Things you need to be aware of before investing in foreign stocks

Invest in what you know is the basic investing philosophy that is explained and followed by Peter Lynch, a very successful fund manager of the US fund company in his book - One up the wall street. 

He basically explains that as an investor, find companies and businesses around you, from your every day to day life that you are familiar with (and then of course follow up on that with fundamental analysis). When we check the companies around us, we come across businesses like Microsoft, Google, Amazon, Sony, and hence, the desire to invest in foreign stocks begins. Furthermore. Higher returns, lower risks, better companies, and geographical diversification further increase the need to invest in foreign stocks

Where investing in foreign stocks is all fun and hopefully higher returns, one must also understand the setbacks or the costs of investing in the same. 

1. Remittance charge 

The costs of a remittance transaction include a fee charged by the agent/broker to you for their service of converting and remitting funds from Indian banks to US bank/broker accounts. It also includes FX conversion fee or spread for the purpose of investing in the US. This can range from 0.5-2% of the amount remitted and depends on two factors.

  1. Does the platform/app/broker you are using to invest have any tie-up with any of the Banks in India.  For instance, Vested has a tie-up with the Bank of Mauritius, which helps as you pay only a 1.2% remittance charge for each side.
  2. If you are going to transfer directly and there is no special tie-up between the bank and broker, you can end up paying INR 1000 + GST (Fixed) to a minimum of 0.8 % of the transferred value as a remittance charge.

However, you can negotiate a better rate with your bank, depending on how much and how frequent your remittances will be. Even if you do at best, you can get a rate close to 0.8% of the transferred value.

Assuming you don’t make any gains from your investment and stay flat, you would incur approximately 2% in remittance charges. The bottom line, you end up losing a % of your funds to charges even before your investments start making money for you. Hence it is recommended that you transfer in and out in bulk rather than follow a SIP kind of approach to transferring money when investing in foreign stocks. This is especially applicable for smaller accounts. 

2. Taxes collected at source (TCS)

The Union Budget 2020 introduced a tax on forex transactions. A 5% tax collected at source (TCS) will be applicable on all remittances above INR 7 lakh under RBI’s Liberalised Remittance Scheme (LRS).

TCS will apply only to over INR. 7 lakh in a fiscal year and not on the total amount. For instance, if you remit INR 10 lakh in a financial year, TCS will apply to the balance of 3 lakhs at a rate of 5% and thus will incur a tax of INR 15,000. The taxpayer will get a TCS certificate and can claim a refund while filing the annual IT returns. Thus, this is not a direct cost but gets added to your cash flows while investing the money.

3. Taxation 

You may not have to pay taxes on the earnings made from capital gains in the USA from US stocks but you would have to pay the same in India. For dividend tax is deducted at source in the USA but you do get credit for the same when you are paying taxes in India. Basically, it is good to know about the tax liability and compliances that you have to do when you invest in foreign stocks, you can learn more about it here in detail - How taxes work when buying US stocks from India

4. Death - Estate Tax

We Indians are not used to paying taxes on death and inheritance but in the US, Estate tax is payable by the heirs on the estate of a deceased individual, which can be as high as 55%. The estate tax can arise by way of investing in US assets. So your stocks and other capital market investments in the US are subject to estate tax when they are passed on as inheritance.This tax could end up eating into all the gains that one would make from investing in US stocks. Ways in which you can manage the estate taxes are as follows:

  1. Buy a separate (top-up) term insurance to cover this tax liability on your foreign stock investments. 
  2. People set up joint accounts to deal with Estate taxes, so in the event of the death of one of the account holders, its estate tax is levied only on the portion of the asset held by the deceased.
  3. Now, if you are a UHNI (Chances are you would not be reading this, still) and looking at better ways of managing all of this, setting up an offshore trust to invest in the US seems to be the recommended route.

These charges and taxes are not a deterrent to your investments in foreign stocks but do know them and plan your investments around them.

Advice to to-be married/newlywed couples on money

Starting your new life as newlyweds means blending your worlds, and that includes your finances. Talking about your finances may not be the most romantic topic of conversation, but it is an important one to have. That's why it's crucial to find the best advice for newlyweds that will help you manage your money the best way possible.

