Tagged: Health Insurance
ATM :: You can cut tax via these 3 expenses and interest income also: Find out how
By Babar Zaidi | ET Bureau|Jan 08, 2018, 06.30 AM IST | Economic Times
Most of us are aware of deductions available to a taxpayer on gross total income. The most well known are the deductions under Section 80C. Here are a few more breaks available under 80C and various other sections of the Income Tax Act that you can make the most of to further reduce your taxable income.
1. Education loan
If you have taken an education loan for yourself, your spouse or children, or a student you are legal guardian to, you can claim this deduction under Section 80E for the interest paid on the loan amount. The entire interest paid in a financial year is eligible for deduction without any limit. School tuition fees also qualify for tax benefit under Section 80C. The amount of tax benefit is within the overall limit of the section of Rs 1.5 lakh a year. For tax purposes, the fee lowers the total gross income of the taxpayer, which in turn, reduces the tax liability.
2. Medical insurance premium
The amount paid as medical insurance premium is eligible for deduction under Section 80D. The maximum deduction that can be claimed under this section is Rs 60,000, but there are many sub-limits. An individual can avail a maximum deduction of Rs 25,000 for premium paid for themself, their spouse or dependent children. An additional deduction of Rs 25,000 is allowed on premium paid for parents. If the policyholder is a senior citizen, the deduction limit is Rs 30,000. One can also claim a tax break of Rs 5,000 on preventive health checks.
3. Home loans
- Repayment of the principal amount of a home loan is allowed as tax deduction under Section 80C. This deduction is available irrespective of the year for which the payment has been made. The amount paid as stamp duty and registration fee is also allowed as a deduction under Section 80C.
- A tax break for payment of interest on home loans is allowed under Section 24. The maximum tax deduction allowed of a self-occupied property is Rs 2 lakh.
- Section 80EE provides for an additional deduction of Rs 50,000 for interest on home loans for first-time buyers. In this case, the loan amount should be below Rs 35 lakh and the value of the house should be lower than Rs 50 lakh.
4. Interest on savings account
Interest earned on savings bank account is allowed as deduction under Section 80TTA. The maximum amount that can be claimed is Rs 10,000. This does not mean that interest of up to Rs 10,000 is exempted income. You should show this amount as income from other sources in your ITR and then claim deduction under Section 80TTA.
Source : https://goo.gl/gUB5Ss
ATM :: How to become rich fast at a young age in India: 5 amazing investment strategies to follow before you turn 30
Everyone wants to be financially secure and well off by the age of 35-40. However, when we are in our 20’s, we tend to live life in the moment and forget saving for the future.
By: Sanjeev Sinha | Updated: November 27, 2017 2:25 PM | Financial Express
All of us have various financial goals in life. Everyone wants to be financially secure and well off by the age of 35-40. However, when we are in our 20’s, we tend to live life in the moment and forget saving for the future. This is not the right approach towards creating wealth. Therefore, to ensure that you are financially secure and on the right track with your money, here are 5 important investments that you must make before you hit your 30-year milestone:
1. Investment towards tax saving
Considering that you are working and earning, it is important for you to assess your tax liability and take advantage of tax deductions available under Section 80C of the Income Tax Act. “By proper tax planning, you can not only reduce your tax liability but also save some more to invest towards your other goals. One of the best tax-saving instruments is Equity-Linked Savings Schemes (ELSS). It is a type of open-ended equity mutual fund wherein an investor can avail a deduction u/s 80C up to Rs 1.50 lakh for a financial year,” says Amar Pandit, CFA and Founder & Chief Happiness Officer at HapynessFactory.in.
2. Investment towards emergency corpus
There are various events like accidents, illnesses and other unforeseen events that we may encounter in our lives. These events should never occur, but if they do, one needs to be adequately prepared for the same. In critical cases, such events may hamper one’s ability to work and may even lead to a loss in earnings for a few months or years. Hence, “it is advisable to build a contingency corpus, which is equivalent to at least 5-6 months of living expenses. Further, your emergency fund should be safe and easily accessible (liquid in nature) at short notice, in case of an emergency. Hence, savings bank accounts and liquid mutual funds are two options for setting aside the emergency corpus. However, considering that liquid and ultra-short term mutual funds are more tax efficient in nature, it is advisable to park a major portion of your corpus in the same,” says Pandit.
3. Investment towards long-term goals
It is very important to save and invest towards your long-term goals such as marriage, buying a house, starting your own venture, retirement, and so on. You must start with determining how much each goal will need and the savings required to achieve the goal. Once the corpus is fixed, you can invest towards the goal regularly. As an investment strategy, start fixed monthly investments – SIPs (Systematic Investment Plan) in mutual funds. Always remember, the earlier you start investing towards your goals, the longer time your investments will have to grow and the more you will benefit from the power of compounding. Equity mutual funds which are growth oriented are a preferable investment option for long-term goals.
4. Investment towards short-term goals
There are many short-term goals that are recurring in nature, such annual vacation, buying a car or any asset in the near term and so on. For such goals, you are advised to park your funds in liquid or arbitrage mutual funds rather than a savings account. “Mutual funds are more tax efficient than savings accounts and also there are different funds for different time horizons. For example, for goals to be achieved within a year, you can opt for liquid or ultra-short term funds whereas for goals to be achieved post one year, you can opt for arbitrage funds,” advises Pandit.
