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INSURANCE has been misunderstood for a long time and even today, many people still have the wrong notion.
A lot of pain and frustration can be avoided if more people have a clearer understanding of it.
To begin with, insurance does not offer any protection although the word is popularly used to sell insurance. It can only pay compensation to the unfortunate insured party.
It works by getting a large number of people to participate in a huge fund managed by an insurance company.
For most of the contributors, there is no monetary return as they are fortunate not to suffer any harm to themselves or their properties.
For the minority who are not so lucky, the compensation paid out to them is much more than the premiums they paid. It is an “odd” case of the winners losing their money and the losers gaining it.
However, compensation can never replace what was lost and very often the claimants would receive less than they hoped for.
The insured must always bear in mind that it is not practical for insurers to provide full and total coverage to keep the premiums at an affordable level.
Life insurance policies with just the basic cover popularly known as term assurance have proven to be unpopular, other than for mortgage cover.
As such, the majority of life insurance policies are those with loaded premiums, which allow insurance companies to invest and eventually return to the insured, more than what they have paid.
It is important to note that insurance companies must remain profitable, otherwise their operation is not sustainable.
The public should not be lured by low premiums or high returns as everything would be lost should an insurance company collapse.
From time to time, we come across complaints by senior citizens that they are not eligible to buy insurance and have their life savings wiped out by expensive medical care.
We must realise that life and medical insurance can only be bought with our health and paid by our wealth.
For those who continue to scorn at the quality of our public hospitals or find queuing unbearable; get your insurance cover now before it gets too expensive or beyond reach.
However, having an insurance company to underwrite your risks does not necessarily mean there are no further monetary risks to worry about.
It would be wise to read and adhere to the fine print as the insured may not be fully covered for all types of contingencies.
The best form of protection is to be careful, lead a healthy lifestyle and contribute to make this world a safer place.
Y.S. CHAN,
Kuala Lumpur.
Sunday, December 19, 2010
Today's grads create their own jobs
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By Hannah Seligson (China Daily)
By Hannah Seligson (China Daily)
Updated: 2010-12-19 08:47
Successful young start-ups with no offices, addresses or expertise.
Five years ago, after graduating from college with a film degree and thousands of dollars in student loans, Scott Gerber moved back in with his parents in New York City. He then took out more loans to start a new-media and technology company, but it went broke in 2006.
"It made me feel demoralized and humiliated," he says.
So Mr. Gerber considered his career options. Using his last $700, he started another company.
With Sizzle It, Mr. Gerber vowed to find a niche, reduce overhead and generally be more frugal. The company, which specializes in short promotional videos, was profitable the first year, he says.
Mr. Gerber, now 27, isn't a millionaire, but he has paid off his loans and rents his own apartment. In October, he started the Young Entrepreneur Council "to create a shift from a résumé-driven society to one where people create their own jobs," he says. "The jobs are going to come from the entrepreneurial level.
The council consists of 80-plus business owners across America, ages 17 to 33. Members include Scott Becker, 23, co-founder of Invite Media, an advertising technology firm recently acquired by a Google unit; and Aaron Patzer, the 30-year-old who sold Mint.com to Intuit for $170 million.
The council serves as a help desk and mentoring hotline for individual entrepreneurs. Each month a group of council members will answer 30 to 40 of their questions in business publications like The Wall Street Journal and American Express Open Forum, and on dozens of small business Web sites.
Council members assert that young people can start businesses even if they have little or no money or experience. But roughly half of all new businesses fail within the first five years, according to United States federal data. And the entrepreneurial life is notoriously filled with risks, stresses and sacrifices.
But American unemployment is at 9.8 percent. According to the National Association of Colleges and Employers, only 24.4 percent of 2010 graduates who applied for a job had one waiting for them after graduation (up from 19.7 percent in 2009). The lesson may be that entrepreneurship can be a viable career path, not a renegade choice.
"It's not a pure dichotomy anymore that entrepreneurship is risky and other jobs are safe, so why not do what I love?" says Windsor Hanger, 22, who co-founded HerCampus.com, an online magazine.
Thanks to the Internet, there are fewer upfront costs for entrepreneurs, who can build a Web site, host conference calls, create slide presentations, and host live meetings and Web seminars - all with very little capital.
For $300 a year, Mr. Gerber rented an address from ManhattanVirtualOffice.com, which forwards mail from a recognizable address. He says it saved him $100,000 in rent and gave Sizzle It credibility; his clients now include Procter & Gamble and the Gap. He does most of his work at home and in coffee shops and shared work spaces.
Open-source software can reduce or eliminate the need for tech support.
