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What Is The Difference Between Health Plan And Health Insurance?

What Is The Difference Between Health Plan And Health Insurance?
by Priyanka Sharma 27/06/2017
New Page 1

While discussing health covers, people generally get stuck on a split road, both looking identical. On one glance, the terms Health Plan and Health Insurance seem the same. This exactly is where an untrained eye is mistaken. In reality, the difference in between these two terms is as wide as the difference in sea water and fresh water.

A Health Plan (also known as mediclaim) is basically a health cover that covers the cost incurred during one's hospitalization. On the contrary, a Health Insurance is a broader health cover that covers everything beginning from the diagnosis of the illness.

Broadening the Horizon

As mentioned earlier, a Health Plan can only be triggered when the covered person is hospitalized. The cost that the insurance company is payable is only the hospital's final bill, which generally excludes certain consumables. Normally, the cap for a Health Plan is usually less, falling somewhere around Rs 5 Lakhs. There are different kinds of Health Plans specifically tailored for every man's need. A family man would find it easier to buy a Health Plan that covers his family of four. Senior citizens have special benefits that tag along with their mediclaim.

Lately, certain Health Plans do offer a combined plan for distant relatives as well. Also, one can request for any number of claims until the insured amount exhausts. For instance, a man claimed Rs 2 lakh in hospital bills for his knee surgery, while the sum insured is Rs 5 lakhs. In such a case, he is eligible to put forward another claim in case of another hospitalization, for there is still a sum of Rs 3 lakhs remaining as a cover.

Health Insurance works in a highly broader field. It doesn't just cover one's hospitalization bills, but even takes care of the pre and post hospitalization cost. Just like in a critical illness policy, Health Insurances take care of the loss of income suffered when the family's breadwinner is diagnosed with an illness that is financially detrimental as well. Falling at a range of Rs 60 lakhs, the limit over the assured sum of money is pretty vast.

It is not necessary to be hospitalized in order to extract a claim in case of Health Insurances. All you need to do is show a proof of the diagnosis of that particular illness and the job's done. There is no purpose in making multiple claims here for the insurance company pays you a lump sum amount once the claim is proven.

Summing It Up

No matter how lucrative one sounds than the other, both the plans come equally handy when you compare a person's need. A thorough discussion with your advisor is something that would make you sure of a particular health cover policy. Apart from these, Health Plans and Health Insurances also provide you pre-defined tax benefits. A visit to the doctor no more is an agony on your financial health.

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How To Use Double Indexation To Reduce Your Taxes?

How To Use Double Indexation To Reduce Your Taxes?
by Nutan Gupta 27/06/2017

Transaction of capital is great as long as the flow is incoming. The common enemy that the common man shares is 'Tax'. One avoids the straight path and follows the curviest road possible, all to save taxes off their hard earned money. Interestingly, there are other shorter and smarter ways of reducing taxes on your capital. Double Indexation is one such method employed to sail through sea of taxation in India.

Understanding the Basics

The term Indexation is nothing but a method for suitable balancing of payable tax by stationing an appropriate price index, which is to be adjusted according to the inflation rate. It basically balances the value of one's asset by taking into consideration the inflation rate from the time of purchase to the time of selling. For instance, a man buys a property for Rs 10 lac in the year 2010 and he sells it off in 2015 for Rs 25 lac. Dividing the CII (Cost Inflation Index) for the year 2010-11 and 2014-2015, we get a value 1.4402. This number multiplied by the purchase price will give us about Rs 15.2039 lac, which is the indexed purchase price. Accordingly, this capital gain (profit) would Rs 25 lac-Rs 14.402 lac, which is around Rs 10.597 lac and not, as earlier assumed, Rs 25 lac-Rs 10 lac = Rs 15 lac. The man now has to pay tax on Rs 10.597 lac and not Rs 15 lac.

Twisting the Plot

Indexation hence works out in the favor of a taxpayer. A smarter way around is double indexation over the trading of your assets. It is shown that index value changes every year, in accordance with the fluctuating inflation rate. Double Indexation is nothing but buying an asset just before the financial year end (the month of March) and selling it off right after it. Let us consider the man from the previous example. This man invests in the same property in the year 2010 but in the month of February and he sells it off in May 2015. Here, he will be entitled to CII from 2009-10 to 2015-16. As a result, his new CII divided value would be 1.7104. By doing similar calculations, his tax payable amount has now reduced to Rs 7.896 lac. Despite having held the property for a little over 5 years, this man has enjoyed indexation benefits for two extra years.

Summing It Up

Since returns from equities become tax-free for a 12 month holding period, the concept of double indexation isn't applicable to it. It, though, can suitably be applied to different assets such as FMPs (Fixed Maturity Plans), Gold Funds, International funds etc. Benefits by double indexation are best tapped during the month of February and March. The difference in the tax payable amount, as shown in the previous example, is significant. With appropriate planning, long-term gains can be achieved in a further profitable way.

