Prajna Capital |
- Term Life Insurance Policy Is A Must Have
- Home Loan Interest and Tax Benefits
- NPS should go back to basics
| Term Life Insurance Policy Is A Must Have Posted: 17 Dec 2013 04:06 AM PST Invest In Tax Saving Mutual Funds Online Call 0 94 8300 8300 (India)
The tragic floods of Uttarakhand remind one of the vagaries of life. Imagine not only the loss of life but also the financial loss suffered by all those who lost their prime breadwinners in these floods. Next in line to suffer serious damage were those who were careless in insuring themselves sufficiently. Their term insured amounts would soon come to an end. "Never Leave a Job Half Done" Another commonly followed practice is the art of purchasing a policy and not doing enough about it. Course correction is very essential in that term life insurance policy.What about a change in salary or an increase or decrease in assets or liabilities .Another problem faced among the individuals taking up a term insurance policy is the art of over insuring oneself. Why pay a huge premium for a policy of a sum assured of a Crore when one does not need it. A thorough knowledge of financial products based on a strong platform to deliver this financial knowledge across the nation is lacking in our nation.. Another problem faced not only in term insurance but all forms of insurance is the "Haste Makes Waste " approach .Never come to the conclusion that a term policy is futile listening to your insurance agents. Always do the ground work yourself. Only once you are convinced that this term policy provides no utility value to you must you surrender this policy. Another important point one needs to note is that continuous switching of one's term insurance policy might lead to a policy which one might not want. This policy of continuous change results in a state opposite to Charles Darwin's theory of evolution. Frequent chopping and changing confuses the issue giving one a term policy which one might not want. A major problem faced in India with regard to life insurance is a get more for less approach. One views term insurance as a loss on investment as if one survives the term policy the returns are nil. People consider life insurance in India as an investment .The idea that if they survive the term policy and get no returns for this irks them.
Life Is Ten Percent what happens to you and Ninety Percent how you react To It
One has heard the famous saying "The Road To Success And The Road To Failure Are Almost The Same". So What Does This Mean? Mere effort without a sense of direction and purpose is of no avail. One needs to ask oneself a set of questions before taking up any life insurance plan. Why A Term Insurance Plan? What Are Its Benefits Versus Other Types Of Plans? How Much Should I Insure Myself For? Mis-selling is a rampant disease in our country and causes severe loss not only to customers but also to the insurance sector in general. This is mainly due to a myopic approach followed by insurance agents and certain insurance agencies is that achieving of their targets is the "Be All And End All" of this believes that if each and every Indian knows about life insurance and its purpose to him the disease of mis-selling of insurance can be eradicated from this nation. This also is a long term approach which could save the life insurance agencies trillions of rupees and improve the state of the economy. The Insurance Laws Amendment Bill 2008 seeks to raise the cap on foreign investment from 26% to 49%.The passing of this bill will inject much needed liquidity into the sector and a suitable environment needs to be created in order to encourage foreign investors into the life insurance market in strongly advocates that a term life insurance policy is a must have policy among all the working youth of our country especially those who are at the start of their careers. Term life insurance is a pure protection policy. This is the best form of insurance as it provides a mortality cover at a low cost. Premium rates are coming down and a number of good deals are available on the online believes that once you know why the term life insurance plan is vital to your financial interests you will automatically reach for it.
Obstacles Are Those Frightful Things You See When You Take Your Eyes off The Goal
One knows that a term insurance plan is mainly a basic protection cover or a mortality cover provided by paying an amount known as premium for a fixed time period. It is plain simple to understand. One survives the term plan there are no survival benefits. If the policy holder dies during this period his dependants get the sum assured .Now since one knows what is term insurance let us understand why one needs such a policy.
When God Calls You Gotta Go Home
God forbid if one were to die suddenly at a young age the funeral expenses are quite high nowadays. Who would bear these expenses .One's spouse would have to bear these expenses and in times of rising costs this is quite high an expense. A term insurance plan helps one to bear this expense.
Spiraling Costs of Education and Debts
Each and every one of us wants our children to have good schooling and an education. One knows the cost of schooling in a good educational institute runs into thousands of rupees. Who will bear the rising costs of school and college education once one is not around? Now one has to look towards the term insurance plan. Would one like to leave a legacy of debts behind to be repaid by your family? Certainly Not? That term insurance plan can help your family pay off those mortgage debts when you are not around. Certainly Food For Thought.
