financially until retirement.

Income protection insurance is quite simple. If you lose your income due to temporary or permanent disability through illness or accident you will be paid up to 75 per cent of your previous salary for the period of cover, which could be two years, five years, or until age 65.

People will often take life insurance cover and reject income protection insurance as "too expensive",  even though it is the more valuable cover. They underplay their chances of having an accident or falling ill.

Other common reasons that people don't take out income protection or related insurances, are that they:

* don't know what it costs

* get confused by analysing too many policies, or

* fear they won't be covered for an illness they've suffered in the past.

The irony is that most people would take out insurance to cover a machine in their business that would produce $1 million worth of net profit over the next 20 years. Yet they don't cover their own income, which is worth roughly the same.

Who Is Liu Yang

China’s first female astronaut and two other crew members emerged smiling from a capsule that returned safely to earth on Friday from a 13-day mission to an orbiting module that is a prototype for a future space station.

The Shenzhou 9 parachuted to a landing on the grasslands of the country’s sprawling Inner Mongolia region at about 10 a.m. (0200 GMT). China declared the first manned mission to the Tiangong 1 module a major stride ahead for the country’s ambitious space program.

About an hour later, mission commander Jing Haipeng, 45, emerged from the capsule, followed by crew mates Liu Wang, 43, and 33-year-old Liu Yang, China’s first female astronaut.

Career With Purpose

Poor access to public goods and services in India, a Chief Diversity Officer, the burst dot-com bubble, a water treatment plant in Ontario, and the Grateful Dead. Give up? Your question is: What does it take to have a career with purpose?

I wanted to know if people who have successful careers in social responsibility and social change got to where they are for similar reasons. Three common threads about these people. At some point, each had an insight about a social issue that was particularly meaningful to them. This insight provided inspiration to pursue working in social responsibility. Finally, they also had the intention to accomplish something remarkable that ultimately led to careers in this area.




Insight
Having a career with purpose starts with a realization that there is something fundamentally wrong with society or that there are particular gaps in the way specific social issues are being addressed.
In 2003, while teaching at the University of Delhi, Poonam Madan found herself interested in the problem of poor access to public goods and services in India including healthcare, education, water, and sanitation.

“The biggest source of social sector funding here is the state, but there are several systemic inefficiencies in public delivery,” says Madan. “As a result, globalization and high economic growth notwithstanding, there are persisting inequalities in income and in access to social infrastructure and clear implications of environmental degradation for poverty.”

Inspiration
In addition to becoming aware of and committed to a pressing social issue or injustice, it’s very motivating to discover something that inspires you to get more directly involved in corporate social responsibility and social change.

As an undergrad, Marcus Chung heard the President at his university give an award to a woman who was Chief Diversity Officer at a large, multi-national company. “It was the first time I’d ever heard of a position like hers – one that worked to improve business from within and align it to a ‘nobler’ mission beyond pure profit,” says Chung. “That first exposure to a values-driven business role ultimately sparked my interest in pursuing a CSR career.”

Intention
It’s great to be inspired, but, to be successful, ultimately you need to turn your wake-up call into action. Madan commissioned and edited a special section on sustainability awards for companies in India, and starting thinking about the role of business in society.

Charismatic Storytelling

If I had to sum up in two words everything I’ve learned in 25 years of work on communications, rhetoric, public speaking, speechwriting, and body language, those two words would be: charismatic storytelling.

Charismatic because in an over-stimulated, impatient world, it’s passion and charisma that get attention. But passion alone doesn’t get you to charisma; that magic ingredient takes a little additional work.

Storytelling, because we’ve already got way too much information to take in, so the only thing we remember these days is stories. And oh yes, that’s the way it has always been.
The good news is that both charisma and storytelling are skills you can learn, not gifts from the gods that only a select few are anointed with.

That’s it. If you’re a charismatic storyteller, you can command attention, persuade people of anything, sell successfully, lead multitudes, and even make politics work again.

Carlos Ghosn - Creative Leadership

You don’t trust your boss, and why should you? He micromanages your projects. His communication with you is uneven, and you’re never exactly sure what he wants. He takes credit for your ideas and successes, yet he is quick to hand out blame. He breaks promises. And sometimes he just doesn’t seem to know what he’s doing. Taken together, or even separately, these are good reasons to not trust your boss.

Yet the problem is not that you don’t trust your boss, but that he doesn’t trust you, or anyone working for him, for that matter. Maybe your boss has been burned before and refuses to risk trust. Or maybe he’s too selfish to understand that trust is a two-way street. Or he just doesn’t know how to trust, to establish the kind of relationship that allows for good leadership.

I believe even good leaders struggle with trust. Recently I was counseling an individual running important projects through his organization. He prides himself for his “flat” organization and his perfectionism, a potent mix for leaders. Everyone reports to him, and he demands the highest quality work from himself and others. Who can argue with that? The problem with perfectionists, however, is they frequently are micro-managers, waiting to step in at any minute to “save” the day. Honestly, this is a terrible way to run an organization because it undermines employees and their faith in their leaders. Without trust, empowerment is impossible, worker commitment dissolves and work is not scalable.

Creative Leadership
Leaders should embrace humility, acknowledge errors and apologize for mistakes. From your comments and emails, it is clear I struck a nerve. Obviously far too many of you are in the presence of, and possibly the victim of, egotistical and selfish managers who are blind to their own faults and unwilling to admit when they’re wrong.

For that reason, I decided to discuss the most basic building block of leadership — TRUST, which is an integral component of our thinking around Creative Leadership. Trust allows for a covenant between leaders and their colleagues and employees, providing the foundation for interpersonal bonds that lead to organizational success. I believe most problems in the workplace, although some bosses might disagree, stem from a lack of trust.

Our theory of Creative Leadership is built on the idea that everyone at every level in the organization is a leader; that leaders know themselves, alert to their failings and strengths, to better serve the organization; and that only by mastering complexity – both human and organizational – will they be able to achieve alignment. Without trust, however, leadership is often a hollow victory because there is no guarantee it can be sustained.

Much is made of trust in interpersonal relationships, political life and general society, but there is not nearly enough focus on the role of trust within complex business organizations. A trust-based ecosystem builds confidence and certainty. Of course, that doesn’t mean that leaders won’t have to make difficult decisions that impact lives, but there is a way of approaching these things that does not undermine trust.

The last decade of corporate greed and wrongdoing has taken its toll on trust in the workplace, however. Outsourcing, financial scandals, exorbitant CEO pay and downsizing have helped to create an environment of anxiety, fear and suspicion in corporate America. While understandable, it is toxic.

