5

5 kinds of fake insurance calls

Hundreds of people fall in the trap of fake insurance calls. The fraudulent callers are increasingly ingenuous and appeal to our sense of fear and greed to part with personal details and money. We have compiled here the different kinds of pitches they make. If you come across any of these, just disconnect the call. Also please share this page with your friends and if you have new pitches to add, please put it in the comment section.

Fake Call 1: This is a call from an LIC service branch,  You can transfer the existing policies to new policies for better returns.

Fake Call 2: There is an annual equity bonus lying unclaimed in your Account, which will be transferred to your Insurance Agent/govt. Please deposit money in a certain bank account to avoid this transfer.

Fake Call 3: Your insurance agent purchased insurance policy of xyz company at the time of purchasing your LIC policy. Dividends from policy of xyz company will be transferred to your agent and xyz insurance company. Please deposit money to transfer this money to your account.

Fake Call 4: You are entitled to loyalty bonus for being a valued customer. This bonus is transferred to agent code instead of your code. Give policy details so that the bonus is properly transferred to you.

Fake Call 5: We are calling from Insurance Verification Department. Give your PAN Card number, Bank Details and Aadhaar number to complete the verification process.

9

Indian Stock Market timings

Indian Stock Market Timings

Trade in the stock market can only be undertaken during a specific time interval in India. Retail customers have to perform such transactions through a brokerage agency between 9.15 a.m. to 3.30 p.m. on weekdays. Most investors undertake purchase/sale of securities listed on the major stock exchanges in India – Bombay stock exchange (BSE) and National Stock exchange (NSE). Indian stock market timings are the same for both these major stock exchanges.

 

Indian stock market timings for trade is divided into three segments:

Pre-opening Timing

This session lasts from 9.00 a.m. to 9.15 a.m. Orders to purchase or sell any securities can be placed during this time. It can be further classified into three sessions:

  • 9:00 a.m. – 9.08 a.m.

During this stock market opening time in India, orders for any transaction can be placed. The order entry is given preference when actual trading begins, as these orders are cleared off in the beginning. Any requests placed during this time can be changed or cancelled according to need, which is beneficial to investors, and no orders can be placed after this period of 8 minutes during the pre-opening session.

  • 9:08 a.m. – 9.12 a.m.

This segment of Indian share market timing is responsible for price determination of security. Price matching order is done by corresponding demand and supply prices to ensure accurate transactions among investors who want to purchase or sell a security, respectively Determination of final prices at which trading will begin during normal Indian stock market timing is done through multilateral order matching system.

Price matching order plays a vital role in determining the price at which the security is transacted during a normal session of Indian stock market timing.

However, benefits of modification of any order already placed in not available during this session.

 

  • 9:12 a.m. – 9.15 a.m.

This time acts as a transition period between preopening and normal Indian share market timing. No additional orders for transactions can be placed during this time. Also, existing bets already placed from 9.08 a.m. – 9.12 a.m. cannot be revoked as well.

Normal Session 

This is the primary Indian share market timing lasting from 9.15 a.m. to 3.30 p.m. Any transactions made during this time follows bilateral order matching system, wherein price determination is done through demand and supply forces. Bilateral order matching system is volatile, thereby inducing several market fluctuations which are ultimately reflected in security prices. To control this volatility, the multi-order system was formulated for the pre-opening session and was incorporated in Indian stock market timings.

Post-closing Session 

Stock market closing time in India is marked at 3.30 p.m. No exchange takes place after this period. However, the determination of closing price is done during this time, which has a significant effect on the following day’s opening security price.

Stock market closing time in India can be divided into two sessions –

  • 3:00 p.m. – 3.40 p.m.

The closing price is calculated using a weighted average of prices at securities trading from 3 p.m. – 3.30 p.m. in a stock exchange. For determining the closing prices of benchmark and sector indices such as Nifty, Sensex, S&P Auto, etc. weighted average prices of listed securities are considered.

  • 3:40 p.m. – 4 p.m.

This period is post stock market closing time when bids for the following day’s trade can be placed. Bids placed during this time are confirmed, provided adequate buyers and sellers are present in the market. These transactions are completed at a stipulated price, irrespective of changes in opening market price.

