Choose the best Life insurance company and Term Plan

Claim settlement ratio? repudiation ratio / rejection ratio or the largest Insurance company?

Who is the best insurance company for you? How to choose the best company and best policy?

The main purpose of buying term insurance is to ensure that after the death of policyholder, nominee or legal heir gets the sum assured. It could be very sad in case the insurance company rejects the policy claim to the nominee. Hence, it is important to choose a right insurance while keeping in mind about the common exclusions.

While the popularity of Term insurance is catching pace, so is the complications coming to the fore. Many people including ones who sells endowment policy claims that in term insurance nobody gets money back. 

Well that is not true, term insurance is comparatively new and still finding its base, awareness is low and it will gain pace with time as people get hands on experiences. However, as it is likely and we all hope that most of the policyholders will outlive the policy term, (mostly ranges till 60-70 years of age), people feel it is unreasonable and unnecessary, many end up buying the cheapest policy online without any homework. There are also cases of hiding (or non-disclosures) of medical conditions to get cheaper premium, and not writing hobbies (adventures, bunjee jumipng, horse riding etc) to avoid rejection while buying the policy. There is a list of common exclusion which is followed by the life insurance companies. Apart from the common exclusion, we should also educate ourselves on criteria on how do choose the best insurance company, which will stand in our favour incase of life loss of the policy holder. 

You can give a weightage based marking system on the below mentioned parameters. Keeping 5 marks for each criteria, and marking 1 for lowest performance on the parameter and 5 for the highest. 

Though do check out the premium amount of each insurance, but it should not be a criteria of choosing insurance

Here is a list of criteria I personally followed while choosing term insurance – 

Which company is offering your desired insurance cover and package – List down what is the kind of cover you are looking at, are you looking for a rider like Personal accident cover/ Critical Illness benefits or Premium waiver or multiple option of payout of death benefit. First step is to short-list your requirement. 

Tip – Its a good idea to bundle your Critical Insurance cover with Life insurance and not health insurance, as in life insurance you lock your premium of entire term, while Health insurance premium keeps increasing based on age and claims 

Company history/reputation – In financial services, trust is the first factor. So, knowing how the Brand in general is perceived by you, your circle of friends who happens to work in financial services can come handy. Doing a google check on the news on the company/ promoter, checking its review would be helpful. Check how long the company is in operation specially in India and how the news have been on their claim settlement experience (simple google check – insurance company + issues on claim settlement) will give you some snapshot on how the negative experience have been on the particular company. It is good idea to short list companies a per their age – ideally more than 5 years of operations. 

Do keep a criteria on How long they’ve been in business; In which states they sell their products and how is their quality of service

Claim settlement Ratio – A crucial matrix for shortlisting the insurer. It is considered that higher the claim settlement ratio, higher the chances of settling your insurance claims. While considering an insurance company, check repudiation ratio and rejection ratio of the claims too.

Based on 2018-2019 IRDA data on claim settlement ratio of Life Insurance companies

Link to IRDAI Annual Reports 

According to latest Annual report of IRDAI, Claim settlement ratio of LIC was at 97.79% as at 31.03.2019 when compared to 98.04% as at 31.03.2018. For private insurers, settlement ratio had increased to 96.64% during the financial year 2018-19 when compared to 95.24 % during the previous year

Claim Amount settlement ratio –  Claim settlement ratio can be looked at in two ways, first is no. of claims settled based on claim received, a volume measure and second is the ratio of settlement ratio based on claimed amount

Claim repudiated / claim rejection ratio – This is an important parameter, in any scenario, if this ratio is closer to one or above 1%, just tick-off the insurance company off your list, even if it is meeting all other criteria

Image taken from IRDA Annual report 2018-2019

Pending claims ratio – This figures shows what are the pending claims application lying with insurance companies. Ideally a company should close the claim within 30 days, but there are times, when the companies take a lot of time to conclude their investigation resulting into agonizing waiting game.

Solvency ratio – Financial strength of your insurance is important. Minimum solvency ratio of insurance should be 150% as per IRDA. Higher solvency ratio is a good way to look at it, however, the decision should be made keeping in mind the claim settlement ratio as well.

We need to keep in mind Term policy is taken for a period of 25 – 35 years term, and all these ratios can alter in this time frame. Given all the above parameters play important role in deciding life insurance company and Term policy, the first priority remains filling the insurance application truthfully to ensure claims don’t get rejected.

Keep reading my blogs on investments, insurance, mutual funds, second income options, and many financial education topics.

Must read for Financial Education – 
Let’s Talk Money – Monika Halan
I will teach you to be rich – Ramit Sethi
Rich Dad Poor Dad – Robert Kiyosaki
Easy Money Triology – Vivek Kaul 
Aapka Paisa Aap Samhalein (आपका पैसा, आप संभालें)- Rajnish Kant

Insurance claims do get rejected. What if it’s unjustified ?

11 reasons Term-life insurance claim can be rejected

What to do if the claim rejection appears unreasonable

Buying a term-insurance doesn’t ensure the it will cover death of policy holder under any or all circumstances. There are death claims which gets rejected because of  exclusions in term-life insurance plans and also non-disclosure. Insurance is contract between two parties, the policy holder and the insurer, when you buy a policy online or through agent, you must read the form carefully, do not hide any fact about yourself what you ought to tell the insurance company, i.e. the questions mentioned in the insurance application. Also, keep a copy of of your filled up form, take a print out and keep it in a folder/ safe ocker for future reference.

Initially it me seem tempting to avoid habits like smoking/ drinking, hobbies like bungee jumping, horse riding etc, but you should know in advance for such activities Life Insurer may add extra premium. The focus here should be to ensure to respond to each query truthfully. Following are the nine common reasons why claims get rejected. But everything cannot be decided in black and white, and there are times when conflict may arise between the nominee and insurance company and nominee may feel the insurance is rejected on false grounds, will cover that too in the post. 

life insurance claim can be rejected

Also Read – Term Life MUST to secure future of loved ones

11 reasons Term-life insurance claim can be rejected –

Suicide or death due to self-inflicted injury – If the policy holder commits within one year of purchaisng the policy, nominee won’t get death benefit. However, the nominee will get the benefit second year onwards.

Death involving homicide: If death of the policy holder is suspected to be murder and the nominee(s) are suspect of the crime, the claim-compensation to that nominee(s) will stand rejected, until her/his innocence is established in a court of law

Death due to sexually transmitted diseases like HIV or AIDS – Death claim arising out of STDs will be rejected as per common exclusions, no insurance company will honour such claims

Death due to the pre-existing health conditions (condition present prior buying the insurance) – If policy holder happens to have pre-existing health condition such as diabetes, hypertension or any disease, such claims which may arise from death due to complication on such condition will be declined. As, many health condition appears little later part of our life, it is prudent to apply for term-life insurance policy as soon as getting a job, atleast by 30 years of age. 

Death caused due to the involvement in illegal or criminal activities – If a policy holder dies while engaging in any illegal or unlawful activities such as drug peddling, smuggling, unauthorised arm dealing any activity which is considered illegal as per Indian Law, the insurance will be rejected

Accidental death due to driving under the influence of alcohol or drugs – If the policyholder dies due to accident caused by driving under the influence of Alcohol

Death due to the participation in racing activities – Death caused by sports or adventorous activities like bike racing, car racing, traking, bunjee jumping, horse racing, any adventorus activities which has inherent life risk, claim arising from such activities are out of the scope of policy claim. Claim arising from fatal accident such as these will be outright rejected. 