Even if you already lived together before getting married, managing your money will change after you become legal partners. These money matters may be awkward to talk about at first, but doing so will improve your communication skills and prevent any money misunderstandings in the future.

Also, working together as a team with your finances will strengthen your relationship and help you achieve your money goals together! 

In order to help you out, we are finally announcing the pre-booking of our course- Honey & Money.

Financial Advice for Newlyweds

Don't let your money matters put a damper on your relationship. Here is some advice to newlyweds to keep their finances in order!

1. Discuss Financial Priorities

Talking about money can be stressful, but it’s important to talk about your financial priorities with your partner.

  • Is saving and investment a major priority for you, or do you prefer to spend money at the moment?
  • How much of your income are you willing to spend on luxuries versus necessities?
  • If you plan to have children, how much do you want to support them financially?
    • Will you pay for child care, or will one of you be a stay-at-home parent?
    • Will you pay for the entirety of their college education?
    • Do you expect your children to support you financially in your old age?

These questions don’t have a “correct” answer. Making sure that you and your partner have similar priorities, or can find a compromise somewhere in the middle, can help avoid financial arguments in the future.

2. Talk about your family financial history

Discussing your family financial history is one of the most critical newly married couple tips you can do. Talking about your family's history with money is a great way to open up the conversation about your marriage finances. 

Revealing how your parents handled money, what you learned from their financial resume, and how they taught you to save or spend can be helpful information for couples.

This can also help you figure out if you've inherited financial insecurities or have any money blocks you need to work past. This way, you can tackle them as a team and work towards financial success!

3. When in Doubt, Spend Less on Your Honeymoon

Keep this in mind as you’re planning your honeymoon. Your memories won’t revolve around where you were cheap – you won’t even remember it at all. It can be memorable even if you stayed way out of the city center in a much less expensive hotel. 

This is a prime opportunity to learn about one of the fundamental rules of personal finance together. Money spent on nonessential stuff that you won’t remember is money wasted. Remember what’s essential is you being with your partner. Don’t burn money on other stuff if you are out of budget. All you’ll do is hurt you and your partner in the future.

4. Don't hide your spending habits

A common issue that causes conflicts in marriage is problems with overspending. Overspending can rack up debt, cause mistrust between partners, and shows a lack of respect within the marriage.

Avoid these relationship issues by consulting your partner before making big purchases and being open and honest about your spending habits.

5. Open A Joint Account But Keep Existing Separate Accounts

Before it is even a question of making decisions about retirement planning in a partnership, couples often face a tense conflict in their relationships much earlier. The conflict regarding the allocation of financial resources comes almost unavoidably to all couples.

We advise that both partners should first keep their existing accounts and also open a joint account to which each partner makes a monthly deposit. This joint account will ensure that all your expenses are running from the common account. We have discussed it in detail in our session 1 of the course - Managing cash flows.

6. Start an emergency fund

You never know what the future holds for you, so it's always best to be prepared. You will never regret starting an emergency fund after marriage. For example: if you lose your job, if you are suddenly expecting a baby, if the roof leaks, the car breaks down, and the list goes on.

The size of the fund would depend on several factors such as your income, lifestyle, and number of dependents, existing debt, and so on. It is advisable to save for 3-4 months at least so that the amount should ideally cover your expenses.

Some of the options available to you are:

  1. Fixed Deposit (should be linked to your net-banking)
  2. Liquid Mutual Funds
  3. Cash at Home - Up to 1 month’s expenses (For super sudden need!)

It would be useful to keep reviewing your emergency fund requirements at least once a year, as there may be changes in your life like starting out a business, taking a sabbatical from work, the addition of a new family member, or a change in your lifestyle.

7. Create financial goals as newlyweds

Some of the best advice for newlyweds is to create financial goals together. Having goals set can help you achieve your big visions in life! It will be much easier to reach your goals if you can work toward them together, and it can help reduce tension if you make sure you don’t have goals that directly contradict one another’s.

  • Do you want to live in a lavish house or a small one?
  • Would you rather rent or own your home?
  • Do you want to retire early or work full careers?

8. Discuss your finances with your spouse regularly 

Your marriage finances should not be swept under the rug. Circumstances are bound to change at various points in your married life. So make it a habit to review your finances on a monthly or bi-monthly basis to ensure you are staying true to your household budget.