I'm A Man of Simple Tastes I'm Always Satisfied with the Best
Would one like ones family to alter their lifestyle drastically when the prime bread winner is not around. One might be living in a good housing society where certain standards have to be met and an availability of funds is a must. One knows what happens when the prime breadwinner is lost. When one is not able to match ones set goals and objectives then compromise would be necessary, The proper amount of insurance allows ones family to continue their lifestyle even when the breadwinner is not around. The actual amount that one needs to purchase depends on one's current lifestyle and an estimate of one's future needs. Want to prevent your family having to make that compromise after you have gone. Insufficient Coverage In That Term Policy. One knows the results of this Buck Up. Want to know how much term life coverage you need. Just leave a missed call at IndianMoney.com.
Tenure of That Term Insurance Plan
Let us consider that one plans to retire at 60 Years of age. One is currently 30 Years of age. According to the rule of thumb one deducts ones current age from the planned retirement age. In this case it is 60 Years minus 30 Years which is 30 Years. This translates to a tenure of 30 Years for ones term policy. If one is 30 Years of age and has taken a single term insurance policy with a tenure of 25 years ones policy comes up for renewal when one is 55 Years of age .If ones health condition is bad would one get a renewal. Definitely Not It would be wise to take up another term policy when one is 35 Years of age which would expire when one is 60 Years of age. This way one is covered throughout ones working life.
Why That Term Policy Is Very Essential For a Young 30 Year Old Person
In India Insurance is viewed as an investment and not as a mortality and protection cover. This attitude makes term insurance less popular with the younger generation who are not willing to swallow the fact that if they survive the tenure of the term policy they will get nothing for it. This attitude forces them to take up an Endowment policy which might not be the right thing to do at this age .In order for an Endowment policy to give real returns one needs to stay invested in it for a very long time.Term insurance is the cheapest form of life insurance and in combination with a debt or an equity instrument can give massive returns over a very short period of time. The term insurance policy is best suited for a young individual at the start of his career and becomes a wealth generating option for his family in case something untoward were to happen to him. The term policy can be converted into an Endowment policy with the passage of time especially if a convertibility option is present in these plans. The term insurance plan is very essential for a young working person who has taken a home loan as his family would not be able to bear the liability in case of his early demise.
Happy Investing!! We can help. Call 0 94 8300 8300 (India) Leave your comment with mail ID and we will answer them OR You can write back to us at PrajnaCapital [at] Gmail [dot] Com
--------------------------------------------- Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.
Invest Tax Saving Mutual Funds Online Tax Saving Mutual Funds Online These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)
Download Tax Saving Mutual Fund Application Forms from all AMCs Download Tax Saving Mutual Fund Applications
These Application Forms can be used for buying regular mutual funds also
Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )
------------------ Best Performing Mutual Funds
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| Home Loan Interest and Tax Benefits Posted: 17 Dec 2013 03:21 AM PST Invest In Tax Saving Mutual Funds Online Call 0 94 8300 8300 (India)
As the financial year comes to an end, it is time to start planning your tax saving strategies. A house can also be used to reduce the tax liability to a certain extent. Under Section 24 of the Income Tax Act, interest paid up to Rs 1.5 lakhs per annum on a home loan can be set-off from salary or business income, for a self-occupied property.
Loan for construction eligible for deduction
A loan availed for the construction of a residential property, purchase of a residential property, extension of an existing house, and major repairs and renovation of a house are eligible for tax benefits. Under Section 80C of the Income Tax Act, a home loan borrower can claim a deduction of up to Rs 1 lakh from his taxable income on repayment during the year along with specified savings instruments like provident fund.
All co-owners eligible for deduction
In case there are co-owners to a property, each of them can claim tax benefits separately , in proportion to their share holding in the property. If the share holding is not mentioned in the purchase deed, they can execute an agreement on a stamp paper, mentioning the shares in the property, and claim tax benefits separately. Co-owners can thus claim a deduction of up to Rs 1.5 lakhs per annum separately, on interest paid towards a self-occupied house, and also up to Rs 1 lakh per annum towards principal amount repaid.
Pre-EMI qualifies for benefit
The entire pre-EMI interest amount (the interest paid during the construction period ) is allowed as a deduction under Section 24 of the Income Tax Act equally over five years (20 percent of total interest paid per annum), starting from the year in which the construction is completed.
However, if one avails a loan only for a land purchase, he is not eligible for any tax benefits. In the case of a composite loan (for land and construction) and the house construction is completed within three years, only after completion of the construction will one be eligible for the tax benefits.
Happy Investing!! We can help. Call 0 94 8300 8300 (India) Leave your comment with mail ID and we will answer them OR You can write back to us at PrajnaCapital [at] Gmail [dot] Com
--------------------------------------------- Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.
