Prajna Capital

Take Health Test before buying Term Insurance Plans
Insurance Riders do you need them?
Home loan is a convenience and not a bad debt

Take Health Test before buying Term Insurance Plans

Posted: 08 Feb 2015 02:10 AM PST

In the case of life insurance policies, the higher the sum assured, the higher the premium the policyholder has to pay. However, in some cases, the premium for a higher sum assured can be lower. According to data from Policybazaar. com, for a 30- year old male non- smoker, the premium for a ₹ 40 lakh policy bought online is higher than the premium for a ₹ 50 lakh policy. This is because insurance companies offer a discount for policies where holder undergoes a medical test prior to buying it.

Most life insurance policies offer online term plans up to ₹ 50 lakh sum assured without medical tests and only a self declaration by the holder. However, they charge a higher premium, as the risk is higher for them in such cases. Some companies offer online term plans even up to ₹ 75 lakh without medical tests, but at very high premium.

Unfortunately, this is one reason why insurance companies see a higher instance of fraud in the under ₹ 50- lakh segment.

There are cases where the person had died even before the policy was purchased. Or where the policyholder did not exist at all. In order to deal with fraud, companies might stop issuing non- medical policies or insist on personal verification of the policyholder even for online policies for lower sum assured. In case of a medical test, we are at least seeing the person.

One reason buyers want to avoid a medical test is the fear of premiums rising in case of chronic ailments such as diabetes or heart trouble. Kumar insists that as term life plans evolve, companies will be more open to offering policies to such people but with a loading of premium.

We need to think if we are losing customers of a certain kind.

Even in the case of policies with a lower sum assured, under ₹ 50 lakh, companies offer lower premiums if the policyholder is willing to undergo a medical test. About 95 per cent of our policy holders undergo medical test. If you do a medical test, the chances of the claim getting rejected at the time of claim, on account of medical grounds are minimal.

In case of older buyers, that is, above 50 years, even for sub ₹ 50 lakh policies companies will insist on a medical test. But even for younger buyers, it is advisable to opt for a medical test, to ensure hassle- free claims.

This becomes even more important now, as Section 45 of the Insurance Laws (Amendment) Ordinance says no claim can be rejected after three years for any reason. This means the insurer has a three- year window to reject claims on grounds of misstatement or fraud. So, insurers could become even more stringent while investigating claims and any non- disclosure of medical facts could be taken seriously

Best Tax Saver Mutual Funds or ELSS Mutual Funds for 2015

1.ICICI Prudential Tax Plan

2.Reliance Tax Saver (ELSS) Fund

3.HDFC TaxSaver

4.DSP BlackRock Tax Saver Fund

5.Religare Tax Plan

6.Franklin India TaxShield

7.Canara Robeco Equity Tax Saver

8.IDFC Tax Advantage (ELSS) Fund

9.Axis Tax Saver Fund

10.BNP Paribas Long Term Equity Fund

You can invest Rs 1,50,000 and Save Tax under Section 80C by investing in Mutual Funds

Invest in Tax Saver Mutual Funds Online -

Invest Online

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For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

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Leave a missed Call on 94 8300 8300

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Insurance Riders do you need them?

Posted: 08 Feb 2015 01:05 AM PST

Riders let you take additional cover against a specific risk at a low price. But they should not be seen as replacements of the base cover.

A basic health insurance policy is a must have today. A cover of `3-5 lakh for individuals, especially senior citizens, or a `5-8 lakh family floater plan (in a family where the eldest member is below 45 years old), is considered sufficient.

But what about incidental expenses? Will a health insurance policy be enough to cover a critical illness or a serious accident? Worse, what if the event impairs your ability to earn?

To tide over such medical emergencies, there is another category of insurance plans that you need to consider. These are known as riders, but they are not replacements for basic insurance policies like a pure term plan or a comprehensive health insurance.

Many of these riders are available as standalone policies, but they are more expensive. For example, the premium for a standalone personal accident policy ranges between `200 and `250 per lakh of sum assured. For a personal accident policy with a sum assured of `3 lakh, you will end up paying `600750. A personal accident rider (sum assured `3 lakh) will cost you `563 annually.

