Financial Mistakes We Should Avoid To Secure Our Lives

Life without mistakes is a myth. All of us tend to make mistakes at every stage of life – from childhood to adulthood. But, with every mistake we make, we get to learn a new lesson and become wiser and more experienced. While childhood mistakes do not matter, mistakes we make in adulthood matter and sometimes lead to hamper our quality lives, especially if they are financial in nature. Let us go through some of our financial mistakes and try to learn from them.

Not Living in the Present

Often, we regret our past mistakes and worry too much about repeating them going forward. In the process, we tend to ignore the fruits of the present. In short, we do not enjoy what we have or make any meaningful life derivative from our today. For example, our worry about the financial uncertainties, or the fear of probable financial concerns in the future. It may or may not happen. Hence, we continue saving money from our limited sources of income.

Future is uncertain – we all know that. However, by restricting access to our own income in the present, through savings, is not such a smart thing to do if we do not approach it wisely and prudently. We ought to invest, not save. It is important to ask yourself how much savings and investment we should do in the present to safeguard our future income or other monetary requirements. In that sense, you must let your money grow. The only compounded growth of your income must give you the satisfaction of savings/investment in the present. It is not only our income which is uncertain, but also our future which is not in our hands. We can only do as much to safeguard our future expenses and real-time requirements.

Blaming the Past for Your Present

Learning from the past mistakes holds the key to a practical future. There is no point in ruining your present because of the mistakes you made in the past. If you have still not saved and invested money, there is no point cribbing or blaming yourself for it. A better approach is to start planning for today.

Moreover, it is better late than never. Fortunately, there are many financial instruments, including a mutual fund SIP or a life insurance policy, which you can buy for a fixed tenure at an early stage of life, say age of 18 years or so. Though there is no age limit as far as mutual fund investments are concerned, insurance companies however do set an upper age limit to buy an insurance policy. So, if you have not invested so far, there is no point delaying it further to secure a financially stable future.

Not Building Your Future

While budgeting for your family expenses, you should consider the depreciating value of money. If you are just living by the present standards of living, and not considering the money needed to secure your future, you are making a grave mistake of not having a sound and viable living in the future. There is a need to invest, and there is a need to do that smartly. By choosing to spend your time and money only on the present, is like turning a blind eye to the road of life ahead. It can be full of minor bumps and more significant uncertainties. A life insurance plan, for example, is a prudent investment to have monetary access in the future as well. You need to evolve financially for a safe and secure future.

Not planning for the Worst

The proverb, hope for the best and prepare for the worst, has a different connotation when you are planning to budget or invest in the future. It should be hope for the best and plan for the worst. One should be optimistic in life, agreed, but that should not deter you from planning for the future especially when it concerns the matters of finance. It needs more time and effort for you to prepare for the life ahead. Life is full of uncertainties and to cover up financially, you may need the assistance of an insurance policy to help you overcome any real obstacle in the needy times.

So, an insurance policy can provide you financial assistance and protection against life uncertainties like death of the bread winner (giving money equivalent to the value of your income at ‘that’ given point of time), simple savings plans, retirement plans, health plans, thus, ensuring the fact that you have money when you need it the most.

How to Secure Future Income Sources for Your Family?

In a world where things are altering every minute and every second, and our surroundings are not as safe as they are desired to be, the most important thing we need is undoubtedly our security. Not only our personal security, but our family’s security as well. Our search for complete and trusted security is so high that we do not consider the overall future events and falsely anticipate our future needs.

So, in order to ensure financial security for our families, it becomes very important to consider all possible future events and carefully assess our future needs, especially in our absence. As far as financial security is concerned, there is nothing better than a term insurance to ensure that your family does not suffer in case of any unfortunate event.

So, what are the significant events or phases of life in which we need security or as they call it, term insurance benefits?

* Generally, we begin to think about various term insurance plans after finding a steady source of income

* Then comes marriage and the need for the security of our life partner and the next big event is having children

* From there on everything revolves around them until they are capable enough of standing on their own feet. Schooling, college and higher education are becoming expensive with each day, and your income may not be able to keep up

* We might suffer from illnesses as we age and rounds to the hospital, let’s hope it does not come to that. However, if it does, we need to be prepared

All of us have different needs, and according to those needs, we want to invest in an insurance plan that offers maximum benefits. Few insurers, like PNB Metlife, offer term insurance benefits which allow insured’s family to receive regular income along with the lump sum payment.

While taking a term plan, there are a few things to look for such as premium, insurance cover, claim settlement ratio and age restriction, mainly. However, the payout option is also an important factor to account for these days. You can select the payout option to make the after-claim life far more convenient for your loved ones. There are primarily four modes of benefit payouts offered by the insurance companies:

* Full Payout as Lump Sum: This option is for those who are looking to get the total payout at the end of the term plan or in case of any unfortunate event. This will enable you or your family to receive a lumpsum amount at the end of the plan, possibly in your old age to support and maintain your financial independence.

* Payout as Lump Sum + Regular Monthly Income: This option is best for those who want a certain fixed monthly income after a certain period and a final lump sum payment at the end of the tenure. This will ensure a steady income for you and your family and still cover old age for both or anyone alive. Ignoring death is not the right thing to do while selecting insurance plans and hence let’s be practical to secure either or both the spouses along with fixed security during the lifetime.