This is why it’s so important to have “money dates”. In simple terms, a "money date" is a regularly scheduled conversation between you and your partner where you discuss finances. They’re an opportunity to talk about your day-to-day finances, as well as prepare for any short or long-term financial plans in a fun manner.

While money dates can be enjoyed by couples at all stages of their relationship, we recommend you start as soon as you move in together and begin sharing large expenses together. This allows you to build the habit of talking about money together and makes the conversations easier over time. Best of all, you'll quickly start to feel like you're on the same team, working towards shared goals together.

Getting married is an exciting but potentially stressful time. These newly married couple suggestions can help you budget better, create goals, and most importantly find enjoyable things to do together too. Why not get started by taking our free financial courses together to work towards financial success!

Pre-book to our course- Honey & Money to get  70% discount now - click here.

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10 Financial Lessons That You Must Know

These are basically the gospel truths of personal finance. It is a quick 3 min read but will definitely have more information than some long-form articles:

1. Time is a Scarcer resource than money - Invest in a way that you can have more control over your time.

2. Get rich quick and get poor quick are two sides of the same coin. As we always say: High Risk = High Returns and low Risk = Low Returns. Every time you look at returns, be prepared for the risk that comes with it.

3. A house that you live in is your consumption, not an investment. Your second house can be considered an investment.

4. Don’t pay interest to acquire something that loses value - Car & personal loans for weddings & travels must be avoided.

5. A rise in income shouldn’t mean a rise in lifestyle. Well as we reach the new financial year, many of us would be looking at bonuses and appraisals, plan to invest a part of it before we plan our expenses.

6. A penny saved is more than a penny earned. Save before you spend

7. Invest in your mind and skills first.

8. You don’t have to be rich to invest, but you have to invest to be rich.

9. Market corrections come more regularly than birthdays expect them. For those who have been investing from April 2020, be careful there is more to markets than just going up.

10. There is an inverse relationship between investment performance and time spent watching financial news. Only watching the news will not help you get high returns.

11. The more complicated the investment advice the less useful it is. Go for simple advice which can actually help you apply it.

12. Admire people who earn more money than you, not people who spend more money than you. Yes please, people who look rich are not always rich.
We have our youtube videos live, where we are sharing highlights on investing in Equity this week - do check the videos to learn more here


Disclaimer: - The articles are for information purposes only. Information presented is general information that does not take into account your individual circumstances, financial situation, or needs, nor does it present a personalized recommendation to you. You must consult a financial advisor who understands your specific circumstances and situation before taking an investment decision.

Income tax Feature Image

Income-Tax Relief For Home Buyers

Hello fellow investors
As a part of various relief measures taken by the Government in response to the economic slowdown post-COVID-19, the Finance Minister (FM) has announced a very attractive income tax relief for home buyers (new residential properties of value up to Rs 2 crore). Here is what you need to know.  
Income Tax relief for home buyers 

In case the declared purchase consideration of the land/building is less than the stamp value (circle rate) by up to 20%, there will be no additional tax outgo for both the seller and the purchaser for the period 12th November 2020 to 30th June 2021. Earlier, the acceptable difference was 5% which was to be enhanced to 10% with effect from 01 st April 2021.

This move will also help developers in selling off their unsold inventory at up to 20% below the circle rate and the buyers in getting cheaper homes without any additional tax burden on either party. Let’s look at the relevant provisions of the Income Tax Act to understand the applicable tax relief.

Section 43CA of the Income-tax Act - for the seller

This section provided for deeming of the stamp duty value (circle rate) as sale consideration for the transfer of real estate inventory in the case the circle rate exceeded the declared consideration. The circle rate is the minimum rate per unit area fixed by the state governments for the sale of land or property and is
aimed at reducing stamp duty evasion by declaring lower sale values in the sale-purchase deeds.

Thus, even if the real estate was sold at a price below the circle rate, the circle rate was considered as the sale value for the calculation of the business profits of the seller. For example, if a house is sold by a developer for Rs 80 lakh but its value as per the circle rate is Rs 96 lakh, the developer is supposed to take Rs 96 lakh as the sale value for
calculating his profit.