Without organizational trust, morale wanes, productivity declines and profits disappear. Distrust inside an organization is a poison, one that spreads with an insidious speed and with disastrous consequences. Trust brings respect for the organization and its leaders. It allows employees to feel invested in the organization and to fully contribute, whether offering solutions or daring to take informed and necessary risks.

There is no better example of the transformational nature of trust inside organizations than Carlos Ghosn’s remarkable success at remaking Japanese automaker Nissan. When he arrived in March 1999, as a result of the merger with Renault he became chief operating officer, the problems facing Nissan seemed insurmountable: Only four of its 43 models were profitable; it was $22 billion in debt; and seven of the prior eight years had been in the red.

Immediately, Ghosn moved to engender trust by putting his own job on the line. He told workers, dealers, customers and the greater business community that he would quit his job if he was not able to show a profit at Nissan within two years. He did it in 18 months.

The first few weeks after his arrival, Ghosn toured the company’s far-flung operations to meet employees and managers, introducing himself and asking people for their own ideas on how best to rescue the company. As the first non-Japanese leader at the company, Ghosn was uniquely committed to honoring company and Japanese culture.

An anecdote reported in The Ghosn Factor, a book written by Miguel Rivas-Micoud, illustrates Ghosn’s unwavering commitment to culture, even to the smallest of details. Ghosn insisted on learning how to hold and use chopsticks, a good idea in Japan but also a savvy choice as a leader. Ghosn wanted to demonstrate his subordinates would be reminded of his faithfulness to their culture and his respect for their traditions. A small but critical way to build trust.

To meet his ambitious goals, Ghosn launched a campaign to build trust by adopting a sensible leadership strategy of transparency, execution and communication. Effective leaders are transparent in what they think, say and do, and they challenge their employees to do the same. Ghosn also understood that execution is 95 percent of the task at hand and strategy 5 percent, so the emphasis was on taking action and not navel gazing. Finally Ghosn was committed to thoroughly communicating the company’s policies and direction, eliminating secrecy even when the hard decisions had to be made.

Ghosn adopted a system of cross-functional teams to encourage brainstorming and to build an ongoing dialogue about streamlining company operations and policies. These teams, which were later made permanent, were vital in creating an environment of trust and interconnectedness. While Ghosn oversaw a number of layoffs and plant closings in his first two years at Nissan, he was still able to garner the trust and respect of his employees because he maintained a relationship built on openness and made the case for changes with logical arguments based on real-world data.

Faced with a debilitating downward slide, Ghosn helped Nissan decide what kind of organization it wanted to be. Ghosn’s respect for individual contributions shows a profound understanding of how to build trust and empower individuals. And even if you get burned when employees fail to follow through or honor that trust, the organization is better off because employees feel they have the trust of their leaders and will be more committed to the overall mission and strategy.

Ghosn is often lauded for his strategic thinking in saving Nissan, but the often-ignored key to his success, I think, lies on the “softer” side of organizational life. This is the most difficult area of leadership theory to teach and execute in organizations. Leaders of every level must fully embrace the “softer” skills to succeed.

For that perfectionist colleague who sought my advice on trust, the struggle was learning how to build a culture of trust while getting the work done. He noted that if he just let the people working for him complete the work on their own, there was the chance they would fail, and he would be held accountable for that failure. A thorny situation for managers.

I told him that if he really wanted to empower his team, he would have to take the leap of faith to trust them, with all their individual weaknesses and strengths, and, yes, take the risk that they would fail. In fact they probably would fail at some point, despite their best efforts. But the risk of failure would be seriously diminished and the consequences muted if he was wise in choosing his team. And further, his team would trust him and work harder for him; they would be more committed to the organization.

I have found, and I believe quite passionately, that good people need to trust their leaders, and leaders must strive to trust their people. Building an organizational culture of trust is perhaps the most important thing a leader can do to build a successful organization.

Telling Your Wife To Buy Insurance

We tend to think of husbands as the family members with the greatest need for life insurance. But the death of a wife can be every bit as financially devastating for those who are left behind.

The main purpose of life insurance is to replace lost income, and two-income households have become commonplace in the U.S. Like husbands, wives need life insurance to make sure that their deaths don't create an economic crisis for the people who depend on them.

The problem is that telling your spouse or domestic partner that they need to buy a life insurance policy  can be a difficult task. That's because many people dislike contemplating their own death, says Kate Levinson, author of "Emotional Currency," a book about women building healthy relationships with money. They may resist discussing the topic.

Even if they work full time, wives remain the primary homemakers for most families. Many don't realize how much their families have come to rely on their efforts at home and in the workplace.

"It is relatively new that so many women are making more income," Levinson explains. "Their families depend upon their income as well as the work [they do] running the home."

What to say
Telling your wife she needs life insurance requires sensitivity, since no one likes to be reminded that their death is inevitable. Here are some ways to approach the subject:

• If your wife works, point out that her earnings are vital to household finances. Explain that finding a way to replace her income would be extremely difficult without life insurance. Federal labor data and found that hiring someone to do the work that mothers typically perform around the house could cost $60,381 per year. That's more than typical middle-wage families can afford.
• If you have children, remind her that the cost of higher education is increasing. A life insurance policy could help ensure that her children are able to attend college or receive other career training.
• Stress to her just how uncertain the economy is. Making sure that she is adequately insured will create economic stability for your household and bring her peace of mind.
• Getting your wife to face her own mortality may require "breaking through resistance," says Levinson. She advises men to emphasize that either partner in a relationship could die unexpectedly. Preparing for this with a life insurance policy is the best thing you can do for your loved ones.
• Tell her not to count on outliving you. Nancy Fagan, a divorce mediator in San Diego, observes that women often delay buying life insurance because they assume they will outlive their husbands, "and it doesn't always happen that way. Wives do die. They should think about the children and what would happen if their husband isn't earning enough money to take care of them."

The gender gap
Although men historically have earned more than women in comparable jobs in the U.S., the gap is narrowing. 66% of women age 18 to 34 years old say being successful and having high-paying jobs is "one of the most important things" or "very important" to them, according to a recent Pew Research Center report.In comparison, only 59% of young men feel the same way.

The Pew group found that women have made significant workplace gains since 1970, when just over 38% of the U.S. labor force consisted of women. In 2010, women made up almost half of the labor force (46.7%).

"Women are really, really closing the gap," says Margaret King, director of The Center for Cultural Studies & Analysis in Philadelphia. As a result, husbands are growing more financially dependent on their partners. At one time, middle-wage families may have been able to economically justify skipping a life insurance policy for Mom, but those days are over.

Yet women generally have lower amounts of individual life insurance than men of the same age, reports LIMRA, a research group that tracks insurance trends. On average, women have $129,800 of individual life insurance. In contrast, men have $187,100 in coverage.