* Payout as Lump Sum + Increasing Monthly Income: This payout option is for all those millennials who have a hectic and an unhealthy lifestyle. It is no news that the common illnesses/diseases per person is on a constant rise. Diseases like diabetes, high blood pressure, polycystic ovary syndrome (PCOS), mental disorders like anxiety, depression have become common. As the list grows, so does the medical bill. Hence, this plan ensures that an increasing monthly income will cover the increase in the bill. To top it up, you will also get a lump sum payment for added security.

* Payout as Lump Sum + Regular Monthly Income till child turns 21: This payout is for all those parents who want to secure their future as well as be able to afford their child’s education. Regular payments till the child turns 21 will provide security and increase your ability to pay for their education or any other emergencies that come in between. In case of unfortunate events, like death of both the parents, the child can still be covered and be able to sustain till he/she becomes financially independent. Along with that, the lump sum will give you an added security.

Be it your old age, need of a steady income after retirement, tackling increasing medical costs or any other costs or even securing your child’s future, the regular payout option offers a dependable solution for all such needs. With a secure regular income, your family members can focus on meeting their life goals instead of worrying about the sources to fund them. These lump sum or regular payout options can provide us a big relief as we move ahead in life.

How to Choose The Best Child Plan?

Life has many simple pleasures, seeing your child grow into a responsible and confident adult is one such unbeatable pleasure of life. A lot of effort, love and time goes into the development of your child. However, the importance of education reigns supreme when it comes to the ability to face the world and to be financially independent.

Higher education, vocational courses etc. will be the ones playing an important role in your child’s future. The rise in the cost of education makes it logical and wise to start investing early on to meet these goals for your children.

Understand your Need/Goal

If you wish to opt for the best child plan for your kid’s education, it is imperative that you set your investment goals right. There are few factors influencing the amount you will need in the future and thus the amount you need to start investing now.

See the example below to understand how your child’s education goal is defined:

Example: Vijit and Vani are about 30 years of age. Vaibhav, their son, is three years of age. Vijit and Vani discuss that average amount of money needed for a good higher education is approximately Rs. 10 Lakh. Since the higher education expenses usually start at the age of 18, Vaibhav’s higher education goal can be estimated as:

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How to Estimate Ideal Investment Amount for Your Goal?
Conclusion: You may invest in safe debt funds or bonds, or risky equities as per your risk appetite. Accordingly, your monthly investment amount will change for the same goal. Ideally, it is recommended that you opt for a balance between the two, or even better change the balance in favour of safer debt fund as you near the goal.

Simply check the ratio between your target amount of expense and given theamount in the table multiply the estimated future cost of the goal to achieve your target investment amount.

Investment Options Available

The financial goal you have set out to achieve will be achieved through the investment options available in the child plan. Most insurers provide at least three different investment options to their investors, these are:

Ø  Diversified Equity Funds

Ø  Diversified Debt/Gilt Funds

Ø  Liquid or Money Market Funds

If your goal is more than five years away, it is better to use equity funds for investment. However, if your goal is more than ten years away, as in the case of Vijit above, you can select higher risk equity funds to improve your overall returns. Of course, provided such investment option is available in the child plan.

Some insurers like ICICI Pru Life, offer eight different funds to choose from in their child plans.

Portfolio Management

Another factor that you may consider is the management of a portfolio of the child plan. That is, you start with a higher equity exposure in the beginning, and as you approach the maturity, your equity investments are slowly converted to the safer debt funds.

Usually, you will make the investment choice at the time of purchase and decide the ratio of equity and debt investment. You can even put all your investment in equity or only in fixed income funds.

This managed equity-debt ratio has two significant advantages over fixed portfolio investment:

  1. Your investment value is relatively stable as you get close to maturity regardless of the equity market movement.
  2. You need not bother about reducing your equity exposure manually.

Some insurers call this facility “Lifecycle Based Portfolio Strategy”.

Note: Just in case you are looking for a child plan for a lumpsum investment, make sure to check for automatic transfer feature, which allows you to put all the funds in a money market fund and then transfer a fixed amount each month into one or more equity funds. This is the best way to enjoy rupee cost averaging even when investing a lumpsum amount in a child plan.

Additional Benefits & Covers

Additional benefits may include all or some of the following:

Ø  Premium Waiver

Ø  Accidental Death/Disability Benefit

Ø  Loyalty Additions & Wealth Boosters

The premium waiver is allowed if the policyholder dies within the policy term. Best child plans will:

– Pay the sum assured under the life cover opted to the nominee

– Continue to allocate units in the investment funds as if the contributions are still going on

– Pay the accumulated corpus for the kids’ education goal at maturity as was intended in the beginning

Insurer’s Claim Settlement Ratio

You have already checked most of the features and benefits of the best child plans. However, it is also important to see that the insurer is financially sound and has a proven track-record of processing claims promptly. This can save your loved ones from much trouble in case of an untoward incident.

You can check the claim settlement ratio and solvency ratio for the insurers on IRDA’s (Insurance Regulatory Authority of India) website. Claim settlement ratio above 95% and solvency ratio above 2.5% is considered good for life insurers.

How to Buy?

Nowadays, like most other products and services child plans can also be bought online. In fact, it is far easier to compare and buy these plans directly through insurer’s website. You do not have to deal with the paperwork, and you can complete your application at the time and place of your convenience. In case you need any assistance 24×7 chat and call assistance is available to help you out with your application for the best child plan.

Six Must Have Insurance Policies for a Small Business Owner

From the day an entrepreneur starts doing business, he exposes himself to a number of risks, making it necessary to consider a few right insurance policies for his business. Remember, if you think that as you are a small business owner, you should save money and buying insurance is just an extra expense, think again. One lawsuit or a catastrophic event is enough to wipe out your small business, even before it has a chance to set off the ground.