Death due to pregnancy and childbirth – If the death of the policyholder takes place due to pregnancy complications or childbirth, the insurer would not pay the sum assured to the nominee.

Pre-existing disease / Condition – Death due to any condition that existed while availing the term insurance policy will not be settled by the insurer

Death due to natural disaster/ war/ nuclear calamity – It is a common exclsion in life insurance, in situations like war and nuclear calamity, insurance company protects itself from mass claim which may arise in such situations. 

Non-disclosure – Non-disclosure such as smoking habits, recent surgery, any medical procedure, family history or any point in the query list of the policy application form  will be counted as breach of the insurance contract conditions, and on discovery of such facts, Insurance companies will reject the claim

What to do if you feel the claim rejection was unjustified?

The above are the direct rejection reasons, but if nominee is not satisfied with the reason of rejection, delay in claim settlement the nominee can escalate the matter. Ideally, insurance claims needs to be settled within 30 days of claim application. If the claims are not settled on time and the nominee is not satisfied with the response from the insurance company, nominee can take following action. The nominee needs to file a complaint first with the insurance company through the consumer grievances section online or reach out grievances cell officer with written complaint and required supporting documents at the earliest, they should respond to your complaint within 15 days of complaint submission.

If Insurance company fails to resolve your query or sort the claim settlement issue, you can complaint to IRDAI (Insurance Regulator and Development Authority of India)approved Insurance Omudsman in a written format. Insurance Ombudsman scheme was created by government of India for individual policyholders to have their complaints settled out of the courts system in a cost-effective, efficient and impartial way.

IRDAI Website details out here when and how you can approach the ombudsman- https://www.policyholder.gov.in/ombudsman.aspx  

There are at present 17 Insurance Ombudsman in different locations in India. Ombudsman has authority to intervene in the claims below Rs. 30 lakhs. Incase of claims above 30 lakhs, one needs to approach the consumer court for sorting the matter with legal help. In consumer court, Court’s directive will be final for the insurance company. Insurance company cannot escalate the matter to any other court. If the nominee wins the case, the court can direct the insurance company to pay penalty and interest charges on the claim amount in favour of the complaint.

So, Read the policy application carefully, make comparison with few products, also check claim settlement ratio before making a decision. Even after buying a insurance policy, Policy holder gets a free-look period of 15 days, within which policyholder should go through the policy document, incase of dissatisfaction, policy holder can cancel the polcy and get back the premium paid (company may deduct medical expenses – if incurred).  

Check my blog for informative posts on financial products, second income options and financial education.

Must read for Financial Education – 
Let’s Talk Money – Monika Halan
I will teach you to be rich – Ramit Sethi
Rich Dad Poor Dad – Robert Kiyosaki
Easy Money Triology – Vivek Kaul 
Aapka Paisa Aap Samhalein (आपका पैसा, आप संभालें)- Rajnish Kant 

POSTED ON AUGUST 21, 2020 ”DID YOU KNOW PERSONAL ACCIDENT INSURANCE COSTS RS. 12?”

Youtube Link

Term Life MUST to secure future of loved ones

Why to buy Life Insurance? Life insurance is the best way to protect your family financially. In plain language, it protect the family members financially incase of death of the polcy holder. There are other benefits available apart from death benefit. I have come across calls from many insurance agents who try to sell other life insurance products like endowment plans and ULIPs trying to push as term plan. In this post, we will talk about why term plan/ protection plan/ peru life insurance makes sense for a bread winner. 

Term Insurance product has caught fancy of savvy Investors only recently , little more than a decade and constantly gaining popularity in Urban India especially. Let us look at what is a pure term insurance and how it works in our scheme of financial planning

Read – How life insurance claims gets rejected? What to do if claim is rejection is wrong?

“Insurance” is a contract to protect against risk. Investment components are added to the product to make it more attractive. I must add, that a chunk of lump-sum money payout  together at a deferred term incase of ULIP and Endowment insurance plans makes the products (savings/Investment + Insurance) a very attractive offer. But this one is unable to over any family adequately. 

For all Life Insurance insurance plans, IRDAI (Insurance regulator and Development Authority of India) has mandated a maximum premium to be capped at 10% of the sum assured (or Sum Assured to be 10 times) to be annual policy premium to become eligible for tax deduction benefit under income tax section 80C for and total maximum investments capped at Rs. 1,50,000 as on FY 2020-2021 . 

Let us consider we have 3 insurance policy options – a) Option offering 10 times Sum Assured and Option B) 20 Times of Sum Assured and a 3) A Term policy. For illustration we are chosing a 30 year old male non-smoking with 1 crore sum assured for 3 years. I will not mention any insurance company here, as I am doing this illustration for education purpose and understanding only. I am also not including the saving or investing benefits offered by option A and Option B (Cause they do have assurance of retun on maturity, Option C is only death benefit, No Maturity value). 

I am taking HDFC Life insurance Term insurance premium for illustration purpose.

Life Insurance coverage10 times of yearly premiumPlan A20 times of yearly premiumPlan BTerm Insurance (Pure protection plan) [HDFC Life]Plan C [approx]
25 Lakh2.5 lakh1.25 lakhRs. 3,600/- (approximate)
50 Lakhs5 lakh2.5 lakhRs. 6,000/- (approximate)
75 Lakhs 7.5 lakh3.75 lakhsRs. 8,000/-(approximate)
1 Crore10 lakhs5 lakhsRs. 10,000/*- (approximate)

So we can see, the premium for adequate life coverage can be bought at a very affordable rate in Term insurance plan, while the other plans offer same insurance cover at 40 to 80 times of the term plan. 

However, Plan A and Plan B has additional investment component – Noteworthy, your investment cannot be partially withdrawn, making it an illiquid investment option through out the policy term. If you have job change, take sabbatical or some minor setback, Plan A and Plan B will become a burden and on non-payment Insurance benefit will be compromised. 

What we can Expect from a pure-term Insurance plan? It is a low cost high coverage insurance plan. It is designed for financially protect the family of the policy holder in-case of untimely death. This insurance is only for the bread-winner of the family whoseuntimely demise can shake the financial foundation of the loved ones. , it should be taken by anyone who has responsibilities like elderly dependant parents, dependant wife and children, home loan, car loan etc. One should consider higher insurance cover incase of medical conditions of self or family members, impending college education cost for children or absence of retirement kitty. 

Term insurance benefits

As Life insurance acts as protection against untimely death, it is said that one should take atleast 10 times of one’s annual salary, to adequately protect the loved ones to protect against inflation, child education, non-earning spouse, dependent elderly etc. 

Term plan doesn’t guarantee a return on your premium. There is no financial product which is risk free. But I have learnt with experience, that biggest ‘risk’ in finanacial product is not knowing the product and category well. So check the exclusions each insurance company has mentioned in their websites and learn and choose the insurer after reading and taking proper feedbacks. 

Important factors to choose term insurance policy – 

How many dependents you have – If you have elderly parents dependent on your income or you are married and your spouse is a home maker (and) or school going Children

Family financial Goals – If you have not yet saved enough for adequate critical milestones like children higher education, have outstanding big loans (home loan/ vehicle loan)

What is the adequate life cover you need– Do some calculation on this. Apart from 10 times of yearly salary rule, do you have any high liability like children high education/ outstanding Home loan etc

Compare a few options based on coverage amount, claim-ratio, policy exclusions and rejection ratio

Term plan is not a substitute for investment. It offers a support  system. In ideal situation, term-insurance premium we should consider as a yearly premium to Insurance company for protecting future of your loved ones in your absense, while buying this insurance, we really hope and pray that we should never require to file this claim settlement form ever. As this insurance cover offers a lumpum benefit to the immediate family members in case of death, this works like a parachute or a cushion from a hard-landing.