In addition to replacing income, people typically buy life insurance to pay mortgages, cover funeral expenses and fund children's educations. The amount of life insurance that a woman needs depends on such factors as salary, age, the number of dependents she supports and the family's debt.

Struggling not to lose ground
The American middle class has been losing economic ground for decades. Ginita Wall, director of the nonprofit Women's Institute for Financial Education, says it's hard for any middle-wage person, male or female, to earn enough money to support a home and children without the help of a domestic partner.

"Traditionally all of the [personal finance] articles have been geared toward the male needing life insurance," Wall says. "These days there often is not one major breadwinner. It's two people and sometimes the women are earning more. To protect the income stream if they are both working, they both are going to need life insurance."

A Gift For Mankind

Smart Advice on Life Insurance

Talk about an unpleasant expense: Life insurance is something you pay a lot for, then never get to use. It's also likely one of the least-understood major expenses. Many people buy it when they don't need it, and many need it and don't buy it. And some don't have it and don't need it, but they allow salespeople or family members to make them feel guilty for forgoing it.
You need life insurance if those you leave behind will suffer financially from your death. This is typical when you have children, debt and a one-income household, when losing the breadwinner would be financially tragic.

When you've paid off the house, the kids are gone, the savings accounts are topped off, and your death would just be an excuse for your remaining friends to get together and have a drink, your need for life insurance is over.

 Shop - search tools are a great way to make sure what you have now is still a good deal. But if you're buying your first policy, or know you're going to replace existing coverage, more due diligence is in order. Check several search sites and beat the local bushes as well.

 Buy term  - There are two basic classes of life insurance:

Permanent or whole life. As the name implies, these policies offer a lifetime of coverage. They also combine a savings account and life insurance contract, allowing you to tap the savings component, known as cash value, should the need arise.

Term insurance, on the other hand, has no cash value and covers you for a specific period of time, from one year to 20 or more. If you die during the term covered, your beneficiaries get a check. If not, you're out the premiums.

While permanent sounds like a no-brainer, most people should buy term. The reason is simple: Term is much cheaper. In addition, you usually need insurance when you're younger, in debt, and raising a family. As you age, pay off the mortgage, and no longer have people depending on your income, the need for insurance withers. (That's good, because the older you get, the more insurance costs.)

 Be aware that many insurance agents and some financial advisers will give you the opposite advice. They believe the forced savings offered by a whole life policy is worth the extra cost. But most objective advisers will tell you to buy term and use the difference in price to save and invest on your own.

The longer the term you buy, the less it will cost per year. In other words, you're better off getting a 20-year-level premium policy than one that renews every two years. In an ideal scenario you'll pick a term that matches your need for insurance.


Don't buy more than you need - As someone who sold life insurance back in my stockbroker days, I can assure you that fear is often an integral part of the sales process. In addition, the insurance salesman makes assumptions that may not accurately reflect your financial need.

 For example, many salespeople will simply say to multiply your annual salary by seven. They might also assume you want a benefit big enough so your spouse and children can live forever off the interest alone. Or that your kids plan on attending Harvard. Or that your mortgage balance isn't decreasing with every payment you make.

How much insurance you need isn't an exact science. Maybe you want to leave your survivors wealthy, or maybe you just want to leave enough to pay for your funeral. But if you leave it up to a company-sponsored calculator or salesperson, expect a big death benefit -- and a big premium to go with it.

 Better idea? Figure out what your death would mean financially to your family and determine their needs, both short term (paying for your funeral) and long term (paying off the mortgage and college costs). When you've arrived at an estimate, subtract the money you have now or can expect from Social Security or work-related policies, then cover the shortfall with insurance.

 Avoid guaranteed issue - Ever see a TV commercial, usually directed at older folks, offering insurance with no medical exam and insisting "you can't be turned down"? That's guaranteed-issue life insurance. It doesn't take a rocket scientist to figure the angle: The death benefit is so low, the first few years of premiums may add up to more than your beneficiaries will receive.

Avoiding a physical sounds convenient, but you'll probably get a better deal by submitting to one, even if you're not in the best of health. If you know for a fact that you're otherwise uninsurable, you may not have a choice. But if you have alternatives, explore them first.

 Stay on top of it - Health issues will make your insurance more expensive, so getting healthier can mean savings. If you quit smoking, lose weight or make other life changes that lower the risk for the insurance company, don't be afraid to contact them and ask for a reconsideration. But be prepared to provide proof, such as an extensive medical history, to get a lower rate.

Health isn't the only thing that can lead to changes in your policy and premium. Have a new baby? You might need more insurance. Pay off the mortgage? You might need less. Periodically re-evaluate your coverage needs and costs.

If you need to increase your coverage, you may be able to do so less expensively by buying a rider (an addition to an existing policy) rather than taking out a new policy.

 Pay annually - As with most kinds of insurance, companies often charge a little more if you pay premiums monthly rather than annually. You should also ask about discounts for allowing the company to tap your bank account and collect the premium automatically.

Don't buy it for the kids - Unless your child is contributing financially to your family, you child doesn't need life insurance.

As with the whole life-versus- term argument, this advice is not fully embraced by everyone. There are those who insist that buying a permanent policy for infants is a good idea, for three reasons:
If they should later develop a health condition that renders them uninsurable, at least they'll have some coverage. Although it's certainly more rare than with seniors, children die. They'll establish a permanent savings account.

While these are valid arguments, they're not enough to convince me or most financial advisers. A savings account for kids is a great idea, but there are lower-cost ways of going about it.

Bank & Life Insurer Scam Customer

Imagine walking into your bank, only to discover that all the money in your account has disappeared through an insurance scam promoted by your bank. That’s what happened to a woman in China.
Ms. Zhang from Binzhou City, Shandong Province, said she lost 20,000 yuan (US$3,412) in a scam promoted by her bank.

Zhang opened a bank account at the local Postal Savings Bank on June 11, 2010 and deposited 5,000 yuan (US$785) . A bank clerk recommended to her a new wealth management service that offered higher than average interest and comes with a free insurance plan. Ms. Zhang agreed to the plan and received an insurance contract from a local life insurance company.

On Nov. 28 of the same year, Ms. Zhang deposited another 15,000 yuan (US$2,356) into her bank account. A bank clerk again recommended a similar deposit plan, to which Zhang again agreed, receiving yet another insurance contract.

In May 2011, Ms. Zhang lost her banking card. While renewing her card, she had to take care of some business with PICC and found out that her insurance plan was not free, and her 20,000 yuan had been taken by PICC to pay for insurance payments.

She was also told that in the next four years, she would have to pay 20,000 (US$3,412) yuan each year for her insurance, and if she wanted to cancel the plan, she would suffer major losses.