Fortunately, small business owners have access to a wide range of insurance policies to protect themselves against various types of losses or damages. So, for a secure future of your business, make sure you consider the following insurance policies:

  1. Commercial Auto Insurance – This policy will protect vehicles owned or taken on lease by you. You can use the policy to protect vehicles that carry employees and equipments. With commercial auto insurance, you can protect your work cars, SUVs, vans and trucks from losses, damages, and collision.
  1. Workmen Compensation Insurance Policy – This insurance policy will offer coverage to employees who are injured during employment. Insurance companies offer wage replacement and medical benefits to your injured workers. However, in exchange for compensation, the injured employee gives up his/her rights to sue the employer. As a business owner, it is imperative to have a workers’ compensation insurance policy to safeguard you and your company from legal complications that may arise in case any of your employees meets with an accident.
  1. Product Liability Insurance – If your business manufactures products or offers services for commercial reasons, it is necessary to have a product liability insurance. Even a business that takes every step to make sure its products are safe can find itself named in a lawsuit due to damages caused by one of its products or services to third-party. Product liability insurance protects a business in such a situation with coverage available that can be tailored specifically as per the product or business. For instance, if you have a bakery business and one of your customers seriously falls ill from food poisoning caused due to your negligence, your product liability insurance will cover you for damages.
  1. Property Insurance – As you may have some expensive items, including office equipments, inventory, and computers, you should consider buying a property insurance policy that will safeguard you and your business from mishaps like fire, theft, vandalism etc. You can also opt for business interruption/loss of earning insurance if you want to safeguard your earnings in case your business doesn’t work well.                                                                                                                                                                                                                                                  If your business involves dealing with antiques and artwork, make sure to buy an art insurance policy. The policy will cover your items, like fine art, pictures, gold, and antique silver jewellery, musical instruments, etc.; against various perils like accidental damage, burglary, theft, fire, etc.
  1. Professional Liability Insurance – Also called, Errors and Omissions Insurance, this policy protects you against accidents or negligent acts that may occur while rendering professional services. It is common for even the most skilled worker to commit a mistake. A case can be filed against you if a third-party suffers losses or damages by trusting on your advice. Without a professional liability insurance, you would be responsible for paying for those errors from your pocket. Here, a professional liability insurance policy can help you by offering you financial protection.
  1. Directors and Officers Insurance – Being a director is not an easy job. If one is held liable for his/her own decision or others director’s decisions, one could face serious financial repercussions with cases filed by creditors, suppliers, shareholders, etc. Here, Directors and Officers (D&O) policy comes to help. Such type of insurance policy covers directors and officers against legal cases that may arise due to wrongful decisions taken by them in their managerial capacity.

Any catastrophic event or loss is enough to derail your business’ growth. However, by having the right insurance policies, a small business owner can easily avoid a major financial loss. While, it is necessary to have the above listed insurance policies, it is equally important to know that the policies you are buying should offer you adequate coverage. There is no point in taking the policy if it is not sufficient. To find the right insurance coverage, you can take help of corporate insurance advisors, like SecureNow who will help you in choosing the right policy after comparing all the available options. In most of the cases, the policy is also issued within 24 hours.

Health Hazards That Reduce Productivity of Employees

Today’s competitive environment constantly forces us to give our best. Businesses can easily disappear from the market for a simple reason of not being competitive enough. This volatility has created a highly demanding and complicated environment in many industries. Demand for highly productive workers is at its peak levels.

Is the productivity of your workers only dependent on their skills?

Name any workplace, and chances are it is teeming with health hazards (for the uninitiated hazard is any possible event abetting a loss) that can impact employees. This does not mean that organizations are not concerned with the health of their staff – it is just that it is the nature of the beast.

The Need of Workplace Safety

Any office will pose some health risk or the other to the people working within its environs. Some workplaces, however, are more of a hazard than others. And while it may not be immediately obvious, such health hazards often end up reducing the productivity of employees. In fact, there are times when the health risk is so acute that employees have no option but to opt out of the workplace.

Employers are legally bound to ensure that workplaces are safe and do not pose any dangers to the employees. Protection against health and safety hazards at work is the fundamental right of staffers. The productivity of the workers is also affected if they face repeated risks to their healthy lives at the workplace.

It is obvious that it is necessary to identify, monitor and reduce risks associated with the office premises to manage health and safety at the workplace, however another important aspect is to provide group health insurance to your employees. Before we throw more light on securing group health insurance, let us first identify what can constitute workplace hazards.

Various Health Hazards (Risks) in a Workplace

Any aspect of work that can cause health and safety risks and that has the potential to harm an employee constitutes a risk to the workplace. It is quite possible that some workplaces will pose more dangers to workers than others. Besides, some hazards are more likely to be present in some workplaces than others, depending on the nature of the business, as also the location of the workplace and the way the workplace is constructed.

Common hazards that may affect the productivity at any office/business

  •         Physical Hazards

These are the most common workplace hazards, and examples are vibration, noise, faulty wiring, improper electrical connections, poor air-flow, poor cleanliness, lack of overall hygiene in the office, inadequate air conditioning, non-cleaning of ducts and AC filters, damp corners, ill-maintained washrooms, and so forth.

  •         Ergonomic Hazards

These are physical factors that can harm the employees. Almost every workplace has ergonomic hazards, not matter how high-end the office is. It is impossible for a workplace to provide ergonomic seating to every employee, as people come in different shape and size, and it is simply not practical for employers to customize the chairs for all employees, even if they are really concerned with the health and well-being of their employees.

