Types of Health Insurance Plans
Insurance companies offer different health insurance plans based on an individual’s needs. Though the health plans differ from company to company, here are a few basic plans which most of the companies offer:
|Type of Health Insurance Plan||Characteristics||Suitability|
|Individual Health Insurance||An individual health insurance is the one which is bought by an individual for himself. The premium for an individual health cover is comparatively lower than other health insurance plans as it only covers a single person.||Individual|
|Family Floater Health Insurance||As the name suggests, this type of health insurance is bought to cover your family. Family floater health insurance provides cover to the individual, spouse and children or your parents.||Family - Self, spouse, children and parents|
|Senior Citizens Health Insurance||This health insurance plan is designed specifically for senior citizens. The plan provides cover to anyone from the age of 60 and above.||For citizens from the age of 60 and above|
|Group Health Cover||A group health cover is a welfare benefit plan which is provided by an employer to its employees. These insurance plans are usually uniform in nature and offer the same benefits to all employees.||Corporate houses|
|Super Top-up Policy||Super top-up plans act as supplementary policies to your regular policies. A top-up policy will help you to increase the amount of your sum insured without paying too much. The super top-up policy can be used only after the sum insured of one’s regular policy is exhausted.||One can use this when the sum insured of his existing policy gets exhausted.|
|Critical Illness Health Cover||A critical illness plan usually pays a lump sum amount to the insured on diagnosis of serious ailments listed in the policy document. This lump sum amount can be used for expensive treatments, specialist fees etc.||Can be used for expensive treatments, specialist fees etc.|
Where To Invest Money - SIP vs Recurring Deposit?
Systematic Investment Plan (SIP) is a monthly investment in Mutual Funds while Recurring Deposit (RD) is a type of bank deposit. However, there are some basic differences between SIP and RD which one needs to understand before investing.
|Investment||One can invest in mutual funds through SIP which can be weekly, monthly or quarterly.||RD is like a fixed deposit account where one can make monthly investments.|
|Investment Scheme||An investor has an option to decide on the equity or debt scheme, depending on his risk appetite.||An investor has only one choice of the scheme - to invest in a deposit with fixed rate of return.|
|Returns||The returns in SIP depend on the performance of the equity or debt market. |
Usually, SIP gives returns of 12-15%.
|The returns in RD are fixed and are known to an investor at the time of starting RD. Usually, the returns in RD ranges between 7.1-8.5%.|
|Risk||As the returns in SIP depend on market performance, SIP carries some risk. However, research suggests that SIP has given positive returns over a longer period of time.||RD is completely risk-free as the rate of returns are fixed.|
|Liquidity||SIP is a very liquid investment. One can close the SIP and withdraw money anytime without bearing any exit load.||Though RD is liquid, pre-mature withdrawal charges may be applicable.|
Why Purchase Term Insurance Policy Online?
With more and more people shifting their preference to online shopping for almost everything now, buying insurance products on the net is no exception. Widely known as E-insurance, online insurance plans are proving to be value for money products, with regard to both charges and premium. Of all the life insurance plans, buying a pure term insurance plan is the most cost-effective way.
If you are yet to purchase a term insurance plan, we give you top reasons to buy one ONLINE ASAP:
Cost-Efficient - When purchasing a term plan online, premiums are comparatively lower than that when you buy a plan offline due to the absence of insurance agents or any other intermediaries. Buying a plan online means a direct transaction between the buyer and the insurer. As a result, this saves on the commission and other operation costs.
Quick - Many insurance companies and financial services firms have launched advanced platforms to make online insurance shopping more convenient. 5paisainsurance has recently launched India’s first 100% automated insurance advisor. It takes every aspect of an individual from family details, income & expenses, current assets & liabilities, lifestyle, family health history, risk profile, existing insurance and future goals into consideration and provides a fully automated advice for insurance requirement in totality. With 5paisainsurance, all you need to do is spend just 5 minutes of your time and fill in your details in 3 easy steps.