5. Investment towards health and life cover
Life and health insurance typically are not supposed to be considered as investments. However, both are very important and must be considered as one of the priority money move to be made before turning 30. If you are earning and have a family dependent on you, you must assess and buy the right life insurance term cover for yourself. Further, with costs of health care and medical on the rise, any untoward illness without sufficient cover will have you dip into capital which is unnecessary. Hence, there cannot be any compromise on health insurance. Thankfully, there are various health covers available in the market today. You should opt for the right cover for yourself, depending on your needs and post considering all the options.
Source: https://goo.gl/Abf7TR
ATM :: 10 Ways to Invest Wisely and Save Income Tax
Are you still trying to figure out ways to save tax? Tax saving is not as difficult as we think. We just have to be aware of things that we need to do to reap the tax benefits.
News18 Specials | Updated:July 3, 2017, 2:41 PM IST | news18.com
Are you still trying to figure out ways to save tax? Tax saving is not as difficult as we think. We just have to be aware of things that we need to do to reap the tax benefits. Also, it is crucial to declare investments at the beginning of the year to your employer so that accordingly, he can adjust the TDS (Tax Deducted at Source) and you get the tax benefits in advance rather than waiting for refund from the I-T Department.
Given below are 10 Ways to invest wisely and save income tax.
Home Loan: Paying EMIs for home loan can be a burden for you but the good news is that it can help you claim the tax benefits. You can claim the interest paid upto Rs.2,00,000/- on your home loan EMIs as an exemption from your taxable income. If you make any pre-payments to your home loan, then pre-paid principal upto Rs. 1,50,000/- can be claimed as a deduction.
HUF Account: If you are earning additional income apart from your salary, then it is taxable. However, if you open a Hindu Undivided Family account and show it under your HUF then you can save tax.
Tuition Fee Payment: We usually spend hefty amount of our income to pay for the education of our children. We can get tax rebate for the amount that we pay as tuition fee for upto two children.
Leave Travel Allowance: LTA given by your employer for the expenses that you and your family have incurred on travel within India can be claimed as deduction. It’s better to plan your vacation in advance and get the LTA benefits.
Health Insurance + Medical Expenses: You can claim tax benefit up to Rs.15,000/- for self, spouse and children and Rs.20,000/- for parents above 65 years of age. Additionally, you can claim upto Rs.15,000/- annually for medical expenses by showing genuine consultation and medicines bills.
Pension Funds: Fortunately, I-T laws provide you the opportunity to reduce your taxes if you are investing in pension funds.
Education Loan Repayment: Just like tax benefits available on tuition fee payment, you can also claim deduction for EMIs that you pay towards your Education loan. So investing in your education has more benefits than just upscaling your skillset.
Employee Provident Fund: Under section 80C, not only the interest, income and maturity amount of your EPF account is exempted from tax, but also the contribution that you make to the PF account can be claimed as deduction.
National Pension Scheme: NPS is one of the most secure investment options given by the postal department. You can claim tax rebate on the amount that you contribute to this scheme.
Donations for Charity: While donating for a charitable cause you not only get the inner peace but it also makes you eligible for tax exemption.
Source: https://goo.gl/CmqgtS
ATM :: Risk cover for your home loan
BALAJI RAO | The Hindu
A term assurance provides financial stability in case of unforeseen events and ensures that EMIs are paid.
Rangan is 35 years old, married, has twins aged three years. His wife, Ragini, is a home-maker. She teaches music to a few young aspirants and earns a small amount of money every month that takes care of her personal expenses. But Rangan is the main earning member of the family. He works for an IT company, earns well, has a home loan which still has another 17 years of repayment (Rs.50 lakh more to be paid including principal and interest), has a car loan to be paid for another three years, and has to take care of his children’s education over the next 20 years.
Rangan is bit worried about unforeseen events such as accidents, illness, loss of job and premature death. He has a beautiful house on which he had spent quite a bit of his savings and also taken a hefty loan. He also wants to secure his family financially.
What could Rangan do that ensures his family is not into any financial mess if some unforeseen event occurs? The one solution for all these is insuring the risks adequately. There is a general confusion due to lack of financial education and awareness that insurance plans are purchased to meet life’s events, whereas the purpose of insurance is to protect against unforeseen events leading to financial risk. Financial goals and risks should not be mixed; it would be a bad marriage.
Segregate goals, risks
Rangan should segregate his financial goals and financial risks. His goals are to meet his children’s education expenses, their marriage, expenses upon retirement some 25 years from today, vacations, upgrading of house, upgrading of car, pre-closing his home loan, etc. His financial risks are losing his job, health scare leading to hospitalisation, and premature death that could risk his house (not being able to pay the EMIs).
While Rangan is investing in financial instruments such as debt and equity to meet his financial goals he has inadequate cover to meet his financial risks. He should split his risks in such a way that he manages them diligently with low investments. Let’s see how Rangan can do it.
Three elements
He should buy three separate pure risk covers by way of term assurances. For the home loan outstanding, he should buy a term assurance which could cost him Rs.5,000 per annum (approx.) for a period of 17 years. In case of premature death the insurance company would pay his legal successor the sum assured which could be utilised to repay the home loan and retain the house.
For the children’s education he should buy another term assurance plan for Rs.1 crore for a period of 20 years which could cost him Rs.6,500 per annum (approx.). In case of his untimely death, the sum assured would be paid by the insurance company to cover the children’s education-related expenses.
For his life risk until retirement, he can choose another Rs.50 lakh to Rs.1 crore as sum assured under term assurance for 25 years which could cost him Rs.5,500 to Rs.6,500 per annum (approx.) that would take care of all other financial risks.
In case no untoward incident (such as his untimely death) happens, at the end of 17 years during the repayment of his home loan the premium payment will stop. Similarly, 20 years from today the premium payment for education too stops; only the overall risk-related premium payment would continue till he is 60 years old.