The fact is that the very act of sitting in front of a computer – something that has to be done by practically every individual in an office – poses dangers to the musculoskeletal system of employees. Carpal Tunnel Syndrome, Repetitive Stress Injury (RSI), Spondylitis, Sciatica, poor body posture, numbness, pinched nerves, and so forth, are just some of the problems that employees face on a daily basis. All of these can reduce their productivity significantly.

  •         Chemical Hazards

Contact with dangerous chemical substances that employees might have to deal with as part of their job can also cause significant health problems. Even if there is no direct contact, the mere presence of toxic chemicals within the office environs constitutes a health hazard.

  •         Biological Hazards

Bacteria and viruses within workplaces constitute biological dangers that can even prove fatal, or, at the very least, cause significant health problems.

  •         Mental Hazards

These are the most pervasive hazards present in workplaces. Most jobs demand too much from employees, as do the employers themselves. The competitive nature of today’s workplaces means practically everyone is dealing with a lot of mental stress and fatigue.

Many employers deliberately set impossible targets for their employees in an attempt to eke out the most out of them and keep them on their toes all the time. While an element of competition is to be expected in a job, nowadays, every business faces so much competition, employers readily burden their staff with too much work. Expectations are sky-high, and promotions depend on endless hours spent toiling away.

In fact, some businesses, such as IT, finance, stock broking, etc., expect employees to work well after office hours, and even take the work home. Constant comparisons, the fear of losing out on a promotion, or the job itself, the constant threat of being reprimanded, sometimes in public, take a heavy toll on the health of employees.

Mental fatigue, burnout, depression, high levels of stress, a sense of reduced well-being, and so forth, are common ailments, leading to reduced productivity of employees.

Remedial Actions – Group Health Cover, Workmen Compensation Insurance

These health hazards not only affect the health of your permanent staff, but many a times if you employ some contractual workers at your business premise, they are also exposed to similar risks. While your permanent employees can be covered sufficiently with a group health cover, contractual employees also fall under your responsibility, and you can cover the risks to them with a workmen compensation insurance. It also benefits you in the long run if you regularly need to use such staff.

With so many hazards lurking in workplaces these days that threaten to reduce the productivity of workers, it is no wonder that a large number of companies are looking at providing group health insurance to their staff. Online corporate insurance advisors such as SecureNow can assist you in finding and managing the insurance policies to counter your workplace hazards and sustain the productivity and morale of your workers.

How to Buy a Car Insurance in India? A Checklist to Help You

India is a country of savers. We, by nature, spend more time in saving money by availing offers or discounts, as compared to putting more efforts to earn extra amount of money. Saving money is a good habit, but not always and not everywhere. Sometimes, to save money, we end up buying an inferior product or service and regret on our decision later. Buying a car insurance is also one of those activities where many a times we do commit mistakes while choosing one, because a policy with lowest premium is not always the best one.

However, it is not easy either to pick the cheapest and the best of the lot. Buying a car insurance policy for your vehicle can be tricky unless you are proficient in choosing the right policy cover. Follow the below checklist to buy the right car insurance in India.

Types of Car Insurance

Generally, car insurance policies available in the market can be broadly segmented under the following two heads:

  1. Third-Party Liability Insurance: It covers losses or damages caused to a third-party. As per Indian laws, it is mandatory to have a third-party liability insurance to ply your vehicle on roads.
  2. Comprehensive Plan: It is a preferred option by most car owners as it offers comprehensive coverage, covering both ‘own damage’ as well as ‘third-party loss or damages’. In addition, it offers an extensive coverage against various perils, including natural disasters like earthquake, cyclone, etc.

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Factors that Determine Premium Rates

Your car insurance premium depends on various factors, like:

  1. Vehicle-Related Risks: Model, make and fuel type of your car are a few parameters which decide your car’s insurance premium rates. As there are higher chances of receiving frequent claims in case of vehicles like SUVs and commercial vehicles, insurers levy high premium rates.
  1. Location-based Risks: Premium also depends on the registration area. Usually, premiums will be high if you live in the urban area or near a densely-populated area. Similarly, if your area is more prone to theft, the insurance company will charge a high premium.

Tips for Cutting your Insurance Premium Rates

  1. Go for Voluntary Deductibles: Mainly, the deductible is the amount that a policyholder has to pay before the insurer makes any payment. If you agree to settle petty claims for small damages from your pocket, the insurer can give you affordable premium rates.
  1. Avail No Claim Bonus (NCB): Insurers reward such policyholders who do not make a single claim in a policy year. This benefit is called No Claim Bonus (or NCB) and helps you lower your premium rates. Even if you sell your vehicle, this NCB can be transferred to your new insurance policy, and you can get affordable premium rates on a new policy.
  1. Install Anti-Theft Equipments: If your car is equipped with enhanced security features, including anti-theft alarms and immobilizers, there is a low probability of your vehicle to get stolen. As a result, insurers reward owners of such cars with low premium rates. However, these security features should be approved by the Automotive Research Association of India (ARAI).

Riders for your Car Insurance

Most of the car insurance companies offer an array of riders to give you more out of your motor insurance policy at a little extra cost. Some of these riders are as under:

  1. Zero-Depreciation Cover: Even a comprehensive policy doesn’t offer complete coverage because, at the time of any claim, the insurer deducts the depreciation value. However, a nil-depreciation cover or zero depreciation policy guarantees the full claim amount with zero depreciation deduction.