Investment and Insurance are both essential and important part of our financial plan. But, both has different purpose in the plan. Even if you choose to buy ULIP or Endowment, you should do some research and learn about all the insurance option before opting for an insurance plan 

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POSTED ONEDIT”अटल पेंशन योजना -PENSION FOR EVERYONE – FINANCIAL SECURITY FOR ALL”

अटल पेंशन योजना -pension for everyone – Financial security for all

Old age deserves some peace of mind and happiness. But millions of people under poverty line, that is still distant dream in India. To fight the perils of poverty and old age, PM Narendra Modi introduced multiple social security scheme in year 2015. And Atal Pension Yojana is one of them.

What is Atal Pension Yojana? This is a pension yojana now you can suggest your maid, cook, Kirana wala, Plumber and contract labours and everyone who doesnt have one and doesn’t pay income tax yet.. 

Read here about Pradhan Mantri Suraksha Bima Yojana and Pradhan Mantri Jeevan Jyoti Bima Yojana,

In 2015, Indian Government introduced important financial inclusion and social security programs for the financially non-protected citizens especially. To enseure financial security to especially for those working in informal sector or self-employed Indian citizens, The Government launched Life Insurance, Personal Accident Insurance and Pension Scheme – a simple savings scheme

Atal Pension Yojana is a scheme aimed at protecting the financial future of the low-income self employed people and people with unorganized sectors, like shop-keepers, contract labours etc.

This scheme is open to citizens of India who doesn’t pay income tax yet and not empanelled under EPF and other schemes (chart mentioned below), one can subscribe to it between 18-40 years, the contribution can be made till 60 years of age. Under this scheme, a subscriber will receive a minimum guaranteed pension of Rs 1,000 to Rs 5,000 per month after attaining the age of 60 years, depending upon his contributions. According to a recent announcement in July 2020, Finance Ministry is considering a proposal to relaxing the maximum monthly pension to Rs 10,000 from Rs. 5000 currently and raise the maximum age limit for entry age in the Atal Pension Yojana scheme to 50 years.

Finance ministry is also considering the proposal to  enable the Atal Pension Yojana (APY) subscribers to increase/decrease their pension plans as per their changed income levels and capacity to pay APY contributions, which will be very uselful foo continue the subscriber contributions in the scheme till 60 years.”

How can One apply for Atal Pension Yojana (Online too)?

This scheme is currently being distributed through 258 active APY Service Providers consisting of Banks and post-offices as this scheme is only available to those who have a Savings Bank account. Having a Aadhaar card will be very useful in this. 

Who can Apply?

Any Indian Citizen Between Age 18 – 40 can enter the scheme and continue the contribution till 60 years. Who is not empanelled with any other government pension / EPF scheme. 

What is the minimum contribution requirement for APY? And how frequently one has to pay?

The contribution will depend on the entry age and target pension, . One can choose monthly, quarterly or half-yearly payment. The contribution can be made by auto-debit facility. 

Atal Pension Yojana Chart

You can change the deposit amount during the course of accumulation phase, once a year. One can get physical transaction receipt every year. 

There is a small-payment on non-payment on non-contribution. Banks are required to collect Rs. 1 per month for contribution of every Rs. 100, or part thereof, for each delayed monthly contributions. On non-payment, one has to make the contribution next month. 

Does your house maid has a life Insurance? It costs Rs. 330

It is mandatory to provide nominee details in APY account. If the subscriber is married, the spouse will be the default nominee. Unmarried subscribers can nominate any other person as nominee & they have to provide spouse details after marriage.

How to Check the Status of your contribution in Atal Pension Yojana?
Find Atal pension yojana statement here – Keep Your PRAN No. handy. 
https://www.npscra.nsdl.co.in/scheme-details.php
Then click on APY e-PRAN/Transaction Statement View
You will be directed to your contribution page. 

How does Pension distribution happen?
Subscribers would receive the guaranteed minimum monthly pension of Rs. 1000 or Rs. 2000 or Rs. 3000 or Rs. 4000 or Rs. 5000 at the age of 60 years. The monthly pension would be transferred to the subscriber’s account, and after him to his spouse and after their death, the pension corpus, as accumulated at age 60 of the subscriber, would be returned to the nominee of the subscriber.

Ask your plumber to get a personal accident insurance cover- It costs Rs. 12

In case of premature death of subscriber (death before 60 years of age), spouse of the subscriber can continue contribution to APY account of the subscriber, for the remaining vesting period, till the original subscriber would have attained the age of 60 years.

Other pension plans are there like NPS, lic pension plan, Annuity plan etc you can check online for them.

Who cannot apply for Atal Pension Yojana?
Indian Citizens who are already part of a social security system such as mentioned below cannot apply for it.

Employees’ Provident Fund and Miscellaneous Provision Act, 1952
The Coal Mines Provident Fund and Miscellaneous Provision Act, 1948
Assam Tea Plantation Provident Fund and Miscellaneous Provision, 1955
Seamens’ Provident Fund Act, 1966
Jammu Kashmir Employees’ Provident Fund and Miscellaneous Provision Act, 1961. 
Or any other statutory social security scheme 

Pradhan Mantri Jeevan Jyoti Bima Yojana, Pradhan Mantri Suraksha Bima Yojana and Atal Pension Yojana aims to cover the lower section of our society, let us spread the word about the benefits to the people who may need it. 

Banks – State Bank of India, Canara Bank, Punjab National Bank, Federal Bank, UCO Bank and many more 
You can open Atal Pension Yojana account at India Post office branches too. The forms are available in Hindi, Bangla, Gujarati, Marathi, Tamil,Telegu, Oriya etc. 

Find more details at –https://npscra.nsdl.co.in/nsdl/scheme-details/APY_Scheme_Details.pdf


Must read for Financial Education – 
Let’s Talk Money – Monika Halan
I will teach you to be rich – Ramit Sethi
Rich Dad Poor Dad – Robert Kiyosaki
Easy Money Triology – Vivek Kaul 
Aapka Paisa Aap Samhalein (आपका पैसा, आप संभालें)- Rajnish Kant https://www.youtube.com/embed/XE2iFvR5rQc?feature=oembedPOSTED ONEDIT”DID YOU KNOW PERSONAL ACCIDENT INSURANCE COSTS RS. 12?”

Did You Know Personal Accident Insurance costs Rs. 12?

Many a times lack of awareness is what makes us feel helpless. During this lock-down phase, I have spoken to many women who work as house-helps, other jobs earning small sum, many of them didnot have Jan-dhan account, the ladies who had Jan-dhan account, most of them, depending on the eligibility, got the money deposited in their account as promised by government. We may not have ultra-social security facilities, but we do have many benefits which a lot of people are not aware of. Let us take the responsibility and share the information on Jan Dhan account, Life Insurance – Pradhan Mantri Jeevan Jyoti Bima Yojana, Personal accident insurance (Pradhan Mantri Suraksha Bima Yojana) and Atal Pension Yojana.https://www.youtube.com/embed/XE2iFvR5rQc?start=43&feature=oembed

Pradhan Mantri Suraksha Bima Yojana

Pradhan Mantri Suraksha Bima Yojana offers Accident cover for only Rs. 12 per year. Let us look at Eligibility, Cover and benefits. It is a government-backed accident insurance scheme.

