Thursday, July 5, 2012

Prajna Capital

Prajna Capital

Health Insurance Claim Loading

Posted: 05 Jul 2012 03:44 AM PDT

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In the recent past, health insurers like Apollo Munich, Tata-AIG General and Max Bupa have launched health insurance products without the claim loading clause. The clause allows insurance companies to hike premiums after the policyholder makes a claim. Needless to say, insurance customers often felt cheated by the clause, as most insurance companies used the clause to hike premiums on renewal after a person made a claim on the policy. So, a typical policy, which is supposed to help a person in future when he develops a health problem, can become very expensive with the loading, especially since premiums increase with age. If you are looking to buy a health cover, you should first check out these products without the claim loading clause.


Typically, a health insurance policy – at least the indemnity-based ones from general insurers – has to be renewed every year. Many insurers – state-owned as well as private – incorporate a claim loading clause in their policy, which allows for an increase in premium following a claim made in the previous year.


However, insurers do not follow a standard format for the purpose for loading of premium and it varies with each insurer. That is why you should go through the policy wordings to understand the calculations at the time of buying the policy itself. This is because the insurance company can't change the structure described in the policy during the course of the contract. However, don't confuse claim loading with the loading of premium. That comes into the picture if there is any adverse medical history.


Claim loading gets triggered either on individual claim or the company's overall claim ratio (premium earned versus claims paid out during the year) going haywire. It could also be linked to the type of the claim —that is, if it is chronic or otherwise — and the average usage of the total sum insured.


Besides, companies can choose to increase the rates for their overall portfolio or a particular segment, citing medical inflation. Then, of course, there is the regular rise in premiums in accordance with the advancing age of the policyholder.


Claim loading may not seem like an important parameter while buying a policy, especially at a young age, as the tendency then is to focus on cheaper premiums. However, remember that health insurance, although renewable annually, is a long-term contract. Given that the loading in case of some companies can go up to 200%, it could wreak havoc on your finances, especially in your silver years. One should not buy a policy which has claim loading clause as it can have a compounding effect, making your policy prohibitive for you in times of need.


If a policy's wordings are not upfront about loading, ensure that you enquire about the same. Also, factor in other elements. As part of long-term financial planning, there is no doubt that one should look for zero loading as one of the features, apart from lifetime renewal, lifetime zero co-pay ratio, no limits on surgeries and room rents, and the claim settlement track-record.


Now, first-time buyers have several policies to choose from and thus, can avoid the ones with unacceptable claim loading structures. But, how do those who have been paying premiums for a long period of time deal with the situation?


Being aware of the policy's terms and conditions, competitor's offerings and the regulatory scenario could be a possible solution.


The first option is to go through the claim loading clause in your policy document and question the insurance company if it has not adhered to it completely. Also, the Insurance Regulatory and Development Authority (Irda) has issued guidelines related to loading on premiums for senior citizens, which bar companies from increasing the premiums by more than 50-75%.


Secondly, thanks to the health insurance portability mechanism, implemented since last October, such policyholders have the option of switching to an insurer who offers better terms.


The flipside is that since accepting or rejecting the proposal to port is left to the new insurer, those having made claims, particularly senior citizens, in the past may not stand a great chance.


One can only hope that with increasing competition, companies will make efforts in future to retain their customers.

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Best Performing Mutual Funds

    1. Largecap Funds:
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    3. Mid and SmallCap Funds
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    4. Small and MicroCap Funds
      1. DSP BlackRock MicroCap Fund
    5. Sector Funds
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    6. Gold Mutual Funds
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

 

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Kotak Select Focus

Posted: 05 Jul 2012 01:52 AM PDT

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Being picky about its investment strategy has not affected Kotak Select's performance so far. Though the fund has managed to beat the benchmark returns since its inception, a fear of missing out on opportunities in abstained sectors lurks

Prima facie, Kotak Select Focus appears to be like any other diversified equity scheme. The differentiating factor, however, is its flexibility to abstain investment in select sectors, irrespective of their weightage in the benchmark index. The scheme, has, currently not invested in capital goods, engineering, infrastructure, realty and telecom sectors but invested in financials, FMCG and healthcare. The strategy of being sector selective has, so far, worked in its favour as it has managed to outperform the benchmark returns. The risk, however, is that it may miss out on occasional opportunities arising in abstained sectors.