Here’s how it works:

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  1. Engine Coverage Rider: As an engine repair cost can run in lakhs, it makes sense to go for an engine coverage rider, which covers damages to an engine due to water stalling, oil leakage, etc.
  1. Roadside Assistance Cover: You can avail numerous important services if you have a roadside assistance cover which can help you in case you have an accident or your car breaks down in the middle of the road. Some of the services covered under this rider are – breakdown support over the phone, battery jump start, flat tyre, the arrangement of arental vehicle, arrangement/supply of fuel, message relay and arrangement of accommodation.
  1. Personal Accident Cover: It ensures the financial security to your family in the event of a disability or in the case of your unfortunate demise. Some insurers extend the cover to your co-passengers as well.
  1. Vehicle Replacement Cover: Under normal car policies, when the car repair cost is more than 75% of its value or if it gets stolen, the insurer considers it as a total loss. Which means, the total claim amount received from the insurer would be less than the actual market value of the vehicle. But, if you have a vehicle replacement cover, you will get the claim amount which will be equivalent to the market value of the new vehicle, and enough to replace your old vehicle.
  1. Rental Reimbursement: Once your vehicle is sent to a network garage for repairs, managing without one can be daunting. Either you would have to carpool or take public transport for commuting, and in both the cases, it means, incurring extra expenses. However, if you have a rental reimbursement rider, the insurer will pay a fixed daily allowance for the number of days the vehicle is in an authorised garage or as mentioned in the policy document, whichever is lesser.

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Areas where you can go wrong while buying a policy:

  1. Opting for Lower Insured Declared Value (IDV) for your Car: Many a times, to trim premium rates, people often lower the Insured Declared Value (IDV) of their vehicles. However, the insurer will settle claims only on the basis of your vehicle’s IDV, which means you will have to pay a part of the claim amount from your pocket. It defeats the entire purpose of buying the insurance. Therefore, always go with the correct IDV of your vehicle to get the maximum benefit from your insurance policy, even if it means shelling out a little extra money as premium.
  1. Policy Lapse: Though every insurer gives a grace period to renew the policy after the due date, it is inevitable to get your policy renewed on time. You can’t run the risk of driving your vehicle without insurance. Moreover, you will also lose benefits and discounts in case your policy gets lapsed.
  1. Claim Settlement Ratio: While buying a car insurance, check the claim settlement ratio of an insurer which is a yardstick to measure the number of claims settled by the insurer. The higher the claim settlement ratio, the higher the chances of a claim being settled.

One should keep all the above points in consideration while choosing a car insurance policy. We wish you a safe and secure journey in your ‘insured’ vehicle!

How Health Insurance helps in Tax Planning

This is a guest post by Priyanka Khandelwal, who is heading eBusiness vertical at MediManagea specialist health insurance advisory service for Individuals, Families and Corporates. Know more about Medimanage’s free advisory services here.

A quote that is often attributed to the Taxman goes like this: “We have what it takes to take what you have”. And Albert Einstein – the smartest human ever – once lamented, “The hardest thing in the world to understand is the income tax”. Benjamin Franklin goes a step further and says, “In this world nothing can be said to be certain, except death and taxes”. Singer Kishore Kumar is known to have major income tax problems, he said in an interview he used his tax record files as pesticides, because the moment a rat bites on them they would die immediately!

We all share a love-hate relationship with taxes. We know it has to be paid, we know it is used for the benefit of society as a whole, we know its role in the economy, but we still are uncomfortable paying it. As our income increases, the discomfort with rising taxes also goes up. This is where tax saving investments come in. There are a plethora of schemes available, that help you save taxes. Traditionally, Insurance has been known as an important medium to save taxes. So, where does Health Insurance fit in? Let’s see.

Health Insurance and Taxes

The tax exemptions available to Medical Insurance schemes is summed up in Section 80D of the Income Tax Act. For any health insurance policy bought, a policyholder can claim deduction on premium paid for up to Rs. 25,000 (according to Budget 2015). The deduction for senior citizens is Rs. 30,000.

For those very senior citizens (80 years and above) to whom health insurance is not available, any payment made on the account of medical expenditure for such people shall be allowed as a deduction under Section 80D, subject to a maximum limit of Rs. 30,000. This deduction will be given subject to the fact that any premium towards any health insurance is not being paid for such person.

However, total deduction for health insurance premium and medical expenses for parents shall be limited to Rs 30,000.

Section 80D allows for tax deduction from the total taxable income for the payment of medical insurance premium paid by an individual or a Hindu undivided Family (HUF), in any mode other than cash. This deduction is over and above the normal deduction of Rs. 1,50,000 allowed under Section 80C.

The deduction under Sec 80D is allowed for making a payment towards maintaining an insurance policy which:-

In case of an Individual:- Is for the health of the self or the spouse, dependent parents or dependent children, or

In case of HUF:- Is for any Member of the Family.

Amount of Deduction Available

The deduction is to be claimed while filing income tax returns. The deduction is the sum of the following amounts –

In case the payment of medical insurance premium is for self, spouse, dependent children or parents (dependent or not) – Rs. 25000. In case the person insured is a Senior Citizen, the deduction allowed should be Rs. 30,000.

So, the total deduction that can potentially be claimed by a family under Section 80D is as below:

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Criteria for claiming deductions

The criteria for claiming deductions under Section 80D by way of health insurance premiums is as outlined below:

* The said policyholder/ tax payer is an individual or HUF (Resident or NRI)

* The insurance premium paid is in accordance with the schemes framed by General Insurance Corporation of India & approved by Central Government.

* The premium has been paid by any mode other than cash.

