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All you need to know about porting your health insurance policy

Most of us purchase health insurance policies as a financial backup to afford medical treatments at any point in our life. Moreover, our sedentary and changing lifestyle has led to a rise in several diseases like diabetes, cancer, heart attack, etc which requires long-term treatment and hence a regular drain to our financial resources at a time when medical treatments are becoming more and more expensive due to medical inflation.


Health insurance not only protects your hard-earned savings by covering the expenses but also enables you to avail best medical treatment and care with peace of mind as we don’t have to worry about hefty hospital bills. But are you satisfied with the health insurance policy you are currently having? Sometimes a big no, when we find that the current insurer is charging more premium and providing less services than its competitor. So can we port our health insurance policy to that competitor without being in any disadvantage just like we port our mobile numbers?


Yes. The Insurance Regulatory and Development Authority (IRDA) provisions, introduced in 2011, allow you to port your individual/family floater health insurance policies, and you don’t have to lose the benefits you have accumulated like in past when such a move resulted in your losing benefits like the waiting period for covering “pre-existing diseases.”


The insurance regulator protects you by giving you the right to port your policy to any other insurer of your choice. It not only “allows for credit gained by the insured for pre-existing condition(s) in terms of waiting period” but also protects your credit when you move from one plan to another with the same insurer. Please keep in mind that the new insurer is not duty-bound to insure you, this totally depends on his underwriting criteria.


What can you port?


The IRDA provisions say you can port credits on time-bound exclusions and no-claim bonus. The new insurer is bound to give you the credit relating to the waiting period for pre-existing conditions that you have gained with the old insurer, if he accepts your proposal. Do keep in mind that the features of your existing policy are not portable.


You can port only to the extent of the sum insured (including no-claim bonus) with the previous insurer. He will have to insure you at least up to the sum insured under the old policy. For example, if you have medical insurance of ₹5 lakh, but while porting to a new insurer, you want to enhance the sum insured to ₹10 lakh, the porting benefits will apply for only ₹5 lakh plus bonuses, if any.


How to port the policy


Notifying the insurer. You will have to apply for portability at least 45 days before the expiry of the current policy (and not before 60 days).


Specify the insurer (company) to which you want to shift the policy.


Fill up the portability form with existing insurance details, including the name and age of the insured.


Fill up the proposal form with complete details for the new insurer.


Submit the essential documents.


The essential data will be furnished on the IRDAI web portal. The new insurer will have to inform you within 15 days so that if he rejects your proposal, you still have time to renew your existing policy (there is a 30 day grace period if porting is under process). If the new insurer fails to inform you within time, he will be bound to accept the application.


Source: LiveMint

What to do when your portfolio is in down

We all worry about money. It is easy to understand why one would be worried about having little or no money. But, we also worry when we have money. This is especially true if our money is invested in the stock market and there is a market crash. In 2020, during the 1st wave of the COVID-19 pandemic, stock markets crashed dramatically and caught most investors unawares.


While a crash in stock markets or a market correction is impossible to predict, there are various strategies that investors can utilize to minimize its impact on their investment portfolio.


In this blog, we will discuss strategies that investors can utilize to minimize the impact of a stock market crash on their investments.


During market corrections, selling off your investments might seem like a good idea. Negative news such as a pandemic, an asset bubble that’s about to burst, scams being revealed, etc., can influence any investor.


Moreover, in 10 years out of the 20 years, the gap between the best and worst performance days of the NIFTY 50 was less than a month.


This is the key reason why the strategy of timing the market does not work well for most regular investors. The key thing to remember is that fear leads to panic, especially among amateur investors. This panic often makes investor sell their investments at low prices during a stock market crash.


But historically, markets have always recovered from a crash and instead of selling in a panic, you should just stay calm and allow your Systematic Investment Plans (SIPs) to continue. If you manage to continue investing irrespective of market conditions, you will reap the rewards when the markets recover at a later date.


Resist The Urge To Make Panic Buys


Similar to making panic sales during a market crash, it is also important that you do not make panic buys during a market crash. Panic buying can be described as a state of mind that pushes you to make investments indiscriminately, which can become an obstacle to reaching your current investment goals.


After all, when markets are down, it often seems the best time to invest at reasonable valuations. In such cases, investors often invest in Bluechip stocks or purchase Index Funds.