On June 19 of this year, a reporter from the Qilu Evening Post accompanied Zhang to the bank and PICC to investigate the issue. They were told that the staff who had handled Zhang’s account no longer worked there, but they were promised that someone would look into the matter.

However, on June 20, when Zhang returned to PICC to ask for a refund of her original 20,000 yuan, as well as an additional 20,000 (US$3,412) yuan she paid to continue the insurance plan, she was turned down. A PICC staff named Zhan told Qilu that cases like Zhang’s are common throughout the industry, and many insurance workers purposely hide the small print from unsuspecting customers.

Agent To Adviser

In several countries and for years, life insurance has been brought to the customers by the “agent” of the insurance company. In spite of introduction of several new channels of distribution, including the Internet, the agency channel contributes 86.6% (2010-11) of the premiums in the Indian market.

Hence, even during the current era, when the insurance market is undergoing a massive transformation, the significant role of the adviser/agent cannot be underestimated.

Almost every life assured has had at least one tryst with this person but everybody holds different opinions about him. Those who believe in the merit of life insurance treat him as a family friend, but a vast number of existing and prospective customers would treat him as an intruder.

However, the professionals and life insurance companies are responsible themselves for this perception. There is an urgent need on the part of the agent community as well as the industry to redefine the role as well as the image of the life insurance agent so that the growing Indian economy gets maximum advantage of this professional group, which by number is larger than the employees of the Indian Railways and almost double the size of the Indian defence forces.

By any standard, this group has the potential to channelize several trillions of rupees for investment in the development of infrastructure and the capital market.

Transformation tools
Treat as a profession: The first step to an effective transformation would be to modify one’s own perception about the profession and the career. Selling life insurance is a very challenging job; transaction with each prospect is a unique experience. The insurance agent, therefore, needs to position himself in the market as someone who believes that everyone in the society needs life insurance because financial security of the family is a basic need of an individual. This belief unfolds a vast market before the salesperson.

Acquire knowledge: The agent is basically an adviser in financial planning, hence, he should have an intense desire to acquire knowledge and information. Selling would become much easier for him if he talks with conviction and authority. Knowledge-based information appears to be logical and worth accepting. Continuous training and regular reading would be very effective just like regular sharpening of the saw.

Be organized: He has to be a very well-organized person and has to learn how to seek appointment and how to honour it without fail. He needs to prepare well in advance, find out the financial and social profile of the prospect and then suggest the most need-based plan.

Keep customer’s interest on top: Money-centred agents often end up suggesting wrong products as they can’t resist the temptation of allowing their personal interest to supersede the interest of the customer. One has to grow in his profession by understanding and practising certain principles such as life insurance is a kind of social service, life insurance protects people from being homeless and destitute, life insurance ensures good education and marriage for children and life insurance enables the elderly to live life with dignity. Anyone performing with this end-result in mind is bound to stay motivated.

Missing encouragement
In India, there are lakhs of agents, who offer end-to-end solutions and services to clients, but some have defamed the profession and unfortunately their conduct is discussed in a sweeping and derogatory manner.

Interestingly, the large group of salespersons, who by virtue of hard work provide social security across all sections of society, are the most neglected lot. Social security is primarily the responsibility of the government. Hence, those who render such service to the society need to be encouraged, supported and given the respect that they deserve. It is a great irony that for such a large group of workers, the government has not established even a single institute nor provided benefits such as Employee State Insurance Corporation as they have done for employees and workers engaged in several other vocations.

The regulations push for acquiring the minimum possible knowledge about the job, but doesn’t say anything for staying motivated and enhancing productivity. This professional group has the power to act as a major catalyst in our economy’s growth if it is taken care of by all stakeholders.

Extending Retirement Age from 55 to 60

The most appropriate retirement age for a person depends on his or her personal choice and capacity. However, it is also limited by law. The Private Sector Retirement Age Bill 2012 to raise the retirement age from the current 55 to 60 years old would bring different levels of impact to the government, employers and employees.

The knowledge of experienced employees is indeed valuable, but they enjoy relatively higher salaries and better benefits, including medical expenses might increase. If these employees lack the ability to innovate and refuse to adjust, it will turn out to be a burden instead.

70 per cent of low-income earners spend all their EPF savings three years after their retirement. Extending the retirement age could force wage-earners to save more.

However, it will be painful for employees and employers to extend the retirement age if the work culture is not improved and the mindset is not adjusted. Working will become torturous for those who do not like or enjoy their work, and do not know how to learn and improve themselves.

Risk Pooling Without Middleman

As the nation with the largest population and second-largest GDP, China is often perceived as a land of vast economic opportunity, where entrepreneurs hawking the latest novelties of high technology operate alongside others peddling the tried-and-true amenities of more mature economies. In the latter category fall the property insurance products -- homeowners, business-owners, and transportation policies -- familiar for generations to those living in North America and Europe, but only now gaining a small foothold in the Middle Kingdom.

Many observers of China's insurance market attribute the country's slow reception of these forms of insurance to cultural characteristics that will change as the country evolves. However, it is quite possible that conventional insurance is simply failing to compete against another, very ancient, financing mechanism: risk pooling -- insurance without the middleman.

To evaluate the potential of national insurance markets, analysts frequently employ the metric of "insurance penetration": the ratio of total insurance premiums to total GDP for a given time period. In 2010, China's property-liability insurance premiums constituted only 1.3 percent of GDP, compared to a figure of 4.5 percent for the U.S.

Although China's property-liability market is overwhelmingly dominated by domestic companies, even these local insurers appear to anticipate that business will grow as cultural attitudes "modernize." In particular, it is expected that as economic relationships become more sophisticated, individuals and firms will abandon both (1) their traditional reliance on extended-family financial resources and (2) an ingrained fatalism that discourages planning for the perils of fire, wind, earthquake, etc. But what if both of these characteristics are actually more appropriate -- and even more "sophisticated" -- than the use of conventional insurance?

The notion of an insurance policy traces its earliest roots to the use of bottomry contracts in Babylonian society somewhat prior to the introduction of Hammurabi's Code (ca. 1772 B.C.). Under this type of arrangement, a land or marine trader would take out a loan of merchandise or money from a wealthy merchant, agreeing to a high rate of interest (usually at least 100 percent). If all went well, then the principal and interest would be paid at the end of the trading expedition; however, if the merchandise or money were lost or stolen, then the principal and interest would be forgiven. In short, the merchant was compensated for assuming the risk of the trading venture through the large interest payment.

