January 2013 – Page 2

IRFC Tax-Free Bonds Issue Details

This post is written by Shiv Kukreja, who is a Certified Financial Planner and runs a financial planning firm, Ojas Capital in Delhi/NCR. He can be reached at skukreja@investitude.co.in

Indian Railway Finance Corporation Limited (IRFC) will be the next company to launch its tax-free bonds this financial year from January 21st. The company plans to raise Rs. 1,000 crores from this issue with an option to retain oversubscription up to Rs. 8,886.40 crores.

This will be the second such issue by IRFC as the company issued tax-free bonds last year also. The issue will close on January 29th, coincidently on the same day on which the RBI is scheduled to announce its monetary policy.

Investors who want to invest in these tax-free bonds for their higher effective yields, I think this is the last such opportunity this financial year. I am saying this because IRFC was among those few companies which filed their final prospectus in December when the yield on the 10-year government securities was higher at around 8.15-8.20%. It has fallen by 35-40 basis points (or 0.35-0.40%) since then.

As the interest rates offered by these companies are linked to the benchmark government securities, the upcoming tax-free bond issues are going to offer lower rate of interest and hence, will be very unattractive.

As most of these tax-free bonds are quite similar in their regular features, here are some of the unique features of this issue:

Interest Rate

IRFC is offering 7.84% per annum for its 15-year option and 7.68% per annum for the 10-year option to the retail investors investing up to Rs. 10 lakhs. Again, the additional incentive of 0.50% will be payable to the original allottees only who invest in these bonds during this offer period. In case these bonds are sold or transferred by the original allottees, except in case of transfer of bonds to legal heir in the event of death of the original allottee, the coupon rates will be revised downwards to the base coupon rates.

As with all of these issues, the interest rate for the other categories of investors, like QIBs, corporates and HNIs, will be 0.50% lower than the above rates offered to the retail investors. For 15 years, it will be 7.34% per annum and for 10 years, it will be 7.18% per annum.

NRI Investment: Like HUDCO tax-free bonds, NRIs can also invest in this issue, but only non-US based NRIs. They can apply for these bonds both on repatriation basis as well as non-repatriation basis. Eligible NRIs can use their NRE/NRO/FCNR/NRNR/NRSR account to invest in this issue but will be required to get a bank certificate made to confirm that the money has been used out of an NRE/NRO/FCNR/NRNR/NRSR account. If the NRI is a Person of Indian Origin (PIO), then it is mandatory to attach the copy of the PIO card.

Other Terms of the Issue

The issue is secured in nature and has been rated â€˜AAAâ€™ by CRISIL, ICRA and CARE. The bonds will get listed within 12 working days post closure of the issue on both the national exchanges, National Stock Exchange (NSE) and Bombay Stock Exchange (BSE).

Like its first issue last year, IRFC has fixed October 15th as the interest payment date for this issue as well. The investors have the option to apply for these bonds either in the demat form or physical form and thus, demat account is not mandatory to apply for these bonds.

40% of the issue is reserved for the retail investors, another 20% of the issue is reserved for the high net worth individuals (HNIs) i.e. for the individual investors investing above Rs. 10 lakhs. 20% of the issue is reserved for the institutional investors and the remaining 20% is for the corporate investors.

The minimum amount of application is Rs 5,000 with face value of Rs 1,000 per bond. The allotment will be made on first-come-first-serve basis.

About IRFC

Indian Railway Finance Corporation Limited (IRFC) is a wholly-owned public sector undertaking (PSU) and works as a financial arm of Indian Railways. It is also registered with the RBI as Infrastructure Finance Company-NBFC (IFC-NBFC). IRFC has strong asset quality zero gross and net non-performing assets (NPAs) as on March 31, 2012.

The proceeds raised from the issue will be utilised by the company towards financing the acquisition of rolling stock that will be leased to the Ministry of Railways and for funding other projects approved by the Ministry of Railways.