* It is paid out of taxable income

Proof of payment

As proof of payment, mediclaim receipt has to be furnished while claiming the deduction.

Illustration

During a financial year, a policyholder/ tax payer pays medical insurance premium as below:-

  1. Rs. 24,000 as premium on his own health policy &
  2. Rs. 29,000 as insurance policy premium on the health of his parents

In the above mentioned scenario, the assesse would be allowed a deduction of Rs. 49,000 (Rs. 24,000 + Rs. 25,000) in case neither of his parents is a senior citizen. However, if any of his parents is a senior citizen, he will be allowed a deduction of Rs. 53,000 (Rs. 24,000+ Rs. 29,000).

The importance of having a judicious Health insurance cover cannot be emphasized enough. Even if the premiums seem like too high an expense, one should also keep in mind that these premium payments not only help save lives but income tax as well! The limits of deduction by age has to be understood properly before claiming such deduction while filing for returns.

As illustrated above, Health Insurance can also be an important instrument for saving taxes, and should be an inseparable part of one’s tax planning. Albert Einstein would approve. And apparently, so would Kishore Kumar.

If you want to speak to Priyanka’s team of expert advisors for a one-to-one discussion on your requirements, post your inquiry here.

Need of the hour – Super Top-up Policy

This is a guest post by Priyanka Khandelwal who is heading eBusiness vertical  at MediManagea specialist health insurance advisory service for Individuals, Families and Corporates. Know more about Medimanage’s free advisory services here

Life is full of risk and unpredictable most of the time. A sudden situation might arise and end up making you physically, emotionally & financially stressed.

One grave example is the fact of not buying an additional cover & relying only on your company insurance. It is often believe that the coverage provided by the employer is sufficient to take care of any unforeseen medical expenses which may arise. Let us look at 2 important facts to get a clear understanding as to why we require a supplementary cover.

  • The average medical cover that a company insurance offers ranges from Rs. 2 to 4 lakhs.
  • In the last 5yrs the medical cost has increased making it difficult for a common man to borne the expenses from his pocket. Let us look at the cost of few medical treatments in India:-
Procedures20082013Increase %
Heart Valve ReplacementRs. 1,75,415Rs. 3,43,14552%
Knee ReplacementRs. 2,70,220Rs. 4,36,73061%
Cataract RemovalRs. 16,000Rs. 25,00056%
AngiographyRs. 14,000Rs. 22,00057%
Coronary Artery Bypass GraftRs. 1,65,000Rs. 2,40,00045%
AppendectomyRs. 28,000Rs. 47,00066%
Gall Bladder RemovalRs. 32,000Rs. 59,00084%
Angioplasty (PTCA) with 2 StentsRs. 1,75,000Rs. 2,65,00051%

Please Note: Rates are as per the approximate cost of treatment.

Looking at the above figures, do you still feel that your coverage is sufficient enough ?The answer will be “NO”.

It is also important to note that along with the cost of the medical expenses the premium rates may also inflate Thus, it may not be practically possible to either enhance the current cover or buy an additional cover. So in such situation, what should be the solutions?

The answer is Super Top-up policies.

In this article, let us understand – What is a super Top-up Policy? How will this be beneficial? We will also be providing a detailed comparison between 2 notch products available in the market for your reference .

What is a Super Top-up Policy?

A Super Top-up Policy is a unique type of health insurance policy available which offers an additional coverage, beyond the “ Aggregate Threshold Limit”. Thus it acts as a cushion & comes in to action when you have exhausted the exisiting cover.

Let us understand with an Example:-

Let’s say if you have an individual Policy of Rs. 5Lac and a Super Top-up Policy of 10lac with 5 Lac Threshold Limit.

Incase there is a claim for 7Lakh, your individual health insurance policy will pay Rs. 5Lakh and the remaining claim amount of Rs. 2 Lakh will be paid by your Super Top-up Policy.

Now if there is another claim of 4Lakh in the same policy year, then the entire 4Lakh claim shall be paid by the super top-up policy. Because your aggregate threshold limit of 5 lakhs is crossed. This claim will be paid upto the limit of sum insured.

When you buy Super top-up, consider the below points:-

  • While buying a super Top-up policy it is not mandatory to have an existing health insurance cover
  • The threshold limit is applicable for each policy year
  • The threshold limit is the mandatory deductible, which needs to be take care by the customer either by way of a corporate policy or any other individual policy. You can also pay this from your pocket.
  • An aggregate threshold limit is sum total of all hospitalization expenses in a policy year.

 

Let us also look at the comparison – L&T Medisure Classic & Apollo Munich – Optima Super

ELIGIBILITY DETAILS:

Insurance CompanyL&T – Medisure – Super Top-upApollo Munich – Optima Super
Sum InsuredSI 3Lac & 8Lac – 2Lac Deductible
SI – 7 & 12Lac – 3Lac Deductible
SI – 6, 11 & 16Lac – 4Lac Deductible
SI – 5,10,15 & 20Lac – 5Lac Deductible
SI – 5Lac, 7Lac & 10Lac
Deductible – 1, 2, 3, 4, 5, 6, 7 & 10Lac
Min Entry AgeAdult – 18yrs
Child – 91days
Adult – 18yrs
Child – 91 days
Max Entry AgeAdult – 65yrs
Child – 23yrs
Adult – 65yrs
Child – 21yrs
Renewal AgeLifelongLifelong
Pre Acceptance Medical Checkup55yrs45yrs
Cost of MedicalOn acceptance of proposal, 50% of the cost of medicals will be re-imbursed.On acceptance of proposal, 100% of the cost of medicals will be re-imbursed.
Family DefinationIndividual Cover – Self, Spouse, Children, Parents, Parent-in-laws, Siblings, Grandparents, Daughter-in-law, Son-in-Law, Nephew, Niece, Grand children.
Floater Cover – Self, Spouse, 2 Children (Parents & Parent-in-Laws can also be covered as a separate cover)
Individual – Spouse, dependent children and dependent parents (Max 4Adults & 5Children)
Floater – Self, Spouse, 2 Children (Max 2 Adults & 2 Children)
Parent-in-law – If financially dependant.
Family Discount2 or more family members are enrolled 10% Discount2 or more family members are enrolled 10% Discount
Policy Tenure1 & 2yrs1 & 2yrs
Tenure Discount5% discount on premium7.5% Discount on premium

