Skip to main content

Do you have enough insurance cover?

Download Tax Saving Mutual Fund Application Forms

Invest In Tax Saving Mutual Funds Online

Buy Gold Mutual Funds

Leave a missed Call on

94 8300 8300

 

It's easy to take a call on investments. For instance, with equity markets rising almost 20 per cent in the past three months and the rally looking sustainable, retail investors can either take a call on buying or booking profits. And if stock markets are bad, there are debt instruments like fixed deposits or debt funds or fixed maturity plans where one can invest.

But taking a call on a life insurance cover isn't so easy. With a rise in salaries and responsibilities, one is often not sure how much insurance is enough. Is five times the gross salary enough or one should get more? The problem also arises because insurance policies are often bought to save income tax. And many people just keep accumulating policies as per their tax needs. Of course, the market has been vitiated because of rampant mis- selling by insurance brokers.

Any insurance policy cannot be treated as a ' buy and hold' strategy like one may want to do with their investments.

Some elements that merit a review of insurance needs are discussed. The list is not exhaustive but only indicative.

Review the basis for arriving at the insurance cover: In the case of life insurance, the coverage chosen for a particular policy is often a function of one of the following factors: premium paying capacity, the extent of liability that one is going to take up, a certain multiple of the annual income earned, amount of wealth that an individual has or in some cases quantification of the various unfulfilled responsibilities of the individual.

After taking the cover, if there is any change in any of the aforementioned factors, then the insurance coverage should be reviewed. For example: If an individual takes a life insurance cover of ₹ 75 lakh immediately after the birth of his first child, she should review the coverage required once the kid is around six years of age and again when they turn ten. With the cost of quality education increasing yearly, it is important to ensure that the life insurance cover in case of any untoward incident is sufficient to cope up with the same.

Co- ordination of beneficiaries with your estate plan: A review of the policies is not necessarily in terms of the extent of coverage but extends to other aspects as well. Under section 39 of the Insurance Act, 1938, the holder of a policy of life insurance may at any time nominate the person to whom the money under the policy shall be paid in the event of his death. This nomination overrides the claim of any other heir on the proceeds from the policy. Therefore, at the time of drafting one's will or their estate plan, it shall be ensured that the beneficiaries as named in the will document for the amount available under the policy is coordinated with the insurance document. This will help in avoiding any potential conflicts in the future.

Change in applicable premium rates: In the last four years, the insurance regulator has modified the solvency margins as applicable to life insurance companies on more than one occasion. The change in margins has had a direct impact on the premium rates charged by companies for their term products. In some cases, the premiums have fallen by as high as 30 per cent with the same product of the same company in an individual's own case despite growing older. Life insurance products being long- term contracts, the companies are not in a position to pass on the benefits of reduction in premiums to existing policy holders. In such cases, if health conditions have not deteriorated, then policy holders would have to change their products either within the same company or can look for competitive rates with different companies.

Performance of policies: For individuals, who have opted to route their investments through insurance policies would also need to keep a check on whether the policies performance is matching up to the envisaged objective. Although investment backed insurance policies are long- term products, yet a review of the same is essential.

Long- term care provisions: With rising age, close attention needs to be paid to one's medical coverage. The decision to upgrade from a family floater cover to standalone policies for family members needs to be reviewed keenly. Growing children and senior citizen parents would need to be provided for with adequate covers rather than combining all of them in a single floater policy.

In recent times, few insurance companies offer top- up plans for medical policies, which are also a cost- effective way to enhancing one's coverage.

One has to look at making provisions for their medical needs of the next five years at the time of review rather than look at their existing health conditions.

Rising income, rising eligibility: The coverage under disability- policies is dependent on one's average income for last three years. With rising income, the eligibility of the individual also rises. Accordingly, while climbing up the career ladder, the disability provision needs to be increased proportionately.

Along with the above, constant innovation in the insurance industry opens up possibilities for new type of coverage which might not have existed when your last insurance decision was taken. For example: One of the private medical insurance companies has now made available a stand- alone product for diabetes patients, which did not exist a year back. A review will provide the individual to compare new products with the ones in their portfolio and opt for the better.

To conclude, the insurance review, when done proactively, will help provide an opportunity to the individual to address any inefficiency (that might have crept in over the years) in a controlled environment where the problems can be fixed.

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

Leave a missed Call on 94 8300 8300

Leave your comment with mail ID and we will answer them

OR

You can write back to us at

PrajnaCapital [at] Gmail [dot] Com

---------------------------------------------

Invest Mutual Funds Online

Invest Any Mutual Fund Online

Download Mutual Fund Application Forms from all AMCs

Download Mutual Any Fund Application Forms

---------------------------------------------

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Franklin India Bluechip
      4. ICICI Prudential Top 100 Fund

B. Large and Midcap Funds Invest Online

      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
      4. Birla Sun Life Front Line Equity Fund
      5. Franklin India Prima

C. Mid and SmallCap Funds Invest Online

      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
      5. Birla Sun Life Dividend Yield Plus
      6. SBI Emerging Businesses Fund
      7. HDFC Mid-Cap Opportunities Fund
      8. ICICI Prudential Discovery Fund