A somewhat different practice developed among marine traders in ancient China (possibly as early as the use of bottomry contracts in the West, although firm dates are difficult to establish). Rather than simply transferring all risk from one party to another, groups of traders formed reciprocal arrangements in which each trader's store of merchandise was subdivided into small equal shares, each of which was carried on a different ship. In that way, no trader would be completely devastated by the sinking of one ship.

What is particularly interesting about these two approaches to financing risk is that each illustrates one of the two distinct characteristics of modern insurance. Specifically, the bottomry contract exemplifies the concept of risk transfer, in which one party cedes responsibility for an uncertain outcome to another party (who receives financial compensation for assuming the risk), whereas the Chinese mariners' arrangement embodies the concept of risk pooling, in which each member of a group cedes responsibility for shares of its own uncertain outcome to the other members of the group (who in turn are permitted to cede similar shares of their own risks).

In conventional insurance, the policyholder transfers its risk to the insurance company, which then creates a for-profit pool of many policyholders. This naturally raises the question: What happens if the policyholders prefer to form their own pool, and avoid the costs of the insurance-company middleman?

Essentially, that is what the ancient Chinese mariners did; and perhaps what many Chinese individuals and businesses implicitly do today. Specifically, one could argue that a reliance on family financial resources -- basically the pooling of risks close to home -- is more economical than purchasing insurance. Similarly, one could interpret a fatalistic acceptance of certain risks as the institutionalization of high deductibles, which makes considerable economic sense in the presence of budget constraints and/or high premiums.

In short, it seems reasonable to think of Chinese consumers as simply expressing a preference for informal risk-pooling alternatives to conventional insurance; and it is instructive to note that the broad formal use of risk-pooling mechanisms in more developed economies -- through self-insurance, risk-retention groups, and captive insurance -- is only a few decades old.

3 Reasons - Buying Life Insurance

There are three important reasons for buying life insurance.

Number one is to take care of dependents. Sometimes the family of the deceased is left with huge debt or financial obligations, not knowing where the money will come from to pay them off. Many well-off families have been forced to sell properties in order to raise the funds needed for such obligations. When a person buys life insurance, this hassle will not be there. The insurance policy will make sure that the proceeds from the policy will have been used for this purpose.

Death means the end of everything – no more income from work or business to pay for the usual daily obligations such as utility bills, food expenses, transportation allowance, etc. With a life insurance policy, one is assured of financial pay-out from the insurance provider. The pay-out could be used to take care of those bills just like when there is a steady source of funds. When one buys a life insurance policy with coverage that is 10-15 times his or her annual income, family will no longer worry about the recurring bills and financial obligations left by the departed loved one. Thinking about the welfare of loved ones will be reason enough to buy life insurance.

Number two is estate planning. For some people, life insurance can serve other purposes than just leaving money for the beneficiaries. If an insured owns estates or properties, chances are the estate taxes to be collected from such properties are likely to be huge. Some insurance providers offer this inclusion or condition to life insurance – estate planning.

A life insurance policy will be used to pay for the estate taxes in advance, so that heavier or stiffer taxes imposed on the estates or properties will be avoided. A plus factor of buying this life insurance is that an insurance settlement amount will not be taxed at all at the maturity rate. This is the best way to transfer properties or estates to beneficiaries and loved ones without the unnecessary hassles. More details on the benefits of this life insurance may be requested online. The important thing is to make sure that when you buy life insurance, corresponding benefits are included for specific purpose and intent.

Number three is paying for burial expenses, which are very expensive. Families are having to spend thousands of dollars for funeral expenses and a memorial service. Many families cannot afford this, and cannot send off a loved one in the way they would like. Purchasing life insurance would cover these expenses.

Nik Abdul Aziz Nit Mat

The 'ordinary ways' of PAS Murshidul Am Tuan Guru Nik Abdul Aziz Nik Mat never fail to amaze Malaysians who have grown used to political leaders who travel in expensive cars and live in picturesque mansions.

Since 1990 when he was appointed as the Kelantan Menteri Besar, Nik Aziz's decision to snub official perks has earned him respect from friends and foes. He continues to stay in his family house in Kampung Pulau Melaka, leading the daily prayers at the neighbouring mosque and giving his dawn religious lectures to attendees.

If a picture speaks a thousand words, then this one on the right tells so much of the trait of moderation and simplicity that has been lacking among many Malaysian leaders, their spouses and children. This morning, Nik Aziz walked by himself across the street to quench his thirst at a roadside stall located some metres away from Medan Ilmu. The 81-year old had just delivered his weekly Friday morning lecture there.

"When I see the above picture and contrast it to the scene I witnessed two years back where a MCA deputy minster was having lunch at a posh restaurant with bodyguard in attendance. It just reinforce my determination not to vote for BN. Even though I am a Chinese, I will vote for a PAS Malay over a MCA Chinese anytime".... comment from blogger

Scalable Leadership

I’ve often said, “if leadership doesn’t scale neither will your organization.” Experience has led me to conclude there is no greater contribution a leader can make to the enterprise than developing a true culture of leadership. Here’s the thing – a culture of leadership can only exist when leaders understand their primary obligation is to develop other leaders. If leadership is sought after, valued, developed and rewarded, then good things will happen. In today’s column I’ll examine the value of creating a culture of leadership.

Scale is not an individual endeavor – it’s a cultural and organizational achievement that requires the right set of collaborative individual efforts. People don’t scale, but effective groups, teams, and organizations can create scale. Well intended, but ill equipped leaders push individuals for more output, where savvy leaders teach and mentor individuals to think strategically and create leverage, which in turn, leads to scale.

There’s a difference between acting strategically and understanding strategy. The most valuable leaders are not only astute, but they’re insightful. They don’t just think strategically, they shape strategy. Perhaps most importantly, they ensure the sustainability of strategic focus by developing a culture of leadership.

Team members become most valuable to an organization when their strategic (thinking/teaching/mentoring/coaching) skills are leveraged far beyond what their tactical (doing) skills could ever achieve. When individuals enlighten, inform and empower groups to be more productive scale is achieved.

When individuals are pushed to simply “do more,” both the quality and quantity of performance declines. The simple truth is most process glitches and production bottlenecks are individual choke points, not system errors. Scale is not a production issue, technology issue, or money issue – it’s a leadership issue.