 

BENEFITS:-

Insurance CompanyL&T – Medisure – Super Top-upApollo Munich – Optima Super
Room RentUpto the Sum InsuredUpto the Sum Insured
ICU RentUpto the Sum InsuredUpto the Sum Insured
Doctor’s fees and related charges, Other Medical ChargesUpto the Sum InsuredUpto the Sum Insured
Ambulance ChargesNot CoveredRs. 2000 per Hospitalisation
Per & Post Hospitalization30Days Pre & 60Days Post Hosptialization60 Days Pre & 90Days Post
Day Care ProceduresCovered – No Static List.Covered. 144 day care procedures
Organ TransplantNot CoveredCovered – Only Hospitalization Expenses
Addo-on BenefitsService Guarantee. Cashless hospitalization Response in 6 hrsNA
Co-payment10% Co-payment for Insured age 80yrs & above.No Co-payment

 

EXCLUSIONS & WAITING PERIOD:

Insurance CompanyL&T – Medisure – Super Top-upApollo Munich – Optima Super
Waiting Period for AccidentNoneNone
Waiting Period for Specific Ailments24months24months
Joint Replacement Waiting Period24months24months
Cataract – LimitationNoneNone
Limitation on Major IllnessNoneNone
Waiting Period for Pre-Existing Diseases36months48months

 

Let us also look at an example – Mr. Rao wants to enhance his existing Health Insurance of cover.

Age: 35yrs                      Existing Health Insurance: 5Lac  Required Super Top Up Cover: 10Lac

How much premium will be charged to Mr. Rao?

Insurance CompanyL&T – Medisure – Super Top-upApollo Munich – Optima Super
PremiumRs. 1,236Rs. 2,475

Please Note: L&T Premium is Inclusive of ST & other companies Premium is exclusive of ST.

Our Opinion:

Super Top-up Policy are the best way to enhance your basic sum insured. If we look at the comparison both the products are good but there are few points where L&T – Medisure Classic takes an upper hand. Let us look at those points:

  1. In terms of premium, it is lighter on the pocket.
  2. Service Guarantee: Cashless hospitalization response in 6hrs.
  3. No Pre-Acceptance medical check up till the age of 55yrs.
  4. Option to add more extended family members under one policy (Customer has the choice of adding Grandparents, Siblings, Grandchildren, etc.)
  5. Family Discount of 10% in case you add 2 or more members in an Individual policy.
  6. The customer has the option of paying 2yrs premium at one shot and avail additional 5% discount.
  7. No Sub Limits on Room Rent, ICU, Nursing, Doctor’s expenses, medical bills, etc.
  8. Day Care procedures are covered without any static list.
  9. Pre-existing diseases covered after 36months.
  10. Under a single policy multiple relationships can be covered.

When you buy a policy always keep in mind the medical inflation while selecting the sum insured. Cost should not only be the deciding factor in choosing the Best Health Insurance plan. The ability of the plan to function when required should be the core of selection.

If you want to speak to Priyanka’s team of expert advisors for a one-to-one discussion on your requirements, post your inquiry here.

 

PMJJBY & PMSBY – Claim Settlement Process

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

People are enthusiastic about the launch of Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and Pradhan Mantri Suraksha Bima Yojana (PMSBY). Many of them are thanking Prime Minister Mr. Narendra Modi and his government for launching such people-centric schemes.

But, there are many people who are skeptical about an efficient implementation of these schemes and the benefits of these schemes reaching their ultimate beneficiaries. How these schemes will get managed, how the claims will get processed and how easy would it be for the policyholders or their nominees to get their claims, all this is yet to be seen and observed.

But, one thing which has been made clear by the banks or the insurance companies is the process of making the claims in case of any mishappening. Courtesy State Bank of India (SBI), here is the bank’s process of claim settlement for PMJJBY:

Claim Settlement Process in State Bank of India (SBI) – PMJJBY

On receipt of death intimation, the servicing bank branch shall send the Claim Form (annexure 7), Death Certificate, Discharge form (Annexure 8) and Certificate of Insurance from the nominated beneficiary and shall send these to the nearest SBI Life Office or to:

SBI Life Insurance Co. Ltd. – Claims Dept,

Kapas Bhavan, Plot No. 3A,

Sector 10, CBD Belapur,

Navi Mumbai – 400 614.

Tel: +91 – 22 – 6645 6000

Fax: +91 – 22 – 6645 6654

E-mail: claims@sbilife.co.in

On admission of the claim, the claim amount will be paid to the bank account of the nominee with intimation to the designated branch of the Bank (Annexure 9). In case of requirements or claim is not accepted, the same will be intimated to designated branch of the Bank.