This is by far the best method of addressing financial risks. People make the mistake of buying traditional plans such as endowment, money back and whole-life policies which are highly expensive and impractical to cover the entire financial risks across different stages and requirements of life.
Health insurance
Rangan should also buy health insurance. Though he argues that his company has medically covered him and he will not need another insurance cover, this has no rationale because if he quits his job, his company-covered insurance would become invalid. Even if he works till his retirement, post-retirement his insurance cover would cease to exist. Hence, he should buy a health cover worth at least Rs.15 lakh which could cost him approx. Rs.15,000 per annum.
Source : http://goo.gl/xXVEqh
ATM:: 9 smart ways to save tax
Babar Zaidi | TNN | Jan 11, 2016, 08.57 AM IST | Times of India
Do-it-yourself tax planning can be rewarding and challenging. Rewarding, because you can choose the tax-saving instrument that best suits your needs. Challenging, because if you make the wrong choice, you are stuck with an unsuitable investment for at least 3-5 years. This is where our annual ranking of best tax-saving options can prove helpful. It assesses all the investment options on seven key parameters—returns, safety, flexibility, liquidity, costs, transparency and taxability of income. Each parameter is given equal weightage and a composite score is worked out for the various tax-saving options.
While the ranking is based on a robust methodology, your choice should also take into account your requirements and financial goals. We consider the pros and cons of each option and tell you which instrument is best suited for taxpayers in different situations and lifestages. We hope it will help you make an informed choice. Happy investing!
ELSS FUNDS
ELSS funds top our ranking because of their tremendous potential, high liquidity and transparency. The ELSS category has given average returns of 17.8% in the past 3 years. The 3-year lock-in period is the shortest for any Section 80C option.
If you have already fulfilled KYC requirements, you can invest online. Even if you are a new investor, fund houses facilitate the investment by picking up documents from your house and guiding you through the KYC screening. ELSS funds are equity schemes and carry the same market risk as any other diversified fund. Last year was not good for equities, and even top-rated ELSS funds lost money. However, the funds are miles ahead of PPF in 3- and 5-year returns.
The SIP route is the best way to contain the risk of investing in equity funds. However, with just three months left for the financial year to end, at best, a taxpayer will manage 2-3 SIPs before 31 March. Since valuations are not stretched right now, one can put in a bigger amount.
SMART TIP
Opt for the direct plan. Returns are higher because charges are lower.
ULIP
The new online Ulips are ultra cheap, with some of them costing even less than direct mutual funds. They also offer greater flexibility. Unlike ELSS funds, where the investment cannot be touched for three years, Ulip investors can switch their corpus from equity to debt, and vice versa. What’s more, there is no tax implication of gains made from switching because insurance plans enjoy exemption under Section 10 (10d). Even so, only savvy investors who know how to use the switching facility should get in.
SMART TIP
Opt for liquid or debt funds of the Ulip and gradually shift the money to the equity fund.
NPS
The last Budget made the NPS attractive as a tax-saving tool by offering an additional tax deduction of Rs 50,000. Also, pension fund managers have been allowed to invest in a larger basket of stocks.
Concerns remain about the cap on equity exposure. Besides, the taxability of the NPS on maturity is a sore point. At least 40% of the corpus must be put in an annuity. Right now, the income from annuities is taxed at the normal rate.
SMART TIP
Opt for the auto choice where the equity exposure is linked to age and comes down as you grow older.
PPF AND VPF
It’s been almost four years since the PPF rate was linked to the benchmark bond yield. But bond yields have stayed buoyant and the PPF rate has not fallen. However, the government has indicated that it will review the interest rates on small savings schemes, including PPF and NSCs. If this is a worry, opt for the Voluntary Provident Fund. It offers that same interest rate and tax benefits as the EPF. There is no limit to how much you can invest in the VPF. The contribution gets deducted from the salary itself so the investor does not even feel it go.
SMART TIP
Allocate 25% of your pay hike to VPF. You won’t notice the deduction.
SUKANYA SAMRIDDHI SCHEME
This scheme for the girl child is a great way to save tax. It is open only to girls below 10. If you have a daughter that old, the Sukanya Samriddhi Scheme is a better option than bank deposits, child plans and even the PPF account. Accounts can be opened in any post office or designated branches of PSU banks with a minimum Rs 1,000. The maximum investment in a financial year is Rs 1.5 lakh and deposits can be made for 14 years. The account matures when the girl turns 21, though up to 50% of the corpus can be withdrawn after she turns 18.
SMART TIP
Instead of PPF, put money in the Sukanya scheme and earn 50 bps more.
SENIOR CITIZENS’ SCHEME This is the best tax-saving instrument for retirees. At 9.3%, it offers the highest interest rate among all Post Office schemes. The tenure is 5 years, extendable by 3 years. Interest is paid quarterly on fixed dates. However, there is a Rs 15 lakh overall investment limit.
SMART TIP
If you want ot invest more than Rs 15 lakh, gift the amount to your spouse and invest in her name.
BANK FDS AND NSCs
Though bank FDs and NSCs offer assured returns, the interest earned on the deposits is fully taxable. They are best suited to taxpayers in the 10% bracket or senior citizens who have exhausted the Rs 15 lakh limit in the Senior Citizens’ Saving Scheme.
SMART TIP
Invest in FDs and NSCs if you don’t have time to assess the other options and the deadline is near.
