Insurance – Page 2 – My Money Streets

December 20, 2016

Bajaj Allianz is all set to bring an ultimate inclusive term insurance plan for all

Term insurance is making its place in India with its own right. The beauty of the pure insurance product has charmed the savvy Indian investors and steadily catching up with all.

What is a term insurance ?

Term insurance is the purest form of life insurance with no strings of savings or investment attached to it. It is known for providing a lump sum benefit incase of unfortunate death of policyholder. It is an ultimate protection plan for the claimant.

Who should buy term insurance policy?

Term insurance is one of the most important financial instrument for every earning individual who has dependants to look after. The tenure can vary from 10 to 40 years. However, generally the cover is extended till upto 70 years of age.

Affordable premium for high coverage

The benefit which make it most attractive to the younger generation is it’s low-cost pricing. The pricing is extremely affordable compared to the other forms of life insurance with a high monetary coverage for the policyholder ensuring unforeseen situation doesn’t cause financial distress. It’s best to buy the insurance policy early to lock-in a low premium for the entire term. With every passing year, the premium cost increases, entering early has it’s own advantage. So, with increased age of the policy holder, premium increases significantly. Two other important factor which affects the premium are the lifestyle of the policyholder (smoking/drinking habits) and nature of profession, individual with life risk exposure in the job, will fetch higher premium.

What do we expect from a friend? To be flexible, helping and being around through ups and downs and sail through the #IfsOfLife. This product aims to be just that. This product aims to protect you and your family like that best friend, who will help you in sail through all tough times.

What is so special about the new product by Bajaj Allianz Life Insurance company?

Looking at the growing interest on term insurance plans, Bajaj Allianz has designed an inclusive product which will not only provide death benefit but also extend a caring hand incase of critical illness or permanent disabilities.

Isn’t it great if an insurance product is committed to you for life, like your best friend, staying around and helping during the toughest phase of your life. Many a times it is not untimely death, but a critical illness or permanent disability caused by an accident which leaves the family morally and financially down and distressed. This product will be an answer to these unforeseen circumstance. And all these can be done with few clicks! Starting from choosing the right protection amount and tenure, term, and additional benefits which is a flexible choice. It also will encourage the buyers to do a thorough check on inclusions and exclusions.

Bajaj Allianz, a joint venture between Allianz SE, the world’s leading insurer, and Bajaj Finserv Limited an established name in the life and non-life insurance segment. It has done an extensive research to develop the insurance plan keeping in mind the changing lifestyle of the progressive Indians. The gen Y is now aware and accept the concept of pure insurance and increasingly opting for term plans which offers adequate cover at rational pricing.

I am eagerly waiting for the launch of the new life insurance product by Bajaj Allianz @BajajAllianzLIC, on 23rd of December 2016 in Mumbai. #IfsOfLife

December 19, 2016

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

December 3, 2016

Top reasons for claim rejections in term insurance policies

LIC with highest #claim settlement ratio above 95%, smaller private players faired at about 76-80% only. As the premium for #term plans of private insurance players for #term plans are much lower, so is their #claim-settlement-ratio. The insurance companies blame it on the #policy holders.

Have you ever bought an ice-cream without checking the flavour?

Have you ever done a haircut without a mirror in front of you, giving the scissor and your head to your hairdresser without discussing which look you want and took a beauty sleep when you were getting a new look?

Do you ask your vegetable vendor to chose vegetable for you or you chose yourself?

Do you simply walk-in at a 5star restaurant and order a meal without looking at the menu?

If most of the answers are in negative, I would like to know, do you look into the documents and terms and conditions while buying an insurance policy? If you are nodding your head in affirmation, it is a much bigger concern compared to any of the topics discussed above.