"All you need today is a laptop, patience and willingness," says Shama Kabani, 25, a council member and founder of Marketing Zen, a digital marketing firm in Dallas, Texas, with yearly revenue in the seven figures. Ms. Kabani hired all of her 24 employees online; 15 are in the Philippines. "I've never met any of them," she says.
But start-ups do need some financing. So Mr. Gerber, whose message is "No one will give you money," is also starting the Gen Y Fund, from which young entrepreneurs can seek funding.
The goal is not to find the next Facebook or sexy Web start-up, he says; instead, it will look for practicable, marketable business ideas. In fact, a favorite phrase of his is "boring is better.
Mr. Gerber has never taken a business or economics class. "I e-mailed people in my circle and figured who knew what I needed to know," he said.
Lack of experience can be an asset. When Ms. Kabani started Marketing Zen, she tried to hide her age. "Then one of my clients told me he hired me because I was 23. He wanted someone who spoke digital as a first language.
Ms. Hanger says being young helps attract advertisers like New Balance and Juicy Couture to HerCampus.com, which recently started turning a profit.
For many of these entrepreneurs, success didn't happen overnight. It took Eric Bahn, 29, another council member, several years to get his company, BeatTheGMAT.com, a community for business school applicants, off the ground. Now it generates close to seven figures in revenue.
Ben Brinckerhoff, 28, started Devver.net, an online tool to test computer software in 2008. It folded last spring.
"There are very real cons to starting a company," he said. "It can hurt your ego, and financially it's a big hit.
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Five years ago, after graduating from college with a film degree and thousands of dollars in student loans, Scott Gerber moved back in with his parents in New York City. He then took out more loans to start a new-media and technology company, but it went broke in 2006.
"It made me feel demoralized and humiliated," he says.
So Mr. Gerber considered his career options. Using his last $700, he started another company.
With Sizzle It, Mr. Gerber vowed to find a niche, reduce overhead and generally be more frugal. The company, which specializes in short promotional videos, was profitable the first year, he says.
Mr. Gerber, now 27, isn't a millionaire, but he has paid off his loans and rents his own apartment. In October, he started the Young Entrepreneur Council "to create a shift from a résumé-driven society to one where people create their own jobs," he says. "The jobs are going to come from the entrepreneurial level.
The council consists of 80-plus business owners across America, ages 17 to 33. Members include Scott Becker, 23, co-founder of Invite Media, an advertising technology firm recently acquired by a Google unit; and Aaron Patzer, the 30-year-old who sold Mint.com to Intuit for $170 million.
The council serves as a help desk and mentoring hotline for individual entrepreneurs. Each month a group of council members will answer 30 to 40 of their questions in business publications like The Wall Street Journal and American Express Open Forum, and on dozens of small business Web sites.
Council members assert that young people can start businesses even if they have little or no money or experience. But roughly half of all new businesses fail within the first five years, according to United States federal data. And the entrepreneurial life is notoriously filled with risks, stresses and sacrifices.
But American unemployment is at 9.8 percent. According to the National Association of Colleges and Employers, only 24.4 percent of 2010 graduates who applied for a job had one waiting for them after graduation (up from 19.7 percent in 2009). The lesson may be that entrepreneurship can be a viable career path, not a renegade choice.
"It's not a pure dichotomy anymore that entrepreneurship is risky and other jobs are safe, so why not do what I love?" says Windsor Hanger, 22, who co-founded HerCampus.com, an online magazine.
Thanks to the Internet, there are fewer upfront costs for entrepreneurs, who can build a Web site, host conference calls, create slide presentations, and host live meetings and Web seminars - all with very little capital.
For $300 a year, Mr. Gerber rented an address from ManhattanVirtualOffice.com, which forwards mail from a recognizable address. He says it saved him $100,000 in rent and gave Sizzle It credibility; his clients now include Procter & Gamble and the Gap. He does most of his work at home and in coffee shops and shared work spaces.
Open-source software can reduce or eliminate the need for tech support.
"All you need today is a laptop, patience and willingness," says Shama Kabani, 25, a council member and founder of Marketing Zen, a digital marketing firm in Dallas, Texas, with yearly revenue in the seven figures. Ms. Kabani hired all of her 24 employees online; 15 are in the Philippines. "I've never met any of them," she says.
But start-ups do need some financing. So Mr. Gerber, whose message is "No one will give you money," is also starting the Gen Y Fund, from which young entrepreneurs can seek funding.
The goal is not to find the next Facebook or sexy Web start-up, he says; instead, it will look for practicable, marketable business ideas. In fact, a favorite phrase of his is "boring is better.