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Significance of Family Health Plan

Significance of Family Health Plan
by Nutan Gupta 27/06/2017
New Page 1

Family is one of the life’s greatest blessings. They are your strength because they see you through good and most importantly through bad times. Thus, it makes sense that when it comes to them and their well-being, only the best is acceptable. And in the insurance world, the best for your family translates to a family floater plan.

What is a Family Floater Plan?

In quite simple terms, it means insurance coverage for you as well as your family. If you are the only working member with dependents, then this is an ideal plan in terms of savings. It is a basic comprehensive health plan specifically designed to provide coverage to entire families.

A family health plan proves to be a godsend when it comes to protecting the finances as well as the health of an entire family, and all this in one policy package!

Which is better – An Individual Health Insurance Policy OR a Family Health Plan

*Given figures are only for demonstrative purposes.

As you can see from the above example, with a family health plan, Mr.Nair and family get better coverage while at the same time paying a lesser premium amount. Moreover, he avoids the hassle of handling multiple insurance policies.

Suppose, Mr.Nair’s father has to undergo hospital treatment that amounts to Rs.3 lakh. The Nair family still has a cover of Rs.7 lakh to safeguard them from treatment costs for the remaining of the year. Under an individual health insurance plan, Mr.Nair’s father would have had to pay Rs.1 lakh out of his own pocket as his insurance coverage was only up to Rs.2 lakh.

The Worry of Rising Medical Prices

With the steep inflation of medical prices, getting even a simple procedural treatment can prove to be a costly affair. Though newer treatments, innovative healthcare, and revolutionary drugs are increasing life expectancy, they are also proportionately increasing the cost of treatment. Add to that the responsibility of the health costs of an entire family and you’ve got a constant worry on your hands.

It is important to note here that, in case any one family member utilizes the sum assured before the end of the policy year, the other family members won’t be able to benefit from it for the remaining part of the year.

A Better Plan for Everybody

Due to the changing insurance scenario, many insurance companies offer tailor-made policies that cater to family needs with a number of added benefits. With facilities like Daily Cash, Maternity Cover, Health Check-up, Ambulance Charges, Dental Cover, OPD Coverage etc. family health plans are becoming more popular because of the advantages they offer. Insurance companies are also offering coverage for extended family members.

However, having said all that, it is imperative that you do thorough research about the features and benefits before selecting any family floater health insurance plan. By carefully combing through the policies, you can find minute differences that can prove invaluable – you can save money on premiums while getting similar superior benefits.

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5 Stocks Recommendation For Feb 25th, 2019 – Mar 1st , 2019

Stock recommendations
by Gautam Upadhaya 21/07/2017

1) Balkrishna Industries Ltd - Buy

 

Stock Balkrishna Industries Ltd
Recommendation The stock has witnessed a breakout from its sideways consolidation
backed by an uptick in volumes on the daily chart. It has also shown
positive momentum on the daily MACD-Histogram, an indication that
the uptrend will continue in the short term.
Buy/Sell Range Target Stop Loss
Buy (Cash) Rs850-855 Rs892 Rs827
NSE Code Market Cap (in Rs cr) 52-week high/low 200-Day EMA
BALKRISIND 16543 Rs1467/741 Rs987

 

2) REC Ltd - Buy

 

Stock REC Ltd
Recommendation The stock has witnessed a consolidation breakout backed by an uptick
in volumes on the weekly chart. Derivative data indicates fresh long
positions in the stock.
Buy/Sell Range Target Stop Loss
Buy (Cash) Rs131-133 Rs139 Rs127.8
NSE Code Market Cap (in Rs cr) 52-week high/low 200-Day EMA
RECLTD 26068 Rs148/89 Rs119

 

3) Mahindra & Mahindra Ltd - Buy

 

Stock Mahindra & Mahindra Ltd
Recommendation The stock has witnessed a rounding bottom formation and has managed
to close above its 10-DEMA, short-term resistance level on the daily charts.
It has also formed a bullish hammer candlestick on the weekly charts.
Buy/Sell Range Target Stop Loss
Buy (Cash) Rs641-647 Rs672 Rs625
NSE Code Market Cap (in Rs cr) 52-week high/low 200-Day EMA
M&M 80272 Rs992/615 Rs771

 

4) Raymond Ltd - Buy
 

Stock Raymond Ltd
Recommendation The stock has witnessed a breakout above its resistance levels backed by an uptick in volumes on the daily charts. It has also shown strong momentum on the daily MACD-Histogram.
Buy/Sell Range Target Stop Loss
Buy (Cash) Rs721-728 Rs755 Rs705
NSE Code Market Cap (in Rs cr) 52-week high/low 200-Day EMA
RAYMOND 4478 Rs1151/593 Rs806

 

5) HDFC Bank Ltd - Sell

 

Stock HDFC Bank Ltd
Recommendation The stock has formed a bearish engulfing candlestick pattern backed by an uptick in volumes on the daily chart. Derivative data indicates fresh short positions in the stock.
Buy/Sell Range Target Stop Loss
Sell (March Futures) Rs2105-2120 Rs2030 Rs2164
NSE Code Market Cap (in Rs cr) 52-week high/low 200-Day EMA
HDFCBANK 569029 Rs2219/1830 Rs2041

 

Research Disclaimer

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Short Put Options Trading Strategy

Short Put Options Trading Strategy
by Nilesh Jain 02/08/2017

What is short put option strategy?