PENSION PLANS
Pension plans from insurance companies still have high charges which makes them poor investments. They also force the investor to put a larger portion (66%) of the corpus in an annuity. The prevailing annuity rates are not very attractive. Pension plans launched by mutual funds have lower charges, but are MFs disguised as pension plans. Moreover, they are debtoriented plans so they are not eligible for tax benefits that equity plans enjoy.
SMART TIP
Invest in plans from mutual funds. They offer greater flexibility than those from life insurers.
INSURANCE POLICIES
Traditional life insurance policies remain the worst way to save tax. Still, millions of taxpayers buy these policies every year, lured by the “triple benefits” of life insurance cover, longterm savings and tax benefits. Actually, these policies give very little cover. A premium of Rs 20,000 a year will get you a cover of roughly Rs 2 lakh. The returns are very poor, barely 6% if you opt for a 20-year plan. And the tax-free income is a sham. Going by the indexation rule, if the returns are below the inflation rate, the income should anyway be tax free. The problem is that once you sign up for these policies, they become millstones around your neck.
SMART TIP
If you can’t afford to pay the premium, turn your insurance plan into a paid-up policy.
Source: http://goo.gl/DWqo4K
ATM :: 5 Finance Pitfalls That Can Cost You Dearly
Creditvidya.com | Updated On: April 11, 2015 14:11 (IST) | NDTV Profit
If you take a quick look at your finances, it may seem like everything is in order. From a distance, your finances may appear to be devoid of any discrepancies: You have a steady income and manage to pay off your mortgage/credit card bills on time and also have that extra bit to splurge on each month. However, a closer look may reveal that you are actually making several money mistakes that may lead to disastrous consequences in the days to come.
Let’s take a look at some of these mistakes:
1) Treating home loan as just another ‘to do’ item
If you have taken a home loan, just paying EMIs on time isn’t enough. You must keep an eye on the interest rate cycles and ensure that you are in touch with your lender on a regular basis. Putting your home loan on a backburner may mean that you are missing out on big monthly savings.
2) Putting away the task of checking credit score
Most of us are guilty of some procrastination, but this is one habit that may cost you dearly. Do not wait to check and improve your Cibil score only when you are planning to apply for a crucial loan. Keeping a tab on your Cibil report from time to time to see that your financial health is in order is a good practice.
3) ‘Retirement savings can wait’
When you are young and have good prospects in your career, you may have a feeling that it is too early for you to start planning your retirement. This is, however, a crucial mistake because you are ignoring the benefits of compounding and also missing out on having the safety net of your own contributions. The later you start saving for your retirement the costlier it gets for you.
4) ‘Medical insurance is a waste’
You may be in perfect health now, but there is no saying when calamity strikes. That is exactly the reason why you need to invest in a good health plan. In case a medical emergency occurs, you may end up wiping off all your savings at one go.
5) No savings for a rainy day
When the going is good, people think that they can put away their savings for a later day. But what if there are unforeseen events in the future like a job loss or a large, unexpected expense? If you do not have a pool of savings to dip into at such times, you may end up making huge expenses on account of emergencies on your credit card. This may inflate your debt burden into an unmanageable size in the future. Making sure that you have put away at least three to six months of your monthly expenses as savings all the time is a healthy practice.
Maintaining a good financial health is as important as physical health. By keeping these five points in mind, you can ensure that your financial health is in order.
Disclaimer: All information in this article has been provided by Creditvidya.com and NDTV Profit is not responsible for the accuracy and completeness of the same.
Source : http://goo.gl/SEqSMN
ATM :: Don’t Let Your Money Be Footloose And Fancy Free
Rajiv Raj | Dec 9, 2014, 04.49 PM | Business Insider
Earning your first salary is undiluted pleasure. It is all too easy to get soaked in its headiness and go a bit haywire in your expenses. However, this is a curial period of your life to build it financially. Decisions made in these initial years will affect your financial status throughout the life.
So if you are young and have just started earning, here is some important money advice that will serve you well for life.
1. Start with a small fixed saving every month
When we first start earning, money always seems short. We are perpetually overdrawing from a credit card or waiting for the next salary to come in. Even so, it is essential to start saving early. Even a small amount grows fast if invested early, much faster than a larger amount invested a few years later. The power of compounding helps money grow in multiples over a longer period of time. To ensure that there is a compulsory saving, invest in an instrument like Systematic Investment Plan (SIP) or a recurring deposit, and instruct your bank to directly debit your account at the beginning of the month.
2. Start building your Cibil credit score
Your borrowing and repayments is what builds up your credit score. Borrowing could be spending on a credit card or taking an EMI loan for a car or even a home loan. Importantly, the loans need to be repaid on time to build a positive credit score. Also avoid spending more than 30% of your credit limits. Maxing out on the credit cards will bring down your credit score. At this stage of life, building a good Cibil credit score is of paramount importance as you will soon be in the market for the all important home loan, and a good Cibil credit score can make all the difference.
3. Buy insurance
For most Indians, insurance is a source of investment. Insurance,however should be used only to cover risk. Buy a term policy that is easy on the pocket and serves the purpose of giving you risk cover. The remaining amount must be invested in other areas.
4. Take advantage of the benefits offered by your company
Many company offer reimbursements for health-related expenses. They also help you to structure your salary in the most tax-effective manner. Some companies may also offer group life insurance and medical insurance, where the rates work out to be much cheaper. Become friends with the people in human resources and take advantage of what the company has to offer its employees.
5. Pay attention to taxes
The government of India gives its citizen excellent opportunities to save tax along with encouraging investments. You can get exception under sector 80 C upto Rs 1.5 lakh in taxes every year by simply investing in your Provident Fund account or paying your life insurance premium etc. Also do file your tax returns on time to avoid the heavy penalties.