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Download Mutual Fund Application Forms from all AMCs

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Best Performing Mutual Funds

    1. Largecap Funds:
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    3. Mid and SmallCap Funds
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    4. Small and MicroCap Funds
      1. DSP BlackRock MicroCap Fund
    5. Sector Funds
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    6. Gold Mutual Funds
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

 

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Ten reasons for investing in gold

Posted: 04 Jul 2012 07:57 PM PDT

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Ten reasons for investing in gold

UNDERSTANDING the uncertainty in the equity markets around the world, gold has become a very popular mode of investment. Today, the financial planners and analysts advise investors to diversify the portfolio and include metals like gold and silver as a hedge in the portfolio.

Gold, since May 2011, has risen by over 25 per cent, also making them favourite for investors betting on market capitalisation.

Gold is a liquid asset, which can be held in various forms like physical gold, ornaments or exchange traded funds (ETFs).

Here are 10 reasons why you should prefer to buy gold.

■ Portfolio allocation strategy: While constructing a portfolio, it is important to have a range of asset classes running alongside (all eggs not in one basket principle), to decrease the risk of the portfolio. All asset classes have different returns (based on highrisk-high-return strategy). Along with equity and debt, gold forms to be an important asset class.

■ Hedge against inflation: The value of gold has increased defeating the forces of inflation.

The purchasing power of gold to other assets has been increasing slow and steady, but and is less volatile.

■ Hedge against currency: Gold, usually traded in the US dollars, is seen as a safer haven, opposed to holding physical currency of any country. As soon as dollar prices decline to major currencies around the world, the gold prices see an inherent upward change. There is an inverse relation seen between the dollar (against other currencies) and gold.

■ Change in prices: Change in prices is often referred to as volatility and, gold as an asset class, remains less volatile, opposed to others like equity, real estate and debt. We have observed violent changes upwards and downwards in the equity markets in recent times, but gold continue to be less volatile. Rising demand: Central banks on reasons as stated above, have started buying gold as a part of the assets they hold.

It is therefore, by mere market capitalization, the prices of gold recently have sored very high. The investment demand also continues to become high due to the increase in monetary base globally.

Safe haven: It is usually seen that when equity markets become risky or unstable, the price of gold increases instantly. This phenomenon can be seen through the yesteryears. Gold is therefore, considered as a safe haven. This was once again observed in the past three months.

Fossil fuel like future: Gold mines for production is becoming limited day-by-day, and there are fewer sites being found for further mining. The stage of mining extension is nearing soon.

Central bank gold agreement (CBGA): With the CBGA, and its signatories becom ing buyers, the supply continues to remain lower to the demand, making gold prices go higher at each level. No credit risk: Gold continues to be an asset which `holds value', and unlike debt, it does not pose a credit risk. Credit risk has been one of the largest problems that the US and Europe have faced in recent times.

■ Seasonal patterns: Patterns in buying gold are seasonal in nature, opposed to the regular buying in the open market. Regular tracking can ensure regular profits in intervals from such periods.

Availability of gold and different forms in India: Gold can be acquired through other means also.

Availability of e-gold has made demand of gold increase manyfolds. ETFs in the commodity markets are now used for regular gold investment. These options have made gold buying easy and safe. There is no problem of storage. It comes in paper form.

■ Gold (commodities): Can be traded in gold futures through Multi Commodity Exchange of India (MCX). Margin-based trading is allowed.

■ E-gold: This product has a feature to buy gold in demat form through National Spot Exchange (NSE) in denominations as low as one gm. It has a lower cost, compared with physical gold, and the storage of gold is not required.

■ Gold exchange traded funds (ETF's): One gm of gold is equivalent to one unit of ETF, and these units are backed by physical gold through stock exchanges. It is an ideal option for equity dmat holders with an easy and simple transaction process.

■ Gold fund of funds: With this option, your money can be invested in schemes of mutual funds that invest in gold ETFs.

With this option, systematic plans are also possible which help in averaging gold prices.  

 

 

---------------------------------------------

Invest Mutual Funds Online

Transact Mutual Fund Online

 

Download Mutual Fund Application Forms from all AMCs

Download Mutual Fund Application Forms

 

Best Performing Mutual Funds

    1. Largecap Funds:
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    3. Mid and SmallCap Funds
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    4. Small and MicroCap Funds
      1. DSP BlackRock MicroCap Fund
    5. Sector Funds
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    6. Gold Mutual Funds
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

 

Mutual Fund Application Forms Download Any Applications
Buy Mutual Funds Online Invest Online
Infrastructure Bond Application Forms Download Applications

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