There are about 10% of all death claims in term plans get rejected mostly because of callous attitude of the policyholders, putting the near ones in a bigger mess after death. While choosing right amount, right insurance company with high-claim settlement ratio is important, it is equally important to go through the documentation and complete the necessary processes to obtain the insurance contract papers.
Top 5 reasons for rejection of #death claims

1. Dependence on insurance agent – The insurance agent gets a commission when he sells a policy, for him it is just another deal. He may be your best friend’s brother, but still may not be well aware of minute details which needs to be filled in the form, a small human error in date of birth/profession/annual income/source of income can cost your family members thee policy amount additional to the emotional trauma of life loss

2. Hiding personal details – Nobody is a fool here, certainly not the insurance claim settlement officers. So if one hide about nature of profession (with life risk) like in mining/fire-fighting will take no-time to decline claim incase of accidental death at work. Many a times to hide a small additional premium policyholder hide their lifestyle habit of smoking/drinking, it will cost

3. Not utilising the free-look period –there are many fine prints of inclusions and exclusions in a insurance policy document. To enable policy holders to take informed decision, the insurance policies have a feature of free-look period of 15-30 days, within which policyholder can cancel his policy citing dissatisfaction and opt for any other policy. Policyholder is reimbursed the premium after deduction of minimum processing and medical test charges incurred by the company. This is the best way to be sure of what are you buying as a guarantee for your loved ones after your death.

4. Improper nomination – Life insurance Policy is a very long term investment. Many a times policies are bought by unmarried individuals, they nominate their parents as nominee, as time passes by, gradually nomination needs to reviewed after marriage or death of parents, so that settling claim doesn’t suffer due to ignorance in documentation work.

5. Policy lapse – Keeping your policy alive is solely your responsibility. Pay your premium timely. Generally, insurance companies have a grave period of 15-30 days after the air date, failing which, your policy is considered to be lapsed, and no chance of #claim settlement

6. Suicide/missing person case – This area has little less to do with the adhering to policy rules, but one must not now out noticing this part of the agreement. Incase of suicide within first two years of policy, many insurance company can simply reject the claim. Missing person claim is one more painful thing to handle for the family members. Often in calamities or terrorist attacks, many deceased persons cannot even recognised or the deadbody is simply buried beyond recovery, in this cases, insurance companies follow the list shared by government. If the policyholder’s name doesn’t reflect in the list, insurance companies will follow 7 year rule. Under this rule one cannot claim settlement untill 7 years and within these years, the family members have to keep the policy alive by paying regular premiums.

The point here is about taking informed decision and doing a periodic review of the insurance policy to avoid inconvenience in future. Stay happy. Stay alert.

#term insurance #claim settlement #insurance policy #life insurance

http://www.mymoneystreets.com/2016/11/10-reasons-why-we-are-obsessed-about.html?m=1

September 19, 2016

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 Find more
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 6^th 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.

August 29, 2016

Good news for the Indian investors, fewer bank representatives will push you to buy wrong insurance plans #ULIPs #bankassurance

Personal finance take on IRDA’s latest move on banning incentives to bank staffs

IRDA bans incentives to bank stuffs, #bankassurance

Impact –
1. To help lower misselling of insurance products by bank representatives. #bankassurance

2. The structure remains untouched for the other agents with 7% incentives over and above the commision.

3. The affect on the premium difference or anyother service differential is yet to be seen post this development.

The overall commision expenses have reduced over last decade, however, it still remains a costly affair for the investors.

The commision on sales still remains very high at 35-40% on the first year, 7.5% at the seond year and 5% for rest of the tenure, especially for the offline products

While online counterpart offers better pricing compared to these agent/ bank led products, one need to be careful to compare the exact offerings and the difference in benefits, if any.

#newsyoucanuse

August 26, 2016

10 Reasons why you should avoid Endowment Insurance Plans and chose Term Plan instead

10 Reasons why you should not by endowment insurance plans, slide show#

Endowment plans (Life insurance product) especially made popular by #LIC since mid 20th century, are very popular products in Indian households because of its high pitch campaigns and rampant mis-selling by insurance agents. Due to limited knowledge on the return calculation and conservative mindsets for investments, Indian population often fall for this wealth eroding instrument. Let us at look what these insurance cum investments/ savings plans actually offer.