Through Finance Act 2018, a difference of 5% between the two rates was declared to be acceptable. This was increased to 10% through Finance Act 2020. Now, the FM has raised this acceptable difference to 20%. Thus, in the above case, the difference is exactly 20% as seen below and the developer can consider Rs 80 lakh for calculating his profits from the sale. 

Section 56(2)(x) of the Income-tax Act for the buyer

This section is applicable to the buyer and provides for stamp duty value to be deemed as purchase consideration even if the purchase was made at a lower price. As per the above example, the buyer is deemed to have received Rs 16 lakh (the difference between the stamp value and the sale consideration) and was supposed to declare this amount as ‘Income from other sources and pay tax on the same. Now, he will not have to pay any tax if the difference is up to 20% as is the case in the above example.


In summary, this announcement by the FM comes as a major relief to real estate developers who were struggling to offload their inventory due to lower demand in the market. The benefit is applicable, however, only for the primary sale of residential properties and not for commercial and secondary sales.


How Many Mutual Funds Should You Have? (Part 1)

This week I am back with some discussion around Mutual Funds. In one of my workshops, during our mutual fund's discussion, I had this one trainee ask me - So what's your number?

I stared at her for a while not knowing what I am supposed to answer to that. Well, she rephrased her question, 'What is the number of mutual funds you are invested in?'  I said, '6 Mutual Funds'.She had the bewildered look on her face wondering how I had so fewer funds. I decided to show her my portfolio.

How many mutual funds schemes should you own? 

Owning around 5-7 mutual fund schemes across various categories is enough. These many mutual fund schemes will help you diversify, do your asset allocation, and also map these investments to your goals. You can invest your savings in the mutual fund schemes as per the below categories:

  1. Large Cap Mutual Fund (Equity)
  2. Large & Mid-Cap Mutual Fund (Equity) (your ELSS tax saving schemes are generally a Large & Mid Cap Mutual Fund)
  3. Mid Cap Mutual Fund (Equity)
  4. Small-Cap Mutual Fund (Equity)
  5. Thematic Mutual Fund (where you understand specific sectors and have a higher risk-taking appetite)  
  6. Short Term Debt Mutual Fund (For your short term goals)
  7. Long Term Debt Mutual Fund (For your long term goals)

In addition to the above, I have one Liquid Mutual Fund where I park my Emergency Funds. You can park your Emergency Fund in a Bank Fixed Deposit as an alternative.

Why only 5-7 Mutual Funds?

When you invest in Mutual Funds, you already diversify your risk across the stocks of the companies a particular mutual fund has invested in. Hence, with a large-cap mutual fund, your risk is diversified across more than 70 stocks that particular large-cap mutual fund has invested in. Investing in three different large-cap funds is not going to reduce your risk further, it will only make your investment portfolio messy.

'Mutual funds investing is to diversify your risk and not to di"worsify" the same'.

Further, reducing the number of schemes to a minimum of 5 also reduces the cost of managing the same and the time that goes in keeping a track of it and analyzing it regularly.

What do I do when I have more savings to Invest?

Increase your investment in the existing mutual fund's schemes you own. 
Investing in a new scheme every time you have extra savings will just lead you to own 15-20 mutual funds schemes with no plan in sight. Hence, it is important to do your due diligence and identify the mutual funds you want to invest in and stick to them. 

Yes, you must review your schemes regularly to see how are they performing in various market cycles but know that all schemes will not give you the best results always. There are some time periods where mid-cap and small-cap schemes will do better, other times when large-cap schemes will outperform and sometimes your debt investments will be the best performer for the year. Hence, it is important to be diversified across categories.

'Every time I check for the best mutual fund scheme and invest in the ones that are on the top' 

Studies have proven that selecting mutual funds based on high-performance track records is naive. The Star rating of various mutual fund keeps changing, a fund that is top rated in this one year, is hardly the top-rated fund in the subsequent years. Tim Courtney, a chief Investment advisor of US-based Burns Advisory did backtesting of past performance of the funds most highly rated, he found that they usually performed poorly after they have gotten 5 ratings. Hulbert financial digest, an investment newsletter found that if investors continually adjusted their mutual funds' holdings to hold only the highest-rated funds, a total stock market index would have beaten them by 45.8 % in the past decade (he studied funds from 1994 to 2004 in the USA). In fact over the years, it has gotten even more difficult to beat the markets and get alpha on your investments.  - extracts from Millionaire extracts - How to build wealth living overseas by Andrew Hallam

Hence, just investing in top-rated schemes is not going to give you the desired returns but only make your portfolio messy and not even get you the best returns.

