Housing finance major HDFC have recently raised Rs 4,300 crore through a qualified institutional placement issue of non-convertible debentures (NCD) with attached warrants that entitle the holder to buy HDFC shares at around Rs 3,000 per share within three years.  The corporation raised Rs 4,000 crore through the issue of debentures, which offer a return of 7.15% and 7.85% for two and three years investment, respectively, and close to Rs 300 crore was raised through the issue of warrants priced at Rs 275, which give the holder the option to buy HDFC shares at Rs 3,000 within three years. The effective price for the warrant holder works out to be Rs 3,275 per share.

Hence. it make sense to invest in NCD with warrant instead of FD, NCC, PF etc….

Insurance in its basic form is defined as “ A contract between two parties whereby one party called insurer undertakes in exchange for a fixed sum called premiums, to pay the other party called insured a fixed amount of money on the happening of a certain event.” When we approach (in most cases they approach) any insurance agent or advisor (both mean the same) will try to sell the ULIP plans or endowment plan or money back policy. They try to link the insurance objective with the investment one but I have one problem with that, can an insurance agent manage the investment in the right way. I know they won’t, then why they try to sell other plans, which will not be an insurance plan at all. Are they worried about their commission? Or they the saving habit?

Agents are often not keen on selling term plans since they earn much less commission from them than, say, unit-linked plans (ULIPs). Since term plans have no investment component, the lowest premium plan qualifies as the best. Information can be gathered from agents or company Web sites. The reasons are very clear. A term plan offers the insured a higher sum assured at a very low cost. And this is the fundamental principle of insurance. But in India, history suggests that insurance has always been sold, it has rarely been bought. Blame the unscrupulous insurance agents for this.

Term plans have many endearing features. To begin with, they provide life cover for different periods or terms at the lowest possible premium. For instance, a 34-year-old person can get a Rs 25 lakh (Rs 2.5 million) cover for an annual premium of Rs 9,550 for 25 years, a coverage that will cost him about Rs 95,550 and Rs 162,550 in endowment and money-back policies, respectively. Term plans are ideal in most cases, but may not work in some conditions. One such scenario is when the policyholder believes that his dependents would not be in a position to take care of their financial needs in the event of his death after the expiry of the policy. Examples of such dependents are parents and differently-abled children. In such cases, whole-life cover can be considered, not a term plan. Term plans also prove inadequate if you lack the discipline or time to invest regularly, want to skip the trouble of researching investment vehicles, or intend to invest in an insurance option for a specific aim such as your kids’ future or your retirement.