Prajna Capital

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• Supplement your Health Cover with Savings
• Mutual Fund Review: UTI Mahila Unit scheme
• Mutual Fund Review: Tata Balanced
• NFO Review: Peerless Equity Fund
• Balanced Funds from Birla Sun Life AMC
• Religare Mutual Fund has announced the launch of Religare Fixed Maturity Plan – Series IX
• Monthly income plans form Insurance companies

Supplement your Health Cover with Savings Posted: 09 Sep 2011 05:05 AM PDT   One of the main reasons that triggered the loading is his increasing age. Most senior citizens see a sudden spurt in their premium — it may be either because of their advanced age or because of loading of premium after a large claim or a spate of claims made on the policy. Taking note of such instances, the Insurance Regulatory and Development Authority (Irda) has come out with guidelines on renewal of health premium for senior citizens. "The loading of premiums, if justified for renewals of mediclaim policies issued to senior citizens, shall not exceed 50-75% of the premiums charged prior to the revision," it has said. WHY IS IT EXPENSIVE? The premiums have increased by almost 30% in the past two to three years due to rising medical inflation and healthcare costs. Insurance is all about covering the risk and offering the right cover to an individual. From the company's perspective, it has to factor in the risk of age, which in includes the possibility of ailments. Hence, senior citizens end up paying a higher premium, because they carry higher risk factor due to the higher age. For example, if you paid 1.5% of the sum assured as a premium at the age of 25, the premium amount can shoot up to 8% of the sum assured when you become 60. The loading is a function of the increase in age. A large claim can also be another crucial factor in determining premium. Senior citizens' policies usually have the co-pay clause, which means the policy holder will bear a fixed percentage of expenses in case a claim arises. The balance is settled by the insurer. General insurance contracts are short-term contracts. An insurer can change the policy terms and you may have to renew the policy as per the revised terms. FOR SENIOR CITIZENS WITH A MEDICLAIM Thanks to the spiralling premium cost, most senior citizens are left wondering if they have to renew their policies. This is because many individuals believe that instead of paying a premium, if they saved and invested the amount, they will be able to build a corpus to take care of their medical bills. But, most experts don't encourage that notion. This question haunts even those who are not senior citizens. For senior citizens, I feel there is no option but to renew your existing policy due to the lack of credible alternatives. After all, this is not a category that is exactly being chased by insurance companies. Medical costs are high and senior citizens are more susceptible to medical ailments. Therefore, not having a medical cover is not an option. The increase in premium for senior citizens may be due to the fact that they have jumped to the next age band — health insurance premiums change with age bands. The premium for the 35-45 age band, for example, will be different from that for the 45-55 age group. So the person who had bought the policy at, say, 40 and has been paying a premium for 15 years without making a claim, may see the premium go up when he reaches 55. This is because the insurance company feels that the age group is more prone to making large claims. Sure, in this example, the person may get a better rate because of his track record and claim-free bonus. But everyone need not be that lucky. The premium can also go up because of loading of the premium by the insurance company if there has been a large claim or a number of claims on the policy. As you can see, there is not much one can do in these situations. It is better to pay the extra amount and continue with the cover. Remaining without a health cover can be extremely risky for elderly individuals. FIRST-TIME MEDICLAIM BUYERS The insurance company does not have your medical history on its records. This gives the company the liberty to charge a premium that is higher than the amount charged from existing customers because it has no idea about your health or claim record. NON-COVERAGE OF PRE-EXISTING DISEASES This clause is present in all health policies irrespective of the age of the policyholder. But it becomes an issue for senior citizens as the chances of them having pre-exiting diseases (diseases prior to commencement of the policy) are higher. The insurer will not entertain any claim related to pre-existing illnesses in the first few years of the policy. The New India Assurance, for instance, covers pre-existing diseases in its senior citizen policy after 18 months of continuous insurance with the company. Further, pre-existing conditions like hypertension, diabetes mellitus and related complications are covered after 18 months of continuous insurance but only on payment of additional premium. SHOULD A SENIOR CITIZEN BUY A MEDICLAIM? Despite all these, being without medical insurance is not a good idea any longer as one single visit to a hospital itself can drain a person financially. Though it might be costly to buy a medical insurance at a later stage, not taking an insurance is not an option. The insurance would cost between 6% and 8% of the sum assured. Also, it will have terms and conditions that may vary from medical covers issued to younger people. BACK IT UP WITH YOUR SAVINGS Every individual should build healthcare corpus along with a health insurance policy. Healthcare corpus should be used only when insurance cover is not sufficient. Health insurance should not be avoided even if you are building health care fund. In case a person builds healthcare fund and does not buy health insurance and if health care fund is exhausted then it may become difficult to build the corpus again. Medical insurance is a must as medical costs are skyrocketing. What seems like a decent corpus may be adequate for just one admittance in the hospital in future. Hence, don't scrimp on medical insurance at all and keep the medical corpus intact and keep topping it up.