However, many investors forget one key aspect of Equity investing in such cases – their risk appetite. The buying frenzy when markets tank can lead investors to invest in Equities well beyond their actual risk appetite.


So instead of panic buying, you should plan for these investments before markets actually tank. But to do this, you need to know how high or low your risk tolerance is. Only then will you be able to accurately decide how much of your existing portfolio can be moved from low-risk assets such as Debt Mutual Funds and Fixed Deposits to higher-risk assets such as Equity Mutual Funds.


Keep Your Portfolio Rebalanced


Portfolio rebalancing is a strategy that helps in reducing the overall risk in your investment portfolio to provide better risk-adjusted returns on your investments. This strategy involves buying and selling investments periodically so that the weight of each asset class is maintained as per your targeted allocation.


So, the first step in rebalancing your portfolio is to have an asset allocation strategy in place. If you don’t have an asset allocation plan in place already, a stock market crash offers you the perfect opportunity to take stock of your current investments. Some key factors to consider when assessing your current investments are:


• What am I invested in – Mutual Funds, Stocks, Bonds, Gold, etc.

• What is the value of my investments?

• What are my financial goals?


• What do I focus on when building my investment portfolio – consistent returns, growth of capital, etc.


Once you have answered these questions and have a target allocation in place for different asset classes, you can accurately figure out your current situation. Then you can decide which investments you need to buy or sell to reach your asset allocation target.


If done right, rebalancing your portfolio will not only help you stay on course to reach your financial goals but also help manage overall portfolio risk when markets are volatile. That said, it might not be a good idea to rebalance your portfolio in the middle of a stock market crash. You should instead consider letting markets settle down a bit before rebalancing your investment portfolio.


Take Advantage Of Tax Laws


The profits generated by selling Mutual Funds or stocks are called Capital Gains, and these are subject to Capital Gains taxation rules. A fall in the stock markets can be an ideal opportunity to increase the post-tax returns on your investment by using a technique called tax-loss harvesting.


Tax-loss harvesting involves selling your Mutual Funds or stocks at a loss so that you can accumulate a capital loss. This capital loss can then be offset against capital gains from other investments to reduce your tax burden and increase the post-tax returns from your investments.


The tax loss harvesting technique is commonly used by investors towards the end of the Financial Year, i.e., in the months of February and March. But this is not a hard and fast rule, so that the technique can be used at any time during a financial year. A market crash offers the perfect opportunity to book a capital loss by offloading some of the poorly performing Mutual Funds or stocks in your portfolio and replacing them with potentially better performing investments.


Investors can also take the advantage of tax-loss harvesting when they are rebalancing their investment portfolio. This can significantly reduce your annual tax liability while simultaneously improving the asset allocation mix of your investment portfolio.


Protect Your Personal Finances


A stock market crash impacts a lot more than just the value of your investment portfolio. In fact, financial markets can also affect employment, the Real Estate Market, consumption of goods, inflation, and much more. Thus stock market turmoil can have a different impact on different individuals, but there are a few things that you can do to minimize this impact.


• Create a Personal Cashflow Statement

A cash flow statement is a record of all the money that is coming in and going out on a daily basis. By maintaining a personal cash flow statement, you can organize your finances better so that a stock market crash does not impact your ability to take of essential expenses such as utility bills, rent, tuition fees, etc.

Moreover, accurately tracking your expenses can also help reduce extravagant and often unnecessary expenses such as expensive dinners, unused gym memberships, spa treatments, etc.


• Create an Emergency Fund


Another way to protect yourself financially in case of an emergency is to create an emergency fund. In case you do not have an emergency fund yet, you should start one immediately. If you have an emergency fund already, a stock market crash is an ideal trigger to consider topping up the fund with an additional amount of up to 2 to 3 months’ expenses.


• Manage Your Debt


As a rule of thumb, a stock market crash is not the best time for taking on additional debt. If you do so, you run the risk of becoming caught in a critical economic situation. Moreover, a correction in markets might also be an excellent time to refinance existing debt such as a Home Loan, Personal Loan, or Credit Card, especially if you have a good credit score and have paid your EMIs on time to date.


Invest in Equities But Choose Carefully


While Equities are cheaper when stock markets tank, it is essential to be careful when making these investments. One way to benefit from the lower cost of Equities is to change the allocation in long-term investments such as National Pension System (NPS) and Unit Linked Insurance Plans (ULIPs). Both NPS and ULIPs are long-term investments with multi-year lock-in periods.