Thus, capital gains can be realised if opening price exceeds closing price by an investor who has already placed their bids. In case closing price exceeds opening share price, bids can be cancelled during the narrow window of 9.00 a.m. – 9.08 a.m.

The overall stock market operating time in India can be demonstrated by the following table:

S. No. NameTime 
1.Pre-opening session9.00 a.m. – 9.15 a.m.
2.Normal session9.15 a.m. – 3.30 p.m.
3.Closing session3.30 p.m. – 4.00 p.m.

Aftermarket Orders

Post this time frame. No transactions can take place. However, investors can place aftermarket orders, for securities of chosen companies, which would be allocated at opening market price the following day.

Muhurat’ Trading 

Indian stock market is generally closed for any transactions on Diwali, as it is a religious festival celebrated all across the country. However, a one-hour trading session is conducted from 5.30 p.m. to 6.40 pm as it is considered to be auspicious.

 

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 calculation of 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.

Know your Mutual Funds (2)

List of banks for your PPF investments

What is PPF?

Public provident fund is a popular investment scheme among investors courtesy its multiple investor-friendly features and associated benefits. It is a long-term investment scheme popular among individuals who want to earn high but stable returns. Proper safekeeping of the principal amount is the prime target of individuals opening a PPF account.

Why open a PPF account?

public provident fund scheme is ideal for individuals with a low-risk appetite and is okay to invest their money in the long term. Since this plan is mandated by the government, it is backed up with guaranteed returns to protect the financial needs of the masses in India.

You can read more about PPF and things to note in PPF in our article.

Eligibility Criteria

Indian citizens residing in the country are eligible to open a PPF account in his/her name. Minors are also allowed to have a Public provident fund account in their name, provided it is operated by their parent.

Non-residential Indians are not permitted to open a new PPF account. However, any existing account in their name remains active till the completion of tenure. These accounts cannot be extended for 5 years – a benefit available to Indian residents.

Interest in a PPF Account

The interest payable on the public provident fund scheme is determined by the Central Government of India. It aims to provide higher interest than regular accounts maintained by various commercial banks in the country.

Interest rates currently payable on such accounts stands at 7.9% and is subject to quarterly updates at the discretion of the government.

How to Open a PPF Account

Both offline and online procedures are available for an individual provided he/she meets the requisite parameters mentioned in the eligibility criteria. Activating PPF online can be done by visiting the portal of a chosen bank or post office.

The following documents have to be produced at the time of activation of a public provident fund account –

  1. KYC documents verifying the identity of an individual, such as Aadhaar, Voter ID, Driver’s License, etc.
  2. PAN card.
  • Residential address proof.
  1. Form for nominee declaration.
  2. Passport-sized photograph.

Tax Benefits

Income tax exemptions are applicable on the principal amount invested in a PPF as an account. The entire value of an investment can be claimed for tax waiver under section 80C of the Income Tax Act of 1961. However, it should be kept in mind that the total principal that can be invested in one financial year cannot exceed Rs. 1.5 Lakh.

The total interest accrued on PPF investment is also exempt from any tax calculations.

Therefore, the entire amount redeemed from a PPF account upon completion of maturity is not subject to taxation. This policy makes the public provident fund scheme attractive to many investors in India.

List of Banks Offering PPF Accounts

  • Allahabad Bank
  • Corporation Bank
  • Bank of Baroda
  • HDFC Bank
  • ICICI Bank
  • Axis Bank
  • Kotak Mahindra Bank
  • State Bank of India and its subsidiaries which include the following –
    • State Bank of Travancore
    • State Bank of Bikaner and Jaipur
    • State Bank of Hyderabad
    • State Bank of Patiala
    • State Bank of Mysore
  • Canara Bank
  • Bank of India
  • Union Bank of India
  • Oriental Bank of Commerce
  • Central Bank of India
  • Bank of Maharashtra
  • Dena Bank
  • Syndicate Bank
  • United Bank of India
  • Indian Overseas Bank
  • Vijaya Bank
  • IDBI Bank
  • Andhra Bank
  • Punjab National Bank
  • UCO Bank
  • Punjab and Sind Bank

These are some of the common PPF Account opening banks. There are other banks too and if you hold a savings account with another bank that is not on the list, you can find out whether the bank is a PPF Account opening bank or not.