According to insurers, riders help you take additional insurance against specific health or life risks at a low cost. Charges for the riders are paid (the regulator has capped the premium at 30 per cent of the base policy) over the base premium. You can buy multiple riders on one base plan.

Around 10-15% of policyholders purchase add-on covers or riders. One should always consider factors like health needs, features in-built in the existing health plan and so on, before deciding on a rider. Maternity cover is useful for someone planning a family. If maternity is available in the base cover, there is no need to purchase it separately. But an out-patient cover is for everybody.

However, incidence of people buying riders is not very high due to low awareness. Riders have not become a popular route to enhance protection also because the quantum of additional protection itself has been capped by regulations

Let's take a look some of the important riders that you could choose to buy.

Riders that are worth considering

Critical illness

This rider can be attached to your life or health insurance policy to substitute loss of income in the event of critical illness. It provides a one-time lump sum benefit. Typically, 5 to 15 critical illnesses, sometimes even 20, are covered. Some experts opine that buying a standalone critical illness policy is better as it covers a wider range of ailments. Moreover, a rider won't continue beyond the tenure of the base plan. Most critical illness covers come with a survival clause of 30 days. This means the policyholder needs to survive for 30 days after diagnosis to make a claim. The insurer will pay the money after the survival period. Also, keep in mind that critical illness plans don't include pre-existing ailments.

Accident

This rider covers death, permanent disability, permanent partial disability and temporary total disability due to an accident. Choose a policy that covers all four casualties. It will pay 100 per cent of the sum assured in case of death or permanent disability. For permanent partial disability, it would pay a portion of the sum assured and for temporary disability, it pays a weekly compensation.

Hospital cash

This policy offers daily cash to pay medical and non-medical expenditure during your stay in hospital. Most hospital cash policies need you to be hospitalised for at least 24 hours to be eligible for the payout. Some companies offer it for up to seven days of hospitalisation while others up to 10 days. A hospital cash policy pays in the range of `500-3,000. For stay in ICU, the limit increases but the number of days eligible for cash reduces.

Room rent waiver

A room rent waiver rider allows you a higher sub-limit or rooms without sub-limits in case of hospitalisation. Most insurance policies have a defined sub-limit on the room rent and room type (single or double). However, if you've have a room rent waiver rider, you can opt for either a better or more expensive room without it eating into your sum insured.

Surgical benefit

Many life and general insurance companies offer surgical benefit riders. These plans cover around almost 600 different surgeries with a sum assured ranging from `1 lakh to `10 lakh. However, check the fine print before you buy because in some plans the benefit amount is capped, according to the grade of the surgery and the plan opted. Such riders also provide a pre-fixed sum of money in case of surgery. Given the nature of the coverage, this rider (and the critical illness plan) are especially useful for people above the age of 30-35. However, experts say these work well as supplementary covers and should not be seen as a replacement of the basic mediclaim cover.

Waiver of premium

This is designed for those who have small children. When taken with an endowment plan or any child plan, this rider ensures your maturity benefit is protected even if the policyholder cannot pay all the premiums, due to untimely demise or total and permanent disability. In case of child plans, a waiver of premium rider is beneficial to ensure that the child receives the benefit even in the case of an unfortunate demise or disability of the parent. Another option could be the `family income benefit rider'. It provides death benefits and a monthly income (one per cent of the sum assured per month) to the beneficiary if the insured dies before policy lapses.

Best Tax Saver Mutual Funds or ELSS Mutual Funds for 2015

1.ICICI Prudential Tax Plan

2.Reliance Tax Saver (ELSS) Fund

3.HDFC TaxSaver

4.DSP BlackRock Tax Saver Fund

5.Religare Tax Plan

6.Franklin India TaxShield

7.Canara Robeco Equity Tax Saver

8.IDFC Tax Advantage (ELSS) Fund

9.Axis Tax Saver Fund

10.BNP Paribas Long Term Equity Fund

You can invest Rs 1,50,000 and Save Tax under Section 80C by investing in Mutual Funds