A stock market crash provides you the perfect opportunity to increase your Equity allocation at a reasonable cost and allows you to switch to a more aggressive asset allocation from a comparatively conservative allocation. This is because Equity investments, especially when purchased at low valuations, have an unmatched ability to boost your investment returns for long-term goals such as retirement.


You can also consider purchasing Equity Mutual Funds and stocks when valuations are low during a market crash. That way, you might be able to generate significantly high returns when markets recover at a later date. For example, if you consider the broad-based NIFTY 500 Index, you will see that this index has gone up by 75% in the previous year, which is substantial. But you must make sure you do sufficient research when selecting individual stocks to invest in.


This is because, when markets recover from a crash, not all stocks give good returns. In fact after the market crash of 2020, many popular names such as Yes Bank, United Spirits, Abbott India, and Bharti Airtel have given negative returns till date.


So, if you plan to make Equity investments during a market correction, make sure you do adequate research. But, if you do not know how to value stocks or don’t have the time to research investment options, it might be a better idea to invest in professionally managed diversified Equity Mutual Funds as compared to investing in individual stocks.


Focus on Making Long-Term Investments


When stock markets tank, a few questions come up every time:

• Will the stock market go down to zero?

• Will the economy recover?

• Can stock prices increase from here?


Every time the answers are the same – the stock market does not go down to zero, the economy always recovers, and stock prices go up, reaching new all-time highs.


While short-term volatility is inevitable when you are investing in Equities, how this volatility affects you depends solely on you. If you are investing for the long-term, these ups and downs in the stock market should not bother you.


So if you are investing for the long-term, you should keep a level head and not pay too much attention to market movements. Instead, focus on your behavior by doing the following:


• Resist the urge to engage in panic buying and selling


• Make sure your portfolio is rebalanced, and you are taking advantage of tax laws


• Protect your cash flows


• Understand that volatility is an integral part of the investment process, and there will be many more market corrections in the future


Bottom Line


A stock market crash offers investors a unique opportunity to grow their wealth. But to take advantage of this crash, you must have a plan in place before the crash happens. The 7 strategies discussed above are designed to help you not only weather a market crash better but also make sure that you can grow your wealth significantly when markets recover at a later date.

Source: ETMoney

What Makes Mutual Funds An Excellent Investment For Young People?

Your early twenties is a phase when you are just a year or two old in your career and slowly beginning to understand the importance of savings and investment. Hence, many youngsters like you are eager to have financial freedom and are looking for ways to use their money smartly. The agenda is to make money work for you and thereby increase your savings and earnings.

Mutual Funds are often the most sought-after option. A simple investment vehicle, mutual fund schemes allow amateur investors to choose among different varieties to create wealth. Besides, looking at the current market trend, mutual funds are one of the best investment routes for young and new investors. Since there is no one-size-fits-all rule when it comes to investment strategies, the earlier you start, the better you’ll learn to manage money.

Let’s discuss why Mutual Funds will prove to be a beneficial investment option for young investors like you:




Investors in their 20’s are only novices in their careers. Hence you may not have enough knowledge and expertise to make large-cap investments. Having said this, it is not that young people are incapable of handling complex financial decisions. Still, Mutual Funds are an easy-to-understand investment vehicle even for those who are starting with the ABC of savings. Because of easy access and fairly comprehensive terms, mutual funds are the best choice for first-time investors.




Mutual Funds hold plenty of securities, like stocks and bonds, under its purview to enable an investor to diversify their investment risk. As a young investor, not only can you enhance your financial portfolio by investing in more than one fund, but you can also lower the risk of your overall investment. In case of an unpleasant economic event, dividing your savings into something as low as even one or two funds will defend your money against a financial crisis. And if the value of your stock falls and the value of your bonds rises, it offsets losses that could otherwise wipe out an entire portfolio in financially tumultuous situations. Since Mutual Funds have a broad market exposure, they are the most advisable investment option for young investors.




When you begin your investment journey, you neither have the money nor the financial skills to take risks. But there are quite a few investment options under mutual funds that require very little money and can be bought without the help of a broker. As a beginner, you can easily open an account within minutes with HDFC Bank via InstaAccount and begin your investment journey with HDFC Bank Mutual Funds. You can create a portfolio with options that best meet your investment goals. Choose between wealth creation, children’s fund, and retirement planning to meet long term goals, while tax-saving and regular income is best to meet short-term requirements.