 

5

Things To Do After You Buy A Health Insurance

Hi there Usually, we have health insurance and discuss how to get health insurance. In this article, we discuss things to do after you buy a health insurance plan. 1.  Understand claim procedures In the case of emergency hospitalization and in the case of planned hospitalization find out the documents and steps necessary to intimate the insurer. Copy this information from the insurer or TPA’s website onto a word processor, print it, and keep it along with the policy document and policy ID card. 2. Recognise that ‘cashless’ is not a right! Health insurance comes with a right to claim reimbursement. However, cashless claims are more of a privilege than a right. It is quite possible that the insurer may either deny cashless or allow it partially and ask the insured to claim the rest of the expenses via reimbursement after the hospitalization is complete. 3. Prepare for the next premium Even if you choose not to increase the cover each year, do not assume the premium will be the same next year. The premium could increase due to other reasons – age of individuals, the risk profile of the entire group covered by the group, underwriting test, and perhaps medical checkups too. Start an online recurring deposit that matures 6-8 weeks before the premium is due.  If you are comfortable, you can choose to put money aside in a liquid fund for your insurances. 4. Understand the implications of sub-limits There is nothing wrong with buying a policy with room-rent sub-limits. The only precaution is to ensure that the room-rent is always lower than that allowed by the sub-limit. This is because every kind of hospital fee (medicines, doctor fees, etc.) is linked to the room rent. So if you choose a room rent higher than that allowed by your policy, you will only be reimbursed (or paid via cashless) a portion of the hospital bill. 5. Recognize the impact of non-medical expenses Hospitalization is not only about paying hospitalization fees! There is a huge list of non-medical expenses that any patient could incur. There are some administrative expenses, household expenses (while you are hospitalized), support staff expenses, and some expenses which get rejected in your insurance. Even if you believe that your health insurance cover is sufficient, these expenses have to be paid. This is where your emergency fund will come in handy. So ensure that you have one in place. 6. Health Cover for family members If you are the earning member it is very crucial to have your own insurance but it is equally important to have health insurance for your family members, as any medical emergency for them would result in a financial setback for you and the entire family. If the budget is a constraint you can consider taking up a family floater plan - watch our youtube video on this.  https://www.youtube.com/watch?v=F0JNvA5a_eQ&ab_channel=WealthCafeFinancial  Health Insurance could be considered as one of the trickiest insurances to buy as the health issues are very different for each person and then each insurance company has varied insurance needs. As a practice, do understand the various clauses of your insurance and have an emergency fund in place to be stressfree of any unforeseen health issues. 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.



11

Health Insurance: Single Plan or a Family Floater Plan?

Hello fellow investors

With COVID-19, the one thing that everyone has realized is Health insurance is a must! We all need adequate Health Insurance cover and at a good price. Because whether to have Health Insurance or not is no longer a point of discussion. In fact, now we want to ensure that everyone in the family also has Health Insurance.

We have been asked many questions about whether you should opt for a stand-alone health plan or a family health plan; and whether to opt for a top-up plan afterwards. We are going to break down these concepts for you.


How much Insurance should you have?

Before getting into the discussion of what type of plan, it is important that you know how much insurance is enough for you. Ideally, if you live in a tier 2/3 city you must have a cover of at least 5 lakhs and if you are in a metro/tier 1 city you must have a cover of at least 10 lakhs. These are indicative numbers based on the cost of health incurred in different places and you can always take a higher cover.

 


What is an Individual Health Insurance policy?

In the case of individual cover, the policy provides specific health cover for each member covered in the policy. You can decide to have a higher cover for the working member and a smaller cover for the children. Each family member will have a dedicated sum assured under the policy.

For example, you can buy an Individual Health policy that gives a cover of INR 10 lakhs each to yourself and your spouse and INR 6 lakh for your elder kid aged 15 and INR 3 lakhs for your younger kid aged 10. The cover amount is specific to each person and not shared among the different members.


What is a family floater plan?

In the case of a family floater policy, all family members are covered in a single policy. Unlike individual policies where there is a dedicated sum assured, here there is a single “floater” sum assured which is shared between all members of the family. 

For example, if the family in the above example takes a family floater policy with a sum assured of INR 10 lakhs, all the four members of the family share the INR 10 lakhs sum assured. That means the insurer’s maximum liability towards the entire family for a particular year (irrespective of which individual gets hospitalized) stands at INR 10  lakhs.