As mentioned above, interest rates have fallen by around 0.35-0.40% in the last few days and going by this trend, the upcoming issues of tax-free bonds will offer lower rate of interest. As much anticipated, if the RBI decides to cut interest rate this time on January 29th, the bond yields should fall more from these levels.

So, it is highly recommended now for the investors in the higher tax brackets to use this opportunity to invest their money either in the ongoing HUDCO tax-free bonds which offer the highest interest rates or in this issue which is rated higher at â€˜AAAâ€™.

Click here to download the application form

Biggest thing in universe upgrades its health coverage and posts secret on Facebook.

A little short on time today so I will just post these seven great links without adding any comment. Have a good weekend.

Outsourced: Employee Sends Own Job To China; Surfs Web

Why We Blab Our Intimate Secrets on Facebook

Biggest Thing in Universe Foundâ€”Defies Scientific Theory

How to Write with Style: Kurt Vonnegutâ€™s 8 Keys to the Power of the Written Word

Andy Mukherjee: Why India needs corporate bonds

How High-Achieving Parents Raise Star Scions

Upgrading your health insurance coverage

In the media

I have recently got the opportunity to write occasional articles in the Economic Times and Moneycontrol, and I wanted to use this post to highlight some of the articles I have written there as well as create a place where I can link to all posts that I write outside of OneMint – be it a media publication or another blog.

Here are my articles in the media and other blogs.

Economic Times

Six tax goof-ups that planning can help avoid:Â This is an article that highlights 6 points you should keep in mind while planning investments for your 80C or other deductions. It addresses things like expenses you may have already incurred that are eligible for tax deduction, and lock – in periods that should be a factor while considering any investing decision.

Moneycontrol

Which is a better investment? Tax-Free Bonds or FDs:Â Investors are often seen confused when it comes to choosing between Tax free Bonds and Fixed Deposits. Choosing one between the two largely depends on investorâ€™s goal as pros and cons exist in both the products. Read this space to know what factors differentiate these two fixed income instruments to take better investment decision.

When should you invest in mutual fund NFOs?:Â Â NFO is often confused with IPO of a share where investors invest presuming they are buying cheap. The fund houses also do a great marketing job to sell their NFOs. Hence before investing, it is important to check if the NFO offered is offering some thing new or if something similar already exists with the Fund house.

DTC effects on ELSS Funds:Â Once the DTC kicks in ELSS will lose its tax benefit. This has raised concerns among investors who are already invested or wish to invest in ELSS. While some of the concerns are genuine, others show that the product is simply misunderstood.

On other blogs.Â

TFL Guide

RGESS and the tail wagging the dog:Â Some thoughts on this new scheme, and how it shows a common problem with the way we think about our investments.

Others

This is not a complete list and I have written so much on other blogs over the years that it will take some time to get the complete list, and I will update this post as soon as I write a new post any place.

IDBI Rajiv Gandhi Equity Savings Scheme Series 1 Review

Last week I wrote about the SBI RGESS, and now IDBI has also filed a prospectus for their own RGESS Fund, and it differs from the SBI RGESS fund in some fundamental ways.

First of all this is a close ended scheme where SBI RGESS was an open ended scheme. The lock in period of this fund is 3 years but it will list in NSE and BSE so people can trade the units on the exchange. I’m not sure what the situation with other mutual funds is right now and how liquid they are to trade in the stock exchange, and if you are investing in this scheme then it’s better to assume that your money will be locked in for 3 years.

The fund has a lock in period of 3 years because the RGESS requires it – how SBI doesn’t have such a lock in is not clear to me, but IDBI has clearly specified this lock-in period, and maybe SBI will file in a revised draft which will have such a lock in as well. (Read: Details on RGESS)

Anyone who wants to invest in this fund is free to do so, and it is not limited to first time investors by IDBI. However, the presence of a lock in period means that people who don’t want to take advantage of RGESS will be turned away from this fund. It really doesn’t offer anything for you to lock-in your money for 3 years if you don’t want the tax deduction.

What will IDBI RGESS Fund invest in?