Great leaders view each interaction, question, or even conflict as a coaching opportunity. Don’t answer questions or solve problems just because you can, rather teach your employees how to do it for themselves. If you make a habit of solving problems for people, you simply teach them to come to you for solutions at the first sign of a challenge.
So, how do you get your organization to create scale? Stop talking about process and start talking
with your people. The following 5 steps will help you create a culture of leadership and create a scalable organization:

1. Focus on Leadership: Everything in business begins and ends with leadership. That said, leadership doesn’t just exist at the top of an organization, but should be expected of everyone within the organization. Hire leaders, develop them to become better leaders, and teach them to repeat the process.
2. Organization First: Leadership is influencing the thoughts and actions of others such that individual interests are aligned with business interests. This becomes a reality when placing the organization ahead of the individual becomes culturally ingrained thinking. To truly understand the value of scalable leadership it’s important to first understand the two primary causes of why leadership doesn’t scale. When individual leaders, or even worse, leadership teams view themselves as the doers and not teachers, mentors, and coaches, organizational scale is quickly sacrificed on the altar of ego and/or incompetence.
3. Do Away With Form Over Substance: I have grown to have a great distaste for 9 box thinking when it comes to leadership development. I question the “best practice” mentality of labeling people, and putting them in a box. If talent management and succession planning were as easy as identifying “high potentials” the business world would have many more success stories than currently exist. In fact, I would go so far as to say the phrases key employee or high potential are outdated, elitist terms that create angst and animosity among the ranks. Good leaders view all employees as key, and great leaders don’t label people as high potentials – they ensure people achieve their potential. The fact a company singles out someone as “key” or “high potential” to begin with means at a minimum they have a lack of transparency and continuity in their organization, and more probably, they lack depth of talent and are weak in process and knowledge management.
4. Drive Decision Rights Down: The best organizations drive the most complex decisions down to the lowest possible levels within the company. If all big decisions are made by an individual, or a small group of individuals, your organization won’t scale. Teach the organization and its employees how to make great decisions and then provide them with the authority to do so.
5. Embrace Dissenting Opinion: Conflict and challenge are part of change. If you stifle candor and free thought you stifle the ability to scale. When leaders engage people with stimulating and probing conversation they learn and grow.

The take away here is great leaders don’t create a state of dependency. In fact, they won’t allow dependencies to exist – rather they mandate independent thinking and decision making. Many leaders struggle with understanding that rescuing is not the same thing as leading. To create a culture of leadership and a framework for scale, stop feeding your employees and teach them how to fish…

Styles & Substance

The recent departures of Australian Rugby League Commission CEO David Gallop and Boral CEO Mark Selway were attributed to the organisations involved needing a different leadership style to take them forward.

After 10 successful years as the head of rugby league’s national body, the NRL, Gallop was appointed CEO of the Australian Rugby League Commission following its formation in February. Four months into his four-year contract, the board says it came to mutual agreement with Gallop “that the game needs a different style of leadership detached from the past for the next stage of its development”.

In the Boral situation, by all accounts (including the Board’s), during his two years in the job Selway successfully restructured and re-energised the business and applied the Lean management philosophy to its manufacturing processes. However, the company says it is now seeking a CEO “with a leadership style suited to harmonising the changes that have occurred over the last two years”.

To me, these situations reflect the delicate balance between CEO style and substance.

After 14 years as an executive coach and mentor, I see leaders as people who can:
– Articulate a vision and inspire others to participate;
– Work cooperatively with their team and take an interest in their development;
– Take command when the going gets tough;
– Manage ambiguity to sustain morale and productivity during times of change;
– Make decisions; and
– Achieve results.

Since leadership is all about influencing, enabling and energising a business, people skills should be equally as important as financial performance – if not more – when it comes to evaluating a CEO’s performance or suitability for a role.

Boards should hire and evaluate CEOs based on a range of criteria including leadership competencies, business acumen and performance. While it is true that some CEOs prefer or are more suited to transformation, turnaround or high-growth situations, a CEO’s leadership style should never be a surprise to a board that has done its due diligence and recruited for both people skills and financial and operational management skills.

CEOs and their boards often come unstuck when there is a lack of alignment between a strategy presented by management and the views of the board. The board is then faced with a decision to either ask for the strategy to be revised – which can be a challenge – or replace the CEO if they believe the CEO is unable or unwilling to deliver the strategy required.

If this lack of alignment comes as a shock to the board, it brings into serious question the very nature of the relationship between the board and CEO up to that point.
 
When it comes to deciding what leadership style is right for an organisation, I would say that a leader’s primary job is to lead others to a destination. The critical success factor, therefore, is whether others will follow.

Purchasing Insurance

Most people know they need life insurance, and yet many still haven’t purchased a policy. Choosing the right policy can be confusing and leads many to putting off the decision. For anyone who is shopping for life insurance, choosing the right type and the right amount of insurance is often a difficult decision.

Life insurance isn’t as complex as it seems on the surface; there are a few basic types of policies, and there are simple ways to calculate the required amount.  Don’t put off buying a life insurance policy because you aren’t sure what to buy, take the time to understand the basics and the choice will become easier.

Types of Life Insurance
There basic types of life insurance policy: term, wholelife, endowment, Unit Link or universal. Term life insurance is purchased for a certain term – a length of time for which the company agrees to provide coverage. Term policies are typically available in a range of lengths from 5 years up to 30 years. Universal and whole life insurance policies are the two most common forms of permanent life insurance. They are very similar, but whole life is more rigid and universal has more flexibility. With a whole life policy the premiums and benefit remain the same over time, while these can be flexible in a universal policy. Universal policies allow you to adjust premium payments and death benefits over time, and have more options than whole policies.

How to choose between term and permanent life insurance?
Here are a few simple considerations. You may want to choose term life insurance if:

• The need is for a large amount of coverage for a specific period of time
• The need is for affordable life insurance
• The policy is meant to bolster an existing permanent policy

Term life insurance carries lower premiums because it has an end date, and insurers are taking a lower risk. Whole, or universal life, lasts until death or the age of 99 at which point it matures. Because the risk of death during the policy term is much higher, rates are higher. You may want to choose permanent life insurance when:

• The person being insured is young and healthy and can lock in a low rate
• The need is for a policy that does not expire
• A smaller benefit amount is acceptable

How Much Coverage to Get
The question of how much coverage any one person needs is a complex one. The need may very well be for a combination of the two; a permanent policy for final expenses and to last until death, and a larger amount of coverage for a specific time period, such as when young children are at home.

A life insurance calculator is the easiest way to determine how much coverage is actually needed. There are a number of free calculators online. A good rule of thumb is to cover five years of income as well as final expenses and any needed care for dependants.

When it comes to the amount of  life insurance, more is usually better, but the cost of the premiums can be difficult to manage. This is where a cheaper term policy combined with a smaller permanent policy can be a good choice.

When to Buy
It’s always best to buy life insurance as young as possible. This usually means lower rates because the person being insured is young and healthy. Although the need for the benefits may seem far off, even young people without dependants can leave debts and final expenses to pay for.

There are policies designed for older people to obtain coverage. Don’t despair if shopping later in life; there are affordable options available.