Under the family floater policy, medical reimbursements can be availed by any or all of the members subject to the total sum Insured.

Let us compare the prices of family floater and individual policies to understand better:

Case 1 - A couple



Family floater plan premiums are determined based on the age of the older person. Given that this is a relatively younger couple, their premiums are not very different.


Case 2 - Parents with 2 children


In case 2, for older parents, there is a significantly higher premium being paid for a family floater plan. In case there is a predetermined illness that would further push the premium for the entire family. However, the 20 lakhs cover under the floater plan would be available to each family member thus increasing the cover amount at a higher premium.


However, where you have a cash crunch, you can go for a floater plan of 5 lakhs wherein the cover of 5 lakhs is available for all members with a reset clause for a cheaper price. You save around 10 K per annum in the premium costs where you go for a floater plan of 5 lakhs for the family. 

The reset clause: Family floater plans come with a reset clause that allows for a 100% reset of the sum insured once in a policy year. This option automatically comes into operation when the sum insured (including the accrued additional sum insured, if any) is already used by one insured person and hence is insufficient for the other. The reset of the policy happens only for an unrelated illness.

For example: In the case above if the husband is sick for malaria and makes a claim of 3 lakhs in a year and later wife gets admitted for a different health issue like blood pressure and has a hospital bill of 4 lakhs. The floater plan will cover it as it would have reset the sum assured. But if the wife is admitted for malaria itself and the bill is of 4 lakhs, only 2 lakhs (to the tune of the original sum assured of 5 lakhs less 3 lakhs claimed by husband) will be payable by the insurance company.

A Family floater policy is value for money and comes a bit cheaper compared to individual policies and that’s a plus especially for young families who are tight on budget for their insurance spending. 
 

No claim bonus: If you do not make any claims under the policy any year, a percentage of your sum insured, say 10%, is added each year to your sum assured. So if in 2019, I do not make any claims under my policy which has a sum assured of INR 5 lakhs, in 2020 when I renew it, my sum assured is increased to INR 5.5 lakhs without any increase in my premium amount. The negative of family floater plan that is that in case of a claim by even one member under a family floater, the entire No Claim Bonus (NCB) is nullified for the year under the policy whereas the same is not true for individual policies.



Top-Up Plan

A top-up plan is a regular health insurance policy that covers hospitalization costs but only after a threshold limit, known as a deductible, is crossed. A deductible is that portion of the claim amount that is not covered by the insurer and has to be paid by the policyholder before the benefits of the top-up policy can kick in.

A top-up plan, therefore, is a cost-effective way to increase your health insurance. You can take a base policy and a top-up over above that policy. This way you can use your base health insurance policy to make a claim up till the deductible amount and use your top-up plan for any payments over that.


Where you want to increase the sum assured of your policy, you can do that only when the policy is due. Top up gives you the option to increase the sum assured at a minimal cost during the year. Hence, Top-up helps you to increase the base sum assured amount for your insurance needs.

What should you do?

The health insurance that you would take would depend upon the age of the oldest member in your family, the number of members, and the premium you are comfortable paying for the same. It would be interesting to check various options and choose which one best suits your needs and pockets.

It is advisable to have separate health insurance for older people or those who are susceptible to illness/hospitalization. By doing that, you are protecting the no-claim bonus clause of the policy and also not paying a higher premium for other insurance.

Hope this helps you understand your insurance needs better.

Happy Investing!


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.



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Insurance is not Investment

When you Invest your money, you part with your money today to get something in return tomorrow. whereas when you get insurance for something, you expect to get financially covered in case an unforeseen event for which insurance is taken occurs.

Thus, term insurance is a pure insurance product, it is not for your living but in case you die, you get the money. According to us, Term Insurance is the cheapest and best way to insure your life.

However, many people feel otherwise and believe that they want to put money in insurance only when they are guaranteed that they shall get something in return either alive or dead. In this bargain, you are just investing (with insurance as add on) but not getting adequate insurance for yourself.

We have already discussed, how a Term Insurance must replace you Financially and how to compute the amount of your sum assured in the article – how to compute your sum assured.

In spite of this many people believe otherwise and want to get returns for their insurance.