It is an personal accident insurance, introduced by PM Narendra Modi in the year 2015, to include all Indian Citizen under this social security cover. This is helpful for people especially who don’t have life insurance or health insurance cover to  financially protect the policy holder incase of permanent partial or total disability incase of an accident.

Pradhan Mantri Suraksha Bima Yojana

Tip – To keep your PMSBY and PMJJBY insurance working, ensure to keep Rs. 340 in your Bank Account in Month of May, so that there is no default, otherwise insurance will expire and you will happy to apply fresh.

What are the features of PMSBY?

PMSBY gives the policy holder to insure oneself against unfortunate events that can lead to death or disability.

The premium is Rs. 12 per year

Insurance cover is Rs. 2 lakh

One can only have one policy under this scheme

What are the top benefits of PMSBY scheme

In case of accidental death, as the claim amount can be availed by the nominee.

Flexibility to continue or discontinue as per one’s wish

Tax deduction as per Income tax Section 80C and Sum Insured of Rs. 1 lakh is non-taxable as per Section 10(10D)

Incase of Permanent total disability policy holder gets Rs. 2 lakh (insurance cover)

Incase of Permanent partial disability, policy holder gets Rs. 1 lakh (insurance cover)

What is the premium payment process?

The premium payment process relies on the auto-debit facility. The policyholder must approve of this while enrolling for the scheme.

When will the policy be terminated?

The policy will be terminated in the cases if the registered bank account is closed, the account balance is insufficient in the time of the yearly premium payment or the policyholder reaches the age of 70. 

Eligibility Criteria for Pradhan Mantri Suraksha Bima Yojana

The minimum entry age for this scheme is 18 years 

Age limit for availing this insurance benefit is 70 years

Applicant’s saving bank account should be integrated with the person’s Aadhaar card

PMSBY application form is available in several regional languages apart from English and Hindi. For example, the form is available in Hindi, Gujarati, Marathi, Tamil, Telegu, Oriya

Must read for Financial Education – 

  1. Let’s Talk Money – Monika Halan
  2. I will teach you to be rich – Ramit Sethi
  3. Rich Dad Poor Dad – Robert Kiyosaki
  4. Easy Money Triology – Vivek Kaul 
  5. Aapka Paisa Aap Samhalein (आपका पैसा, आप संभालें)- Rajnish Kant

अटल पेंशन योजना -pension for everyone – Financial security for all

Old age deserves some peace of mind and happiness. But millions of people under poverty line, that is still distant dream in India. To fight the perils of poverty and old age, PM Narendra Modi introduced multiple social security scheme in year 2015. And Atal Pension Yojana is one of them.

What is Atal Pension Yojana? This is a pension yojana now you can suggest your maid, cook, Kirana wala, Plumber and contract labours and everyone who doesnt have one and doesn’t pay income tax yet.. 

Read here about Pradhan Mantri Suraksha Bima Yojana and Pradhan Mantri Jeevan Jyoti Bima Yojana,

 In 2015, Indian Government introduced important financial inclusion and social security programs for the financially non-protected citizens especially. To enseure financial security to especially for those working in informal sector or self-employed Indian citizens, The Government launched Life Insurance, Personal Accident Insurance and Pension Scheme – a simple savings scheme

Atal Pension Yojana is a scheme aimed at protecting the financial future of the low-income self employed people and people with unorganized sectors, like shop-keepers, contract labours etc.

This scheme is open to citizens of India who doesn’t pay income tax yet and not empanelled under EPF and other schemes (chart mentioned below), one can subscribe to it between 18-40 years, the contribution can be made till 60 years of age. Under this scheme, a subscriber will receive a minimum guaranteed pension of Rs 1,000 to Rs 5,000 per month after attaining the age of 60 years, depending upon his contributions. According to a recent announcement in July 2020, Finance Ministry is considering a proposal to relaxing the maximum monthly pension to Rs 10,000 from Rs. 5000 currently and raise the maximum age limit for entry age in the Atal Pension Yojana scheme to 50 years.

Finance ministry is also considering the proposal to  enable the Atal Pension Yojana (APY) subscribers to increase/decrease their pension plans as per their changed income levels and capacity to pay APY contributions, which will be very uselful foo continue the subscriber contributions in the scheme till 60 years.”

How can One apply for Atal Pension Yojana (Online too)?

This scheme is currently being distributed through 258 active APY Service Providers consisting of Banks and post-offices as this scheme is only available to those who have a Savings Bank account. Having a Aadhaar card will be very useful in this. 

Who can Apply?

Any Indian Citizen Between Age 18 – 40 can enter the scheme and continue the contribution till 60 years. Who is not empanelled with any other government pension / EPF scheme. 

What is the minimum contribution requirement for APY? And how frequently one has to pay?

The contribution will depend on the entry age and target pension, . One can choose monthly, quarterly or half-yearly payment. The contribution can be made by auto-debit facility. 

Atal Pension Yojana Chart

You can change the deposit amount during the course of accumulation phase, once a year. One can get physical transaction receipt every year. 

There is a small-payment on non-payment on non-contribution. Banks are required to collect Rs. 1 per month for contribution of every Rs. 100, or part thereof, for each delayed monthly contributions. On non-payment, one has to make the contribution next month. 

Does your house maid has a life Insurance? It costs Rs. 330

It is mandatory to provide nominee details in APY account. If the subscriber is married, the spouse will be the default nominee. Unmarried subscribers can nominate any other person as nominee & they have to provide spouse details after marriage.

How to Check the Status of your contribution in Atal Pension Yojana?
Find Atal pension yojana statement here – Keep Your PRAN No. handy. 
https://www.npscra.nsdl.co.in/scheme-details.php 
Then click on APY e-PRAN/Transaction Statement View
You will be directed to your contribution page. 

How does Pension distribution happen?
Subscribers would receive the guaranteed minimum monthly pension of Rs. 1000 or Rs. 2000 or Rs. 3000 or Rs. 4000 or Rs. 5000 at the age of 60 years. The monthly pension would be transferred to the subscriber’s account, and after him to his spouse and after their death, the pension corpus, as accumulated at age 60 of the subscriber, would be returned to the nominee of the subscriber.

Ask your plumber to get a personal accident insurance cover- It costs Rs. 12

In case of premature death of subscriber (death before 60 years of age), spouse of the subscriber can continue contribution to APY account of the subscriber, for the remaining vesting period, till the original subscriber would have attained the age of 60 years.

Other pension plans are there like NPS, lic pension plan, Annuity plan etc you can check online for them.

Who cannot apply for Atal Pension Yojana?
Indian Citizens who are already part of a social security system such as mentioned below cannot apply for it.

Employees’ Provident Fund and Miscellaneous Provision Act, 1952
The Coal Mines Provident Fund and Miscellaneous Provision Act, 1948
Assam Tea Plantation Provident Fund and Miscellaneous Provision, 1955
Seamens’ Provident Fund Act, 1966
Jammu Kashmir Employees’ Provident Fund and Miscellaneous Provision Act, 1961. 
Or any other statutory social security scheme 

Pradhan Mantri Jeevan Jyoti Bima Yojana, Pradhan Mantri Suraksha Bima Yojana and Atal Pension Yojana aims to cover the lower section of our society, let us spread the word about the benefits to the people who may need it. 