Buying Term Life Insurance

If you're putting off buying life insurance because you think it'll cost too much, it's time for a reality check. Young adults, who are most likely to qualify for the best insurance rates, overestimate the cost by almost seven times. Basic life insurance is surprisingly affordable, even if you're supporting a family on a shoestring budget.

Buy as much term life as you can afford now
The average cost of basic term life has dropped by about 50 percent in the last decade due to longer life expectancy and greater cost efficiency in product design and administration. A Typical term life insurance covers you for a certain period -- such as 10, 20 or 30 years -- and pays a death benefit if you die while the policy is in force. The younger and healthier you are when you buy, the lower your quotes will be. Life insurance rates go up as you age and as you develop health conditions, such as high blood pressure.

Consider annual renewal term life
annual renewable term life guarantees your insurability for a set period of time. However the premium increases each year during the term, based on your age. With level-premium term life, the premium stays the same for the entire term. In the early years of the policy, premiums for annual renewable term life are less expensive than those for a comparable level-term life policy. Annual renewable term is ideal for people on tight budgets whose incomes will increase over the years.

Comparison
Life insurance rates vary by company. Get term life quotes from different carriers to find the best deal. Generally, the more you buy the less the cost is per $1,000 of coverage.

Don't go by price alone
Check the financial ratings for the life insurance company selling the product before you buy, and shop for quality. Steer clear of ultra-cheap term life products that lack important options, such as waiver of premium riders, which pay the premium if you become disabled and can't work.

Another important feature that might not be available on the cheapest products is the ability to convert the term policy to permanent life insurance, such as whole life or universal life. Permanent life insurance, which normally is more expensive than term life, covers you for your entire life and includes cash value, which grows tax-deferred. The ability to convert is important for two reasons. One, the conversion feature lets you turn the term life policy into permanent coverage, even if you develop a health condition and would otherwise be uninsurable. Two, conversion lets you build a permanent investment as your income grows.

Maximize group life insurance
Many employers offer basic group life insurance as a benefit. Usually, the amount of coverage isn't enough for most families. Check on how much is provided and whether you can supplement it with additional group life coverage at your own expense. Premiums for voluntary coverage through a group plan can be 10 percent to 20 percent less than individual life insurance because of enrollment and billing efficiencies.

Think about your family
If you're tempted to delay purchasing life insurance because money is tight, just think how financially stressed your family would be without you and your income.

Research shows a big reason people don't buy life insurance is they have other financial priorities, such as paying the mortgage or saving for their children's education. But those priorities are exactly the reason to buy it.

Accident Policy - Is It Worth It???

I am probably jinxing myself, but the odds are against me dying in an accident -- especially in a way that would let my family cash in on an accidental death benefit.

"Act now!" You probably get the form in the mail too, if you have a general life insurance policy. It's an offer to increase your coverage through accidental death for what seems like a paltry monthly amount.

But is it really worth the money? Am I really likely to die in an accident?

According to Statistics Canada, accidents or unintentional injuries were the fifth leading cause of death in 2008 -- the latest information available.

Cancer was No. 1, followed by heart disease, stroke and respiratory diseases; only 4.3 per cent of Canadian deaths that year were accidental.

You really need a life insurance policy, not an accidental death policy.

Jim Christie, president of the Canadian Institute of Actuaries, says the evidence suggests young
people are far more likely to die in accidents.

"Accidents are a major cause of death for younger individuals, say 15 to 30," says Christie, offering no opinion on whether or not those people are more likely to have insurance.

They are not.

So, if I'm a 47-year-old boring male with two children who drives around in an oversized sport utility vehicle armed with snow tires, paying decent attention to the speed limit, you have to believe I'm a lower risk.

"In the late teens, certainly up to the 30s, (accidents) are usually the No. 1 or No. 2 cause of death," says Christie. "As you get older you take more precautions. If you have kids, and you need money to look after them in the event of your death, you really need a life insurance policy, not an accidental death policy."

Mark Halpern of illnessprotection.com says there are some cases in which an accidental death policy might make sense to a client, but it is not the preferred option.

"If a person has a heart attack or gets cancer, you get nothing (with accidental death)," says Halpern.

"There are people out there who think they have real life insurance when all they have is this accidental death. You have life insurance and you rob a bank and you get killed and your family will get paid."

Let's say you want $100,000 in insurance at a guaranteed rate for a 10-year term.

For a 40-year-old healthy male non-smoker, it would be $13 a month. To double that benefit, and add $100,000 in accidental life, it would be another $9 a month.

"You are spending on something you won't likely ever collect," says Halpern, noting that for $23 a month the same person could get $200,000 worth of term insurance.

But there is a scenario in which you might want to buy an accidental death benefit, namely if you are otherwise uninsurable.

"The other reason might be that you are in a high-risk profession. Maybe you test dynamite for a living," says Halpern. "Maybe you travel a lot and you're in planes a lot."

There are reasons other than bad health for being denied insurance.

Halpern says he had a client with a driving record that disqualified him from getting life insurance, so he had the client buy accidental death insurance until his driving record was considered clean.

Before you jump into an accidental death policy, you should also take a close look at it. There are a number of exclusions on mine. For starters, you cannot be drunk driving or even drunk biking. You also cannot have any drugs in your system that are not prescribed by a doctor. Don't die in the dental chair and forget about dying from an infection unless you received it from an external visible wound caused by an accident.

Lawyer Michael Smitiuch of Smitiuch Injury Law says companies refusing to pay out are a regular occurrence for a variety of reasons.

"What I see is we have a lot of cases involving life insurance generally and specifically with the accidental life insurance. The area where we encounter issues is typically with the exclusions and they usually involve alcohol and drugs," says Smitiuch, who says when you die, insurance companies dig a little deeper into your life. "They look for a misrepresentation."

The answer is to read the contract very carefully before you sign. That's not to say accidental life can't make sense for some people. But it's no accident insurance companies offer the product at rates which can be high relative to their risk.

Basic Life Insurance Information

Life insurance is an umbrella term for a range of different policies, all designed to provide a financial ‘safety net’ should you die or become seriously ill. It could pay a cash lump sum to your dependants in the event of your death, or provide personal cover that pays out on diagnosis of critical illness, enabling you to maintain your monthly commitments while you’re not working.

Many people only consider life insurance when they take on a mortage or start a family and want the reassurance that they are covered should the worst happen. With so many different types of policy available, it’s wise to make sure you know how much cover you require and the type of insurance you need before committing to anything.

How much life insurance?

To calculate the amount of insurance you require, you’ll need to know what you intend to cover and for how long - plus the monthly premium you want to pay. Obviously the more cover you have the higher the payout will be, but factors such as the type of life insurance, the length of time you want it for, your age, sex and state of health will all determine which life insurance solution is right for you.

