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.