Mr. Gerber has never taken a business or economics class. "I e-mailed people in my circle and figured who knew what I needed to know," he said.
Lack of experience can be an asset. When Ms. Kabani started Marketing Zen, she tried to hide her age. "Then one of my clients told me he hired me because I was 23. He wanted someone who spoke digital as a first language.
Ms. Hanger says being young helps attract advertisers like New Balance and Juicy Couture to HerCampus.com, which recently started turning a profit.
For many of these entrepreneurs, success didn't happen overnight. It took Eric Bahn, 29, another council member, several years to get his company, BeatTheGMAT.com, a community for business school applicants, off the ground. Now it generates close to seven figures in revenue.
Ben Brinckerhoff, 28, started Devver.net, an online tool to test computer software in 2008. It folded last spring.
"There are very real cons to starting a company," he said. "It can hurt your ego, and financially it's a big hit.
The New York Times
Newscribe : get free news in real time
The perils of the American dream
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HOUSING INVESTMENTS
By THEAN LEE CHENG
THERE was this tagline The American Dream is truly attainable! in a local newspaper advertisement marketing US properties.
The advertisement highlighted earning an annual rental income with a three-bedroom detached house of up to 20%, which in Malaysia, would be considered a bungalow.
The nice house and attractive proposition aside, is that American dream really attainable? And if it is, is it sustainable?
If it were, the US government would not need to pump nearly US$1 trillion into the economy and neither would US President Barrack Obama speak to CEOs to seek their help to ease unemployment which is running at more than 9%.
Malaysia's unemployment rate is 3.2%, which is technically considered as full employment. But this piece is not about the American economy, or the Malaysian economy.
It's about the pursuit of the American dream which Hollywood and savvy marketing have enticed us with over the years. That American dream constitues a nice house in a middle class neighbourhood, sons who drive to college, daughters who are trendily dressed in class.
They take annual holidays and are up to date with the latest trends and lifestyle. They go after the latest gadgets that technology has spawned. Sounds familiar? But that lifestyle has also incurred high household debts which in some cases has resulted in foreclosures in the United States.
The situation in United States today is due to choices made years ago. It did not begin with Lehman Brothers fall in 2008, it started way before because of materialism and consumerism.
The Americans have been so good at marketing and advertising, they have made consumerism and marketing into an art and the Americans bought into it.
They are selling that same dream to Asia and other parts of the world just as they have very successfully sold us the various gadgets that technology has spawn.
Out of a population of 28 million, Malaysia has a working class of 12.5 million, of which two million are foreign workers. Of the remaining 10.5 million, 1.5 million are in the public sector.
Only 5.5 million are formally employed in the private sector. The remaining 3.5 million are making a living as traders.
Of late, the authorities and the press have been talking about being in the middle income trap. The middle income group has a monthly salary of between RM2,000 and RM10,000.
Most of us belong to this group whose profile is a house, or several houses, in the Klang Valley and the major towns of Malaysia, with school going children in private or overseas schools and universities. It also includes young graduates who earn slightly less than RM2,000 but who within a short time, move from lower income bracket to the lower middle income group.
This middle income group comprises about half of the 12.5 million working population, who are in a way pursuing that American or Malaysian dream.
The resulting trend is that house buyers no longer seek to buy a house, but to buy a lifestyle.
And developers prefer to build lifestyle homes, because the margin is greater. Lifestyle housing also gives them the added edge of branding themselves.
If it is an apartment, the bigger the better. Buying a house is no longer enough, one has to buy a lifestyle house with designer fittings and sanitary ware.
Education for the children is a premium. Technologically advanced gadgets and branded attire completes the picture.
In short, technically we are geographically in a different location but the people and that American dream remains the same.
Some 30 to 40 years ago, the manufacturing sector was the mainstay of the American economy. It now accounts for 12% of US jobs. Today, services, creation and innovation accounts for a large chunk of it.
In Malaysia, manufacturing used to account for about 35% of gross domestic product (GDP). Manufacturers used to be the largest employers.
Today, contribution from that sector has dropped to 29% of GDP, giving employment to a third of the 5.5 million private sector salaried workers.
The service sector is expected to be the largest employer this year, constituting more than half of the total employment, followed by manufacturing.
For years, the problem in the United States was hidden by cheap debt. We have that today in Malaysia. Banks are pushing attractive mortgage terms. Another way to finance that lifestyle is to leach from the Employees' Provident Fund to finance home mortgages, children's overseas education and private investments in unit trust.
And so the baby boomers (those born in the the 1950s and 1960s) have to postpone their retirement because banks are now approving loans up to the age of 65 or 70.