Wealth cafe Takeaway - While you are investing in 5-7 different schemes across the options stated above, ensure that you invest across various AMCs as well. This will ensure that you are diversifying your risk and your entire money is not with only one AMC.

We shall follow up this article with a part 2 on how to downsize your portfolio.

Until then, keep reading, if you find this helpful, do share it with your friends.

Disclaimer: - The articles are for information purposes only. Information presented is general information that does not take into account your individual circumstances, financial situation, or needs, nor does it present a personalized recommendation to you. You must consult a financial advisor who understands your specific circumstances and situation before taking an investment decision.


What is MSME Registration and how will it help freelancers and small business owners?

Micro Small and Medium Enterprises who obtain registration under the MSMED Act, 2006 can avail benefits under many schemes issued by the government.

Before discussing further on what are these benefits and how to obtain the registration, you must know who is MSME and how are you qualified for the same.

The Government of India has enacted the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 in terms of which the definition of micro, small and medium enterprises is as under:

The companies are segregated into micro, small and medium enterprises based on their investment in equipment and plant and machinery.

  1. Micro Enterprise:
    1. Investment in Machinery: Not more than INR 25 lakh
    2. Investment in equipment: Not more than INR 10 lakh
  2. Small Enterprise:
    1. Investment in Machinery: Between INR 25 lakh and 5 Crore
    2. Investment in equipment: between INR 10 lakh and 2 Crore
  3. Medium enterprise:
    1. Investment in Machinery: Between INR 5 Crore and 10 Crores
    2. Investment in equipment: Between INR 2 Crore and 5 Crore


Being a freelance designer, you should know about everything that protects your interest and enhances your business.


Listed below are advantages that you get for your MSME registration.

1.Collateral Free loans from banks:

The Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGS) was launched by the GOI to make available collateral-free credit to the micro and small enterprise sector. Both the existing and the new enterprises are eligible to be covered under the scheme. The Ministry of Micro, Small and Medium Enterprises, Government of India and Small Industries Development Bank of India (SIDBI), established a Trust named Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) to implement the Credit Guarantee Fund Scheme for Micro and Small Enterprises.

2. A hefty 50% subsidy on  Patent registration

Enterprises that have MSME Registration Certificate can avail 50% subsidy for patent registration by making an application to respective ministry.

3. 1% exemption on the interest rate on overdraft

Enterprises that have MSME Registration can avail the benefit of 1% exemption on the interest rate on OD as mentioned in the scheme (this is bank-dependent).

4. Eligible for Industrial Promotion subsidy

Enterprises that have MSME Registration are eligible for Industrial Promotion Subsidy as may be prescribed by the government in this behalf.

5. Protection against delayed payments

The Ministry of Micro, Small and Medium Enterprises gives protection to MSME Registered Business against delay in payments from Buyers and right of interest on delayed payment through conciliation and arbitration and settlement of dispute be done in minimum time. If any micro or small enterprise that has MSME registration, supplies any goods or services, then the buyer is required to make the payment on or before the date agreed upon between the buyer and the micro or small enterprise. In case there is no payment date on the agreement, then the buyer is required to make payment within fifteen days of acceptance of goods or services.

Further, in any case, a payment due to a micro or small enterprise cannot exceed forty-five days from the day of acceptance or the day of deemed acceptance. In case of failure by the buyer to make the payment on time, the buyer is required to pay compound interest with monthly interest rests to the supplier on that amount from the agreed date of payment or fifteen days of acceptance of goods or service. The penal interest chargeable for delayed payment to an MSME enterprise is three times of the bank rate notified by the Reserve Bank of India.

6. Concession in electricity bills:

Enterprises that have MSME Registration Certificate can avail Concession on electricity bill by making an application to the electricity department along with MSME Registration Certificate.

7. Reimbursement of ISO Certification charges

Enterprises that have MSME Registration Certificate can claim reimbursement of ISO Certification expenses by making an application to the respective authority.


Why do people 'NOT' consider financial education ' Important'?

Hi fellow investors!