Let us understand the same with an example

If you spending INR 5000 for your insurance needs each month.

Case 1 – Where you buy a Life insurance product in which you get an amount on maturity where you do not die like a basic money back policy or an endowment plan. 

Particulars Amount
Premium Per Month              5,000
Premium Per Annum            60,000
Number of years covered under the policy                   30
Total Premium Paid        18,00,000
Sum Assured under this Policy        70,00,000
Amount received on maturity if the person survives        55,30,890

The Rate of Return, in this case, is 6.5%

Case 2 – When you buy a Term Insurance and invest the balance amount in a mutual fund.

ParticularsAmount
Term Insurance Premium per month                    850
Term Insurance Premium per annum               10,200
SIP premium amount                 4,150
Mutual Funds Investment per annum               49,800
No of years covered under insurance and investment                      30
Total Investment Amount           14,94,000
Sum assured under this policy           10,00,000
Amount received if you survive
Term Insurance                      –
Mutual Funds Investment        3,46,16,398

The Rate of Return, in this case, is 15%

Comparison between the  2 cases are as under:

Wealth Cafe actionable – This article is to give you an idea of how important and cheap term insurance is. Buying endowment plans for your insurance needs could be expensive. However, getting an endowment plan for a low-risk investment option could be considered by you for your investment needs. It is important to know the exact return % you are getting from these investments and then, take a decision.

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Have you planned for your parents, Girls !!

Have you planned for your parents, Girls!!!

Let me be very honest, I was never an expert on estate planning or retirement planning. My financial planning expertise was dealing with new bees like me. For my workshops, I started reading a lot and I found this very interesting article that Harsh had preserved since 2009 on Estate Planning, It quoted as under:

“According to Hindu Succession Act, if a Hindu male dies intestate (without making a will), the property is first passed to class 1 heir which include the deceased person’s widow, children, and mother in equal share.” I thought this is pretty fair, the mother, wife and children can all manage easily after the death of the son, everyone is given a good equal standing.

It continues “However, in cases where the ownership is in the name of a woman, her husband and children become equal shareholders of the inherited property upon her death. In cases, where none of them are present, the property can be claimed by her husband’s heir.”

Before I write further about my feelings and research on this topic, please note the following:

  1. I am not a Femi Nazi, I definitely believe in equal opportunities if not equal rights.
  2. We are 2 daughters in the family (i.e. no male sibling to take care of my parents after us).
  3. I have earned and built a decent portfolio of my own before my marriage and my husband’s involvement (and so has he). We both have an individual financially independent life.
  4. All the views are my personal, I am stating laws and its interpretation as per my understanding, I do not wish to ruin anyone’s marriage or any other relationship.

As you may understand, I was pretty shocked by the above language of the law quoted in the article and with very high hopes started researching on HSA has to know more about the inheritance of women’s property in today’s time.

There has been an amendment in HSA, which now states that, property of a female Hindu dying intestate shall devolve on the following persons:

Firstly, upon the sons and daughters (including the children of any pre-deceased son or daughter) and the husband;

(b) Secondly, upon the heirs of the husband;

(c) Thirdly, upon the mother and father;

(d) Fourthly, upon the heirs of the father; and

(e) Lastly, upon the heirs of the mother.

So the law means that if I die (a married woman with some property of her own), without making a will, firstly my property will go to my children. Currently, I have none, so the property will go to my husband. If me and my husband both die, then it shall go to my husbands’ heir (i.e. his parents) and if they are also not there, then it shall go to my parents.

Hence, my parents have the right to my property after my children, my husband and my husband’s heirs.

After knowing this law, I am personally noting down my own will or a plan in case anything happens to me intestate.

  • Some may say, I have an insurance, why do I need to put a will, intestate property includes my insurance money as well. So I have nominated and put my parents as the receiver of my life insurance on my death.
  • I have made a list of assets I acquired pre-marriage and have nominated, appointed my mother and father as the joint holder of the same. I might actually pen down a will very soon.
  • All the assets that I am acquiring post my marriage, is to split in the ratio of 60:40, with 60% devolving with my parents and 40% with my husband and his family.

These are just a few points that I am doing to ensure my responsibilities towards my parents are fulfilled financially even after my death and that my husband is under no pressure to take care of anyone.