6. Make a career plan
It is essential to make a career continuity plan. You may have joined a firm as a graduate, but to move ahead an advanced degree is needed. A rough plan must be chalked out. For instance, you might want to study for an MBA degree in 2 years time. So you need to plan out the source of finance to pursue the course along with living expenses for that period. An education loan can be taken, but to avail that loan you must have a good Cibil credit score. It is a full circle which comes back to prudent spending and investments.
About the author: Rajiv Raj is the director and co-founder ofwww.creditvidya.com.
Source : http://goo.gl/zQYyVU
ATM :: Six insurance policies you should avoid buying
By Sanjeev Sinha | ECONOMICTIMES.COM | 31 Dec, 2014, 01.51PM IST
Every asset has an economic value, but after its life-time, the asset needs to be replaced with a substitute. However, there can be an unfortunate event like an accident which may destroy the asset (including human) early or make it incapable of generating any income. For reducing the financial effect of such adverse situations, insurance comes into the picture. So, the simple rule is: all those things, which will cause you economic loss to replace or reinstate, should be insured.
“But practically it’s not possible because if you try to insure everything under the sun, you will be left with no money for your living expenses & financial goals. One should, therefore, consider two things before taking any insurance – the probability of an event & its financial impact on your life,” says Hemant Beniwal, Director, Ark Primary Advisors Pvt Ltd (a Sebi-registered investment adviser).
It can be simply understood by this grid:
Six insurance policies you should avoid buying
A: High Probability, High Financial Impact – type should be covered without any second thought – e.g. health insurance & motor insurance.
B: Low Probability, High Financial Impact – type can have a significant financial impact. So should be considered after looking at personal situations & assets; e.g. term insurance, accidental insurance & critical care insurance.
C: High Probability, Low Financial Impact – In this case risk should be retained or transferred to insurance companies; e.g. extended warranties.
D: Low Probability, Low Financial Impact – Such insurance can be outrightly ignored, like credit card insurance.
Sometimes the probability of an event may depend on your job profile or individual situation. Take the case of IT professionals, for instance. They sit in front of their computers or laptops for most part of the day. The prolonged sitting leads to problems such as back pain. This means they have a greater risk of physical health problems and so they will be more concerned about them. Now consider a manufacturing company. The probability of an accident taking place there is high. So, accidental insurance may be essential for the people working there.
Still there are some insurance policies which people don’t need in normal circumstances. Here we take a look at some of them:
Insurance for Investment Purpose: Insurance is an investment is a myth which companies or agents have played around with to maximize their earnings. Since we are used to looking at receiving a return on every penny we spend in our lifetime, agents or companies push expensive products with return maximization strategies. This leads us to buy the wrong product every time.
Therefore, “you should never mix insurance and investments. This is also applicable on investment products which offer insurance benefits. Like some mutual funds offer the benefit of health & life insurance, if you invest in their schemes. These offers should be ignored as they always come with some hidden T&C of exit loads & expenses. Also, ignore health insurance policies which have investment components and go for plain vanilla health insurance products instead,” explains Beniwal.
Life Insurance for Children: All parents want to ensure their child’s future. And to do this, some want to buy a child policy which can meet their child’s financial requirements. But buying a policy on child’s name is not the right solution as the objective of insurance is to support your dependents financially when you are no more. Hence, the insurance has to be in your name rather than that of your child.
Also, “child plans — be it ULIPs or traditional ones — are highly costly and can fall short of inflation-adjusted corpus at the time of need for education or marriage. Even coverage may fall short of requirement, taking into consideration the high cost of primary education, leave aside higher education,” says Subhabrata Ghosh, Certified Financial Planner and Member of The Financial Planners’ Guild India.
Excess Accidental Insurance: Accidental insurance is a must have insurance, but in India there are some limitations in the product. The biggest flaw is that in most of the cases accidental death is the base policy, which is already covered in the term insurance. So if someone already has sufficient life cover through a term plan, this insurance is not required. A lot of people also opt for accidental death benefit rider in case of traditional insurance policies. They should check their total life coverage before taking any decision. In international markets, dismemberment policy can be bought with accidental death benefit, which is not the case in India.
Wedding Insurance & Flight Insurance: Both of these fall under the low probability but high impact category. Flight insurance can be clearly ignored as that will be covered under life insurance. Wedding insurance is a new category in general insurance, which covers loss due to wedding cancellation, damage of property, personal accident & public liability.
“Accidental & property damage is already covered under any comprehensive accidental insurance and householder insurance policy. So a separate cover is usually not needed for it. It’s wedding cancellation & public liability, however, which can have a significant financial impact. But in India people are more accommodating in case of cancellation of an event in comparison to the western world. Add to it the list of exclusion in such policies, and wedding insurance is still not in a priority list,” informs Beniwal.
Credit Card Insurance: How many times you lost your credit card? Even if once, what’s the first thing that you did? In fact, you asked to block your card and the card company issued a new card. So rather than taking insurance for loss of credit card, make sure it’s not lost or rather keep lesser-limit cards in your wallet.
There is another issue too. Whenever you get your credit card from a bank or financial institution, they usually start pitching a lot of insurance policies which are marketed as ‘especially available for our card holders’ – health insurance and accidental insurance are the most common. In most of the cases, either these policies are expensive or come with a lot of limitations. Moreover, insurance in these policies may not be transferred if you don’t want to continue with your card company. So, why to get stuck with such policies?
