Have you ever wondered when life insurance first came into existence? Today, let’s explore some interesting facts about the origins of life insurance through a conversational dialogue between two characters. Any resemblance to real persons or other real-life entities is purely coincidental. All characters and other entities appearing in this work are fictitious

Characters:

• Asha: A curious student of history.
• Vikram: A seasoned historian.

---

Asha: Vikram, I’ve been reading about the origins of life insurance, and it’s fascinating! But I didn’t realize how far back it goes. Did it really start in ancient Rome?

Vikram: Yes, it did! The concept of life insurance, as we know it, can be traced back to ancient Rome. It’s quite an interesting story. Have you heard of Caius Marius?

Asha: Marius? Wasn’t he a military leader?

Vikram: That’s right. He was a prominent Roman general who understood the fears his soldiers had—not just of dying in battle, but of what might happen after they were gone. The Romans believed that an improper burial would doom a soul to wander restlessly as an unhappy ghost. It was a deeply held belief, and Marius recognized how important it was for his troops to know they’d be given a proper burial.

Asha: So, what did Marius do?

Vikram: He formed what we might call the first “burial club.” Every soldier in the club contributed to a common fund. If one of them died, the fund would cover the funeral expenses to ensure a dignified burial. Over time, these clubs evolved to also provide financial support to the families of the deceased soldiers.

Asha: That’s such a thoughtful concept. But what happened to these clubs? Why didn’t they continue?

Vikram: The fall of the Roman Empire around 450 A.D. brought about the decline of many such practices, including the burial clubs. The concept of life insurance, as it had been developed, faded away for a long time after that.

Asha: I see. But life insurance didn’t just disappear forever, did it?

Vikram: No, it didn’t. Fast forward several centuries to the late 1600s in London. The city was a hub of trade and commerce, and with that came the need for new forms of insurance. There was a small coffee house on Tower Street—Edward Lloyd’s Coffee House. It became a popular gathering place for ship captains, merchants, and ship owners.

Asha: Wasn’t Lloyd’s famous for something related to insurance?

Vikram: Exactly! The conversations in that coffee house soon turned towards marine insurance, and eventually, it became the birthplace of the modern insurance company. In 1769, a group of professional underwriters broke off to establish New Lloyd’s Coffee House, which grew into what we know today as Lloyd’s of London.

Asha: So, Lloyd’s wasn’t just about life insurance, but insurance in general?

Vikram: Yes, Lloyd’s initially focused on marine insurance, but it set the stage for the insurance industry as a whole. However, the first true life insurance policy was created even earlier, in 1583. It was a term life policy in England that insured a man for a specific period. If he died during that time, his beneficiary would receive a payout.

Asha: That’s the beginning of life insurance as a commercial product, right?

Vikram: Exactly. By the 1700s, life insurance had gained popularity, and in 1706, the Amicable Society for a Perpetual Assurance Office became the first company to offer life insurance in a form we would recognize today.

Asha: But I’m guessing it wasn’t all smooth sailing?

Vikram: No, it wasn’t. The financial panic of 1837 led to a shift towards mutualization in life insurance companies. This meant that policyholders became stakeholders in the companies, which helped build trust and stability during uncertain times.

Asha: That makes sense. It’s like giving people more control over something that’s so important to them.

Vikram: Exactly. And while all of this was happening in Rome and London, across the world in ancient India, the concept of “Yogakshema” was taking root. It was mentioned in the Rig Veda and represented the well-being and security of individuals, laying the philosophical foundation for life insurance in India.

Asha: Wow, that’s incredible! It seems like the desire for security and protection is universal, regardless of time or place.

Vikram: It truly is. From the burial clubs of ancient Rome to the bustling coffee houses of London and the ancient scriptures of India, the story of life insurance is a testament to humanity’s enduring belief in the importance of security and well-being.

Asha: This has been such an enlightening conversation, Vikram. I never realized that life insurance had such deep and diverse roots.

Vikram: I’m glad you found it interesting, Asha. History often holds the key to understanding how our modern practices evolved. Life insurance, in particular, shows how the need to care for our loved ones transcends time and culture.

Amit: Hey, Neha! I’ve been thinking about getting life insurance, but I’m really confused about how much coverage I should go for. Any thoughts?

Neha: Hi, Amit! That’s a great question. Deciding on the right amount of life insurance is one of the most important financial decisions you’ll make. It’s not just about how much premium you can afford but about ensuring your family is financially secure if something happens to you.