With HDFC Bank, you can opt for Equity Funds, Debt Funds or SIP (Systematic Investment Plans). Or by opening an Investment Services Account, you can easily carry out transactions and have complete control over your Mutual Funds via NetBanking.


Tax Saving


Before blindly investing in a Mutual Fund, learn about your fund. Every category has its own risks and rewards that will help you decide whether or not it meets your saving goals. For instance, as a young investor who is just starting out in the professional space, tax-saving investments are a sensible choice. If the mutual fund you are investing in is an ELSS fund, you will reap tax benefits under section 80C. ELSS funds have a lock-in period of 3 years and are ideal to meet short-term goals. These investments offer the dual advantage of tax saving and better returns than traditional investment tools.


Bottom Line


Mutual Funds are a smart investment choice for all those are ready to go beyond Fixed Deposits and Recurring Deposits to increase their savings. Relatively simple to understand, Mutual Funds are a safe investment option because SEBI regulates it. However, mutual fund schemes are subject to market risk so always read the documents thoroughly before making a decision.


Source: Hdfc Bank

SIP vs RD: Which Is a Better?

Setting aside a part of your monthly income can be an interesting way to invest money when you know the scheme will safeguard your investment and build wealth to achieve your financial goals. So, if you are looking for a similar investment option, Systematic Investment Plan (SIP) and Recurring Deposit (RD) are the two most popular options that let you invest a fixed amount every month for long-term wealth creation.


An SIP is a provision to make an investment in mutual funds by setting aside a small amount of money monthly or quarterly rather than investing in a lump sum. On the other hand, an RD is an investment tool wherein you can deposit a fixed amount each month for a fixed interest rate and predefined duration. This article elucidates everything about these two investment options so that you can make an informed investment decision.


What is an SIP?


A Systematic Investment Plan (SIP) is an investment tool that lets you invest a small sum of money in mutual funds on a daily, weekly, monthly, and quarterly basis. It is a systematic approach to managing your investments. Depending upon the mutual fund scheme you choose, your invested money will be allocated in debt and/or equity. You can start an SIP with a minimum of Rs 500 a month. With a standing instruction, the SIP amount will get deducted from your registered bank account on a predefined date. You do not have to worry about market volatility and timing the market as you make small investments periodically, typically for the long term. With increased awareness about mutual funds, this disciplined manner of investment has been gaining popularity in India.


What is a Recurring Deposit?


A Recurring Deposit (RD) is a type of term deposit offered by banks. It lets you make regular deposits and earn interest on the investment. Due to the regular deposit factor and fixed interest rate, RD is one of the preferred saving-cum-investment instruments in India. Most banks in India offer RDs for a term that ranges between 6 months to 10 years. You can choose the term in accordance with your financial goal. The RD amount gets automatically deducted from your Savings Bank Account and is transferred to your RD account. The interest rate remains the same throughout the term and does not get affected by market volatility. On maturity, you receive the lump sum amount that includes your investment plus the interest earned. Most major banks in India offer to invest in RDs with as little as Rs 1,000. Since the rate of interest offered on RDs is equivalent to the rate of interest offered on Fixed Deposits, it earns you a decent amount on maturity.


Which is a better investment option?


Now that we have understood the basics of these two investment tools, let’s compare them on certain parameters to decide which option works the best for you.


1. Type of Investment:


SIP is a route offered by mutual funds to invest a fixed amount in a mutual fund scheme at regular intervals. You can choose between debt, equity, or hybrid mutual fund schemes depending on your risk capacity.

Whereas, in an RD, an investor contributes a fixed amount every month for a fixed rate of return. Unlike SIPs, RDs offer an interest rate that remains unchanged until maturity. That said, it neither takes advantage of the market conditions nor does it get affected by market volatility.


2. Risk Involved:


Depending upon the market conditions, the SIPs offer variable returns. Hence, it does involve the risk of returns and capital. However, the carefully chosen and long hold SIPs have consistently given good returns compared to the traditional methods of investment.

Since RDs offer a fixed interest rate, they are considered one of the safest investments for conservative investors who do not want to risk their capital and do not expect high returns.


3. Investment Frequency:


SIP lets you invest periodically, such as daily, monthly, weekly, and quarterly.