The SBI RGESS fund was aimed at investing in only stocks that are part of the CNX 100. The IDBI RGESS Fund will also invest in these stocks, but in addition to that they can also invest in shares of public sector enterprises which are categorized as Maharatna, Navratna or Miniratna by the Central Government as these shares are also RGESS eligible securities.

Interestingly enough, IDBI has other funds that invest in RGESS eligible securities and as I said in my earlier post, I haven’t read anything that tells me that existing funds are not eligible for the RGESS fund; if you know differently then please leave a comment.

Other funds from IDBI that invest in RGESS eligible shares:

IDBI India Top 100 Equity Fund: Invests only in Equities and equity related instruments comprising the CNX 100 Index.
IDBI Nifty Index Fund: Invests only in and all the stocks comprising the S&P CNX Nifty Index.
IDBI Nifty Junior Index: Invests only in and all stocks comprising the CNX Nifty Junior Index.

Â Actively Managed Fund

This is an actively managed fund which means the fund manager will pick and choose stocks in an attempt to beat the underlying index and generate extra returns.

Usually actively managed funds come with a higher expense ratio when compared with passive funds, and the expenses ratio of this fund is shown below according to the offer document:

(i) On the first Rs.100 Crores of the daily net assets 2.50%; (ii) On the next Rs.300 Crores of the daily net assets 2.25%; (iii) On the next Rs.300 Crores of the daily net assets 2.00%; (iv) On the balance of the assets 1.75%:

This indicates that this fund will not be low cost, and the expenses will be a bit high like other active funds. There will be both a dividend and a growth option, and investors can choose one of those.

They have just filed the draft document so dates for when this fund will open for subscription aren’t out yet, and I will update this post with the dates when they are declared.

What is the meaning of fiscal deficit?

India’s somewhat scary fiscal deficit has turned a lot of attention to these two words, and a lot of people who were going on about their lives blissfully unaware of what a fiscal deficit is suddenly feel the need to understand these two words, and see if it is cause enough for them to worry about.

What is the fiscal deficit?

I think the easiest way to understand the fiscal deficit is to think of the government as a regular person with income and expenses, but unlike most regular people, the government, specially the Indian one, often ends up spending more than they earn.

When they end up spending more than they earn they have to come up with the shortfall somehow, and in the government’s case they plug the shortfall with borrowings.

Fiscal deficit is the amount of money that the government needs to borrow in a given year because their expenses were more than their revenues.

To further understand this, take a look at this picture below (the numbers are based on the last budget), and read the explanation that follows.

Budget: Government’s Revenues and Expenses

Every February, the government comes up with its budget for the coming year, and in this budget the finance minister lists down how much the government is expected to earn and spend in the ensuing year.

The revenues should always match the expenses but the government doesn’t always earn enough to cover for its expenses and then that shortfall is met with borrowings.

Expenses

There are two heads of government spending â€“ Non Plan Expenditure and Plan Expenditure. Non Plan Expenditure is money thatâ€™s spent on sustaining the country like defense, postal deficit, subsidies etc. and Plan Expenditure is the money that is spent on improving the country like the money spent on dams, roads etc.

Revenues

Revenues of the government are split into three categories.

Tax Revenue: This is the revenue raised from taxes like your income tax and corporate tax.
Non Tax Revenue: This is the revenue the government earns by things like dividends from PSUs, royalty from selling petroleum, spectrum fees etc.
Capital Receipts:Â Includes mostly borrowings

The Fiscal Deficit

To build on what we have covered so far, the government budgets how much it will spend and earn in the next year, and both of these should be equal.

The source of income for the government is tax and non tax revenue, and they have to add these two to see if it will cover all the expenses that the government is supposed to incur.

If there is a shortfall then the government will have to borrow this money, and this borrowing is called the Fiscal Deficit.

Conclusion

The worry about India’s fiscal deficit is that the government has to borrow a lot more money than they originally budgeted for.