Amit: That makes sense. But how do I figure out the right amount? I’ve heard there are different methods.

Neha: Exactly! There are two common methods that can help you determine how much coverage you need: the Income Replacement Value and the Human Life Value (HLV). Let’s break them down.

Amit: Sure, let’s start with the Income Replacement Value.

Neha: The Income Replacement Value method is pretty straightforward. It’s based on your current annual income and the number of years left until you retire. You simply multiply your annual income by the number of years you have left to work.

For example, let’s say you earn ₹7,00,000 per year, and you plan to retire in 20 years. Your insurance needs would be ₹7,00,000 multiplied by 20, which equals ₹1.4 crores. This amount would replace your income if you were no longer around to provide for your family.

Amit: That’s easy to understand. But what if my income changes or if I take on a loan?

Neha: Good question! There’s also a variant of the Income Replacement method where you multiply your income by a factor that changes with your age. For example, between 30 and 40, the factor is usually 15-20. So, if you’re in your 30s and earning ₹7,00,000, you might multiply it by 15, giving you ₹1.05 crores as your insurance cover.

Also, if you have any outstanding loans, you should add those amounts to your coverage. You want to ensure that your family isn’t burdened with debts if something happens to you.

Amit: Got it! Now, what about the Human Life Value method?

Neha: The Human Life Value method is a bit more comprehensive. It calculates the present value of all the future income you would have earned for your loved ones. It also considers your liabilities, expenses, and savings.

For example, if your annual income is ₹10 lakhs and you’re 35 years old with plans to retire at 50, you’d calculate your HLV by multiplying your income by the years left until retirement. So, ₹10 lakhs multiplied by 15 years equals ₹1.5 crores. This is the economic value you’d be providing to your family until retirement.

Amit: That sounds more detailed. But what if my family’s needs change over time?

Neha: That’s where the Need-Based method comes in. This approach considers day-to-day expenses, the number of dependents, their needs, any loans, and big future expenses like your children’s education or marriage. It’s a more tailored way of calculating how much insurance you need.

Plus, it’s important to revisit your HLV calculation regularly. As your income, family, and financial responsibilities change, your insurance needs might change too. What you need at 25 when you’re single might be very different at 35 when you’re married with kids.

Amit: Wow, there’s a lot to think about. So, I should aim for coverage that equals my HLV?

Neha: Yes, your HLV gives you a good estimate of the maximum life insurance cover you should consider. It’s about ensuring that if anything happens to you, your family’s financial future is secure.

Amit: Thanks, Neha! This really clears things up. I’ll definitely calculate my HLV and make sure I’m getting the right coverage.

Neha: Anytime, Amit! Remember, it’s not just about having insurance—it’s about having the right amount to protect the ones you love.

On a sunny afternoon, little Aarav was playing in the garden when he saw his grandfather, Dadaji, sitting under the shade of an old banyan tree. Dadaji was quietly reading a book, and Aarav, curious as ever, ran to him.

“Dadaji, what are you reading?” Aarav asked, sitting down beside him.

Dadaji smiled, closed his book, and said, “I’m reading about Rahul Dravid, the famous cricketer. Do you know who he is?”

Aarav thought for a moment and then nodded. “Yes, my teacher told us about him. He was called ‘The Wall’ because no one could get him out easily.”

“That’s right, Aarav,” Dadaji said, his eyes twinkling with pride. “But do you know why Dravid was so successful?”

Aarav shook his head, eager to learn more.

“It wasn’t just talent, but his consistency that made him great. He played 164 Test matches and scored more than 13,000 runs, making him one of the top run-scorers in cricket history. He didn’t achieve this overnight; it took years of dedication and hard work.”

Aarav looked impressed. “Wow, Dadaji! That’s a lot of runs! But how does that happen?”

Dadaji chuckled. “It’s all about time and consistency, my boy. Just like Rahul Dravid kept practicing and playing match after match, we need to be consistent in other things we do in life too.”

“Like what, Dadaji?”

“Like investing,” Dadaji said, his tone becoming more serious. “When you start saving and investing regularly, even if it’s just a small amount, over time, it can grow into something big.”

Aarav was confused. “But how does that work?”

Dadaji picked up a small pebble from the ground and said, “Imagine this pebble is your money. If you just leave it here, it stays the same. But if you put it in a place where it can grow, like in a garden, it will become part of something bigger over time.”