Easy debt has become a millstone in latter years. Come 2011, house buyers who purchased properties with the 5/95 scheme and variations of it, will be getting the keys to their properties. They paid a downpayment of only 5% of their property price in the first quarter of 2009.
They will now have to cough out the other 95%. Americans are slowly relinquishing that American dream. We are aspiring towards it. Is the American or Malaysian dream sustainable? Food for thought.
Like other middle class wage earner, assistant news editor Thean Lee Cheng is herself a victim of the American dream.
HOUSING INVESTMENTS
By THEAN LEE CHENG
THERE was this tagline The American Dream is truly attainable! in a local newspaper advertisement marketing US properties.
The advertisement highlighted earning an annual rental income with a three-bedroom detached house of up to 20%, which in Malaysia, would be considered a bungalow.
The nice house and attractive proposition aside, is that American dream really attainable? And if it is, is it sustainable?
If it were, the US government would not need to pump nearly US$1 trillion into the economy and neither would US President Barrack Obama speak to CEOs to seek their help to ease unemployment which is running at more than 9%.
Malaysia's unemployment rate is 3.2%, which is technically considered as full employment. But this piece is not about the American economy, or the Malaysian economy.
It's about the pursuit of the American dream which Hollywood and savvy marketing have enticed us with over the years. That American dream constitues a nice house in a middle class neighbourhood, sons who drive to college, daughters who are trendily dressed in class.
They take annual holidays and are up to date with the latest trends and lifestyle. They go after the latest gadgets that technology has spawned. Sounds familiar? But that lifestyle has also incurred high household debts which in some cases has resulted in foreclosures in the United States.
The situation in United States today is due to choices made years ago. It did not begin with Lehman Brothers fall in 2008, it started way before because of materialism and consumerism.
The Americans have been so good at marketing and advertising, they have made consumerism and marketing into an art and the Americans bought into it.
They are selling that same dream to Asia and other parts of the world just as they have very successfully sold us the various gadgets that technology has spawn.
Out of a population of 28 million, Malaysia has a working class of 12.5 million, of which two million are foreign workers. Of the remaining 10.5 million, 1.5 million are in the public sector.
Only 5.5 million are formally employed in the private sector. The remaining 3.5 million are making a living as traders.
Of late, the authorities and the press have been talking about being in the middle income trap. The middle income group has a monthly salary of between RM2,000 and RM10,000.
Most of us belong to this group whose profile is a house, or several houses, in the Klang Valley and the major towns of Malaysia, with school going children in private or overseas schools and universities. It also includes young graduates who earn slightly less than RM2,000 but who within a short time, move from lower income bracket to the lower middle income group.
This middle income group comprises about half of the 12.5 million working population, who are in a way pursuing that American or Malaysian dream.
The resulting trend is that house buyers no longer seek to buy a house, but to buy a lifestyle.
And developers prefer to build lifestyle homes, because the margin is greater. Lifestyle housing also gives them the added edge of branding themselves.
If it is an apartment, the bigger the better. Buying a house is no longer enough, one has to buy a lifestyle house with designer fittings and sanitary ware.
Education for the children is a premium. Technologically advanced gadgets and branded attire completes the picture.
In short, technically we are geographically in a different location but the people and that American dream remains the same.
Some 30 to 40 years ago, the manufacturing sector was the mainstay of the American economy. It now accounts for 12% of US jobs. Today, services, creation and innovation accounts for a large chunk of it.
In Malaysia, manufacturing used to account for about 35% of gross domestic product (GDP). Manufacturers used to be the largest employers.
Today, contribution from that sector has dropped to 29% of GDP, giving employment to a third of the 5.5 million private sector salaried workers.
The service sector is expected to be the largest employer this year, constituting more than half of the total employment, followed by manufacturing.
For years, the problem in the United States was hidden by cheap debt. We have that today in Malaysia. Banks are pushing attractive mortgage terms. Another way to finance that lifestyle is to leach from the Employees' Provident Fund to finance home mortgages, children's overseas education and private investments in unit trust.
And so the baby boomers (those born in the the 1950s and 1960s) have to postpone their retirement because banks are now approving loans up to the age of 65 or 70.
Easy debt has become a millstone in latter years. Come 2011, house buyers who purchased properties with the 5/95 scheme and variations of it, will be getting the keys to their properties. They paid a downpayment of only 5% of their property price in the first quarter of 2009.
They will now have to cough out the other 95%. Americans are slowly relinquishing that American dream. We are aspiring towards it. Is the American or Malaysian dream sustainable? Food for thought.
Like other middle class wage earner, assistant news editor Thean Lee Cheng is herself a victim of the American dream.
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