D. Small and MicroCap Funds Invest Online

      1. DSP BlackRock MicroCap Fund

2.Franklin India Smaller Companies

E. Sector Funds Invest Online

      1. Reliance Banking Fund
      2. Reliance Banking Fund
      3. ICICI Prudential Banking and Financial Services Fund

F. Tax Saver Mutual Funds Invest Online

1. ICICI Prudential Tax Plan

2. HDFC Taxsaver

      1. DSP BlackRock Tax Saver Fund
      2. Reliance Tax Saver (ELSS) Fund

G. Gold Mutual Funds Invest Online

      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund
      4. Birla Sun Life Gold

H. International funds Invest Online

1. Birla Sun Life International Equity Plan A

2. DSP BlackRock US Flexible Equity

3. FT India Feeder Franklin US Opportunities

4. ICICI Prudential US Bluechip Equity

5. Motilal Oswal MOSt Shares NASDAQ-100 ETF

Popular posts from this blog

Am you Required to E-file Tax Return?

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Am I Required to 'E-file' My Return? Yes, under the law you are required to e-file your return if your income for the year is Rs. 500,000 or more. Even if you are not required to e-file your return, it is advisable to do so for the following benefits: i) E-filing is environment friendly. ii) E-filing ensures certain validations before the return is filed. Therefore, e-returns are more accurate than the paper returns. iii) E-returns are processed faster than the paper returns. iv) E-filing can be done from the comfort of home/office and you do not have to stand in queue to e-file. v) E-returns can be accessed anytime from the tax department's e-filing portal. For further information contact Prajna Capit...
Read more

Mutual Fund Review: HDFC Index Sensex Plus

  In terms of size, HDFC Index Sensex Plus may be one of the smallest offerings from the HDFC stable. But that has not dampened its show, which has beaten the Sensex by a mile in overall returns   HDFC Index Sensex Plus is a passively managed diversified equity scheme with Sensex as its benchmark index. The fund also invests a small proportion of its equity portfolio in non-Sensex scrips. The scheme cannot boast of an impressive size and is one of the smallest in the HDFC basket with assets under management (AUM) of less than 60 crore. PERFORMANCE: Being passively managed and portfolio aligned to that of the benchmark, the performance of the index fund is expected to follow that of the benchmark and in this respect, it has not disappointed investors. Since its launch in July 2002, the fund has outperformed Sensex in overall returns by good margins.    While every 1,000 invested in HDFC Index Sensex Plus in July 2002 is worth 6,130 now, a similar amount invested in Sensex then wo...
Read more

IDFC - Long term infrastructure bonds - Tranche 2

IDFC - Long term infrastructure bonds What are infrastructure bonds? In 2010, the government introduced a new section 80CCF under the Income Tax Act, 1961 (" Income Tax Act ") to provide for income tax deductions for subscription to long-term infrastructure bonds and pursuant to that the Central Board of Direct Taxes passed Notification No. 48/2010/F.No.149/84/2010-SO(TPL) dated July 9, 2010. These long term infrastructure bonds offer an additional window of tax deduction of investments up to Rs. 20,000 for the financial year 2010-11. This deduction is over and above the Rs 1 lakh deduction available under sections 80C, 80CCC and 80CCD read with section 80CCE of the Income Tax Act. Infrastructure bonds help in intermediating the retail investor's savings into infrastructure sector directly. Long term infrastructure Bonds by IDFC IDFC issued an earlier tranche of these long term infrastructure bonds on November 12, 2010. This is the second public issue of long-te...
Read more

National Savings Certificate

National Savings Certificate Here's everything you need to know about the 5-year savings scheme offered by the Government This is a 5-year small savings scheme of the government. From 1 July 2016, a National Savings Certificate (NSC) can be held in the electronic mode too. Physical pre-printed NSC certificates have been discontinued and replaced with Public Provident Fund-like passbooks. What's on offer The minimum amount you can invest in them is Rs100 and there is no upper limit. Under this scheme, all deposits up to Rs1.5 lakh qualify for deduction under section 80C of the Income-tax Act, 1961. The interest earned is taxable. You can invest in multiples of Rs 100. These certificates can be owned individually, jointly and also on behalf of minors. The interest rates for all small savings schemes are released on a quarterly basis. The effective rate for NSC from 1 October to 31 December is 8%. The interest is calculated on an annual compounding basis and is given along w...
Read more

Different types of Mutual Funds

You may not be comfortable investing in the stock market. It might not seem like your cup of tea. But you can start by investing in Mutual Funds. Many first-time investors invest in Mutual Funds. This is because they do not know how to invest in individual securities. Basic information on Mutual Funds People invest their money in stocks, bonds, and other securities through Mutual Funds. Each Fund has different schemes with specific objectives. Professional Fund Managers look after these schemes. Your Fund Manager could help you invest in a scheme that suits your financial goal. Functioning of Mutual Funds You could make money through Mutual Funds in different ways. A single Mutual Fund could hold many different stocks, bonds, and debentures. This minimizes the risk by spreading out your investment. You could earn dividends from stocks and interest from bonds. You could also earn capital by selling securities when their price increases. Usually, you could choose to sell your share any t...
Read more
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now