“Like planting seeds?” Aarav asked.

“Exactly!” Dadaji said, pleased with the comparison. “When you invest a small amount every month, it’s like planting seeds. Over time, these seeds grow, thanks to something called compounding. It’s like magic, but it’s real. The money you invest earns interest, and then that interest earns more interest, and it keeps growing.”

“But what if I can only save a little bit?” Aarav asked.

“That’s okay,” Dadaji reassured him. “Even if you start with just Rs 500 or Rs 1,000, the important thing is to start. You can do this through something called a Systematic Investment Plan, or SIP.”

“SIP? What’s that?” Aarav was curious.

“It’s a way to invest a fixed amount of money into a mutual fund every month,” Dadaji explained. “Think of it like paying an EMI, but instead of paying off a loan, you’re building your wealth. The best part is, you don’t have to worry about the ups and downs of the market too much. If the market is high, you buy fewer units, and if it’s low, you buy more. Over time, this balances out and helps you grow your money steadily.”

Aarav nodded slowly, understanding the concept. “But what if I get scared and want to stop investing when the market goes down?”

Dadaji smiled and patted Aarav on the shoulder. “That’s natural, but remember, the key is to stay consistent. Markets will go up and down, but if you keep investing regularly for 3 to 5 years, you’ll start to see the benefits. Just like Rahul Dravid didn’t quit when he faced tough bowlers, you shouldn’t stop your SIPs because of market ups and downs.”

Aarav thought about this and asked, “Is that why Warren Buffett is so rich?”

“Yes, Aarav,” Dadaji said with a proud smile. “Warren Buffett started investing when he was young and kept at it for over 70 years. His wealth grew slowly at first, but in the last 30 years, it multiplied more than 20 times because he stayed invested and let his money grow over time.”

“Wow, that’s amazing!” Aarav exclaimed. “So if I start now, I can be like him too?”

“Maybe not exactly like Buffett, but yes, you can build your wealth if you start early and stay consistent. It’s playing a sport – the more you practice, the better you get.

Aarav smiled, feeling inspired. “I’ll remember that, Dadaji. Time and consistency. I want to start investing too!”

Dadaji beamed with pride. “That’s the spirit, my boy! Just remember, it’s not about how much you start with, but how consistently you keep at it. And one day, you’ll see the rewards of your hard work, just like Dravid did on the cricket field.”

As the sun began to set, Aarav and Dadaji sat together under the banyan tree, the wisdom of time and consistency sinking deep into Aarav’s young heart, ready to guide him on the path to building wealth.

Before I end this blog post I would like to mention that in our lives too, we know what we need to do to make better friends. But, we just don’t do it. It’s the biggest struggle that we will all face in our entire lives.

Being consistent on the things that matter to us. Showing up when it matters. Curating the life WE want, and not someone else’s.

But you need to start somewhere right? To give you a small example…I’ve written some 16-odd articles in the past 3 weeks on Simplified Money Talks and I aim to cross 100+ posts by the next 60 days. You might think I have been working day in and day out on creating such blog posts! But, that’s not TRUE!

My 50+ posts are the perfect example of creating something big through daily and weekly actions. My blog posts have just crossed another 1,000+ hits in just 3 weeks. The reason behind this is my consistency. I am trying to post content, day after day.

Similarly, when it comes to investing you have to be consistent just like what Dadaji mentioned above.

The Department of Economic Affairs, Ministry of Finance, has released rules for regularizing irregularly opened accounts under National Small Savings (NSS) schemes via Post Offices. A circular was issued by the ministry announcing these changes on August 21, 2024. Now, lets try to understand the changes that will soon be implemented through the conversational dialogue between 2 people.

Ravi: Hey, did you hear about the new rules for regularizing irregular small savings accounts starting from October 1st, 2024?

Friend: No, what’s happening?

Ravi: The Ministry of Finance has introduced some guidelines to handle irregularly opened accounts under various National Small Savings (NSS) schemes. This includes accounts like PPF, Sukanya Samriddhi Yojana, and others.

Friend: Sounds important. What kind of changes are we talking about?