You can invest in an RD on a monthly basis.


4. Returns:


Returns on SIPs are based on the type of schemes you choose, such as debt or equity. Also, the fund you choose makes a huge difference in the returns.

The RDs offer fixed returns. However, the bank you choose for an RD makes the difference in the returns as the interest rates vary from bank to bank.


5. Tenure:


There is no fixed tenure for an SIP, but the minimum period is 6 months.

Most banks offer to choose RD tenure between 6 months to 10 years.


6. Liquidity:


In terms of liquidity, an SIP is a better option as it allows you to withdraw funds whenever you need without any charges.

Although RDs allow premature withdrawals, you will be charged a penalty for it.


7. Taxation:


The SIP investments and returns are exempted from the tax only if they are Equity Linked Saving Scheme (ELSS) funds.

Resident individuals below the age of 60 years with an annual income above Rs 5 Lakhs have to pay 10% TDS if the interest earned is more than Rs 10,000.


8. Investment Goal:


Depending on the fund and investment frequency you choose, an SIP can help you build wealth over a period. It can assist you in achieving long-term as well as short-term investment goals.

Since the interest rates offered on RDs are considerably lower, they cannot help you create wealth or achieve long-term investment goals.


To Conclude:


When choosing between SIP and RD, it is advisable to consider your income slab, risk appetite, investment tenure, and investment goal. A combination of carefully chosen SIPs can prove as a beneficial investment if you are open to taking relatively higher risks and ready for a longer investment horizon. However, if you want to minimise the risk, you should consider debt SIPs. If you do not want to risk your capital at all and not looking for high returns, you can consider investing in an RD. For your money to grow in a decent and interesting way, it is advisable to make an investment plan, based on your risk appetite, that includes SIPs as well as RDs.


Source: Personalfn

Which one is better? Daily SIP or Monthly SIP?

SIP is a systematic investment plan which not only helps to bring discipline in investment, but also helps to chalk out the short term market fluctuations. Mutual funds offer SIPs of various durations.


Mutual funds offer the facility of investing in mutual funds through the systematic investment plan or SIP. You may invest in mutual funds through (I) Lump-sum investments (ii) Systematic investment plan (SIP)


Are you confused about the interval of SIPs one should opt for? Please read on for the clarity.


Understanding the meaning of SIP

SIP is a systematic investment plan that brings discipline to your investments. SIP is a facility offered by mutual funds that allow the investor to invest a fixed amount of money periodically in a mutual fund scheme.


SIP is usually a better investment option than a lump-sum investment as it utilises market volatility to average out the cost of the investment. SIP would help you stagger your investment over intervals which makes them safer than lump-sum investments. SIP will enable the investor to buy more mutual fund units when the stock market corrects or crashes and lesser units when markets rise.


It helps you average out the cost of purchase of the mutual fund units over some time. This method has become widely popular as it uses the technique of ‘rupee cost averaging’ to maximise returns with time. Also, by consistently investing in equity funds through SIPs, you get the benefit of power of compounding, which gives a return on your returns. The discipline that SIP brings and maximising return would help the investor build a large corpus in the long-run, even with a small investment.


SIP is a systematic investment plan that brings discipline to your investments. SIP is a facility offered by mutual funds that allow the investor to invest a fixed amount of money periodically in a mutual fund scheme.


SIP is usually a better investment option than a lump-sum investment as it utilises market volatility to average out the cost of the investment. SIP would help you stagger your investment over intervals which makes them safer than lump-sum investments. SIP will enable the investor to buy more mutual fund units when the stock market corrects or crashes and lesser units when markets rise.


It helps you average out the cost of purchase of the mutual fund units over some time. This method has become widely popular as it uses the technique of ‘rupee cost averaging’ to maximise returns with time. Also, by consistently investing in equity funds through SIPs, you get the power of compounding benefit, which gives a return on your returns. The discipline that SIP brings and maximising return would help the investor build a large corpus in the long-run, even with a small investment.


SIPs are available for different durations as mentioned below.


Types of SIPs based on tenure


SIPs can be classified based on their tenure; generally, monthly and weekly SIPs are popular modes of investments.


Monthly SIP: A fixed sum is invested monthly in the mutual fund. These are the most commonly used types of SIPs.


Weekly SIP: A fixed sum is deducted every week and put in the mutual fund scheme.


