Top 10 common exclusions in health insurance policies

Often I hear from family and friends that ‘#health insurances plans are bad, as they don’t pay’. It gets very difficult to reason with them as they themselves have gone through some bad experiences on claim settlement under #health insurance policies.

With growing healthcare cost, #Health insurance has become unavoidable part of financial planning. It helps us plan for unforseen medical emergencies. Not only financially, health covers acts as an emotional support system. So, it is prudent to check few medical insurance options before finalising a health cover which suits your needs and fits well with medical history of the family. All health insurance products have different sets of offerings, sub-limits and exclusion clause. Here, in this article my idea is to share some of these common exclusions in the health insurance policies.
When you decide to buy a health cover, it is an agreemeent you are about to sign based on mutual trust, that you are disclosing correct information about yourself for an agreed premium, and in return, the insurance company is bound to help you with financial support based on agreed terms and conditions. You may take the cover from private health insurer or public insurer. Check the contract twice or more to confirm on all the details.

Top 10 common exclusions in health insurance policies

1. Complete exclusion on diseases – There are certian diseases which are permanently excluded from the lists. Diseases which are sexually transmitted like HIV infection or AIDS, and others. Diseases caused by alcoholism, drug abuse etc. This is applicable for individual insurance as well as group health policies

2. Pre-existing conditions – Health Insurance companies have clause set for treatments on pre-existing diseases. It also dont cover pre-existing bodily injuries of accidents. It can very from 1-4 years depending on the insurance company and the particular policy in question.

3. Sub-limits on expense heads – Though the insurance company is liable to pay upto complete sum-assured of the insurance policy, certain expenses like room rent, doctor fee, medicine expenses may come with a cap of certain percentage of the sun assured. For example, if any policy has a cap of Rs. 2000 on room rent per day, and the actual rent paid is 4000, the policy holder has to cough up the extra Rs. 2000, even if the total treatment cost is below the sun assured.

4. Hiding medical/family medical history – this is considered to be breach of trust by the insurance company. If any existing disease or medical history undisclosed in the policy contract, insurance company has the authority to completely reject the claim settlement application.

5. Alternative treatments – ayurveda/homeopathy/Unani- Though IRDA is taking more inclusive approach towards the alternative based on growing demand on Homeopathy, ayurveda etc, still many insurance policies don’t provide for it or come with cap on the expenditures.

6. Pregnancy and childbirth – Insurance as a financial product is designed for emergency/un-prepared events, pregnancy doesn’t come under that. Hence, insurance policies don’t cover pregnancy, miscarriages, child-birth untill otherwise specified. Few policies do cover this with a higher premium and a minimum waiting period of 2 years.

7. Cosmetic surgery – Any cosmetic corrective surgery etc is not covered by insurance companies.

8. Injuries during war, neuclear radiation – The insurance company protects itself againstassive losses arising from major threatening situations like war/ public agitation related injuries etc.

9. Treatment for weightloss/gain, and other corrective dental or eye surgeries – surgery or treatment related to weight loss is gaibs are excluded for  the list. Any corrective dental surgery or are surgery unless from accidental injuries are not covered under health insurance.

10. Injuries related to proffesional or hazardous sports – injuries caused in proffesional sports are not excluded from the cover.

Depending on your comfort-level you may buy online health plan or opt to call your financial advisor.

#Health insurance being one of the top three priorities in #financial planning, it deserves a certain amount of attention from the policy holders more than just financial security.

http://www.mymoneystreets.com/2016/12/ladies-yes-you-can-buy-mutual-fund.html?m=1

#health insurance #financial planning 

With the new hike in salary and the yearly bonus, plan tax saving before the Indian festivities blow your pockets

#classroom

Tax saving instruments and avenue especially for salaried individuals

We are almost halfway through this financial year 2016-17, however, many of us has got the revised paycheques with increment and bonus only in July/ August. The accounts team have given reminders for tax declaration forms. Let us quickly look at the lists of investment options where we can save some tax as well as utilise the fund in building wealth and help good cause.
Tax saving investments can be divided in 4 parts – 1. #Investments  2. #Insurance 3. Expenses 4. #Donations and social causes. In this post I intend to only identify the areas of investments. The next post will elaborate on the best ways to manage tax savings.
Tax savings instruments are introduced by government to promote savings practices, participating in the overall economy growth, encourage donation and charities for good causes and also rewarding investing in environmental-social sectors. It is not to be used as tax evasion tool in any form.
In the Income Tax act of India act, section 80C to 80U covers the tax exemption areas.
Tax saving eligible investments options