Ease Of Choosing - Insurance portals allow online comparison of various plans. Also, such websites allow you to read online reviews of several insurance products. Therefore, making it easier for people to buy the term plan best aligned to their needs, with maximum benefits at affordable premiums.
Transparency - When you purchase a term plan online, you are informed almost about everything. Also when the details are filled and the form is submitted online, insurance shoppers get the necessary email or text message to track the current application status and receives guidance about the next course of action.
No Mis-Selling - The traditional way of buying life insurance policies involved lengthy paperwork and blind trust on insurance agents. The online process is a do-it-yourself (DIY) concept with no agents involved. Online buying lets insurance seekers fill up simple and only relevant online forms , thus minimising mis-selling.
Less Formalities - For online policies, medical tests are not always mandatory. People are asked to go for medical tests only if the sum assured exceeds a specified amount, usually over 50 lakhs and above.
Conclusion - These factors possibly have made you think why buying a term plan online scores over the traditional way of purchasing a plan through an insurance agent. However, it is upto the customer what product he/she thinks fits his/her financial plan perfectly after a careful research.
ELSS vs Tax Saving FD - Which is the best tax saving option?
Equity Linked Saving Scheme (ELSS) and Tax Saving FD are both tax-saving instruments and are eligible for a tax deduction of up to Rs. 1.5 lakh under Section 80C of the Income Tax Act. Listed below are some of the differences between ELSS and tax saving FD.
|ELSS||Tax Saving FD|
|Investment||ELSS is a type of mutual fund scheme where most of the fund corpus is invested in equities or equity-related products.||It is a special fixed deposit made with any bank.|
|Returns||Not fixed, depend upon the performance of equity market. However, in the past, ELSS has given average returns of 12-14%.||The interest rate varies from one bank to another. It usually ranges from 6.5-7.5%.|
|Tenure||The minimum tenure is 3 years. One can continue investing in ELSS till anytime as per his choice.||The minimum tenure is 5 years and the maximum tenure is 10 years.|
|Lock-in Period||3 years||5 years|
|Risk Factor||ELSS carries some risk. However, research suggests that ELSS has given positive returns over a longer period of time.||It is completely risk-free and safe as normal FD of banks|
|Online Option||One can start an ELSS online.||Though some banks offer online facility to start FD, majority of the banks do not have this facility.|
|Liquidity||One can withdraw money from ELSS anytime after 3 years.||Tax Saving FD cannot be withdrawn before 5 years.|
Thought the performance of ELSS depends on equity markets and there is some amount of risk attached to it, it has the potential to give double the returns than tax saving FD in a matter of three years. Individuals who are willing to take some risk can look to invest in ELSS.
How To Smartly Use SWP In Mutual Funds
SWP or Systematic Withdrawal Plan is a facility offered by mutual funds to redeem units. The plan allows investors to exit their investments in small portions at regular intervals to meet their short-term goals or regular monthly income needs. These intervals can be monthly or quarterly.
Uses Of Systematic Withdrawal Plans (SWP’s) IN Mutual Funds
Usually, retired people use SWPs to create a regular flow of income from their investment corpus in mutual funds. But others can also use it for goals such as child’s education, to pay EMIs, to pay bills etc.
Salient Features Of SWP’s
Minimum Account Balance - In order to start the SWP facility, the minimum account balance should be Rs 25,000.
Time Intervals - The frequency generally available to withdraw are on monthly, quarterly or annual period basis.
Nature/Type Of Withdrawal Possible - Investors normally have two options to choose from fixed withdrawal wherein a certain amount of money can be withdrawn.
Appreciation Withdrawal - Wherein amount of appreciation only can be withdrawn.
Benefits Of SWP In Mutual Fund -
Rupee Cost-Averaging - SWP can be more beneficial if it is designed for a longer period as it let investors take the advantage of rupee cost averaging. Rupee cost averaging is an approach in which a person invest a fixed amount of money at regular intervals. This ensures that the investor buys more shares of an investment when prices are low and less when they are high.
Tax Advantage - When investors withdraw the money invested in mutual funds within a year, it attracts some amount of short-term capital gains. However when we withdraw the amount through SWP, it would not attract any tax. All the amount withdrawn in the first year would be the capital itself.