Daily SIPs: A fixed sum is invested daily in the mutual fund.


Which type of SIP would be beneficial for you?


Studies have shown that SIP frequency, be it daily, weekly or monthly, has no major impact on returns. For instance, the difference in return between daily, weekly or monthly SIPs is negligible over time. However, you could struggle to monitor your investment if you opt for the daily SIP over the monthly SIP. You would be better off going for monthly SIPs over daily SIPs if you get a fixed salary each month. You could opt for SIP dates close to your salary date for convenience.


You may focus on selecting the right mutual fund over the best fund to achieve your investment objectives depending on your risk tolerance. You could consider SIP as a tool for investing in mutual funds. You must look at picking the right equity fund and investing through daily or monthly SIP (as per convenience) to maximise return over a period. However, you could opt for daily SIP if you earn daily wages.


Points to be considered before choosing SIP type:

1- Daily SIPs would get impacted for the funds that have invested in mid-cap and small-cap stocks. Usually, small-cap funds are considered volatile, and day-to-day investing through SIP in small-cap funds would lead to higher volatility than monthly SIPs. Accordingly, if your daily SIPs are getting invested when the market is rising, you may observe higher returns. If the market is declining, then the daily SIPs would give you lower returns compared to monthly SIPs. However, you can expect stable returns when investing in Large-cap funds through daily SIPs.


2-The growth prospects of daily SIPs are usually dependent on the efficiency of fund management. Hence, before investing in the daily SIPs, one should consider the particular mutual fund’s credibility and strategy.


3-Daily SIPs can limit the losses as the investment is made in granular portions; however, as the risk is minimised, the returns are lower than the return offered by monthly SIPs.


4- Daily SIPs are better for individuals who are into business or any profession that earns daily wages. Whereas for people earning a monthly salary, monthly SIP is a better option. The SIP date should be selected closer to the date of salary credit for salaried employees as you have a sufficient balance in your bank account. If the SIP instalment doesn’t go through for three consecutive months, then the AMC cancels the SIP, and the bank can penalise you.


5- Daily SIPs will diversify the investment. Although, you should opt for diversifying your entire financial portfolio. The returns will be average if the purchase price is averaged. But, if the fund is not volatile, the returns of monthly SIPs will be high as compared to daily SIPs.


6- Monthly SIPs offer better investment planning opportunities, as you can monitor the investment in a better way. However, you could struggle to monitor investments if you put money in mutual funds through the daily SIP.


7- Daily SIPs make it very tedious to track investments and returns. Also, you will have multiple entries of purchase of the SIPs in your account, making it difficult to track all assets in one go.


Source: Cleartax

Why Should You Invest In SIP – Know The Benefits

Systematic Investment Plans (SIPs) are a mode of investment in mutual funds, an alternative to lump-sum investment. Most investors are often confused if SIPs are a type of mutual fund scheme or whether it is any different type of investment other than mutual funds. Well, it is important to note that SIPs allow investors to invest periodically where you can buy units of a mutual fund scheme every month by investing some amount.


What is a SIP?

SIP refers to the Systematic Investment Plan where you can invest a small amount at regular intervals in a mutual fund (MF) scheme. Each time you invest, you buy more units of the scheme and you can set a date for auto payment. You can start and stop the SIP any month, without any charges or fees, unlike the Recurring Deposits, where they charge you for premature closure. You can also skip the SIP installment and then continue from the next month without paying any additional charges.


Benefits of SIP

With a SIP, an investor enjoys not only the benefits of a mutual fund scheme through its returns but also gains some additional advantages. SIPs have certain benefits over lump sum investments as explained below:


Power of Compounding

One of the most advantageous features of SIP is the power of compounding. Each time you make a payment, you buy more units, which generate returns on your investment. These returns are further reinvested in the scheme and hence, investors benefit from the effect of compounding. If investors start investing early and stay invested for a long time, they will reap optimum returns from the SIP.


Rupee Cost Averaging

Investors tend to invest in schemes that seem profitable and have been performing well. Usually, when they outperform the benchmark, more investors invest, thereby increasing the NAV (per unit market value) of the mutual funds. Investing in a lump-sum mode means buying lesser units at high prices. But due to market upheavals, the stocks and the returns also rise and fall. The prices of mutual funds units fluctuate. Through SIP investment, the cost of the total units purchased by the investors as long as they continue the scheme is averaged out. When prices are high, fewer units are bought and vice-versa. This is called rupee cost averaging. This is a benefit unique to SIP and not to lump-sum investments.