Mutual Fund Review: UTI Mahila Unit scheme Posted: 09 Sep 2011 04:00 AM PDT Type Of Scheme Open Ended Liquid Fund Date Of Inception 08/03/2001 Scheme Objective To invest in a portfolio of equity/equity related securities and debt and money market instruments with a view to generate reasonable income with moderate capital appreciation. The asset allocation will be Debt : Minimum 70%, Maximum 100% Equity : Minimum 0%, Maximum 30%. Asset Allocation Debt- Minimum 70%, Maximum 100%, Equity - Minimum Nil, Maximum 30% Face Value Rs.10/- Min Investment Amt Growth Option Rs. 1,000/- Income Option Rs. 5,000/- Other Balanced Funds Are 1). UTI-Balanced Fund 2). UTI-Retirement Benefit Pension Fund 3). UTI-Unit Link Insurance Plan 4). UTI-Children Career Bond Plan(Balanced) 5). UTI-Charitable,Religious Trust And Registered Society 6). UTI-Bond Fund 7). UTI-Children Career Plan (Bond) 8). UTI-Floating Rate Fund STP 9). UTI-Gilt Advantage Fund LTP 10). UTI-Gilt Advantage Fund STP 11). UTI-G-SEC STP 12). UTI-G-Sec-Investment Plan 13). UTI-Liquid Plus Fund 14). UTI-Monthly Income Scheme 15). UTI-Mis Advantage Plan 16). UTI-Short Term Income Fund 17). UTI-Capital Protection Oriented Scheme   -----------------------------------------------------------------   Also, know how to buy mutual funds online:   Invest in DSP BlackRock Mutual Funds Online   Invest in Reliance Mutual Funds Online   Invest in HDFC Mutual Funds Online   Invest in Sundaram Mutual Funds Online   Invest in Birla Sunlife Mutual Funds Online   Invest in UTI Mutual Funds Online    Invest in SBI Mutual Funds Online   Invest in Edelweiss Mutual Funds Online   Invest in IDFC Mutual Funds Online

Mutual Fund Review: Tata Balanced Posted: 09 Sep 2011 03:20 AM PDT   It underperformed severely at first, but Tata Balanced has shown its mettle in the past five years… After five years of severe underperformance, the fund began to pull up its socks in 2002 and delivered a brilliant performance in 2003. Such a top quartile performance was repeated only in 2007 and 2009. By and large, this fund is not known for its outstanding returns, but over a long-period of time, its investors won't be unhappy. Over the past five years ended May 31, 2011 it has delivered an annualized return of 14 per cent (category average: 11%).   In 2008, it was the high exposure to Metals and Capital Goods that hit the fund hard. Towards the end of that year, exposure to both the sectors was reduced significantly while that to FMCG was increased. Once the market began to rally in 2009, the fund manager immediately reduced allocation to FMCG from 16 per cent (March 2009) to 4 per cent (May 2009) and exposure to Technology began to increase. These moves helped the fund along with the fact that its equity allocation was close to the maximum level permitted (between 65 and 75%). Since March 2009, the equity allocation of the fund has averaged around 74 per cent. Last year the fund found itself in the third quartile. According to Venugopal it was sector bets that went wrong. "In year 2010, we had limited exposure to public sector banks which got re-rated. The fund lost out on the upside in an otherwise lackluster market. Also, the fund had investments in investment-led sectors like Industrial capital goods, Construction and Power which were a drag on the portfolio," he says. He also said that some stocks fell sharply for stock specific reasons which could not be anticipated.   The fund manager makes swift sector moves. For example, in 2009 allocation to Financial Services moved between 6 per cent (August), 18 per cent (September) and 7 per cent (December). Between June and July 2009, allocation to Technology moved from 4 per cent to 12 per cent, which was probably due to stock calls rather than a sector call. This fund is actively managed with significant deviation from the benchmark and with reasonable level of churn, depending on valuations and opportunities. Venugopal claims that the sector rotations are just the outcome of his bottom-up stock picking approach. Though he holds significant amount of mid caps, he does not go overboard. Currently, the fund holds over 70 per cent of its portfolio in large caps and is fairly diversified with 45 stocks. On the debt side, since mid-2008, exposure to certificate of deposits (CDs) began to increase while that to debentures decreased.   -----------------------------------------------------------------   Also, know how to buy mutual funds online:   Invest in DSP BlackRock Mutual Funds Online   Invest in Reliance Mutual Funds Online   Invest in HDFC Mutual Funds Online   Invest in Sundaram Mutual Funds Online   Invest in Birla Sunlife Mutual Funds Online   Invest in UTI Mutual Funds Online    Invest in SBI Mutual Funds Online   Invest in Edelweiss Mutual Funds Online   Invest in IDFC Mutual Funds Online