Source : http://goo.gl/kRbVOn
ATM :: Tips to manage finances if you lose your job
By Bindisha Sarang | 3 Nov, 2014, 08.00AM IST | Economic Times
More than 5000 people will lose their jobs when Nokia shuts down its manufacturing unit in Chennai, this month.
While job security cannot be guaranteed today, a skilled or experienced worker can find another one before long. However, the interim period can be difficult if one does not plan one’s finances well.
“Having an emergency fund that can take care of at least three to six months’ expenses can be of enormous help,” says Suresh Sadagopan, a Mumbai-based certified financial planner. If you have an emergency fund, you won’t have to worry about money matters and can focus on hunting for a new job. However, if you don’t, what should you do? The following steps can help you manage your household till you find a new job.
Plan a new budget
Drafting a new budget is the first step and it entails cutting down the lifestyle expenses. A monthly budget has two components: fixed expenses such as rent, and variable expenses. The former include compulsory expenses, such as groceries, electricity bills, mobile bills and other utilities that you cannot avoid, whereas the lifestyle expenses would be weekend movies at multiplexes or restaurant dinners. “The first expenses to let go off during the unemployment period are these discretionary expenses,” says Kiran Telang, a financial planner.
Take independent health insurance
It is likely that your employer offered you and your family a medical cover. However, when you lose your job, you let go of the health insurance as well. This is the reason that most financial planners insist on employees buying an independent cover besides the group cover from the employer.
Medical emergencies can happen any time and paying medical bills while out of job can be excruciating. “Getting health insurance is of paramount importance. The cover should be at least `5 lakh,” says Sadagopan. Financial advisers suggest that you buy a separate family floater policy. The average premium for a family of four is usually around `12,000 per annum. You can port your group health insurance policy to individual health insurance by the same insurer. Check with your former employer’s insurer if this is possible.
“If your life or medical insurance premiums are due during the unemployment period, you must service them, even if it’s difficult to do so,” adds Telang.
Prioritise debt repayment
Most households have debts, such as a home loan, personal loan, and credit card bills. Make sure that you pay your EMIs, especially for the home loan. If you are finding it difficult to pay the instalment, request your lender to restructure the debt.
You can also ask for deferment of loan payment. If you have been a good borrower, chances are that the lender will oblige. Switching the loan to another lender who offers lower interest rate on the loan is also an option you can explore.
Credit card debt can prove very expensive if ignored, so pay at least the minimum amount due. You can also apply for a balance transfer to another bank’s credit card, which will reduce the minimum due amount. “If you have skill sets that can enable you to get a job within 3-4 months, you don’t need to aggressively look into restructuring debts. But if you are working in a lull sector and the overall job market is not looking good, it makes sense to restructure debts as soon as possible,” says Telang.
Tap into your portfolio
Even as you look for a job, you will need to tap into your investments. “Check your portfolio and take funds keeping your asset allocation in mind,” says Sadagopan. For instance, if you have a higher asset allocation in equities, you could sell a portion to meet your immediate needs and, in the process, balance your portfolio.
WAYS TO TACKLE LOAN INSTALLMENTS
Reschedule
The lender will increase the tenure of your loan, reducing the EMI.
Restructure
You will have to convince your lender to give you a better deal in terms of interest rates.
Deferment
Inform your lender that you won’t be able to pay the EMIs for some time, but assure repayment after the said period.
Switch
Switch the loan to a lender who offers a lower interest rate.
Source : http://goo.gl/OQ3nFq
ATM :: 6 financial planning tips for those starting out
ArthaYantra.com | Updated On: August 01, 2013 13:53 (IST) | NDTV Profit
Today, the people in their 20s are in a world where they are forced to make more financial decisions than ever. When we actually observe the trends among the current professionals, most of the financial mistakes are committed during the early part of their career. The impact of these mistakes has a significant downside on their future financial well-being. The following steps ensure that they imbibe the much needed financial discipline and lay a foundation for their secure financial future.
1. Avoid cash-starved month-ends
The most common phenomena observed among the young professionals are the variations in their lifestyle in a given month. Their lifestyle starts on a high note with frivolous spending and as the month progresses, it trends downwards. Planning the expenses and differentiating expenses and committed and non-committed expenses would help them in stabilizing their life style. The long term impact of such financial habits is also significant. Minimize your non-committed expenses and ensure that you save enough for your future financial well-being.
2. Differentiate between needs and wants
Differentiating between needs and wants ensures that you spend your hard earned money wisely. Needs are something which you have to have; wants are something you would like to have. For example, while your monthly household or utility charges are a need, buying an expensive cell phone is a want. You can postpone your wants but not the needs. Always ensure that your money is not disproportionately allocated among needs and wants. Do not let your wishes spoil your saving routine.
3. Cover all bases of risk management first
Every individual on an average faces three emergencies in life. These emergencies can range from a potential job loss to a major health scare. One has to take necessary steps to ensure that such unforeseen emergencies do not cause chaos in their financial life. Especially, the young professionals lack enough savings to counter these situations. They need to make sure that they an emergency fund which account for three to six months of their expenses, adequate life insurance and medical insurance. The decisions of insurance should be need based rather than tax based.
4. Get that piggy bank back
Most of the people in their twenty’s, who just started their first job experience a sense of financial freedom. It is during this time, one has to get back to the roots and inculcate the habit of saving even if it is a small amount. Savings is one of the toughest things to start. It’s the most common resolution everyone makes and skips. Start with the modern day grown up man’s piggy bank: SIP. Start saving at least 500 a month. You can accumulate substantial amount even with minor savings.