Ravi: Well, they’ve identified six key categories of irregular accounts. Here’s a quick rundown:

1. Irregular NSS Accounts:
   • If you have two NSS-87* [National Savings (Monthly Income Account) Rules, 1987] accounts opened before April 1990, the first account will get the usual interest rate, while the second will get a lower rate. From October 1st, 2024, both accounts will earn zero interest.
   • If both accounts were opened after April 1990, the second account will also earn a lower interest rate, and the same rule applies after October 1st 2024.
   • If you have more than two accounts, only the first two will earn interest (under the rules mentioned). The third or more accounts will be refunded without any interest.
2. PPF Accounts Opened in the Name of a Minor:
   • These accounts will earn a lower interest rate until the minor turns 18. After that, the regular interest rate applies, and the maturity period will be calculated from when the minor becomes an adult.
3. Multiple PPF Accounts:
   • The first account will continue to earn the regular interest rate. The second account’s balance will be merged with the first, with any excess refunded without interest. Any additional accounts beyond the second will earn zero interest from the date of opening.
4. PPF Accounts Extended by NRIs:
   • NRIs who have extended their PPF accounts will get a lower interest rate until September 30th, 2024. After that, the account will earn zero interest.
5. Other Small Savings Accounts Opened in a Minor’s Name:
   • These can be regularized with simple interest at the lower rate until the minor turns 18.
6. Sukanya Samriddhi Account (SSA) Opened by Grandparents:
   • If the SSA was opened by grandparents instead of parents, the account must be transferred to the legal guardian. If more than two accounts were opened, the extra accounts must be closed as they violate the scheme guidelines.

Friend: Wow, that’s a lot to take in! Why are they doing this?

Ravi: It’s mainly to bring more structure and ensure compliance with the rules. It also helps in streamlining the benefits and interest rates for these accounts. If anyone has irregular accounts, they should regularize them before October 1st to avoid losing out on interest.

Friend: Makes sense. I’ll need to check my accounts then!

The KYC Conundrum: A Tale of Two Investors

Raghav and Priya, are both passionate about investing in mutual funds. Over the years, they had built solid portfolios, but recently, they found themselves in a discussion about the new KYC norms in the mutual fund industry.

Raghav: “Hey Priya, have you heard about the new changes in the KYC rules? I was reading about it this morning.”

Priya: “Yes, I did! It seems like a big deal. I’m a bit worried, though. My KYC was done years ago, and I used my driver’s license back then. Do you think that’s going to cause any problems?”

Raghav: “Actually, it might. The new mandate relaxes some of the previous requirements, but it’s important to check if your KYC status is ‘validated’ or ‘registered.’ If it’s ‘on hold,’ you could face restrictions on your ongoing SIPs, STPs, SWPs, and even redemptions.”

Priya: “That sounds serious! How do I know if my status is ‘on hold’?”

Raghav: “Well, if your KYC was done using documents other than those specifically listed, like Aadhar or Passport, and your email or mobile number isn’t verified, your KYC could be put ‘on hold.’ This happened to a friend of mine. She used her voter ID, but her email wasn’t verified, so she had to update her details online.”

Priya: “Oh no! My email wasn’t verified back then because I didn’t have one linked to my account. What should I do now?”

Raghav: “Don’t worry. You don’t have to redo everything physically like before. You can submit an online request through your KYC Registration Agency (KRA) or directly on your mutual fund’s portal. If your KYC status is ‘on hold,’ just update your details online.”

Priya: “That’s a relief! But what about you? Did you check your KYC status?”

Raghav: “Yeah, I did. I used my Aadhar card and verified my email and mobile number, so my status is ‘validated.’ That means I’m in the clear, and I won’t need to worry about submitting documents again for future investments.”

Priya: “You’re lucky! I need to check mine right away. How do I do that?”

Raghav: “It’s simple. Just visit one of the five KRA websites like KARVY, CVL, NDML, CAMS, or DOTEX. They have links where you can check your KYC status. If it shows ‘validated,’ you’re good to go. But if it’s ‘registered’ or ‘on hold,’ you’ll need to take action.”

Priya: “Thanks, Raghav! I’ll check it out right now. I guess it’s better to sort this out before any restrictions come into play.”

Raghav: “Absolutely! It’s always better to stay ahead of these things. Plus, the process has become more streamlined now with online submissions. It’s much easier than before.”

Priya nodded, feeling reassured. As the two friends parted ways, Priya made a mental note to check her KYC status and update her details online. She was grateful for the heads-up and knew that staying informed and proactive would keep her investments safe and secure.

—————————————————————–

You can check your KYC status on the following links:

NDML KYC Check the shortened link :- https://shorturl.at/XT62O

CVL KYC Check the shortened Link :- https://shorturl.at/0wRrW