Banks – State Bank of India, Canara Bank, Punjab National Bank, Federal Bank, UCO Bank and many more 
You can open Atal Pension Yojana account at India Post office branches too. The forms are available in Hindi, Bangla, Gujarati, Marathi, Tamil,Telegu, Oriya etc. 

Find more details at – https://npscra.nsdl.co.in/nsdl/scheme-details/APY_Scheme_Details.pdf


Must read for Financial Education – 
Let’s Talk Money – Monika Halan
I will teach you to be rich – Ramit Sethi
Rich Dad Poor Dad – Robert Kiyosaki
Easy Money Triology – Vivek Kaul 
Aapka Paisa Aap Samhalein (आपका पैसा, आप संभालें)- Rajnish Kant 

Did You Know Personal Accident Insurance costs Rs. 12?

Many a times lack of awareness is what makes us feel helpless. During this lock-down phase, I have spoken to many women who work as house-helps, other jobs earning small sum, many of them didnot have Jan-dhan account, the ladies who had Jan-dhan account, most of them, depending on the eligibility, got the money deposited in their account as promised by government. We may not have ultra-social security facilities, but we do have many benefits which a lot of people are not aware of. Let us take the responsibility and share the information on Jan Dhan account, Life Insurance – Pradhan Mantri Jeevan Jyoti Bima Yojana, Personal accident insurance (Pradhan Mantri Suraksha Bima Yojana) and Atal Pension Yojana.

Pradhan Mantri Suraksha Bima Yojana

Pradhan Mantri Suraksha Bima Yojana offers Accident cover for only Rs. 12 per year. Let us look at Eligibility, Cover and benefits. It is a government-backed accident insurance scheme.

It is an personal accident insurance, introduced by PM Narendra Modi in the year 2015, to include all Indian Citizen under this social security cover. This is helpful for people especially who don’t have life insurance or health insurance cover to  financially protect the policy holder incase of permanent partial or total disability incase of an accident.

Pradhan Mantri Suraksha Bima Yojana

Tip – To keep your PMSBY and PMJJBY insurance working, ensure to keep Rs. 340 in your Bank Account in Month of May, so that there is no default, otherwise insurance will expire and you will happy to apply fresh.

What are the features of PMSBY?

PMSBY gives the policy holder to insure oneself against unfortunate events that can lead to death or disability.

The premium is Rs. 12 per year

Insurance cover is Rs. 2 lakh

One can only have one policy under this scheme

What are the top benefits of PMSBY scheme

In case of accidental death, as the claim amount can be availed by the nominee.

Flexibility to continue or discontinue as per one’s wish

Tax deduction as per Income tax Section 80C and Sum Insured of Rs. 1 lakh is non-taxable as per Section 10(10D)

Incase of Permanent total disability policy holder gets Rs. 2 lakh (insurance cover)

Incase of Permanent partial disability, policy holder gets Rs. 1 lakh (insurance cover)

What is the premium payment process?

The premium payment process relies on the auto-debit facility. The policyholder must approve of this while enrolling for the scheme.

When will the policy be terminated?

The policy will be terminated in the cases if the registered bank account is closed, the account balance is insufficient in the time of the yearly premium payment or the policyholder reaches the age of 70. 

Eligibility Criteria for Pradhan Mantri Suraksha Bima Yojana

The minimum entry age for this scheme is 18 years 

Age limit for availing this insurance benefit is 70 years

Applicant’s saving bank account should be integrated with the person’s Aadhaar card

PMSBY application form is available in several regional languages apart from English and Hindi. For example, the form is available in Hindi, Gujarati, Marathi, Tamil, Telegu, Oriya

Must read for Financial Education – 

  1. Let’s Talk Money – Monika Halan
  2. I will teach you to be rich – Ramit Sethi
  3. Rich Dad Poor Dad – Robert Kiyosaki
  4. Easy Money Triology – Vivek Kaul 
  5. Aapka Paisa Aap Samhalein (आपका पैसा, आप संभालें)- Rajnish Kant 

Find jobs during lockdown – 6 skills will help you

Claim settlement Process – Pradhan Mantri Suraksha Bima claim settlement form

Nominee has to approach the Bank, referring to the savings account which is attached with the Policy. Nominee needs to fill the form withe required documents mentioned in the form within 30 days of accident resulting claim.

What is not covered under Pradhan Mantri Suraksha Bima Yojana?

Suicide death is not covered in the policy

Banks Participating in PMSBY

State Bank of India, Union Bank of India, UCO Bank, Punjab National Bank, Canara Bank, Federal Bank, HDFC Bank, ICICI Bank, and many others. Please check with you Bank or closest Bank Branch of any Bank for further details. 

Insurance offers cover to unforseen difficulties. Pradhan Mantri Jeevan Jyoti Yojana and Pradhan Mantri Suraksha Bima Yojana hundreds and thousands of families in India financial support in times of grief and difficulties. 

Thanks for reading, share with a few people who may need this information.

Will come back to you with more informative blog posts. You can share your suggestions, queries and your experience on PMSBY, PMJBBY, Jan Dhan account in the comment box to help others. 

Term Life Insurance PMJJBY पीएम जीवन ज्योति बीमा योजना – security for all

Who should buy this insurance? Why should anyone buy?

पीएम जीवन ज्योति बीमा योजना लाइफ कवर

Pure term insurance plan (टर्म इंश्योरेंस स्कीम ), with low premium option can help many families in difficult times. If one doesn’t have any other life insurance policy, if one cannot afford a premium over Rs. 350/- a year, have income less than Rs. 15,000 a month, can begin with this term life insurance policy, as this insurance will cover 1 year salary incase of any unforeseen events. This is an Indian government initiative.

Have you asked your driver, cook, maid, caretaker, security guard, office peon if they have insurance? Its never too late – help as many as you can, take an effort – choose to walk them to nearest bank branch if required. 

Covid19 pandemic has caught the whole world off-guard, more so for people at lower income and people with a lot of financial obligations. People who are financially fit, will find it easier to sail through the tough time, they always do.

Every one needs an insurance, but due to expensive premium and complex procedures, it wasn’t possible until year 2015. In the year 2015, government of India launched 4 important financial product aiming at financial inclusion. 

PMJDY – Pradhan Mantri Jan Dhan Yojana

– Atal Pension Yojana

– PMJJBY – Pradhan Mantri Jeevan Jyoti Bima Yojana

– PMSBY – Pradhan Mantri Suraksha Bima Yojana

Under Jan dhan se Jan suraksha program, Prime Minister launched this in May 2015. This is under government’s social welfare schemes. In this post, will discuss about the Pradhan Mantri Jeevan Jyoti Bima Yojana and Pradhan Mantri Suraksha Bima Yojana. Both these insurance products are aimed at including all sections of society. These insurance products are affordable in all big private and public sector Banks, listed here in the post. Lets get to the details first.

प्रधानमंत्री जीवन ज्योति बीमा योजना 

Pradhan Mantri Jeeevan Jyoti Bima Yojana

PMJJBY – Pradhan Mantri Jeeevan Jyoti Bima Yojana –  is life insurance scheme, a protection plan, renewable from year to year, offering coverage for death due to any reason and is available to people in the age group of 18 to 50 years. Important for every working member of the family.  For enrolment banks have tied up with insurance companies. Participating Bank is the Master policy holder. 

