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Ways In Which You Can Invest The Money In Your Bank Account Post Demonetisation

In the wake of the recent demonetisation exercise, bank deposits have witnessed a decisive swelling, as people scrambled to deposit the prohibited Rs.1,000 and Rs.500 notes. The money parked in these savings accounts do not provide much returns to the account holder, apart from the minimal interest that it accrues.

Here, we analyse the different ways in which you can judiciously invest the funds currently parked in your savings account, post demonetisation.

●       Fixed deposits (FD) - FDs have traditionally been one of the most popular investment options for customers who are conservative in their investment strategy. The fixed and assured returns and the liquidity factor make this channel of investment a very reliable option. However, banks have recently reduced their FD interest rates, and may even lower them further in the future.

Financial planners advise customers to lock their amounts for a longer tenure, as interest rates are likely to see a downward plunge. The highest interest rate offered for an FD is 7% today. It should be noted that the returns from FDs after taxation are not attractive for investors in the high-income tax bracket.

Customers can also opt for the sweep-out facility in a savings account, where funds above a threshold limit are automatically transferred to an FD account, hence earning a higher interest than an ordinary savings account.

●       Government of India bonds - The Government of India savings bonds can be purchased by investors with a minimum amount of Rs.1,000. These bonds offer an interest rate of 8% per annum. Since these bonds are issued by the Indian Government, these are more secure investment channels as well.

●       Liquid funds - Mutual funds that offer liquidity and instant redemption facility are becoming increasingly popular, particularly among first-time investors. These debt mutual fund schemes have very short maturities, even as short as one day. Hence, these mutual funds offer a great alternative to investors who are looking to park their surplus money for a short duration. There are no exit loads linked to these schemes. Investors can also redeem their investments easily. The rates of interest offered by these schemes are more attractive than the ordinary savings account as well.

Another advantage of a debt mutual fund is the superior tax benefits it offers, specifically for people in the high tax bracket. During the past year, liquid mutual funds have provided returns of almost 8%. However, financial analysts are of the opinion that the returns from liquid mutual funds may decline in the future.

●       Other debt mutual funds - Individuals who are looking to invest money for a duration less than 1 year can consider ultra short-term mutual funds. These funds provide a certain level of liquidity and may, sometimes, provide returns that are marginally higher than liquid funds. Ultra short-term mutual funds invest majority of the invested money in very short-term debt securities. A small portion will be invested in long-term debt securities, as well.

For individuals looking to invest for a duration longer than 2 years, the best option would be to opt for income accrual funds and dynamic bond funds. Additionally, MIPs (monthly income plans) may also be added for a holding period above 2 years.

●       Arbitrage funds - An arbitrage fund is an equity mutual fund that takes advantage of the differential price of the same asset between two or more market segments. These funds are an ideal option for individuals looking to invest money for a timeframe of around 1 year. Although arbitrage funds are equity funds, they are relatively free of risk. These funds also offer tax superiority when compared to debt funds.

●       Post office deposits - Post offices offer term deposit service with maturity period ranging from 1 year to 5 years. The interest rate on these deposits vary from 7% to 7.8%.

The above guidelines are intended to assist an investor in making a decision. The final call will be at the discretion of the investor, and he/she should make an independent assessment before acting on this information.

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Steps for Applying Aviva Life Insurance

Steps for Applying Aviva Life Insurance

Aviva Life Insurance Company is a popular insurance service provider offering financial services and insurance services across India. Developed as a joint venture between Dabur group of companies and Aviva Plc, the British insurance giant, Aviva Life Insurance offers a large number of insurance plans and schemes. From fixed term protection plans to single premium plans, child insurance plans and…

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Life Insurance Policies for Women in India

Life Insurance Policies for Women in India

With the increasing number of women professionals in the country, different financial giants have started concentrating their financial planning on women only plans. One of the most explored areas of women oriented plans is life insurance. There are many financial giants who have introduced life insurance for women.