Categories
Details
Lock-in period
Minimum and maximum investment per year
Other benefits
Tax benefits
EPF
The amount is deducted from the salary by the employer. Employer also for makes equal contribution to the fund. This is a compulsory contribution.
As per new laws, one need to mandatorily keep the fund until 58 years of age
Minimum if 12% of Basic and DA. Benefit upto Rs. 1,50,000 investment per year
Employee can avail loan benefits and partial withdrawal allowed on resigning job. This account is transferable on job change
Maturity amount is complete tax free above 5 years
VPF
Voluntary Provident Fund, can be opted by an employee, carries same interest rate as
EPF
The lower limit not specified, however, upper limit is at 1,50,000
Loan facility/ partial withdrawal facility available
Tax free on maturity
PPF
Long term saving scheme by banks, return over 8% annually
15 years
Minimum Rs. 500 a year and maximum Rs. 1,50,000
Enjoys triple tax benefit. Partial withdrawal allowed 6th year onwards
Enjoys triple tax exemption benefit.
NSC
Eligible for deduction in the year they are purchased.
5 years, 10 years
The interest earned is non-taxable except last year
The interest earned in the last year is taxable.
Sukanya samridhi Yojana
Special saving scheme promoting development of girl child, enjoys higher interst rate than PPF
Until daughter turns 18 years
Minimum investment of Rs. 1000 year, upto 1,50,000
Enjoys triple tax exemption benefit. No tax on interest earned
Enjoys triple tax exemption benefit.
Tax Saving Fixed deposits
Eligible for deduction n the year purchased, banks and post office have this facility
5 years
Maximum Rs. 1,50,000
Interest earned is taxable on maturity
Senior citizen savings scheme
Deposit schemes in banks for senior citizens
Also enjoys higher interest rate
Insurance/ annuity plans (80CCC)
Premium paid for deffered annuity plans, life insurance schemes
NA
The upper limit is at 1,50,000
Enjoys triple tax exemption benefit
ELSS
Mutual Fund scheme, with 3 year lock-in period
3 year lock –in period
Minimum 5,000 Maximum investment 1,50,000 per year
Enjoys triple tax exemption benefit
 Rs. 1,50,000
Contribution towards pension account 80CCD(1)
Maximum deduction allowed is 10% of salary, and 10% of gross income for self-employed,
limit – Rs. 1,50,000
 Upto Rs. 1,50,000
Self contribution – Pension Fund/ Atal pension Yojana- 80CCD(1B)
Towards NPS/ Atal Pension Yojana
Deduction is allowed on contribution up to Rs 50,000. (This is additional to the available 1,50,000 limit)
 Rs. 50,000
Employer’s contribution -Section 80CCD(2)
Deduction is allowed for employer’s contribution to employee’s pension account up to 10% of the salary of the employee.
There is no monetary ceiling on this deduction.
 Upto 10% of employee’s salary
Equity Savings scheme 80CCG
A 50% deduction on tax on the investment. Person with salary less than 12 lakh
Rs. 50,000 is the upper limit
 50% deduction on the investment year

Other earnings eligible for tax saving
Categories
Details
Benefit
Interest earned from savings account
Tax savings claimed can be made on interest earned on savings account
Exemption upto Rs. 10,000 per year
#classroomseries