Some people may still believe that I am being a feminist and this law may work against the hard work and efforts a husband and his family put on the wife to help her build her own assets. I do not wish to undermine any effort put by the family as a whole. It is very important to know what the law states about the right of a woman. Each situation and a family relationship has to be viewed and analyzed separately before a will is made.

Times have definitely changed and from owning a house to building wealth, the female has an equal stand in both her families and she is equally responsible to her both set of parents. Until girls with no male siblings take steps like these to ensure that their parents are self-sufficient, no parents would kill to have a male child.

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Insurance Frauds and Spurious calls

A friend was duped into buying a Private Company’s life insurance policy when she had just started to work with her first employer. Being new to tax planning, she was sold the policy stating that payment of INR 50,000 per annum for the next 7 years will get her INR 1,000,000 at the end of 15 years.

The friend got a call on her landline asking for her insurance needs. Her mother gave her mobile number to the insurance agent and asked her to coordinate with him. She was so occupied at work that she bought whatever insurance he sold to her convincing her that the investment would double in 7 years and the insurance will also give her tax benefits.

When any salaried individual hears – ‘Tax benefit’, they jump into that investment without really thinking if this is going to give any actual tax benefit.

We have in detail discussed in our Article – Why you must buy a term Insurance and mutual funds av/s a general endowment plan. The article explains with examples how a commonly bought insurance from any insurance companies does not give a return of more than 6%. Whereas a mutual fund gives you a return of 9-15%.

I went with my friend to surrender the policy at the HDFC Insurance office and was surprised to see that around 10 people were waiting to surrender their insurance policy on a Friday afternoon.

Why are the policies missold

The Insurance agents get a commission ranging from 40% to 70% on the premium amount paid towards insurance making insurance the most marketed financial product in the world.

This commission is just not for the first year premium. In some cases, they get it for the first 3 years 40% and balance 3 years 20%.

The high commission makes insurance a very lucrative product to sell.

New ways of mis-selling

The case of misselling has worsened since people have started getting spurious calls in the name of regulatory organizations and government or quasi-government authorities. Recently some gangs have been exposed to a new scam of the Insurance Sector “Fake calls from IRDA”.

This scam is to trap the existing policyholders who are not satisfied with their existing plan and are not getting desired returns, bonus or claims.

  • They get calls from people pretending to be representatives of IRDA.
  • They claim that this call is on behalf of IRDA to address the complaints and grievances of the policyholder.
  • The person receiving such a phone call gets convinced and starts sharing the problems faced with the existing insurance policy.
  • On understanding the issue of the policyholders, these tele-callers convince that they will get the refund of the existing policy and the policyholder can withdraw the actual amount of the premium paid to the company.
  • These callers, the fake IRDA representatives, keep complete knowledge about the functioning of insurance companies, regulatory authority, and norms and then they make the other person convinced confidently and smartly with their conversation.

I have also received calls from IRDA asking if I had any issues or I should own a good insurance product. They are regulatory bodies and hence, it is very easy for people to believe them.

When I told them to send me an email, they started abusing me over the phone and spoke in a very disgusting manner. I immediately knew that they are imposters and cut the call.

How can you protect yourself from such spurious calls?

  1. Do not entertain any insurance provider over a phone call; always ask them to drop an email from their official email ID, providing you the offer and other details.
  2. It is very important to educate your parents about the same. It is very easy to obtain the landline numbers and sell the same to housewives with little or no knowledge about these calls. They end up giving their debit card/credit card pins.
  3. Report all the telephone numbers when you receive a call from one, claiming to be a fake LIC agent or the IRDA regulators.
  4. IRDA has issued a public notice to state that the regulator (i.e IRDA) never makes any calls. “The general public is hereby informed that the Insurance Regulatory and Development Authority is a regulatory body which does not involve directly or through any representative in a sale of any kind of insurance or financial products,” a public notice posted on its website said. It further adds that if you make any kind of transaction with such a fake agent, you would be doing so at your own risk.
  5. Likewise, if you receive calls from an agent claiming to be from LIC or any other insurance company for that matter, it’s best to disconnect the call.
  6. If an agent asks you to pay cash, it should be an immediate red flag. According to LIC’s advertisement, when you buy an LIC policy, you should register the same on their portal for easier management of the policy.
  7. When an agent visits you, you should check his/her license, issued by the insurance company. But, then, we think it isn’t too difficult for fraudsters to make fake license. So, maybe paying a visit to the insurers’ branch office or buying a policy online via the company’s website or online insurance portal, would work better.
  8. Register your policies online on the websites and other private insurers to avoid any communication with an agent. You can coordinate with the insurance providers over emails.
  9. Make use of 15 days /30 days free-look period and read all the policy documents after you have received the same.