Some of the best women life insurance policies in India are:

Jeevan Bharathi – I:…

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How To Compare Life Insurance Quotes For Families

How To Compare Life Insurance Quotes For Families

‘Insurance is the subject matter of solicitation’.

What this means is, that insurance is something that has to be asked for, or requested. It is not something that is to be sold. Quite ironical, when one considers the fact that this statement is seen and heard in literally every insurance product advertisement that does the rounds on print, TV and radio!

But this is the first, and most…

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Online Term Insurance in 2015

Online term plans have gained prominence in the last few years after people have realized the value of providing an income for their near and dear ones even in case of unforeseen circumstances--such as death. Spurred by the thought of caring for their families even after they are not there, people are actively buying insurance for large sums and term insurance provides an easy avenue for getting higher coverage. The trend in 2015 has seen some of the best term life insurance plans in India now being offered exclusively online.

What is term insurance?

Term insurance is a pure insurance policy where risk cover for a high amount is available in a very low premium. The entire premium goes to cover the risk and hence no returns are available at the end of the term. An individual, for planning adequate protection cover for his family, must take into account day to day expenditure based on his lifestyle as well as milestone expenditures like a marriage of a daughter or education of his children. Suppose he has a salary of Rs. 60,000 and spends Rs.30,000 each month, he must budget for an amount of Rs. 30,000x20 years=  Rs.72 lakh or till his children grow up. If he has other outstanding loans, the life insurance must take care of the loan repayment also.

Thankfully, term insurance offers a higher sum assured for a low premium because the entire amount goes towards coverage of risk and there is no return of premium after the end of the term. It is also wiser to take term cover for the entire working life of an individual or even longer. Some term covers for a sum assured of Rs. 1 crore are available for as low as Rs. 15 per day.

How term insurance has moved online

In recent years, most insurance companies have started selling policies online. This has two major benefits—policy issuing has become instant and the need for appointing agents and maintaining branch offices has come down. Companies are able to pass on benefits to customers directly and this has resulted in reduced premiums.

Term insurance can be taken at any point in the life, but premiums tend to get higher as one gets older. The premium are lower and entry conditions relaxed when one takes it during early years because they are considered less risky years. Medical tests are usually required for entry at 40 or higher. Opt for a policy that can stretch your term as long as possible. However, if you feel you can fulfil your liabilities by a certain age, say 65 years, then go for limited term.

Some of the term insurance plans available online

Few of best term plans for life insurance are available both online and offline. Some are however exclusively available online.  

Aviva Life Insurance has launched its i-Life plan and Aegon Religare Life Insurance has its i-Term plans which are sold online on their website. Reliance Life insurance sells its Online Term Plan for as low as Rs. 15 per day. Noticing the sudden interest in online term policies, even state-owned Life insurance corporation of India (LIC) has started offering an e-Term policy online.

How to subscribe to a term insurance policy online

Subscribing to an online term plan is easy. Insurance companies have their website and provide a link to new subscribers. You have to fill in your chosen sum assured, gender, coverage for the term required in years and whether smoker/non-smoker. Then there is an additional page for filling in details like health and contact details. If you are in good health, a self-declaration usually suffices. Based on your submitted particulars the website will generate a quote for your premium. If you are OK with it, you may proceed and pay by credit/debit card or net banking and instantly get the soft copy of your policy emailed to you.

How to make claims for online term plans?

Online term plans allow you to register a nominee while subscribing to the plan. The insured needs to keep his nominee or family members informed so that they can inform the company about his/her death. The company usually asks for the insured’s death certificate and few other details before they pay out benefits. Some insurance companies even have moratoriums on how long it takes to process a claim and pay interest for any delays beyond this.

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Importance of Buying Life Insurance for People Above 50

While life insurance advisers urge us in our 20s or 30s to buy a policy, many policyholders usually defer its purchase till such life-changing events as marriage or the birth of a first child.

It is understandable that when an individual is younger he is not burdened with family responsibilities, but as he grows older the need to take insurance arises. But with age, insurance can only get costlier. And the advantage of doing away with medical check-ups for medical policyholders does not apply.