If you’ve a mortgage and dependants your first priority will be to cover the repayments using either a level-term or decreasing-term life insurance policy. Although this sounds complicated, put simply, a level term policy offers a fixed payout regardless of when the claim is made. However, if you want to cover a repayment mortgage then a decreasing-term policy may be preferable, as the potential payout decreases over time - but your monthly payments should be cheaper. Bear in mind that all payouts depend on whether you have met the terms and conditions of the policy.

When a family loses its main breadwinner they may need help with other commitments too; your policy could clear bebts, provide for childcare costs so your partner can work or contribute to education fees with a cash lump sum. Other things to consider include ‘add-on’ benefits such as critical illness that pays out when you’re too ill to work and can cost only a few pounds more a month

Cheapest isn't necessarily best.

With something as important as life insurance, it’s a good idea to devote some time to thinking about the ‘worst case scenario’ and working out how much protection you can afford. An insurance agent will explain different policies in detail and get quotes for comparison, based on your needs. Above all, make sure you choose a policy with the right amount of protection you require – and not just the cheapest monthly premium.

Life Insurance - Mis-selling

Going through a life insurace policy document is a tedious task for many individuals. Understanding the complicated terms and conditions often puts many off. Reema Jain (name changed), however, made an effort to decipher the fine print as soon as the documents were delivered to her.

The 55-year-old home-maker spotted certain discrepancies in the policy bond and brought them to her agent's notice during the 15-day free-look period. Soon, she realised that the agent had deliberately entered misleading details and she alerted the life insurance company immediately. Despite acknowledging the mistake orally, the company is yet to do anything about it or refund the premium.

Kruti Devi (name changed) had filed for a claim after her husband's death. The claim was denied on the grounds that "material facts" were not disclosed. Worse, the company took almost a year to arrive at this decision.

According to statistics released by the Insurance Regulatory and Development Authority (Irda), complaints related to misselling, policy-related matters and claims form a large chunk of the total grievances. Sure, one can always approach the IRDA via its grievance redressal cell or ombudsman offices if the company fails to address the concerns.

However, the sad truth is: in several cases people have to deal with such unpleasant situations because they were a bit casual while buying the policy. For instance, most people bought tall claims made by their agents and bought unit-linked insurance plans earlier, only to repent later. Similarly, some let their agent fill their proposal form, and found out later that some omissions or commissions (willful or otherwise) resulted in rejection of their claims.

Mis-selling of policies

"The most common customer complaint received is that of 'mis'-sale," says Metilda Stanley, senior vice-president, customer relations, HDFC Life. The distributor promises eye-popping assured returns when no such assurance is given by the insurance company. All you have to do is to begin with filling up the proposal form yourself and provide accurate information. Next, go through the policy documents carefully when they are delivered to you. "

All companies send a copy of the proposal form along with the policy document. The answers given in the proposal form need to be checked and in case there is some wrong information, he/she should bring the same to the notice of the insurance company and get the records corrected," adds Stanley.

After going through the documents in detail, if you feel that the policy cannot serve your purpose, you can cancel it during the initial 15-day free-look period. Again, there have been cases where agents withheld policy documents, delivered to them, until the 15-day period elapsed to prevent such cancellations. However, remember that your cancellation request cannot be turned down citing expiry of the free-look. It starts from the day you receive the policy, and not from the date of policy issuance.

Insurance M & A

The race to win a bigger slice of South-East Asia's insurance market is heating up as insurers compete for mid-size acquisitions in the region totalling up to US$1bil (RM3.18bil). Initial bids were submitted for the Malaysian life insurance joint venture between CIMB and Aviva, a deal worth at least US$400mil (RM1.27bil).

The moves come against the backdrop of a US$7bil auction for ING's Asian insurance business as some foreign insurers exit the region to focus on their core markets, while some larger ones and new entrants try to gain bigger exposure to Asia.

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AIA and Manulife are also in the running for ING's Asian insurance business, while Prudential is seen as a strong contender to buy Thai Thanachart Bank Pcl's insurance operations in a deal worth US$500mil. The fundamentals appear compelling. Life insurance premiums in emerging Asia are forecast to grow 9.6% this year and 8.7% next year, compared with the world average of 3.1% and 3.7% in the two years, respectively.

That projected growth comes after the life insurance market grew 15.4% annually over the last 10 years, far exceeding the global growth rate of 5.7% per annum over that period, according to estimates by Credit Suisse late last year. And South-East Asia accounts for less than 0.25% of the world's insurance market share, according to research by Norton Rose, with insurance penetration low in Indonesia, Malaysia and Thailand.

Easy foreign ownership rules were also creating greater interest for foreign insurers, analysts said. Malaysia allows foreign insurers to take up to 70% stake in domestic insurers, while foreign insurers can buy up to 80% of an Indonesian insurer. Indonesia, which has a life insurance penetration of only 1.3%, is attracting interest from foreign players including Swiss, Japanese and South Korean insurers.

INDONESIA
Indonesia's capital market regulator BapepamLK has said it will not change foreign ownership cap norms in the insurance sector despite the central bank's planned move to cap ownership in banks at a maximum of 40%.

There are tremendous interests from many foreign investors, even from US pension funds who are keen to invest in the sector given the current regulatory situation and the underpenetrated market. Last year Japan's largest property and casualty insurer, MS&AD, bought a 50% stake in PT Ansuransi Jiwa Sinarmas, the life insurance unit of Indonesian conglomerate Sinar Mas, for about 67 billion yen (RM2.62bil) at a record valuation of around 5 times book value.

PT Panin Financial controlled by Indonesia's powerful financier Gunawan family, is also planning to sell up to a 40% stake in its life insurance business in a deal worth US$200mil that is attracting Japanese bidders.

The new entrants will be competing against industry leader Prudential, whose domestic Indonesian unit recorded a total premium income of 14.8 trillion rupiah (RM5bil) in 2011 a 47% increase from the previous year. It had 1.4 million policyholders in the country.

MALAYSIA
The auction of the Aviva-CIMB business in Malaysia comes after Britain's second-biggest insurer laid out plans last month to exit non-core markets, a strategy aimed in part at raising money to protect against its eurozone exposure. Aviva entered Malaysia in June 2007 by investing RM500mil in the insurance joint venture with CIMB, according to CIMB's website. Aviva is selling its 49% in the Malaysian joint venture, while CIMB could sell a significant portion of its 51% stake.

 A successful sale will also heighten competition between the foreign companies and domestic players such as Great Eastern, which enjoys a leadership position in Singapore and Malaysia.