A very dear friend visited me for lunch recently, and we had a nice afternoon chat. It was such a relief to see a new face to talk to and eat with. He also happens to be the Marketing Executive for another education company and we got talking about Wealth Cafe and why we conduct money workshops and teach financial education.

The most important discussion we had was around 'WHY' so many people don't consider financial education or money as a priority, and my usual long phone conversations with Harsh Vardhan Dawar (Founder & Director of Wealth Cafe) also majorly revolve around the 'WHY' and 'HOW' of Financial education, I thought it would be interesting to share the same with you this week.

Why it is important yet difficult to study about managing your OWN Money & Investments?


1. Money takes time to grow!

It does and we have always said it. When you buy chocolate, you get to enjoy it within 10 seconds of you purchasing it, whereas when you invest, you may finally enjoy its fruits only after years. Your Fixed Deposit of 10,000 becomes 10,600 after 1 year. 365 days. 8,760 hours. It takes time and it requires the investor to wait for it to grow. 

Remember - Don't wait to Invest, Invest, and Wait.

2. Not a part of our dinner table discussions or school gang chats

Do you talk to your family about where you should invest your money or have your parents discussed it with you over dinner? If you have, then it's amazing, but most families don't have this discussion. Also, when we're hanging out with our friends we almost never talk about investments, savings, or goals (we may have mentioned the economy and stock market but not concrete discussions on how you can plan your finance). 


3.  Money matters 

For most of us, money is important until we have enough to buy and do what we want to do at the moment or maybe in the near future. Many of us are at a phase where we want to earn more and work (job/freelance) for it is the only option. Money matters a lot but only to the extent where it adds comfort to our present life. 

We generally don't tend to ponder over questions like 'Will I have enough when I retire?' or 'Can I quit my job to start something of my own?'

4. Money is boring

Well, I have to face this, I love reading and talking about money and investments, but for a person without a financial background, it may not be as exciting. Not many people are pumped about getting up from their beds and reading about the nuances of Mutual funds or FDs. It is akin to researching the bacteria that caused you the toothache.

But if you love yourself, you go to be on top of your health and wealth. Either learn about it or have an expert take care of it for you.

5. Not a priority

While my friend and I were having this long discussion, I asked him if he had ever taken the effort to educate himself about money matters, and surprisingly, his answer was no!  He said that there was never enough time for him to sort his finances or read up about it. Work always kept him busy and Alas! this is the most important reason.

If any of these reasons are blocking you or holding you back, let's work on it together. 

When you work hard your entire life to make money, you can work a little to make your money work hard for you. It's all about prioritizing.


The important subject of Money Management is not taught at any level of school or college in India which is why the financial literacy of India is at a meager 2%. Without proper knowledge about financial products, one cannot make the right decision with respect to investments. At Wealth Café, we are working on doing that, our everyday effort is to make finance simple for you :).

Here's wishing that you also start taking that small effort to make your own money a priority for you.

Where you think any of your friend or family could benefit from this, please do share via email or Facebook :)

Disclaimer -  The articles are for information purposes only. Information presented is general information that does not take into account your individual circumstances, financial situation, or needs, nor does it present a personalized recommendation to you. You must consult a financial advisor who understands your specific circumstances and situation before taking an investment decision.  


Importance of Travel Insurance post COVID

Not many people realize this but travel-related insurance is easily one of the most ignored aspects of international travel and with the entire COVID-19 scenario running roughshod on international travel, it will become all the more important. This kind of insurance has always been essential to cover travel-related risks like missed connecting flights, lost baggage, injury or illness abroad, loss of travel documents, loss or damages caused by weather-related problems, etc. With the evolving Corona Virus situation, however, things will continue to remain exceptionally unpredictable for the foreseeable future, leading to any factors which will lead to increased need and importance of insurance for travel purposes.


Factor 1: The lingering risk of Corona Virus infection:

There will be a few long months, maybe more than a year, before you can expect an effective vaccine for coronavirus infection. News shows that while some medicines have shown promising preliminary results in the treatment of Covid-19, a vaccine is always the best choice because it is a preventive measure and as the old adage goes, prevention is always better than a cure. International travel takes place in planes which are enclosed environments and people are too close for comfort in the planes. Did you know that even if you fly business class, you are still not far enough from other people in a plane for sensible social distancing to be possible? Imagine flying a coach in such a scenario! This means that ​travel ​insurance​ is going to be extremely necessary for everyone.