These plans offer a sum assured on the maturity and added bonus componen accrued over the tenure. It cover death benefit upto sum assured and additional bonus component upto the premiums paid by the investor till the tie of death. Though it sounds very simple, I have found atleast 10 reasons, we should avoid this age old dominant insurance product.

1. The premium is exorbitant compared to the assured returns

For an insurance cover of 1 lakh, endowment plan would cost about five thousand; a term plan would approximately cover you for 50 lakhs in the same amount (considering the applicant is 30 years old)

2. It doesn’t adequately cover risks

Sum assured compared to the premium is very low. Hence, people end up buying a very low coverage sum assured compared to the actual requirement

3. The returns are not comparable to the rising inflation

Thumb rule of investment is projected return should beat the inflation numbers. If you rightly calculate the bonus payment in addition to the sum assured, on maturity, the return is no more than a 4% y-o-y appreciation of the total investment, while India is fighting inflation at 6-8% in last few years.

This investment is actually eroding the capital

4. Very high cost of investment

For a 10 lakh cover, it costs about 50,000 a year, while a Term Insurance plan would do the same for just 1 thousand

5. The allocation charges, expense break-up are hidden

Endowment plans in India doesn’t disclose the break-up of agent commissions, asset allocation charges, expenses, allocation for sum assured, death benefits etc, while in other investment products like #ULIPs, #mutual funds, it is mandatory disclose actual break–up

6. It is a complex product Insurance + Investment and fails in both area

To attract the attention of conservative investors who strive for capital protection at any cost, the category mixes two benefits, making it a poor product for both the needs, neither it is capable of providing adequate cover, nor giving any opportunity of wealth creation

7. The Bonus component is the biggest joke, offers simple interest, missing out on the Power of compounding

The ‘BONUS’ element in the endowment plans is the biggest miss-selling point used by the agents. The Insurance Company announces a yearly bonus, this is not given to you yearly, is added to your sum assured kitty. But, the bonus component varies every year, and it doesn’t get accumulated as compound interest, it stays the same, without earning a single penny interest on it. So, for example in an 20 years policy, if you earned Rs. 5,000 in the 5^th years as a bonus, it will remain 5000 till the 20^th year, without earning any interest on the amount.

8. The agents/ brokers push and miss-sell because, they get a high commission on this

There has been enough media bashing over high charges on #ULIPs, which #IRDA promptly lowered and capped the expense charges making it a bit better product for the investors. But, endowment plans charge as high as 40% of the premium in the first year, there are also high recurring charges attached to it

9. There is a requirement of pure insurance, keeping it clutter free

#Life Insurance is an important element of over-all financial planning. It is meant to cover life risk of a earning member in the family. It must cover atleast 3 times the annual income of the member, which ensures a financial cushion during a time of trauma and despair. A term insurance product is perfect answer for this. It has low cost structure and offers only death benefit and sometimes critical illness/ permanent disability cover for an additional cost. The premium difference between endowment and term plan is as huge as 80% which can be invested efficiently.

10. There are much better options available for wealth creation in the long term

The sentiment behind endowment plan is mostly having an extra income/ pension post retirement. But the product fails to deliver on the area because of its complex nature and high cost structure. If you are conservative investor also, you may consider dividing the remaining amount in two parts, one for monthly/ quarterly/ yearly PPF contribution (enjoys triple tax exemption benefit and return of 8-8.5% annually). The remaining part can be invested in Systematic Invest Plan (SIP) in a hybrid fund/ balanced mutual funds(about 60% equity 40% debt), will earn you over 12-14% annually over long term. [Note: When a mutual Fund invests 60% of its AUM in equity, it is considered to be an equity mutual fund for taxation purpose, and the return earned on the same over 1 year is exempted from taxation]

Category: Insurance