NFO Review: Peerless Equity Fund Posted: 09 Sep 2011 02:48 AM PDT     Peerless Mutual Fund has announced the launch of its first equity fund- Peerless Equity Fund.   Investment Objective Peerless Equity Fund will be a multi-cap diversified equity fund. The portfolio will have optimal blend of large, mid and small cap stocks based on prevailing macro-economic & socio-political environment, both domestically and globally. The primary investment objective is to generate long term capital appreciation by investing in an actively managed portfolio predominantly consisting of equity and equity related securities diversified over various sectors. The scheme will invest between 80 to 100% in equity and equity related securities and upto 20% in debt and money market securities.   Investment Strategy The investments would not have any industry, sector or market capitalization bias. The strategy would be to invest in stocks and sectors that seem attractive, exhibit strong growth or have the potential for strong growth in the medium to long term. The fund manager would follow a strategy which will be a combination of top-down and bottom-up approach.   Fund Manager Mr. Kaushik Dani will be the fund manager for the scheme. He is a commerce graduate and an MBA in finance with more than 13 years of experience. Prior to this, he has worked with K. R. Choksey Shares & Securities Pvt. Ltd., Birla SunLife, Sharekhan, SG Asia Securities (India) Pvt. Ltd. and Motilal Oswal Securities Ltd. Mr. Kaushik Dani also manages the equity investments for Peerless Income Plus and Peerless MF Child.   Fund House Peerless Mutual Fund is a recent entrant in the industry. It launched its first fund in February 2010. Currently, the fund house manages five funds with more than Rs 5000 crores of average assets under management.   Basic Details NFO Opens: September 7, 2011 NFO Closes: September 21, 2011 NFO Price: Rs.10 Options: Growth and Dividend (pay out and re-investment) Minimum Application Amount: Rs.1000 Exit Load: 1% if redeemed/switched-out on or before 1 year and NIL on or after 1 year Benchmark: S&P CNX Nifty Fund Managers: Mr. Kaushik Dani and Mr. Ganti N. Murthy   -----------------------------------------------------------------   Also, know how to buy mutual funds online:   Invest in DSP BlackRock Mutual Funds Online   Invest in Reliance Mutual Funds Online   Invest in HDFC Mutual Funds Online   Invest in Sundaram Mutual Funds Online   Invest in Birla Sunlife Mutual Funds Online   Invest in UTI Mutual Funds Online    Invest in SBI Mutual Funds Online   Invest in Edelweiss Mutual Funds Online   Invest in IDFC Mutual Funds Online

Balanced Funds from Birla Sun Life AMC Posted: 08 Sep 2011 11:09 PM PDT Birla Sun Life Balance   Birla Balance strikes a balance between the growth that equity offers and the safety that debt provides, thus seeking to maximize returns on your investments at moderate levels of risk. Birla Sun Life 95 Fund   Birla Sun Life 95 Fund strikes a balance between the growth that equity offers and the safety that debt provides, and thereby helps you achieve the best of both worlds. Thus fund seeks to maximize returns on your investment at moderate levels of risk. -----------------------------------------------------------------   Also, know how to buy mutual funds online:   Invest in DSP BlackRock Mutual Funds Online   Invest in Reliance Mutual Funds Online   Invest in HDFC Mutual Funds Online   Invest in Sundaram Mutual Funds Online   Invest in Birla Sunlife Mutual Funds Online   Invest in UTI Mutual Funds Online    Invest in SBI Mutual Funds Online   Invest in Edelweiss Mutual Funds Online   Invest in IDFC Mutual Funds Online