Factor 2: Airlines services will continue to be shaky

Airlines are trying very hard across the globe to keep their systems operational but the situation was so bad that they were not even able to find enough parking spaces for all the grounded planes. The fact of the matter is that airlines always run at paper-thin margins because of the highly competitive industry and extremely volatile cost structure. Once they are going to get things in the air once more, there will be a lot of turbulence. Many systems were working by duct tape and hammer blows and getting back these systems to operational level in an understaffed and risk-bearing situation will mean many people will miss connections, luggage will get lost many times and all such risks will be very high, creating a strong need for everyone to buy travel insurance online before they fly to anywhere out of the country.


Factor 3: You might get stuck out of India during lock-down

Let there be an assumption that you were able to travel to any country out of India and you landed there all safe and sound, but just before you were supposed to travel back, your host area encountered a sudden rise in infections, making it necessary for the government of that area to suspend all travel activities in and out. In such a situation, you will be stuck in your host country until the government of India can arrange for your return. Travel insurance will be your only help in such a case. It will cover all the extra expenses which you will have to bear during the lockdown.


All things said and done, in the coming few months, international travel will change like never before.


What is travel insurance ?

With the increase in travel, one of the important things that travellers need to know about is Travel Insurance. This form of insurance helps cover a whole range of uncertainties and scenarios that can drain out a traveller’s finances. Most countries require mandatory Travel Insurance while applying for a visa. But choosing the right Travel Insurance which covers all the risks of travel is important.


What does Travel Insurance mean?

Travel Insurance is a type of insurance that covers different risks while travelling. It covers medical expenses, lost luggage, flight cancellations, and other losses that a traveller can incur while travelling.

Travel Insurance is usually taken from the day of travel till the time the traveller reaches back to India. Taking Travel Insurance ensures comprehensive coverage in case of any emergency in another country. Travel Insurance is also available for trips taken in the home country of the traveller like Bharat Bhraman & E-Travel, but it is a more popular option for travel abroad.

Some of the risks covered under Travel Insurance are:

  • Personal Accident Cover, which covers:
    • Insured’s Death
    • Permanent Total Disability
  • Accident & sickness medical expense reimbursement
  • Dental treatment relief
  • Emergency evacuation
  • Repatriation of remains in case of death
  • Baggage delay
  • Loss of checked baggage
  • Loss of passport
  • Flight delay
  • Hijack
  • Home burglary
  • Trip curtailment
  • Trip cancellation
  • Missed connection/missed departure
  • Bounced hotel/airline booking.

There may be more risks covered under individual policies depending on the requirements of the traveller. The amounts to which these risks are covered depends on the policy & plan that the traveller opts for. Travel Insurance also covers additional risks at an additional premium. Some of these risks are specific to the traveller or the place the person is travelling to.


Types of Travel Insurance:

There are single trip Travel Insurance policies meant for one journey. But for frequent travellers who travel abroad for business purposes, there is an option to buy a multi-trip Travel Insurance policy. Some policies last for an entire year and cover multiple trips to a particular destination. Opting for such policies is much more cost-effective for businessmen and frequent travellers to a particular destination. We also have student policies which are specially designed for students going abroad for studies at an affordable premium. The maximum trip length can last from 30, 45 and 60 days.

Another type of travel policy is a Group Travel Insurance policy. A group policy covers 7 or more travellers. These policies are cost-effective and offer similar benefits as single trip Travel Insurance policies. Group Travel Insurance policies are based on the age of the travellers which means it works out more cost-effective per traveller. Most travel companies opt for group Travel Insurance policies when they take groups across different countries on tours.

It is easy to pick out a policy once you know the Travel Insurance definition. While planning your trip abroad, pick out a Travel Insurance policy that provides exhaustive coverage with high coverage. It is possible to check the cost of Travel Insurance on insurance aggregators and pick out the best policy. HDFC Bank offers a variety of Travel Insurance policies through the bank’s website like Student Travel Insurance, Domestic, Senior Citizens, Family and even Individual Travel Insurance. You can easily pick out a policy that suits your need and provides the best value for money.


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