Invest in Tax Saver Mutual Funds Online -

Invest Online

Download Application Forms

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

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

Leave your comment with mail ID and we will answer them

You can write to us at

PrajnaCapital [at] Gmail [dot] Com

Leave a missed Call on 94 8300 8300

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

Invest Mutual Funds Online

Invest Any Mutual Fund Online

Download Mutual Fund Application Forms from all AMCs

Download Mutual Any Fund Application Forms

Home loan is a convenience and not a bad debt

Posted: 08 Feb 2015 12:03 AM PST

There is a huge sense of achievement in buying your own home. Even more so today with the skyrocketing property prices, a home purchase is truly a great accomplishment in all aspects. Some homebuyers may even be lucky enough to consider buying a home without a mortgage, but even if you can afford it, it may still be an intelligent decision to opt for a mortgage. Stumped?! Its true. A mortgage is a liability that even financial wizards would approve of. It should not be looked as a mere debt, but a tool of convenience.

Many homebuyers may look to over-stretch their financial capability in the aim of buying a property without a mortgage, but a home loan can actually come with its own advantages. Today, the smart borrower can reap multiple benefits from a great home loan product. The best reason to opt for a mortgage is that it's comparatively the cheapest form of credit available. What the point of forgoing a cheap form of credit, and then, taking expensive personal loans, car loans, or using credit cards to meet your financial requirements? A cheap form of credit also enables a greater monthly cash flow for you and your family, and if this money is invested well, you could even beat you own home loan interest rate in returns!

Everyone buys a home with the view that it will increase in value over time. If they felt otherwise, they would just rent! If history is a good indicator, your home's appreciation, in most cases, will surpass the amount of interest you end up paying over the home loan tenure. Some home buyers may avoid a home loan as it comes with a monthly cash burden, but they don't realize that overtime your disposable income will increase. The EMIs that may seem like a big chunk of your monthly take home will actually get easier to pay with time. Buying a home outright is similar to locking up the funds in your locker when you can use the funds by opting for a home loan. These extra funds can be invested to create even more wealth for you and your family.

Finally if these reasons were not enough, a home loan can help you save a significant amount of tax. The last budget raised the deduction against interest on home loan payment from the old Rs. 1.5 lacs to Rs. 2.0 lacs. In real terms, this will enable taxpayer to save an additional Rs. 15,450 on their tax liability. With the increase in the deduction in interest rate, the borrower is actually ends up setting off a portion of the interest paid in turn, having an even lesser interest component on the mortgage.

These benefits demonstrate how home loans are actually convenient rather than the belief that they are a debt, and should be avoided. Today, borrowers are in an envious position as lenders fight hard to increase their market share. This means that prospective borrowers have access to great home loan products, terms, and in most case, even other benefits such as over-draft or top-up to allow the borrower to have access to even more funds. These facilities can be used for any reason during the tenure of the home loan. Understanding all the products to choose the best one can help a borrower to come out in a greatly advantageous position. Here, it would be wise to consult a home loan advisor to ensure that the home loan product you choose is the best for you, and you know how to use the other facilities of the mortgage for your best interests.

In conclusion, a home loan is good debt. It is the cheapest form of credit available, can help you to have a great cash flow and create further wealth for your family, and is a tool to help save tax! Further, it is an investment, which appreciates in value from the day you buy it as opposed to other purchases such as gadgets and mobiles, which go down in value the day you buy them; this is a fantastic reason why buying a home is a great decision. When investing into a home, buyers should not shy away or avoid a mortgage, but instead embrace it. Moreover, with all the options available the borrower should take time in choosing the best option, and to be safe, consult experts for advice. A mortgage can provide a substantially greater liquidity and financial flexibility, and is truly a tool of financial convenience!

Best Tax Saver Mutual Funds or ELSS Mutual Funds for 2015

1.ICICI Prudential Tax Plan

2.Reliance Tax Saver (ELSS) Fund

3.HDFC TaxSaver

4.DSP BlackRock Tax Saver Fund

5.Religare Tax Plan

6.Franklin India TaxShield

7.Canara Robeco Equity Tax Saver

8.IDFC Tax Advantage (ELSS) Fund

9.Axis Tax Saver Fund

10.BNP Paribas Long Term Equity Fund

You can invest Rs 1,50,000 and Save Tax under Section 80C by investing in Mutual Funds