5. Start preparing yourself for the biggest vacation of life
Retirement, is perhaps the longest vacation of a professional’s life. People generally kick start their career in 20’s and often think it is too early to save for their retirement. However, the financial intelligence has a different story to tell. Early stage of the career is the ideal time to start retirement planning. Especially in case of retirement savings, if you start at a young age you can enjoy the benefits of compounding and ensure that you have a financially secure retirement.
6. Avoid unnecessary tax related baits
Often we tend to buy products or make investments without doing the due diligence on our total tax structure. Having a tax plan in place by the start of financial year will help you make better decisions, and even reduce the burden on financials during the end of financial year. Also, analyze whether you need to make tax saving investments or not. Even if you have to make them, remember tax saving investments generally have a longer time horizon or lock in periods. This might impact your liquidity needs in the near future and often your long term ability to achieve your goals. Never consider tax planning in isolation. It should be an integral part of your holistic financial plan.
ArthaYantra.com provides personal financial advice online.
Disclaimer: The opinions expressed in this article are the personal opinions of the author. NDTV Profit is not responsible for the accuracy, completeness, suitability, or validity of any information on this article.
Source : http://goo.gl/FmQkYU
ATM :: How NRIs can build an India retirement corpus
Five essential factors that you need to consider if you plan to relocate back in your silver years
Vivina Vishwanathan |Thu, May 23 2013. 07 36 PM IST|LiveMint.com
There is a joke in Kerala that every family donates one of its sons to the Gulf (read as the UAE). This would equally apply to Gujarat or Punjab. And after spending much time overseas, many non-resident Indians (NRIs) return to India to live their retired life. It seems they know where to retire, but are not planning enough for it. On 1 May, Standard Life Plc, a savings and investment company, in collaboration with Insight Discovery, a research company, found in its wealth study, NRIs: successfully saving for retirement or not, that three quarters of the UAE NRIs expected their children to look after them.
This may not apply to all NRIs, but it is an important pointer to the fact that NRIs may underestimate the corpus needed and overestimate the willingness of their kids to fund their retirement. Here are five things that you need to do if you plan to relocate back home in your silver years.
Decide your age of retirement
Deciding when you will retire is an essential first step. Some people have age targets while others may aim at a corpus before they retire. Says Suresh Sadagopan, a Mumbai-based financial planner, “Knowing when you will retire helps in calculating the corpus needed for post-retirement period.”
Corpus required during retirement
The corpus required is a tough one to decide because you may not fully understand the costs in India. Also how much you need to save will depend upon the purchasing power of the currency you save in. During your working life, relocation in that sense is a bit easier because your employer would do the math for you but in retirement you are all alone.
Hence take the help of a financial planner to arrive at the living expenses you will need post retirement and the corpus required towards that end. “NRIs who plan to retire in India will need real estate and funds in the homeland. Considering that India is a growing economy and has investment options for NRIs, you can look at India for investment destination,” says Amit Kukreja, chief financial planner and founder, WealthBeing Advisors, a financial planning firm.
Pick the right retirement products
Retirement planning is a long-term goal which means you can take on higher risk for higher gain by investing aggressively in equities. If you have an investment horizon of 20 years or more, almost 60-80% of your investment should go into equity and real estate as it is a long-term investment plan and the remaining into debt. India offers a number of products for NRIs in all the asset classes but do NRIs see India as an investment option? Says Narayan Shroff, director, global research and investments, wealth and investment management—India, Barclays, “There is always a home bias. So NRIs do invest in India. Many of those who have migrated to nearby countries such as Singapore and the UAE continue to have linkages in India and they have better understanding of the local markets as well.”
Says Vishal Dhawan, a Mumbai-based financial planner, “If you want to invest in equity, NRIs can do it directly or through mutual funds (MFs).” To directly invest in stocks, NRIs have portfolio investment scheme—a facility notified by the Reserve Bank of India to buy Indian equities by non-residents. In MFs, NRIs can invest directly.
The Indian realty market has always been attractive for NRIs as it is easier to earn in stronger currency and pay in Indian rupee. NRIs also get home loans to purchase a house. Besides equity and real estate, debt should also form a part of your retirement portfolio. Says Dhawan, “As you near the age of retirement you should reduce your exposure to equity and move to debt. Again India offers debt investment options for NRIs in the form of debt MF, fixed maturity plans and gold exchange-traded funds.”
For conservative investors, bank deposits have always come in handy. NRIs can deposit money in Indian currency or in foreign currency and earn fixed returns on it.
Insure yourself
Insurance is a must, but unlike the work years where having a life insurance cover is just as important as having health insurance, retirement days make life insurance redundant to a great extent. That’s because by then you are able to build a sound asset base and have fewer dependants on your income. Health insurance on the contrary becomes very important.
Just keep in mind that if you are healthy, buying a fresh health insurance policy will not be a problem as insurers are required to offer insurance cover to first time buyers at least till 65 year of age.
Beyond that you may find it difficult. Says Kapil Mehta, founder, SecureNow Insurance Brokers Pvt. Ltd, “If you are retiring always take a higher cover of Rs.10-20 lakh as the medical expense for above 60 years of age is expected to be high.”
Make a will
Building up assets is very important for long-term goals such as retirement planning, but any prudent financial planning remains incomplete without estate planning. You need to have a succession plan in place to avoid heartburns and conflicts later on in the family.
Says Kukreja, “It is always better to discuss your property matters when you are alive so that there is neither ambiguity nor a cause for conflict later. If you don’t want to disclose your plan, you can issue a power of attorney to a person you trust to carry out the transfer.”