So, is life insurance useful and affordable after attaining 50 or 60 years?

The answer to this is yes, if you’re in good health, you should probably consider life insurance. This is more important if you’ve a family or dependents.

Many people are working late into their lives, remarrying and having kids later in life, so big life-changing decisions, usually made in 30s and 40s, are being delayed. Life insurance needs change as you advance through the decades.

Unfortunately, premium costs and risk underwriting become more onerous as we age, further complicating insurance planning in life’s twilight years.

Insurers charge more to a 55-year-old for a 10-year term policy than they would a 45-year-old because there is a significantly greater chance the 55-year-old will die in the next 10 years than the 45-year-old. That is how insurers consider risk.

Provided you need life insurance, here are some ways to wisely plan it, whether you’re in your 50s or your 60s.

To Take a Term Insurance or not?

For 50-somethings, a 15- or 20-year level term policy may be the most affordable way to protect their income and providing for their spouse and loved ones in case of untimely death.

But at that age, insurers mostly refer applicants for a health check-up and charge more if a health condition exists. Typically, taking a lower term, say 20 or 30 years of term insurance, should serve your needs.

Many of the insurers also offer the benefit of converting the policy, i.e. making an existing endowment or ULIP based policy to a whole-life policy so that your dependents can get the benefits after your death. Find out about such facility and their charges and go in for a pure term policy or convert your policy after a thorough comparison.

Don’t Forget Critical Riders

If you’re afraid that an illness may affect your income and well-being in the later years, it is prudent to include critical illness riders on your life insurance policy. This becomes more important if there is the family history of any illness. By taking such a rider, you can protect yourself against huge treatment costs and provide for your family if such an illness strikes.

See what suits you best

Changing the economy, raging inflation and dwindling interest rates can reduce the income in your hands as you start planning for your retirement in the later years. If you are not covered by a government or employment pension plan, you’d have to fund it out of your own pocket. By 50s, most people have an idea how their life’s savings would look like so it is the time to mix and match options or let insurance provide a regular income.

Sometimes, continuing a policy may not seem like really worth it because the benefits would go straight to the dependents. In that case, probably asking your grown-up children to pay for it may not be a bad idea.

So getting yourself life insurance is not a bad idea in your later years if you research the viable options and take the policy that suits you.

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10 Life Insurance Mistakes That May Tumble Down Your Policy

image credits:teamshatter.com

Getting a proper life insurance, suitable for your exact needs is not everyone’s cup of tea. One has to be extra cautious and vigilant on the insurance cover, insurance provider and the terms and conditions of the insurance policy. This is so important because one takes a life insurance for his/her family and their financial protection. Therefore, a single mistake can ruin the life of the family members. To safeguard the interest of the family members, we have jotted down 10 probable mistakes that can be committed by you while choosing for your life insurance. Please read as follows:

Non-Disclosure of important facts: There is some of the crucial information that has to be rendered correctly like Your smoking habits, any existing diseases ,and your financial liabilities. If you skip in answering any of such questions or you answer them wrong, then we are at strong doubt that whether you’ll get you claim or not. So, one should be cautious while providing such relevant information and be true in all your aspects.

Buying at the older age: Keep this point in your mind that if you'll buy your life insurance at the older age, you'll have to pay high amount of premiums, you'll not be entitled to high amount of coverage and you'll be more prone to have diseases which may affect your policy. So, it is advisable to take life insurance policy in your early days of life.

Don't purchase too many riders: If you'll purchase too many riders like personal accident coverage, critical illness rider or permanent disability rider, you'll end up in giving more premiums that will make your policy cumbersome with over load that might me hard to manage in later stages.

Don’t mix life insurance plans with investments: If you are thinking to buy a policy for investment purposes in which you’ll get some small portion of life coverage, then beware of doing that, as that amount of life coverage would not be sufficient to your family for carrying on their livelihood. And moreover in those plans returns are mostly volatile as such plans are mostly ULIP plans that are market-based.