Expenses eligible for tax exemptions (Insurance and expenses) 
Categories
Details
Benefit
Life Insurance premium
Premium paid is eligible for tax benefit (for self, spouse, child)
valid on insurance policies if the premium is less than 10% of sum assured
Premium paid for medical insurance
Benefit upto 15,000 for self, spouse and children. Can be upto 20,000 if self/spouse is above 60 years
Additional deduction for 15,000 for parents and 20,000 if parents are above 60 years
Medical expenditure on handicap relative (80DD)
Expense on treatment, maintenance, rehabilitation and care
For 40-80% disability, fixed deduction of 50,000
Severe disability over 80%  – 1,00,000
Medical expense of self/ dependant (80DDB)
For the diseases specified in Rule 11DD. A certificate in form 10 I is to be furnished by the taxpayer from any Registered Doctor.
The maximum amount of deduction allowed from gross total income on condition that no medical reimbursement is received from any insurance company or employer for this amount
Person suffering from physical disability (80U)
Individual who suffers from a physical disability (including blindness) or mental retardation
Deduction of Rs. 50,000/-
Tuition fee
For children of the tax payer, school, college, university or any other institute within India
Capped at Rs. 1,50,000
Home loan
Principal repayment of home loan
Capped at Rs. 1,50,000
Home loan interest payment (80EE)
First time home buyers can avail this facility for self-occupied property 
The value of the house should be less than 50 lakhs and loan amount is less than 35 lakh. This is over and above the 2,00,000 limit
Stamp duty and registration for home buyers
Allowed under 80 C
Capped at Rs. 1,50,000
Deduction on house rent (80 GG)
This is available in case no HRA is attached in the salary structure and  not allotted accommodation by the employer
Maximum of Rs. 60,000 per annum can be claimed
Education loan for higher studies (80E)
Interest on the loan is eligible for tax benefit, can be upto 8 years or the interest payment completed whichever is earlier
Capped at Rs. 1,50,000
Social causes and donations
Categories
Details
Benefit
Donation towards social causes (80G)
Deduction up to either 100% or 50% with or without restriction as provided in Sec. 80G. click here for details
Donation over 10,000 cannot be by cash
Deductions on Contribution by Individuals to Political Parties (80GGC)
Political party registered under section 29A of the Representation of the People Act.
Cash contribution not allowed
 (80RRB)
Deductions on Income by way of Royalty of a Patent
up to Rs. 3 lakhs
#classroomseries
information used/referred from bankbazaar, cleartax, taxguru etc.

Financial planning simplified

#Personal finance is a very wide subject. Here I just want to simplify the basics, why we need to take care of our money, why the inflow and outflow of funds need to me managed.  
Every person has their own perspective about life, income and expenses. However, we can start with the 5 constants of personal finance apart from the regular aspirations of education for your children, marriage and buying a home.
1. You are going to grow old
2. Prices will go up
3. Value of money will decrease
4. Financial markets will remain volatile
5. There will be unplanned emergencies
Now, what do we do? Start stacking up cash/ gold? Putting in Fixed Deposit? Buy stocks? Mutual funds? Insurance? What?
We need to simply the relation between the goals and financial needs. We need to come in terms with the purpose of the investment so that we allocate funds and plan in a right manner.  

How to go about it?
Start as soon as you feel it is important; don’t wait for emergencies to teach you harsh lessons.
Chalk out your financial goals based on the event and the expected timeline. For eg
Own marriage/ buying property/ vacations/ children’s education and marrage/ second home/ retirement planning etc.


Keep in mind


1. Keep goals clear
2. Time in hand
3. Risk taking ability
4. Avoid mixing asset classes
Based on your age, current financial situation, priority and timeline you can plan your finance. 
First, prepare an Emergency fund, ideally the most liquid investment like savings account/ Fixed deposit/liquid fund.
Your financial liabilities and dependants should determine the life insurance cover. Chose term plan, stay away from endowment and ulips. See Post to know more.
Health insurance is also a significant part of financial planning. A medical emergency can erode a significant portion of your wealth if not planned for emergencies.
Few goals which are 5 – 10 years away and more, a significant kitty can be built with a monthly investing a small amount into equity mutual fund. See post on wealth creation

Younger the age, risk taking capacity is more. Equity based mutual fund investment can yield maximum return in long term.  Thumb rule of equity investment is (100-age)% of total savings can be kept in equity. With increasing age/ nearing the goal gradually shift the investment into debts or fixed instruments like Fixed deposits.
Retirement planning is one more aspect one need to start early. As, the value of money decreases with passing time, maintaining the same lifestyle as today will cost you much higher 20 years later. Hence, investing for retire is important. See post
In other posts will go into details
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