Source: http://goo.gl/NTH2kj
ATM :: Keep your insurance healthy
Take these precautions to make sure that your medical insurance policy does not let you down
July 16, 2013| MUMBAI | Saurabh Mittal | Mid-Day
Your wife was feeling ill and has been admitted to the hospital. The doctors have insisted on running a battery of tests. How could this happen? She is young and in good health, conscious about her diet and habits. This cannot be happening. It’s the end of the month, the budgets have almost dried up, and you’re awaiting your salary credit due a few days from now.
But it is happening, and your heartbeat speeds up, out of concern for your wife as well as worry about the costs.
Then, in the middle of all that panic, you remember that you have a medical policy for your family too. You give thanks that your wealth manager had insisted on the best policy with family cover and you’ve been paying hefty premiums over the years. Surely, you think, you must be equipped to bear the costs and can focus on ensuring your wife recovers soon with the best medical treatment. But that is when it starts…
While your wealth manager did advise you and choose the best product in the market, he also asked you to read the fine print on the document. However, since you were so busy, you let convenience take over and you simply signed the document without reading it. You considered the premium being charged but you forgot to consider the features which are equally, if not more, important.
Here are some of the common mistakes that you may have made.
Sub-limits: Did you know that many policies come with sub-limits on the sum assured? What this means is that besides room rent, your policy comes with sub-limits on surgeries, ICU charges and other procedures that reduces the claim amount by huge margins, which means that, the money you will eventually receive on your insurance claim will not cover the expenses incurred. Exercise your options to invest in policies with minimum or no sub-limits.
Co-payment: While you were hoping that your insurance claim would ease your financial stress, you did not read the print that said you would agree to co-payment. This simply means that as a policyholder, you will bear a specified percentage of the claim amount, while the insurance company will bear the rest of the bill. While the clause is generally inserted to keep a check on undesirable expenses, it definitely makes sense to opt for policies without co-payment.
Network of hospitals: It was an emergency and so your family admitted your wife to the hospital closest to home because of convenience, but unfortunately, it is not included in your insurer’s network. Check if the hospitals you would prefer to go to are included by your insurer to avail of the cashless facility. Do not consider policies by the number of hospitals included. Instead check for the reputed ones closest to home.
Exclusions: While you can’t predict the nature of any illness, it is prudent to be prepared given our hectic lifestyles. Every health policy comes with rules regarding exclusions or diseases/illnesses or procedures that the policy does not cover, either for a specified time period or for the entire term. For instance, cataract or knee replacement may not be compensated for in the first two years. Insurers apply this rule to avoid having to pay in cases where people buy insurance covers after being diagnosed with a disease.
Ensure that you avoid policies that have too many exclusions. Make a note to read the clause and ensure that there is no uncertainty and that it reads clearly. For e.g. A leading health insurance company has a clause, “Treatment to relieve symptoms caused by ageing, puberty, or other natural physiological cause, such as menopause and hearing loss caused by maturing or ageing.” Vague exclusion clauses can be interpreted in various ways, and ensure loopholes, increasing the chances of a dispute.
Day-care procedures: The good news is that your wife just needs to have a day-care procedure and can be home in the evening. But unfortunately, while the procedure is expensive, many policies do not compensate you unless you are hospitalized for at least 24 hours. Simply put, your policy does not cover day-care procedures. It is ironic however, that nowadays, owing to improvements in technology and medical care, you don’t need hospitalization for several procedures including non-invasive or laparoscopic surgeries, which are recognized only by few of the newer policies. Hence, opt for plans that cover the maximum number of day-care procedures.
Alternative treatment: While your wife is discharged and now safely home, she still needs to avail of some alternative methods of treatment such as Homeopathic, Unani and Ayurvedic medicine which are covered by only a few policies. However, such alternative methods are highly recommended for the treatment of some diseases and they do cost money. So ensure that you opt for policies that also cover such alternative treatments, even if they cost more than the normal plan covering allopathic treatments only.
That example was fiction, but it rings true in real-life situations, too. In the age of rising healthcare costs, it is important that you are aware of all details to help protect yourself and your family not just from illness but also from financial stress, ensuing from high healthcare expenses.
Almost all policy documents are available on the internet today, so feel free to download policy wordings, and read the terms and conditions of policies carefully in order to make an informed choice. Search and consider ratings provided by various publications that do independent research on health insurance, and evaluate them. Alternatively you can find an unbiased investment advisor, who gives a fair comparison of various products. Choose the policy that is most inclusive and offers most clarity and convenience.
Spend your money wisely to buy adequate insurance and choose the right policy, ensuring the best of health for your family — and your finances.
The writer is investment advisor, Circle Wealth Advisors
Source : http://goo.gl/vWo9G
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NTH :: SBI comes to aid of Hyderabad blast victim kin
HYDERABAD, MAY 2 | Business Line |
The kin of an unfortunate victim of Dilsukhnagar bomb blasts had an unexpected support in the form of a scheme of State Bank of India (SBI).
The parents of Harish Karthik Kadechur, who succumbed to injuries he sustained in the terror strike here on February 21 this year, approached SBI’s Gaddiannaram branch for closure of his savings bank account.
They, however, were not aware that his account was covered under a personal accident insurance policy for a cover of Rs 4 lakh from SBI General Insurance on premium of Rs 100 a year.
The branch manager informed the parents of insurance coverage and guided them to SBI General Insurance for claim Settlement.
The claim cheque of Rs 4 lakh was handed over to Indrani, the mother of Karthik on Thursday by bank officials, according to a release.
Source : http://goo.gl/Oi8j0