Have a life insurance of higher amount: It is always advisable that you should figure out the amount for which you are planning to take a life insurance. But, before figuring just analyze the fact that whether such amount would be sufficient to give your family a financial comfort. So, always take a policy of higher amount that would be capable of delivering the required needful to your family.

Don’t smoke or drink when your medical checkup is on its way: It is advisable for you to not to smoke or drink when the time of your final medical check up with insurance company is coming closer. This may hinder your policy amount and premium amount. And, your family might face this problem when you’ll not be there with them.

Don't buy policy from the company that is having a less claim settlement ratio: If you are planning to buy a policy, then first thing you should do is to compare the insurance providers and their claim settlement ratios. Don't ever go for a life insurance company which is having a less claim settlement ratio.

Don't take the shorter term for your life insurance: If you are planning to take a shorter term for your life insurance, then it’s a big mistake. Try taking a life insurance for the longer term as you never know the next count of your breaths. So, it is always advisable to take the longer term.

Don’t fail to review your policy: One should review his /her policy every 6 months so as to correct any changes or to provide any additional information.

Don’t forget to get the address and the nominees changed as required: If you are shifting to the new place, your first task is to get the address changed. Or if you have got married or got the kids, your preference might change. So, don't forget to change the names and the other details for your nominees.

So, these are the few mistakes which you can incur while or after taking a life insurance policy. Therefore, be very much sure and safe while taking such a crucial step of  your life.

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Collect Important Information while Buying Life Insurance

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Buying a life insurance plan is probably one of the most important investments you will make but, don't be overwhelmed by this because it is not as challenging or as difficult as it is made out to be. The key here is to stay focused and to take into account the variables that will have a considerable impact on your investment and the outcome.

Information is the tool that will be the driving force behind your decision to buy life insurance. So, take charge of the decision by seeking help. You can start by gathering life insurance information using the following.

Determining the coverage you need:

The coverage you need will be determined by the income you earn, the debts you have, the probable investments you are going to make and so on. So, collecting information begins with analyzing what your current financial situation is and what your future goals are. The idea is that in the event of an unforeseen death, the coverage you have should be able to take care of all the needs that your family will have at the time.

Once you have this insurance information, the next is to go to the step where you determine the type of plan you want to invest in.

Types of life insurance plans:

Life insurance plans are broadly classified as term plan and endowment plan. The term plan has premium payments specified for a period of time after which if a claim finds place, the money invested can be used. That said there is a fair amount of risk in this option. If a claim is not due at the end of the period, a good part of the money you have invested will be lost. This is the risk that comes with the prospect of protection and security in case something happens to you.

An endowment plan is more like an investment plan where you get to extract money when your situation calls for such an action. The premium is higher here and the risk is minimum.

This part of life insurance information collection is very important as you will know which direction to move towards while making a decision.

Market conditions:

Many people who wish to invest in an insurance plan fail to understand that their coverage is not shielded from future market conditions. Inflation can play havoc when it comes to getting the full benefit of the coverage you build. So, before you think the coverage you invest in will yield benefits in the future, make sure you collect information on the predicted inflation rates as you can calculate the coverage and arrive at a fair estimate by taking into account the inflation figures.

 Modalities:

Before you buy life insurance, make sure you have your facts right about the paperwork that is needed to start the plan. Most insurance companies need the insurer to go through a medical examination before determining the coverage. This is however, age-related. So, check with your provider about this before you go ahead with the investment.

Every life insurance plan is different with different parameters but, the above-mentioned pointers can help you make the best start when you decide to buy life insurance. 

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Know about types of Life Insurance in India

It has been proved long back how important are life insurance policies for every individual. Treat it to be a security for the unpredictable life or a way of investment for your future, Life insurance policies are an integral part of every individual financial planning. Have a look at the different types of Life Insurance policies you can choose to avail in India.