Invest Tax Saving Mutual Funds Online Tax Saving Mutual Funds Online These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)
Download Tax Saving Mutual Fund Application Forms from all AMCs Download Tax Saving Mutual Fund Applications
These Application Forms can be used for buying regular mutual funds also
Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )
------------------ Best Performing Mutual Funds
|
| Posted: 17 Dec 2013 02:34 AM PST Invest In Tax Saving Mutual Funds Online Call 0 94 8300 8300 (India)
The decks have been cleared for India's National Pension System (NPS) to return to its earlier avatar of a state-of-the-art pension system with a design architecture (how costs and benefits are placed in a product and how it is engineered to prevent mis-selling) that is possibly the best in the world. The owner and regulator of the NPS, the Pension Fund Regulatory and Development Authority (PFRDA), is now a statutory entity and top-level changes in the body augur well for the road map to roll-out as planned.
A quick recap. After attempts to internally transform the Employees' Provident Fund Organisation (EPFO) from an entity with fuzzy and often conflicting objectives of "policy making, regulation and monopolistic service provision to a viable pension regulator failed, a new pension system was envisaged that would solve some of the most obtuse problems in pension markets worldwide in the very design of the product around costs and mis-selling. This product design rests on four legs that have been broken in the past two years by the pension regulator making the NPS a strange creature that is a wannabe mutual fund (MF) but isn't.
Leg one was to separate product manufacturers from sellers to prevent a product push market. The fund managers would concentrate on their core strength – fund management — and the points of presence would collect the money. A centralized record-keeping agency is the bridge between the two that would funnel money from the points of presence to the asset managers. A year ago, the regulator allowed the pension fund managers to talk to the sales points or "synchronise" their actions. This will eventually lead fund managers to distribution and that, the original design says, is the road to mis-selling.
Leg two was to restrict choices to make it easier for investors to choose. PFRDA used fresh research from the buzzing behavioural finance labs overseas to reduce choice to investors to just three options from three fund managers (a total of nine products to choose from), since too wide a choice is seen to freeze investors. This list was expanded to six fund managers in 2009, making the choice set a bit more complicated (18 products to choose from) but still within the cognitive grasp of most investors. In 2012, PFRDA quietly opened the doors for all "eligible" pension fund managers, breaking the second leg of the product's design.
Leg three was the thin costs of fund management that came from an auction-driven system that saw pension fund managers bid low costs in order to get the mandate to manage pension money. The NPS was envisaged as a product with very thin costs, knowing that fat fees and charges work more for the industry than the investors, especially when the investing horizon is 30 years or more. A one percentage point difference in fund management fees can reduce returns substantially when computed over a working lifetime. In 2009, UTI Asset Management Co. Ltd bid the wafer-thin cost of 0.0009% (PFRDA is held guilty of having costs that are too low to be sustainable, but it was actually a fund manager that bid this number), the other fund managers had to offer the products at the same cost. Two years ago, PFRDA hiked the fund management fee to 0.25%. By arbitrarily changing the core design of an auction-based system, other parts of the product began to fall apart.
Leg four was to allow investors' money exposure to equity in the safest possible manner. The NPS was designed with three asset-based options that allowed a person to choose an allocation between very safe government bonds, fairly safe corporate bonds and an index fund where the investor could put half her money. The index fund road was taken to keep costs low (exchange-traded funds in the US now cost as little as 0.2% a year as expense ratio) and keep out the fund manager risk, or the risk of a fund manager's wrong calls. If you invest in an index fund that hugs the broad market index, you buy the index. It is a very low-cost, low-risk way to expose pension money to equity. But in January 2013, the pension regulator quietly, without any debate, allowed pension fund managers to actively select stocks from a basket of 149 stocks (shares of companies listed on the BSE and the National Stock Exchange on which derivatives are available became the universe from which a fund manager could pick stocks), breaking the leg of providing a safe equity road.
To be sure, the regulatory motivation must have been to give a push to the NPS that had remained stuck in very low individual interest since inception in 2009. What the regulator did not consider is that the solutions put in place were all supply-side interventions when what is needed is a demand-side push. The new regulator needs to go back to the basics and spend his energy on removing the bottlenecks that come in the way of demand. A campaign of public awareness needs to precede the big push to get points of sales to deliver. The NPS needs to be at par with the other pension products in the market in terms of tax breaks. And the compulsory annuity of 40% of the corpus at retirement needs better options than are available today
Happy Investing!! We can help. Call 0 94 8300 8300 (India) Leave your comment with mail ID and we will answer them OR You can write back to us at PrajnaCapital [at] Gmail [dot] Com
--------------------------------------------- Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.
Invest Tax Saving Mutual Funds Online Tax Saving Mutual Funds Online These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)
Download Tax Saving Mutual Fund Application Forms from all AMCs Download Tax Saving Mutual Fund Applications
These Application Forms can be used for buying regular mutual funds also
Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )
------------------ Best Performing Mutual Funds
|
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