Important points – 

Life cover of Rs. 2 lakhs is available for a one year period stretching from 1st June to 31st May at a premium of Rs.330/- per annum

One can enter at the age between 18 years to 50years, renewable upto 55 years

A person can join PMJJBY with one Insurance company with one bank account only

Individuals who exit the scheme at any point may re-join the scheme in future years by paying the annual premium and submitting a self-declaration of good health

It offers tax deduction benefit under Income tax section 80C

Exclusion – Suicidal death is not covered under this scheme

Note – This scheme doesn’t offer any maturity benefit, insurance without any savings or investment component. It only covers death benefit of the policy holder in during the policy term uptill 55 years. The amount of Rs.2 lakh will be passed on to nominee on such unfortunate situation, helping the family through the tough times with financial support. 

Links 

Form of application and claim settlement is available here in Hindi, Bangla, Gujarati, English Kannada, Telegu, Tamil, Oriya Marathi –  https://www.jansuraksha.gov.in/Forms-PMJJBY.aspx

Pradhan Mantri Jeevan Jyoti Bima Yojana Eligibility – Any Indian citizen who is between 18- 50 years old and has a savings account can enroll for this scheme through the participating banks. (List of Banks listed below)

One must have an Aadhaar Card 

How to enroll to Pradhan Mantri Jeevan Jyoti Bima Yojana?

PMJJBY is managed by LIC and other private life insurance companies. One may apply through their Banks – Public sector Banks, Private sector banks, co-operative Banks, as per LIC website, about 1000 banks are associated with PMJJBY as nodal agency or Banking partners

Ask your Bank they offer if they offer PMJJBY or check online, will put a list of big Banks who does offer the scheme

You need to mention nominee (wife/ children/any other legal heir)

How to claim the insurance amount? कैसे उठाएं प्रधानमंत्री जीवन ज्योति बीमा योजना का लाभ?

Claim can be made by nominee incase of death of the policy holder. 

Nominee has to approach the Bank, referring to the savings account which is attached with the Jeevan Jyoti Policy

Nominee needs to collect the claim form 

Submit the claim form duly filled along with – Death certificate, cancelled cheque of the nominee’s bank account, 

In next steps, Bank will verify the claim form. Along with the aforesaid documents of nominee, Bank will forward the claim to insurance company within 30days of submission. 

Insurance company will verify all the documents of the policyholder, nominee details, within 30 days of receiving the claim, Insurance company needs to disburse the claim amount in favour of the nominee. 

List of Bank partners

State Bank of India

Punjab National Bank

Union Bank of India

Bank of Baroda

Canara Bank

HDFC Bank

Federal Bank

ICICI Bank

South indian Bank

Allhabad Bank

Many other Banks are partnering in this scheme. Please speak to your home Bank branch or nearest Bank to get more details. If you have any observation, suggestion or queries do share in the comment box.

Look forward to come back with a informative blog post.

Five life changing books

Find jobs during lockdown – 6 skills will help you

This equity MF offers steady returns in volatile times

No negative return on this equity mutual fund category in short term, NFO launched, Arbitrage Yojana.

Mahindra Manulife Mutual Fund launches Arbitrage Yojana

You read the headline right, no catch there at all. I have seen this fund category earlier too, but there is not much conversation about this fund in India. I just bumped into this NFO of Mahindra Manulife Mutual Fund’s news scheme – Arbitrage Yojana. And got an excuse to share it with you about this product category.

Recently I had mentioned about Bharat Bond Fund, safer than other debt funds. Though I can’t draw a product category parallel with the Arbitrage Yojana, but there is an interesting similarity of onething- that is the safety quotient.

Do you want to know – How to invest in Arbitrage Fund? Are Arbitrage Fund Good for individuals? Is it better than Liquid Fund for retail investors? Why to invest in arbitrage Funds and who can invest in Arbitrage Funds?

Arbitrage, an investment strategy that takes advantage of price difference of an asset in various scenarios.  In this post, we will look at MahindraMMF’s Arbitrage Yojana which is an Equity Fund, it invests in equity and related market securities like other equity Mutual Fund. But, this category has a twist which is not discussed.

Let us discuss this category with help of Arbitrage Yojana NFO launched by Mahindra Manulife Mutual Fund. An Indian Arbitrage Fund, Arbitrage Yojana’s  main focus is generating consistent returns from equity market through positioning trades to leverage the price difference between shares and derivative instruments, its focus is to locking-in profit, whether market goes down or up, this scheme category generates income in any market scenario. It uses four kinds of equity arbitrage opportunities – Exchange arbitrage, cash and carry Arbitrage, Basket of stock and corporate action driven arbitrage opportunity.

Like all other Equity Mutual Fund category, this mutual fund also follows an Index to compare its returns. For Arbitrage Funds, the Index is Nifty 50 Arbitrage Tri Index.

The focal point of the fund is hedging risk and generating consistent income. The strategy can be explained through the illustration below.

Exchange Arbitrage – The stock prices of same company can have a small difference in BSE and NSE platforms, in this case scheme, buy in one exchange and sell in another. These trades are often done in pre-set prices to maintain profit margin.

Cash And Carry Arbitrage – This strategy is implemented closer to contract expiry dates, (Ex Nifty has weekly derivatives contract expiry and stocks has monthly derivate expiry). In this strategy, Scheme place in trades to gain in from the price difference between Future contract and stock prices.

Basket of stock Arbitrage – For example, in this strategy, the scheme buys Nifty stocks in equal proportion as the nifty constituents of a certain value and sell the Nifty Futures for equivalent value.

Corporate Action Driven Abitrage – These are rare occurrences, when there is a visible and considerable difference in price available in case of big corporate action as mentioned in the illustration. 

I have pulled out some information from the NFO document for easy illustration.

Mahindra Manulife Arbitrage Yojana

NFO Open date – 12th August 2020

NFO Closing date – 19th August 2020

Minimum application – Rs. 5000

Type – Open Ended Fund

Minimum SIP Amount – Rs. 500/-

To invest or to know more about the fund – Click here

Arbitrage Fund category –

Risk – Moderate

1 year average return 5.5 % 

Who can look at buying Arbitrage return – One who is looking at steady high post tax return in short term, who needs to keep some fund which doesn’t get affected by market volatility, one who is looking for an all season fund. Whatever the equity market condition may be or interest cycle movement, Arbitrage Fund offers a cushion from uncertain market movements. This investment is ideal for parking cash for short term horizon, it earns better post-tax returns compared to fixed deposits, risk is much lower almost nil compared to equity funds for short term investing horizon of 1-2 years.

Besides stability, it’s tax treatment is what makes it more attractive, as it deals more than 65% Equity, it gets tax treatment of an equity Fund.

About Mahindra Manulife Mutual Fund

This is a joint venture of Mahindra & Mahindra Financial Services Limited and Manulife Investment Management (Singapore) Pte. Ltd. brings together Mahindra’s domestic market strength and track record of successfully building businesses focused on meeting customer needs and Manulife’s global wealth and asset management capabilities and richness of experience in servicing the needs of Asian consumers across developed and developing markets. They are aiming to offer wide variety of investment solutions pan-India, with focus on semi-urban areas.