For example, in the current year, the revenues from disinvestment are a lot lower than expected, and expenses on subsidies are a lot more than what they had expected, and this leads to a bad situation where you will have to borrow more than what you wanted without spending it on things that build the country like dams or roads, and hence the cause for concern about the fiscal deficit.

The other negative effect of this is that the government accumulates debt and a greater share of its income is just spent in paying interest on this debt in future years.

So, while India has run a deficit for many years, and that by itself is not a cause of concern, the missed targets show that either the revenues are lower or the expenses are higher, and for India, this seems to be the caseÂ perenniallyÂ and thus the cause for alarm.

If while going through this post you were wondering, why does the government has to do all this and why can’t it just print money to become rich, read this older post about why a country can’t print money to get rich.Â

Family Floater Health Insurance in India

Even in this age and time, families and the support system is relevant to us Indians. I was speaking to a friend in the US, and he said that itâ€™s only we Indians who move from being dependant to our parents to being independent and then again being dependant to our children, in one lifecycle.

Like our peculiar culture, Health Insurance in India has a peculiar home-grown plan, the Family Floater health insurance plan.

Family Floater as the name goes is an insurance policy covering an entire family in a single cover amount that â€œfloatsâ€ amongst all the family members.

If a family of 4 is covered under a floater of Rs. 5 Lakhs. All or any member can use the Rs. 5 Lakhs annual cover till the cover completely exhausts.

Pros and Cons of Family Floater Health Insurance:

Pro: The primary reasons why floaters are popular and are preferred over individual coverage plans are that they are more cost effective. The family floater concept works under a simple belief that though all members are under risk of hospitalization, not all members would fall ill in a given year. This results in unused individual cover for that member. Â At the same time, there could be one large hospitalization for one of the members. For instance, buying a Rs. 3 Lakh individual cover may not have effective long term use in a family of 4, as much as a Rs. 10 Lakh cover spread across all the 4 members.

Another advantage of a family floater is that if there is any kind of limits or cappings on hospital room charges, you enjoy better benefits on a floater cover, than in the individual plans. For instance a Rs 3 Lakh individual cover for a couple gives them a Rs. 3000 room in Oriental Individual Mediclaim for each of them. If they buy a Rs. 5 Lakh floater cover, their room eligibility moves up to Rs. 5000 per day per room. Same is the case with Max Bupa, Religare, Star Health and some other plans.

Con: The major negative of a Floater is the risk of one of the members swiping out the entire cover, leaving the others uncovered. (However, this issue has been addressed through restore/recharge plans discussed below)

How to calculate health insurance coverage for floater plans?

Calculate the cover you want individually, taking healthcare inflation into consideration. Read my blog post on Health Insurance planning for retirement
Make it a floater by adding additional sum insured for family members as follows:

Young – Less than 40 years: Calculate the minimum individual cover you want, and add an ad hoc 50% additional cover for your wife, plus 25% for each child.

Not Young – Above 40 years: Calculate the minimum individual cover you want, and add 75% for your spouse. Add 25% for each child below 25 years.

Old â€“ Above 60 Years: Calculate the minimum individual cover you want, and add 100% for your spouse. Add 25% for each child below 25 years. Note, family Floaters become very tricky as you grow above 60 years, especially when there are ailments that you are suffering from. Do speak to a unbiased health insurance advisor before you take the call.

Types of Family Floaters:

Extended Family Covers:

Most of the family floater plans cover only Self, Spouse and Kids, but there are some special plans which cover more members. Oriental Happy Family Floater provides for covering Parents and Parents-in-Law, while Max Bupaâ€™s Family First has options to cover 13 relationships, which include parents, in-laws, grandparents, daughter-in-law, grandchildren etc.

Individual/Floater Combination:

Max Bupaâ€™s Family First plan provides a combination cover for all family members. Here each family member has an individual cover, and a separate floater is available for all members covered in the plan. This plan ensures that every member is insulated with an individual cover, at the same time in times of need have the option of dipping into the family pool too.