These are basic solutions and common sense ways to deal with the problem of spurious calls. However, as many of us are too occupied with work and other commitments, we do not spend too much time to sort our investments becoming prey to such scams.

It is your hard earned money which is being invested in various financial products and hence, you must be cautious on how you manage the same.

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6 things to note before buying a Health Insurance

Health Insurance is one of the most important insurance products to own. In fact, it is a mandatory financial product to own after a term insurance to achieve your financial well-being.

We have listed below the things to note before buying a health insurance.

1) Decide the Sum Insured from the Long-Term perspective

The biggest mistake one makes when buying Health Insurance, is consider the expenses that you may incur today. However, in reality, health insurance is bought for 20-25 years from now.

Hospitalization costs today would be ranging from 50,000 INR to 300,000 INR. Assuming you are 30 today, at an modest average healthcare inflation of 7.5% for the next 20 years, single hospitalization bills will range at around Rs. 13 Lakhs when you are 50 years old.

It is very important to think in long-term while deciding the cover of the policy and hence, you must take a higher cover.

2) Know about the things that you must ignore and consider.

There are many features in a health insurance policy. You must have read the same in the insurance brochures and pamphlets. It is important to be able to distinguish between the features that must be considered versus the add-on features which should not be your deciding factor.

Features like Ambulance, Daily Hospital Cash, Domiciliary, and any other benefits that don’t get used often, have low consequences in your health planning. These should be overlooked so that you could focus on the main features like the network of hospital, fees for doctor consultation, Room rent Limit, ICU charges. Check if they are paying for medicines or not and these kinds of expenses which make the major part of your overall bill.

Things like Ambulance charges are not more than Rs 2,000 , if you have to pay it from your own pocket, even that its totally fine. Why choose a policy based on this feature? Its always a bonus advantage and nothing else.

3) Know about the Sub limits in your health insurance.

Many Health Insurance policies have room rent capping, which means you are eligible to claim expenses of the room renting up to the decided cap limit. In case you opt for a room above this cap, you will have to bear the additional proportionate expenses on your own. Let me give you an example

Lets say, as per your policy you are room rent limit is Rs 4,000 per day . Now if you get hospitalized and you choose a room which has room rent of Rs 10,000 . You might think that you will just get 4,000 per day for room rent from the insurance company and other charges you will get as per the limit. But thats not true.

Other hospital expenses such as doctor’s consulting fees, medicines, reports, scanning fees etc are also dependent upon the room that you opt for. If you select a room which is higher than the room cap set. The expenses based on the room rent cap will be reimbursed not on an actual basis but based on the cap set. Other expenses are also proportionate to the room capping

Hence, your preference of health insurance should be in the following order:

  • Policies with Private Room eligibility.
  • Policies with No Room Rent capping.
  • Policies with Room Rent capping.

4) Check for the cost-sharing issue or the co-pay

Many private health insurance companies have a co-pay policy where you have to bear 10%-20% of your health bills. With a big surgery or a huge expense, this amount can also be huge and you may not be in a position to bear it when the time comes. Hence, ensure that all the major expenses of your health bill are covered in your insurance.

5) Tax deduction under section 80 DD of the Act

Ensure that your children, spouse, and parents are also covered by an appropriate health insurance. Anyone can suffer from any health issue and insuring them will reduce your personal financial burden. The benefits of getting your family covered do not end at the level of security rather it offers great tax benefits as anyone paying premiums for parents, apart from themselves, spouse and children, they can claim deductions up to INR 55,000, according to Section 80D.

6) Don’t be late in buying a health insurance

We always advise that term insurance and health insurance should be bought at the earliest possible. These financial products are obtained when you are in good health and young age to reduce the cost of them, After you have developed any health issue it will be very difficult to obtain a health insurance policy which without co-pay criteria.

 

 

 



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