So, in case of an unfortunate event, the nominee is required to follow the following process:

  • Fill the Claim Form and submit it along with the Death Certificate or Original FIR or Post Mortem Report (PMR), Discharge Form and the Certificate of Insurance at the servicing branch of the bank. In case of disability, Disability Certificate from Civil Surgeon is also to be attached.
  • The bank branch will then send all these documents to the nearest office of the insurance company.
  • After scrutinising the documents, the insurance company will transfer the claim amount to the bank account of the nominee and intimate the designated branch of the bank.
  • In case of any discrepancy or the claim is rejected on certain grounds, the insurance company will intimate the same to the designated bank branch.

Here are the sample claim settlement forms for PMJJBY & PMSBY:

PMJJBY Claim Form – English

PMJJBY Claim Form – Hindi

PMSBY Claim Form – English

PMSBY Claim Form – Hindi

In case you have anything to share about these two schemes or have any query regarding the claim settlement process, please post it here.

Pradhan Mantri Suraksha Bima Yojana (PMSBY) – Frequently Asked Questions (FAQs)

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

Pradhan Mantri Suraksha Bima Yojana (PMSBY) and Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) are getting launched from June 1st, 2015. So, if you have not already subscribed to these schemes, you need to quickly take a decision now as only four working days are left for you to do so.

As the deadline approaches, many of you must be having some last minute queries regarding these schemes. So, I thought of covering the FAQs provided on the government’s Jan Suraksha website.

Here you have the FAQs covering PMSBY:

Q1. What is the nature of the scheme, Pradhan Mantri Suraksha Bima Yojana?

The scheme is a personal accident insurance scheme of up to Rs. 2 lakhs for one year. It offers protection against death or disability due to an accident and renewable every year.

Q2. How much is the premium and what are the benefits under the scheme?

Premium payable is Rs. 12 per annum per subscriber. The benefits are as follows:

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Q3. How the premium is to be paid? Do I need to pay the premium every year or is there any auto debit facility?

The premium will be deducted from the account holder’s savings bank account through ‘auto debit’ facility in one installment, as per the option to be given on enrolment. Members may also give one-time mandate for auto-debit every year till the scheme is in force.

Q4. Who is eligible to subscribe? Can I enrol myself with two or more different banks?

All savings bank account holders aged 18 to 70 years in participating banks will be entitled to join. In case of multiple saving bank accounts held by an individual in one or different banks, the person would be eligible to join the scheme through one savings bank account only.

Q6. Who will offer / administer the scheme?

The scheme would be offered / administered through the public sector general insurance companies (PSGICs) and other general insurance companies in collaboration with participating banks. Participating banks will be free to engage any such general insurance company for implementing the scheme for their subscribers.

Q6. What is the enrolment period and modality?

Coverage period would be from 1st June, 2015 to 31st May, 2016. Subscribers should enroll and give their auto-debit option by 31st May, 2015. The enrol period is extendable up to 31st August, 2015. Subscribers who wish to continue beyond the first year will be expected to give their consent for auto-debit before each successive May 31st for successive years. Delayed renewal subsequent to this date may be possible on payment of full annual premium, subject to conditions that may be laid down.

Q7. Can eligible individuals who fail to join the scheme in the initial year join in subsequent years?

Yes, on payment of premium through auto-debit. New eligible entrants in future years can also join accordingly.

Q8. Can individuals who leave the scheme rejoin?

Individuals who exit the scheme at any point may re-join the scheme in future years by paying the annual premium, subject to conditions that may be laid down.

Q9. Who would be the Master policy holder for the scheme?

Participating Banks will be the Master policy holders. A simple and subscriber friendly administration & claim settlement process shall be finalized by PSGICs / chosen insurance company in consultation with the participating bank.

Q10. When can the accident cover assurance terminate?

The accident cover of the member shall terminate / be restricted accordingly on any of the following events:

(i) On attaining age 70 years (age neared birth day).

(ii) Closure of account with the Bank or insufficiency of balance to keep the insurance in force.

(iii) In case a member is covered through more than one account and premium is received by the insurance company inadvertently, insurance cover will be restricted to one account and the premium shall be liable to be forfeited.

Q11. What will be the role of the insurance company and the Bank?

(i) The scheme will be administered by PSGICs or any other General Insurance company which is willing to offer such a product in partnership with a bank / banks.

(ii) It will be the responsibility of the participating bank to recover the appropriate annual premium in one installment, as per the option, from the account holders on or before the due date through ‘auto-debit’ process and transfer the amount due to the insurance company.

(iii) Enrollment form / Auto-debit authorization / Consent cum Declaration form in the prescribed proforma shall be obtained, as required, and retained by the participating bank. In case of claim, PSGIC / insurance company may seek submission of the same. PSGIC / Insurance Company also reserve the right to call for these documents at any point of time.

Q12. How would the premium be appropriated?

(i) Insurance Premium to PSGIC / other insurance company: Rs.10/- per annum per member;

(ii) Reimbursement of Expenses to BC/Micro/Corporate/Agent : Rs.1/- per annum per member;

(iii) Reimbursement of Administrative expenses to participating Bank: Rs.1/- per annum per member.

Q13. Will this cover be in addition to cover under any other insurance scheme the subscriber may be covered under?

Yes, this cover of up to Rs. 2 lakhs will be in addition to your existing accidental insurance cover(s). So, in case of any mishappening, you will get the insurance claims under all your policies, including PMSBY.

Pradhan Mantri Suraksha Bima Yojana (PMSBY)

Participating Banks & Insurance Companies servicing PMJJBY & PMSBY

If you find any relevant info missing in these FAQs or have any of your queries regarding this scheme, please share it here.