Restore/Recharge Options:

As mentioned earlier, floaters have a drawback, where one member or one event can completely wipe out the cover for the remaining members. Restore or Recharge feature provides an excellent feature, where if the health insurance cover exhausts during a particular year, and there is another treatment required in the same year which is unrelated to the earlier claims, the plan provides 100% additional coverage. Some plans like Apollo Optima Restore and Star Comprehensive provide this 100% restore only on complete exhaustion of the coverage in the particular year, whereas Religare Care offers an improved restore option, where the recharge of sum insured triggers for even sum insured falling short in a particular claim.

Some points to note, before you sign-up:

Some Family Floaters have a maximum renewal age, after which they convert into Individual mediclaim policies. Ensure you are aware of this clause before you sign-up.
Family Floater policies require all your family members to be mandatorily covered. In most policies, you cannot buy a policy for your wife, without covering yourself, unless you prove that you are already covered through another health insurance plan.
If any of your family members are above the age of 50 or have a higher risk of falling ill, it is advised that you go for a considerably higher cover, or go for a separate top-up or critical illness health insurance for such members.
As mentioned earlier, keeping healthcare inflation in mind, review and upgrade your coverage by a minimum Rs. 2 Lakhs every 2 years.

Mahavir Chopra is the Head – Personal Lines & eBusiness at Medimanage.com, a specialist health insurance advisory service for Individuals, Families and Corporates. Know more about Medimanage’s free advisory services here. Read his blogs on health insurance here

Enter the CIBIL Free Credit Score Giveaway Contest and Verify Your Entry

About 5 days ago I announced the CIBIL contest where 3 OneMint readers will get their credit score and reports for free from CIBIL. There have been several entries since then, and if you are interested in participating and have not already done so, please read these instructions to participate.

How to participate?Â

There areÂ two waysÂ of entering the contest:

1 A) Like the Facebook page ofÂ OneMintÂ OR

1 B) Subscribe to the daily email newsletter ofÂ OneMint

2) Leave a comment on this post or OneMintâ€™s Facebook page letting me know that you have done so.

Doing one or both of these will give you one entry, and CIBIL will select 3 random winners who will be entitled to get their Credit Score and report for free.

If you are already subscribed or like the Facebook page, then you can just leave a comment as youâ€™re already eligible.

List of people who have already participated

If you have already left a comment on the blog or Facebook then you don’t need to do anything more, just check if your name is present in the list below.

S.No	Name	Source
1	vikrant	Blog
2	Santha Kumar Ramaiyan	Blog
3	Parijat	Blog
4	Vaibhav Bajpai	Blog
5	Rahul Kumar	Blog
6	Amit Tamhankar	Blog
7	Dheeraj	Blog
8	Rakesh	Blog
9	Kunal	Blog
10	Vinodh Kumar	Blog
11	Sriharsha K V	Blog
12	bluecrabs	Blog
13	rohan doshi	Blog
14	Satbir Singh	Blog
15	Vishal Ramaswamy	Blog
16	rahul chandalia	Blog
17	siddhant	Blog
18	Vivek	Blog
19	Ravi	Blog
20	Venkatesan S	Blog
21	Sunder	Blog
22	satbir	Blog
23	Vishnu Kumar	Blog
24	Mayank Shah	Blog
25	Ravi	Blog
26	Kunal	Blog
27	Shailesh Soni	Blog
28	Dipankar	Blog
29	Ashwin	Blog
30	Rajat	Blog
31	Ams	Blog
32	Divya	Blog
33	Anurag Garg	Blog
34	Sumeet Gupta	Blog
35	ashish maskara	Blog
36	Gavisha	Blog
37	Viral	Blog
38	K VENU	Blog
39	Gaurav Sharma	Blog
40	Paul	Blog
41	Kirti	Blog
42	Jayachandran	Blog
43	Anantha krishna T	Blog
44	Kunal	Blog
45	PP	Blog
46	Saurabh	Blog
47	Rahul Sharma	Blog
48	Vinay	Blog
49	Alok	Blog
50	Piyush	Blog
51	Vivek	Blog
52	Saurabh	Blog
53	shekhar Lohumi	Blog
54	naresh	Blog
55	Nikhil Gupta	FB
56	Siddharth Roy	FB
57	Mohit Agrawal	FB
58	Binny Mathew	FB
59	Pratik Parekh	FB
60	Siddharth Roy	FB
61	Suraj Shetty	FB
62	Sureshkumar Nallathambi	FB
63	Ravikiran Chakka	FB
64	Harshad Korde	FB
65	Sneha Dixit Sharma	FB
66	Crosswords Guy	FB
67	Piyush Khanwalkar	FB
68	Shivaji Dhuri	FB
69	Monty Shah	FB
70	Puneet Nirogam Aggarwal	FB
71	Sandeep Dhawan	FB
72	Shekhar Lohumi	FB
73	Padmanabhan Renganathan	FB
74	Balamurugan Balasubramanian	FB
75	Sanjeev Kumar	FB
76	Nagaraj Sharrma	FB
77	Preetam Shetty	FB
78	Gopal Ashish Sharma	FB
79	Mohsin Rafik Shaikh	FB
80	Anjali Kuttikar	FB
81	Deepak Sanghi	FB
82	Jaswinder Singh	FB
83	Venkatasamy Vvs	FB
84	Chintan Desai	FB
85	Pranjal Sarma	FB
86	Sugar Ray	FB
87	Niranjan Aroskar	FB
88	Vinayak Gadkari	FB
89	Parag Joshi	FB
90	Kamal Kothari	FB

