Mutual fund and insurance are two different things

Ajay Devgn, in Bol Bachchan, keeps speaking funny English. In one such line, he said something that set me thinking. It is a reflection of poor levels of financial literacy in our country. While talking about "honesty", he said, "Honesty is the best mutual policy." Many would have ignored it, but being what I am, I could not. It hit me very hard.
What he tried to do was to combine the two products "mutual fund" and "insurance policy" to come up with "mutual policy".
Incidentally, I have come across many, who cannot make out the difference between the two - IRDA may think otherwise. It also means that people are sold ULIPs in the name of mutual funds, even today. Mutual fund's reputation got negatively affected thanks in part to the insurance industry's mis-selling.
A mutual fund is an investment vehicle, where instead of managing money ourselves, we trust the same with a fund manager. The fund manager is a professional, who spends full time managing our money. he is also supposed to be more qualified and skilled in this activity than most of us.
An insurance product, on the other hand, protects us (or our surviving family members) financially in case of an unforeseen situation, called risk in insurance language.
However, most of the products sold by the insurance industry are of a hybrid nature, combining investment along with insurance. Most of us have a poor understanding of the whole concept and we want some part of our money back from the insurance company in case we survive through the term.
Insurance company and the agent (or a company or a bank acting as a sales agent of the insurance company) love this fact. They make more money for the same risk cover that the insurance company has to provide us when we buy an investment-linked insurance policy as against a pure term insurance. A pure term insurance pays our family members (the nominees) in case of death of the policy holder during the term of the policy. If the policy holder survives through the term, the insurance company has to pay nothing. However, in case of all the investment linked insurance policies, there is some survival benefit.
We love this survival benefit, as if it is some sort of a benefit. If someone puts the numbers on paper and does the calculations, it is obvious that these investment linked insurance products are not beneficial  for the policy holder.
Investment linked insurance products are all those products other than pure term plan. All these products return some money when the policy matures. These policies come in various avtars - ULIP, endowment plan, money-back plan, children's plan, whole life plan, etc.
If you seriously want insurance cover, go for the term insurance ONLY. Else, whilc "Bol Bachchan" may be a laughter riot, insurance is no laughing matter.

Adarsh Housing Society brings out issues about “adarsh leadership”

If you are following Adarsh Housing Society case, you must be aware of the “passing-the-buck” game being played by the ex-CMs of Maharashtra. Three of them have chose to pass the blame onto someone else, the most popular targets being the bureaucrats.

Let us stay away from the controversy of the case and not judge whether the politicians made mistakes or the bureaucrats. These matters are not for us to judge. We will only look at how some people have behaved.

Well, the leaders exhibit certain behavioral traits that their followers try to copy. That is the normal leader-follower relationship. Leader leads – followers follow. While we started with the discussion of Adarsh Housing Society, the discussion can be applied to most situations in the present context.

The moment the guns were trained on them the politicians have chosen to shift the blame to the Government Officials. How often have you seen the politicians showering praises on the officers? What we have normally observed is that the politicians are very quick to claim the credit and equally quick to pass the blame. This is not inspired leadership. One has often seen similar situations in the corporate world, too. When a fraud happens, top management is often quick to sack a junior employee and then claiming that everything is under control, only to wake up once again to face a similar fraud.

A real leader is one who stands up and takes the brickbats while leaving the bouquets for his team. It is this state of leadership that is India’s biggest problem.