Religare Mutual Fund has announced the launch of Religare Fixed Maturity Plan – Series IX Posted: 08 Sep 2011 10:18 PM PDT   Religare Mutual Fund has announced the launch of Religare Fixed Maturity Plan – Series IX – Plan E (370 days) under Religare Fixed Maturity Plan – Series IX – Plan A to F. The new fund offer will be open for subscription from September 16, 2011 to September 20, 2011. The scheme will be listed on the Bombay Stock Exchange.   -----------------------------------------------------------------   Also, know how to buy mutual funds online:   Invest in DSP BlackRock Mutual Funds Online   Invest in Reliance Mutual Funds Online   Invest in HDFC Mutual Funds Online   Invest in Sundaram Mutual Funds Online   Invest in Birla Sunlife Mutual Funds Online   Invest in UTI Mutual Funds Online    Invest in SBI Mutual Funds Online   Invest in Edelweiss Mutual Funds Online   Invest in IDFC Mutual Funds Online

Monthly income plans form Insurance companies Posted: 08 Sep 2011 08:44 PM PDT      For years, Indian insurance seekers have been taken in by traditional life insurance products like endowment and money-back plans. But, after the sector was opened to private players, unit-linked insurance plans (Ulips) pipped traditional products to the top spot. Things, however, changed after September 1, 2010, when the insurance regulator capped Ulip charges. Now, traditional plans have again become popular. This is primarily due to the dwindling commission from Ulips, which has resulted in some agents and insurance companies milking the opaque structure of traditional plans to earn higher commissions while keeping customers in the dark. It is also a fallout of insurance seekers' tilt towards safe, assured-return products given the current market scenario. This move has resulted partly out of the demand for debt-oriented products and partly due to the greater regulatory oversight on Ulips since September 2010. Also, these could be seen as quasi-pension plans either without the 4.5% guarantee (or, as IRDA is considering, a capital guarantee) being offered. Finally, the increased demand for mutual fund MIPs (monthly income plans) may also be a cause for the shift. REGULAR INCOME PLANS It is hardly surprising then that insurance companies have stepped up their endowment plan launches this year, with a couple of them having launched monthly income plans in the past few weeks. "Our research revealed consumers were averse to taking risks and preferred guaranteed returns while planning for the long term. It also suggested a significant percentage of customers prefer a guaranteed cash flow for a regular income to achieve lifestage goals, and also to provide extra cushion against any unexpected increase in monetary needs. The USP of such plans, insurers say, is they offer payouts at regular intervals post the premium-paying period. They work much like the money-back policies, which are popular. Monthly income plans promise a regular inflow more often. HOW IT WORKS Most monthly or regular income plans come with a limited premium-paying period after which the payouts begin. Typically, you have to choose the monthly income you would like to receive, and the premium will be calculated based on this figure. Besides monthly income, the policyholder may also receive any reversionary or bonuses upon the policy's maturity. Monthly income plans are structured to provide a defined regular monthly payout, both in case of survival of the insured at the end of the premium-payment term or his/her death during the policy term and are, therefore, more savings-oriented and priced accordingly. These plans fulfil the need for regular income at some time in future. If the insured dies before the premium-paying term ends, dependants receive the monthly income from the anniversary following the date of death till the end of the payout term. If the death occurs after the premium paying term, the payouts will be as per schedule. While some companies choose to disburse any terminal bonus and a part of the sum assured as lump sum to the dependants, others may give bonus only at maturity. THE FLIPSIDE While it does seem like a product with high utility value, it is not without its flaws. Like all traditional products, the charge structure could be more opaque than in Ulips. Traditional products also give you lower returns in the longer run compared with equity products. Also, the annuity is for a limited period only. Before arriving at a decision, it would be wise to consider other products, like mutual funds, that may offer more transparent, and lower, cost structures. Also, I hope agents do not mis-sell it as a pension product as the characteristics of both these products diverge at the annuity distribution stage although the accumulation stage is similar. This apart, the guarantee element in these plans means they cannot invest in equities, thus limiting the potential to generate higher returns. GAUGE SUITABILITY Therefore, it is important to be sure that they fit into your risk profile, asset allocation plan and goal-map. "The target group would primarily be young income-earners who may feel the need to boost their income through an additional source after, say, 10 years, when their financial needs increase. The rising cost of living and securing one's future is clearly a concern. Monthly income plans can fulfil the objective of filling in this gap and securing one's future when household needs are at their peak. They can help policyholders plan for their retirement, their children's education, or any other financial goal they may have set, in a secure and guaranteed manner.   -----------------------------------------------------------------   Also, know how to buy mutual funds online:   Invest in DSP BlackRock Mutual Funds Online   Invest in Reliance Mutual Funds Online   Invest in HDFC Mutual Funds Online   Invest in Sundaram Mutual Funds Online   Invest in Birla Sunlife Mutual Funds Online   Invest in UTI Mutual Funds Online    Invest in SBI Mutual Funds Online   Invest in Edelweiss Mutual Funds Online   Invest in IDFC Mutual Funds Online

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