My apologies if I have missed your name, please leave a comment and I will include it. If you just hit the reply button and sent me an email saying you were interested then your name won’t be in this list. You have to leave a comment so that everyone can see that you have participated, those replies are only visible to me and are not a valid entry.

Mallya, Obama and Robbins

Deepak Shenoy writes a great post on the recent ruckus over Vijay Mallya donating gold, and furthers the discussion in a way that no one else has done so far.

If you were feeling outraged at Mallya’s donation, then you should definitely read this piece to get a grip on what the current situation is and I feel that this will also help you outrage at the right thing, if outrage you must.

Next up, the New Yorker has an excellent profile on Apollo Robbins who is what they term as a ‘theatrical pickpocket’, which is someone who picks pockets for show and you can liken it to a magician’s tricks. The profile is very well written, and to really get a feel of a what he does, watch this video where he demonstrates some of his tricks.

The Financial Times has a good article on seven great travel locations that have not been explored as much.

The Guardian has some superb pictures of Obama from the last year. I can’t help but think how no Indian politician can ever be featured like this – when it comes to Indian politicians – candid moments just don’t exist.

Alpha Ideas has a post on Goldman Sachs’ Indian portfolio.Â

I didn’t know that Mexico was the richest country among the BRICS.

Finally, did you know that the Milky Way was home to 17 billion planets the same size as earth?

LIC Flexi Plus Review

LIC Flexi Plus is a new ULIP launched by LIC this year, and this product gives you life cover and invests a part of your money in either a debt or mixed fund.Â The life cover is ten times your annual premium.

It used to be that ULIPs were ridiculously expensive but with changes in the last couple of years, their costs have come down and you can’t outrightÂ dismiss them these days.

However, they still have costs at multiple levels, and because this relatively low cost regime has not been in existence for very long, it is not possible to see how ULIP funds have really performed compared to equity or debt mutual funds after these changes. We will look at the costs later on in this post, but first let’s take a look at the key features of LIC Flexi Plus.

Insurance

The life insurance cover is ten times your annual premium, and they deduct mortality charges for that from your premium in order to account for the life cover expense.

Investment

You can choose to invest Â your money in either a debt fund or a mixed fund. Here is some quick information about them from the LIC Flexi Plus page.

Fund Type

Investment in Government / Government Guaranteed Securities / Corporate Debt

Short-term investments such as money market instruments

Investment in Listed Equity Shares

Details and objective of the fund for risk /return

SFIN No.