Our take

This is indeed an interestingly safe and good mutual fund category, which offers fixed income like return and taxed like equity. The best part about this category allows investor to earn profit of 5-7% yearly, an average fund generates about 5.5 -6% return in 1 period horizon. Interestingly, for short term profit booking, within a year, it is taxed at 15%, and in long term the return is taxed at 10% above the 1 lakh equity profit threshold. While the debt funds are taxed as per income tax slab upto 3 years. (Can have a tax burden of 34%)

You may visit the Mahindra Manulife Mutual Fund website for checking out full offer document and fund details.

Among others in this category, there are Nippon India Arbitrage Fund, Edelweiss Arbitrage Fund, L&T Arbitrage Fund, Kotak Equity Arbitrage Fund, you can check Valueresearchonline or moneycontrol for more information and insights in this fund category

This post is for sharing information and insight, it should not be considered as recommendation to buy, and one should consult their financial advisor before taking action.

Book Review – Easy Money, triology on brief history of money

In one of his rare interviews, Vivek kaul said, ‘I write for my mother’, implying that he tries to keep his writing style as simple as possible so that people with no economics background can understand it, I must say he has remained true to his words in his books. 

Easy Money Triology is written by the renouned Indian columnist, Vivek Kaul, writes in many esteemed publications in India. In this blog post, I will be taking you through the second book – Easy Money, I happened to read this one first, jumping the row 😉

Easy money is available in Amazon in Hard copy, , Amazon Kindle and Amazon Audible app.Easy Money – the second book of Easy Money Triology, written by Vivek Kaul, Published by Harper Collins India.

‘The Evolution of The Global Financial System to the Great bubble burst’. The Book captures, how the global financial system evolved aftermath of the first world war, stretched economies of Europe, rise and rise of United States and leading upto dot com crash of 2001 and real estate bubble burst of 2008 and beyond.

Written in 10 chapters, this is a handbook captures economics of currency war, rise of Hitler, softening of European economies through ‘2nd world war’, the relationship of paper money with Gold. This book captures the economic evolution between early 20th century and early 21st century in view of major world currencies in the backdrop of Gold, petroleum and modern international trades. It meticulously cover the nuances of evolution of stock and bond market, interest rate movements leading upto easy availibility of money in Wall street leading to tech bubble burst and eventually real estate collapse.

Absorbing and grasping tale of history of modern global financial system is a must read for those who likes economics, finances, a fan of world history or an complete outsider of the subject. The narration is story like. It uses quotes extensively by economists and historians which makes the book very relatable. A perfect read for people who cares for financial literacy. This is a book on history of modern financial system or history of modern finance. The book elaborates on the major role played by the economists and politicians to acquire the resources and livelihood means for their countrymen to make their lives easy, striving to improve the living conditions and gradually supporting lifestyle. 

Vivek Kaul’s trilogy on money unfolds the economic history to us detailing the important historic events and decisions which led to the current global economic situation. The subtle and structured narration takes readers through the ever evolving relationship of Gold and the ‘paper money’ of the countries, the journey of Yen, Rubble and how dollar navigated through the twists and turns of discovery phase of essential commodities of gold and crude oil through earth’s surface. How the gold and oil mine discoveries changed the relationship across Atlantic. It also takes us through the America’s relationship with middle east countries, Japan and Russia apart from the major European forces . The book is based on well researched facts. It takes extensive references from many classics written by world economic historians. The book shares a grasping tale of world economy with unbiased narrative. It’s focus remains the first world countries, India doesnt find a mention in the book. However, his third book Bad Money, captures the evolving NPA situation and its possible impact on Indian economy.

Chapters of the the book

Chapter 1 – Coup De Whisky

Chapter 2 – The Great Depression (1929 and beyond)

Chapter 3 – The Men Who knew too much

Chapter 4 – Hitles Falling, Dollar rising

Chapter 5 – Exhorbitant Priviledge

Chapter 6 – The American Promise

Chapter 7 – The Man who would be King

Chapter 8 – When a Tokyo Palace Became more expensive than California

Chapter 9 – Irrational Exuberance

Chapter 10 – But a pin lies in a wait for every bubble

The books quoted in the book are – Wealth of Nations, Paper Money, Extreme Money. It is a must read for economics and history enthusiast, an awesome account of history of Global Financial markets written by an Indian Author.

Book 1 Easy Money: Evolution of Money from Robinson Crusoe to the First World War

Book 2Easy Money: Evolution of the Global Financial system to the Great BubbleBurst

Book 3 Bad Money Inside the NPA Mess and How It Threatens the Indian Banking System 2020

At 7.1% is PPF a good Tax saving investment in FY 2020-21, tax saving debt option

7.1% is the PPF Deposit rate for FY2020-21 (sep 2020), lowest in it’s history since 1986. This government guaranteed investment was launched in 1968 by ministry of finance for Indian residents. One of the popular tax saving instrument under section 80C, Public Provident Fund, is facing the wrath of low interest regime in India. So is PPF still a good tax saving option?  Is PPF better than ELSS Mutual Fund? Can you invest in PPF Online? Is PPF better than Tax saving ELSS, let us have a quick low down on this investment instrument. Let’s address each question one by one.

What is PPF and how to invest in it? PPF is a fully government guaranteed investment option for resident Indians. One can open a PPF account in Public Sector Bank (PSB) like – State Bank of India, Bank of Baroda, Canara Bank etc also in private sector Bank like ICICI Bank, HDFC Bank, Axis Bank etc and designated Post Offices. PPF account can be opened with a minimum sum of Rs. 500. It has a maturity period of 15 years. One can transfer the account to other branch but not to any other Bank/ post office during its tenure. One person can open only one PPF account in own name at a time, however, one can open separate PPF account in the name of wife/husband or minor child (contribution cumulatively can be upto Rs. 1.5 lakhs for availing tax deduction). In a financial year one can invest between Rs. 500 to Rs.1 lakh 50 thousand according to Income tax law (Income tax act Section 80C) in India. 

PPF account can be opened by visiting Bank branch with documents like Pan card and Aadhaar Card, also you can invest in PPF online through internet Banking. You can make direct transfer in PPF account from other Bank account through internet Banking.

Features of PPF Account 

Though it has a fixed maturity of 15 years, incase of medical emergency, one can avail loan after 3 years and upto 6th year. One can make partial withdrawal beginning 7th year, however amount will be capped to 50% of 4th year balance. One can also close the PPF account after 5 years if needed. It has nomination option, one can nominate two person. However, to enjoy the compounding benefit, its recommended not to make partial withdrawals.

Benefits of Public Provident Fund account

It offers higher interest rate than bank fixed deposits. This is the only investment option which offers complete tax exemption under Section 80C, no conditions attached, during investment, accumulation and maturity withdrawal. One can make flexible deposit in this account every year, with deposit requirement of only Rs. 500 in a year and can deposit upto Rs. 1.5 lakh depending on investment requirements.  This is a good long term debt option, it can be used for long term wealth creation because of the compounding effect and tax benefits. 

How many time you can invest in PPF in a year?

One can make multiple investments and of any sum starting Rs. 500. PPF account remains active even if someone misses payment in some financial year.

Is PPF it better than NPS? Should you buy PPF?

These two financial products should not be compared. NPS has higher investment horizon (more than 20 years depending on entry age) as one can realise benefit after retirement, and it is designed to be used like a pension scheme, with partial withdrawal benefit on maturity, while PPF has fixed tenure of 15 years, can be extended for 5 more years but it has lumpsum withdrawal on  maturity. NPS and PPF should not be mutually exclusive, one should have exposure in both as long term wealth creation/ funding retirement kitty. 

Is PPF better than tax saving mutual Fund (ELSS)? How much to invest? 