Term Insurance Policy

  A legal contract between the life insurance company and the insured, this type of life insurance policy entitles the insured to receive a particular sum of money by the insurance company in the event of his/her death, after a certain period of time. The policy can be taken for a flexible term of 5, 10, 15, 20, 30 or 35 years. Term insurance has the lowest premiums among est  all insurance plans as the payments are fixed and do not increase during the term period. Choosing additional riders such as a child, accidental death or waiver adds to your benefit.

Money Back Life Insurance Policy

Under this type of life insurance, the insured periodically receives a percentage of the sum assured all throughout the lifetime of the policy. In case of the death of the insured during the policy term, the beneficiary receives the full sum insured without the deduction of the money back amount given previously. This is an ideal policy for people looking for savings and insurance cover alike.

Endowment Life Insurance Policy

A ideal policy type for the ones looking to enjoy the retirement life, Endowment plan offers periodic premiums to the insured person and a lump sum amount either on the death of the insured or at the end of the policy period. Generally, when people receive the lump sum amount, they further invest it in annuity policy that generates a monthly pension for the rest of their retired life.

ULIP-Life Insurance Policy

Unit-linked Insurance Plans (ULIPs) is an immensely popular type of life insurance that offers a combined benefit of life insurance policies with mutual funds. Under this plan, the certain amount of the premium paid by the insured is invested in listed equities/debt funds/bonds, and the remaining balance is utilized to provide for life insurance and fund management expenses. Being linked to the market, the insured is able to earn extra monetary benefits.

Whole- Life Insurance Policy

These are never ending policies, i.e. they do not have an expiration period. They go on as long as the insured lives. The policyholder or the insured is not liable to any money during his/her lifetime in this case and the amount is paid only to the beneficiary after the insured’s death. The plan offers guaranteed death benefits, cash values and fixed premiums but no survival benefit.

 When it’s the question of securing you and your family’s future, life insurance policies are the best bet. So, while you decide to invest your hard earned money in life insurance policy, choose the one that best suits your needs and gives you the best return.

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Why and How to Apply Online Life Insurance

Much has been written and discussed about the merits of taking a life insurance. There is no denying the fact that life is uncertain. In this day and age of material possessions, losing an earning member of the family can spell doomsday for the dependents and others in the family. It is therefore always wise to keep an insurance cover and be prepared for any eventuality. We cannot change what destiny has in store but with a little financial planning we can make sure that even in the unfortunate case of death of an earning member of the family, dependents and elderly in the family do not face financial hardships. 

Insurance as a Protective Cover:

A large number of people commit the grave mistake of taking insurance as just another financial instrument and use it either for wealth management or tax saving. While there are certain insurance plans that are developed as a financial tool helping individuals to diversify their financial portfolio as well as some insurance plans made exclusively for tax saving, the prime purpose of insurance must always be protection.

The first purpose of life insurance must always be as a protective cover especially if one has a number of dependents and non-earning family members. Money is the reality of life and one must always buy a life insurance plan that can cater to the future education requirements f the children, medical requirements of elderly and dependent senior citizens in the family in case of untimely death of the individual. One can always invest in other insurance plans and schemes that can help save some taxes or act as a financial wealth management asset but not at the cost of insurance for protection against untimely death.

A case for Term Insurance:

Term insurance has by far become one of the most popular insurance instruments used by a large number of people. Term insurance offers the insurer ample financial coverage depending on his or her income. Term insurance is easy to apply and is not involve much documentation or stern medical tests. The purpose of term insurance plan is to offer your dependents a lump sum amount that can be useful for their sustained living. In case the insured outlives the tenure of the term insurance plan, there is no reimbursement of the premium paid unless specified in the term insurance policy.

Applying for Life Insurance Online:  

Applying for a life insurance plan has never been simpler with the popularity of online filing facility provided by life insurance service providers. A large number of insurance companies offer online filing of insurance plans allowing users to apply for life insurance sitting in their home or office. Gone are the days when applying for an insurance plan meant endless visits to the insurance office. One can simply log on to the website of insurance service provider, select the insurance plan and pay the premium online without having to involve insurance agents.