Debt Fund

Mixed Fund

Not less than 60%

Not less than 45%

Not more than 40%

Nil

Not less than 15% &
Not more than 25%

Low risk

Steady Income â€“Lower to Medium risk

ULIF00118 0912LICFLX+DBT512

ULIF00218 0912LICFLX+MIX512

Plan Payment Term

This is quite an important thing to look at in my opinion as the term is either 10 years or 20 years, and you are locked in to the ULIP for these many years. You can of course discontinue the fund but there is penalty in doing that, and you don’t want to invest here if you can’t pay the premium for the entire term.

The flip-side of this is you can’t exit out of it if the underlying funds don’t perform well.

LIC Flexi Plus Costs

The costs associated with LIC Flex Plus are as follows.

Premium Allocation Charge

These are charges that get deducted from your premium before the money is used for anything else. In the case of Flexi Plus, the premium allocation charges are as follows:

Premium	Allocation Charge
1st Â Year	7.50%
2nd Â to 5th Â Year	5.00%
Thereafter	3.00%

Mortality Charge

The second charge is the mortality charge which is the insurance cost of the ULIP. The mortality charges are dependent on age, and the table below gives a snapshot of how these are charged.

Age

Rs.

1.36

1.66

3.73

6.29

Policy Administration Charges

The next cost related to this is policy administration charges, and they are charged per month as follows:

Policy Year	Policy Admin Charge
1	Â Rs. 50
2	Â Rs. 41.20
3	Rs. 42.44
4	Â Rs. 43.71
5	Â Rs. 45.02
6 and over	Rs. 34.78 and increasing by 3% every year after that

Â Fund Management Charges

Since there are funds that will manage your money, this ULIP has to bear fund management charges as well, and those are as follows.

0.50% p.a. of unit fund for Debt Fund
0.60% p.a. of unit fund for Mixed Fund

The above were all the charges that I could find related to this fund, and while they are not as crazy as they used to be – it’s not very cheap either.

Conclusion

As you can see the LIC Flexi Plus is not exactly cheap, and in a way comes with a long lock in period which you can break after 5 years without a penalty, but before that you will have to pay a penalty called the discontinuation charge which is charged as follows:

Where the policy is discontinued during the policy year	Discontinuance charges for the policies having annualized premium up to Rs. 25,000/-	Discontinuance charges for the policies having annualized premium above Rs. 25,000/-
1	Lower of 15% * (AP or FV) subject to a maximum of Rs. 2500/-	Lower of 6% * (AP or FV) subject to maximum of Rs. 6000/-
2	Lower of 7.5% * (AP or FV) subject to a maximum of Rs. 1750/-	Lower of 4% * (AP or FV) subject to maximum of Rs. 4000/-
3	Lower of 5% * (AP or FV) subject to a maximum of Rs. 1250/-	Lower of 3% * (AP or FV) subject to maximum of Rs. 3000/-
4	Lower of 3% * (AP or FV) subject to a maximum of Rs. 750/-	Lower of 2% * (AP or FV) subject to maximum of Rs. 2000/-
5 and onwards	NIL	NIL

Given the role LIC has played in some of the PSU IPOs in the past, and all these other concerns about the product, I can’t find a good reason to invest in this. I would much rather invest in a balanced fundÂ (Read: Best Balanced Funds in India) or simply a debt fund instead of this and buy insurance separately.

Win a CIBIL TransUnion Score and Credit Report for free!

About a month ago, CIBIL had teamed up with me to create a comprehensive FAQÂ and now theyâ€™ve graciously offered to give away Credit scores (and reports) for free to 3 OneMint readers!

The CIBIL TransUnion Score (and CIR) plays a significant role in theÂ loan approvalÂ process. It indicates what are your chances of getting a house loan or a credit card that you desire.

The Credit report is derived from your credit history across products and lenders. So access to your Credit report will help you understand what are the areas you can improve on so that you can improve your credit history and thereby the Credit score.