PPF is a high interest paying fixed income product which enjoys EEE tax benefit. ELSS enjoys minimum taxation of 10% on realised profit (above Rs. 1 lakh) every financial year. PPF gives a predicted return with compounding benefit. ELSS being a equity product has a potential of higher return over long term period, but all ELSS scheme doesn’t provide same returns. So, under section 80C – one should ideally divide investment in 4 options – ELSS, PPF, Term protection plan (Life insurance) and ELSS to maximise the benefits .

Is PPF Better the Fixed deposits?

PPF enjoys full tax benefits under incom tax section 80C is a long term product, enjoys higher return compared to Bank fixed deposits but, it is not useful if sudden money requirement arise. Fixed deposit interest are fully taxable (above Rs.10,000) as per tax slabs, but useful for emergency funds, can be withdrawn whenever needed. Also one can take over draft facility of 80% of the FD amount with only 1-2% interest rate more than fd rate. PPF partial withdrawal and loan facility available but not easy to avail. So, for short term requirement upto 1-2 years, FD/ liquid mutual fund is a good option. But if your PPF maturity is near, say between 1-2 years, you can invest more money in PPF as you ll get all returns tax free with higher interest income.  

Fixed deposit is an one time investment, but PPF is designed like a bank account which has limited withdrawal option and only keeps accumulating upto maturity.

If you have further queries on PPF investment option, write in the comment box.  You can post your queries in debashree.ad@gmail.com 

Want to make finance easy for you – read these books –

1. Let’s talk Money – Monika Halan – https://amzn.to/37lTpIs 2. Rich Dad Poor Dad – Robert Kiyosaki – https://amzn.to/2Y170kk 3. Cash Flow Quadrant – Robert Kiyosaki – https://amzn.to/2MRd4Xr

For regular updates and new informative posts

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Do you need a health insurance to cover for Covid 19?

Covid19 asymptomatic patients get insurance benefits? Which insurance policy will cover Covid 19 patients with pre-existing medical condition? Will Corona Rakshak Cover a patient of 70 years? Will Corona Kavach cover a patient who has a travel history to Dubai? What if I dont get get hospitalised but because of home quarantine I cant go to office wrestling in salary cut?

There are two new insurance policies launched in India namely Corona Kavach and Corona Rakshak, specific to combat the ongoing coronavirus pandemic. this blog aims to analyse usage of these policies. Do we really need Covid insurance or health insurance is adequate.

The two covid19 policies have different purposes. While Rakshak works like a health cover, covering actual expenses, Kavach works like indemnity cover, incase of Covid19 diagnosis and atleast 3 days of hospitalisation of the policy holder. Many Indian insurance companies have launched the two products. This post is to do a quick analysis on how effective these two policies are to fight coronavirus disease in India. Do we need to buy Covid Kavach or Covid rakshak or relook at our health Insurance policies to understand the benefits we have with our health policies.

Kavach covers expenses, Rakshak offers lumpsum payout

What does Covid Kavach offers?

This is short insurance comes in two categories Corona Kavach Individual policy and Corona Kavach for family. As per IRDA direction, Insurance companies (like HDFC Ergo, ICICI Lombard, Universal Sompo, Reliance General, Max Bupa etc) have launched this plan. The Covid Kavach plan is for people between 18 years – 65 years only. A child of 1 day onward can be covered under this plan. 

Tenure – 3.5 months, 6.5 months and 9.5 months only

Cover – 50 Thousand to 5 Lakhs

Coverage – Hospitalisation, home-care cost, Ayush Treatment (Ayurvedic, Homeopathic treatment etc)

Age of policy Holder – 18 – 65 years

General Exclusion of Covid Kavach policies

  • Treatment taken for any pre-existing disease
  • Travel to any restricted countries
  • Diagnosis done at unauthorized testing centres
  • Diagnosis/Treatment taken outside India
  • Expenses incurred on Day Care & OPD Treatment​​
  • Claims related to COVID where the diagnosis prior to policy start date
  • Dietary Supplements and Substances purchased without prescription
  • ​Expenses done for Unproven Treatments which lacks significant medical documentation

In conclusion, Covid19, which attacks harder to elderly people and people with pre-existing disease, Covid-Kavach may not be useful. Moreover, even the diagnostic cost to determine the disease is not covered under this policy. 

What does Corona Rakshak Policy Offers? 

Under the guidance of IRDA, Insurance companies have launched Corona Rakshak Policy- an indemnity policy which pays out a lumpsum amount on diagnosis of Covid 19 and upon 3 days or 72 hours of continuous hospitalisation. Few Banks or Credit Cards are offering special insurance bundle for their customers.

Coverage – 50k – 5 Lakhs

Premium – Rs. 900 – 6,000 (varies from insurer to insurer)

Tenure – 3.5 months, 6.5 months, 9.5 months (first 15 days is not included)

General Exclusions of Corona Rakshak 

  • Treatment taken for any pre-existing disease
  • Travel to any restricted countries
  • Diagnosis done at unauthorized testing centres
  • Diagnosis/Treatment taken outside India

Incase of payout, the policy will cease to exist.

This discussion should be based on the two scenarios 

  1. You have a health insurance 
  2. You don’t have health insurance

If you have a health insurance policy – 

This is the best possible situation. Independent of your age and pre-existing conditions and family members, the health insurance policy is obligated to cover healthcare expenses as per the policy contract document, though every health insurance cover comes with some differentiation, it is obligated to cover 24 hours hospitalisation, medicine expenses, doctor consultation charges etc. The point here is to look at the waiting period, pre-existing covers, sub-limits and exclusions. If your policy is running for more than 2 years, you have already crossed the many waiting period and pre-existing disease clause.

This pandemic has taught us the importance of life insurance and health insurance. After checking a few insurance policy details of 5 health insurance company, I found that many expenses related to covid related illnesses will be covered by a comprehensive health insurance. 

“Argument arises on the expenses which is not covered under the basic health insurance policies and sublimits of room rent, nurse charges, PPE kit etc”

In a nutshell, a comprehensive health insurance policy will well cover the Covid19 related complexities including co-morbidity, waiting period with a full year coverage, mostly better than short term corona health policy. It will also cover the diagnostic expenses which is not covered in Corona Kavach. You will be covered for the hospitalisation expenses on all health insurance policies. There may be a some additional expenses like PPE its etc, which is not covered under health insurance policies will not need too much attention as country is working hard to increase the supplies and the cost of PPE kits are likely to go down and not up. Given most healthy people between 18-60 years don’t require much of medical attention in case of Corona and Corona Kavach doesn’t cover in case of Pre-existing disease and people with travel history, this is not a compelling option

Corona Rakshak in other hand is a different kind of policy which can be used as it offers a lumpsum Sum Insured benefits in case of 3 days + hospitalization, as it may end up covering some costs of other expenses and cover contingencies. 

A comprehensive health insurance is a must buy, a cover of 10 lakh is ideal. And Corona Rakshak can work like a cushion incase of non-adequate cover or no-health insurance at this point.

In Ideal scenario, would suggest to buy a comprehensive health insurance ( with minimum or no sub-limits, minimum waiting period and maximum coverage on pre-existing conditions) + critical insurance cover and Term life insurance plan. That is best for everyone. This should be for long term, renewed regularly to enjoy a healthy and peaceful life. 

Tip: Check with your Bank and credit card Relationship manager, they have various group plans customized for their customers, offer good coverage and plans

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