A short put is the opposite of buy put option. With this option trading strategy, you are obliged to buy the underlying security at a fixed price in the future. This option trading strategy has a low profit potential if the stock trades above the strike price and exposed to high risk if stock goes down. It is also helpful when you expect implied volatility to fall, that will decrease the price of the option you sold.

When to initiate a short put?

A short put is best used when you expect the underlying asset to rise moderately. It would still benefit if the underlying asset remains at the same level, because the time decay factor will always be in your favour as the time value of put will reduce over a period of time as you reach near to expiry. This is a good option trading strategy to use because it gives you upfront credit, which will help to somewhat offset the margin.

Strategy Short Put Option
Market Outlook Bullish or Neutral
Breakeven at expiry Strike price - Premium received
Risk Unlimited
Reward Limited to premium received
Margin required Yes

Let’s try to understand with an Example:

Current Nifty Price 8300
Strike price 8200
Premium received (per share) 80
BEP (strike Price - Premium paid) 8120
Lot size 75

Suppose Nifty is trading at Rs. 8300. A put option contract with a strike price of 8200 is trading at Rs. 80. If you expect that the price of Nifty will surge in the coming weeks, so you will sell 8200 strike and receive upfront profit of Rs. 6,000 (75*80). This transaction will result in net credit because you will receive the money in your broking account for writing the put option. This will be the maximum amount that you will gain if the option expires worthless. If the market moves against you, then you should have a stop loss based on your risk appetite to avoid unlimited loss.

So, as expected, if Nifty Increases to 8400 or higher by expiration, the options will be out of the money at expiration and therefore expire worthless. You will not have any further liability and amount of Rs. 6000 (75*80) will be your maximum profit. If Nifty goes against your expectation and falls to 7800 then the loss would be amount to Rs. 24000 (75*320). Following is the payoff schedule assuming different scenarios of expiry. For the ease of understanding, we did not take into account commission charges and Margin.

Short Put Options Trading Strategy

Analysis of Short Put Option Trading Strategy

A short put options trading strategy can help in generating regular income in a rising or sideways market but it does carry significant risk and it is not suitable for beginner traders. It’s also not a good strategy to use if you expect underlying assets to rise quickly in a short period of time; instead one should try long call trade strategy.

 

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IPO Note - HUDCO

IPO Note - HUDCO
IPO
by Nutan Gupta 05/08/2017

Issue Opens - May 8, 2017

Issue Closes - May 11, 2017

Price Band - Rs. 56-60

Face Value - Rs. 10

Issue Type - 100% book building

% Shareholding

Pre IPO

Post IPO

Promoter

100.0

89.8

Public

0.0

10.2

Source: DRHP

HUDCO is a wholly-owned government entity with more than 4 decades of experience in providing loans for housing and urban infrastructure in India. It has an outstanding loan portfolio of Rs.36,386 cr (as on 9MFY17), which can be divided into– Housing Finance (30.86%) and Urban Infrastructure Finance (69.14%).

The offer consists of Offer for sale (OFS) of up to 204.1 mn equity shares for disinvestment by the government and employee reservation is up to 3.9 mn shares. There is a discount of Rs. 2 per share for eligible employees and retail investors.

Key Investment Rationale

HUDCO currently focuses on the low income group or the economically weaker sections for housing finance and social housing. The company’s housing finance loan book has grown at a CAGR of 21.9% over FY14-16. This segment has better NIMs and lower gross NPAs @ 3.08% (8.46% for urban infrastructure). There is an increasing demand for housing loans from Tier II/III cities. Deployment of funds towards housing loans by banks and HFCs has increased over the years.

The HUDCO Board decided to stop sanctioning new Housing Finance loans to private sector entities in FY14 in order to reduce NPAs from the private sector. As on December 31, 2016, its gross NPAs for loans made to the private sector (excluding loans given to individuals) were 5.98% compared to 0.75% for loans to state governments. Furthermore, the management decided to stop sanctions of new Urban Infrastructure Finance loans to the private sector. Since 2014, state governments and their agencies represent 99.94% of the total sanctions. As a result, net NPAs have decreased from 2.52% in FY14 to 1.51% in 9MFY17.

The issue is attractively priced at 1.4x9MFY17 P/Adj.BV (upper band price).

Risks Involved

HUDCO’s loan growth may be restricted by a slowdown in real estate and increasing competitive intensity. Also, the company faces general business risks of providing organized finance to LIG and EWS and competitive pricing of HFCs as compared to banks.