Good For Investors Looking For Fixed Income - SWP is good for investors who look for regular income for over a period of time.
How SWP Can Be Used Effectively -
Post-Retirement Income - SWP is one of the best ways to create a regular source of income post-retirement. Investments in debt funds, balanced funds etc can help gain more, apart from letting you withdraw at regular intervals.
Better Use Of Surplus Funds - If you have lump-sum surplus fund, a SWP allows you to invest that amount in mutual fund schemes and withdraw that amount in as per your requirement, hence enabling a disciplined way of managing your savings.
Best Substitute For Pension - Income from most of the pension plans is taxable, whereas if you invest in mutual funds and do a SWP, the amount you withdraw is tax-free. People can try creating a corpus 3-4 years before retirement and invest that later in an equity mutual fund to choose a SWP plan in order to save tax more efficiently.
Capital Protection - Risk-averse individuals can invest in arbitrage mutual funds as returns on these funds are risk-free. Under arbitrage funds, dividends are totally tax-free. Investors can reinvest the dividend received from their investments made in arbitrage funds and do a separate SIP, which can later be used to do regular SWP.
Conclusion - If you are ready to spend the money invested in mutual funds, SWP is a convenient way to get your cash without contacting the fund house every time you want to sell the units.
All About Sovereign Gold Bond Scheme
If you are one of them who consider gold as a necessary investment, gold bond is for you. Gold bonds have all the qualities of gold investment except for shine of gold. These are backed by the government of India and undoubtedly are very secure.
What Are Sovereign Gold Bonds?
Sovereign Gold Bonds (SGB) are substitutes for holding physical gold. These are issued by Reserve Bank Of India (RBI) on behalf of government of India. When people invest in gold bonds, they get a paper against their investment instead of a gold coin or a gold bar. Sovereign Gold Bonds are also available in digital and demat form, and can be used as collateral for loans and can be sold or traded on stock exchanges.
Next Tranche Of Sovereign Gold Bonds From October 24
Government of India is launching Sovereign Gold Bonds 2016-17 - Series III from October 24 - November 2, 2016 for subscription. The bonds will be issued on November 17, 2016. In the sixth tranche of the gold bond, people can buy securities worth up to 500 grams.
The bonds will be sold through banks, Stock Holding Corporation of India Limited (SHCIL), designated post offices and stock exchanges; NSE and BSE.
Features Of Sovereign Gold Bonds 2016-17 - Series III:
The maximum amount subscribed by an entity will not be more than 500 grams per person per fiscal year (April-March). A self-declaration to this effect will be obtained.
Eligibility For Investment:
Gold bonds will be restricted for sale to resident Indian entities including individuals, HUFs, Trusts, Universities and Charitable Institutions.
The tenure of the bond will be for a period of 8 years with exit option from 5th year to be exercised on the interest payment dates.
In case of joint holding, the investment limit of 500 grams will be applied to the first applicant only.
Price of bond will be fixed in Indian Rupees on the basis of simple average of closing price of gold of 999 purity published by the India Bullion and Jewellers Association Limited for the week (Monday to Friday) preceding the subscription period. The issue price of the Gold Bonds will be ' 50 per gram less than the nominal value.
Payment for the Bonds will be through cash payment (upto a maximum of Rs. 20,000) or demand draft or cheque or electronic banking.
The redemption price will be in Indian Rupees based on previous week's (Monday-Friday) simple average of closing price of gold of 999 purity published by IBJA.
The investors will be compensated at a fixed rate of 2.50%/annum payable semi-annually on the nominal value of investment.
Benefits Of Investing In Gold Bonds:
Available both in demat and paper form
Value of your investment in gold bond increases with the increase in gold prices
Gold bond gives a better return than the physical gold as it gives interest as well
No worries about safekeeping as a gold bond can be kept in digital form
No expense of locker as gold bond can be kept in house or demat account
Nil chances of cheating or impurities in gold bond. Investors would always get 100% pure gold bond, which may 100% value
Bonds can be used as collateral for loans