Light On Pocket

SIP is light on the pocket because you do not invest a huge amount at once but contribute small amounts at periodic intervals. You can also skip the installments when you are running short of money and increase/decrease the monthly SIP amount as per the requirement and financial conditions. Beginners can start with amounts as low as Rs. 500, which makes it convenient even for students and young earners with low-paid/part-time jobs to invest.



SIPs are flexible not only because you can start or stop them anytime or skip an installment but also because you can make changes in the SIP amount. It also offers the flexibility to withdraw money partially or fully without any charges or discontinuing the scheme. This way it can serve as an emergency fund where the money is credited into the bank account once you request the withdrawal. Moreover, several types of SIPs like ELSS and ULIPS are tax-saving and insurance-cum-investment plans respectively. Some schemes also allow investing bi-monthly or fortnightly and allow you to opt for ‘Step-up SIP’ which will uniformly increase the installment amount.


Saving Discipline

SIPs inculcate a habit of regular saving and investments. In fact, you can set a date for auto-debit from the bank account to invest in a scheme and this way you develop a disciplined habit of investment. Every month, you end up contributing a small part of your income to investments that can reap you good returns. It will help you build an inflation-beating corpus in the long run.


Wrapping it up:

Systematic Investment Plans or SIPs are a mode of investment in mutual funds where the investors do not buy units at one time paying a lump-sum amount. Rather, they invest through installments paying small amounts periodically. This helps them to stay invested in mutual funds by dedicating a small part of their income which is light on their wallet. Also, it averages out the total costs of the scheme’s units purchased and has a compounding effect on returns. The flexibility and the low minimum amount of SIPs make it convenient for small investors.


Source: Paytm

Commonly Used Health Insurance Terms and its Meaning

Understanding the terms and conditions of a health insurance policy seems like rocket science to many out there. However, it is always wise to have a knowledge of all the jargons your agent uses at the time of discussing health insurance plans. Here is our list of commonly used health insurance terminology:


Certificate of Insurance

This is the description of all important factors of the health insurance plans like coverage, cash limit and including benefits.



It is the number of hospital expenses that the policyholders agree to pay above the reimbursement cost that an insurer pays. The option of co-payment comes an advantage of a lesser premium.


Cumulative Bonus

The increase in the amount of Capital Sum by a certain percentage for each claimless year is a cumulative bonus. It never exceeds more than 50% of the Capital Sum. They increase the coverage amount and offer better protection to the health insurance holder.



It is the amount of money that the insured must pay every year before consuming the benefits of their respective health insurance policies.


Grace Period

It is the time policyholder get for premium payment to the insurance company even after the due date.


Free Look Period

It is like a window given to the policyholder to review the benefits of the policy. In case of dissatisfaction, the insured can cancel the policy to get money back. It generally lasts for 15 days from the purchase of the policy.


Long-Term Care Policies

They differ from traditional health insurance plans as they are designed to provide a long term cover for services and support to individuals above age 65 for activities like custody care, nursing care or home health care services. They reimburse the holders a daily amount for such services. They are more flexible with more options than other policy programs.


Long Term Disability Insurance

They are designed to protect the future of the holder in case he/she loses his ability to work due to physical disability. They replace the portion of the individual’s income.


Maternity expenses

With a certain waiting period, some health insurance plans provide coverage for maternity expenses. One can reduce the waiting period by paying more premium.



If the policyholders discontinue paying a premium when they switch to another insurer or a fresh plan with the same insurer after encountering an issue with the current policy, they may lose certain benefits of the policy. The portability protects the policyholders from this loss. This is the right rendered to the policyholder (including family cover) to transfer credit acquired from pre-existing terms and time-bound exclusions. It works only when the previous policy is preserved without break in the premium.


Reasonable Charges

These are the charges mentioned on the hospital bills. Generally, insurers prefer paying reasonable charges and not the additional expensive services the insured get from the hospital.


Sum Insured

It is an annual maximum amount that the insurance company pay in case of hospitalisation.


Source: Reliancegeneral

Useful Car Insurance Add-on covers that can boost protection for your vehicle

Car insurance is considered an effective tool to financially protect your car from risks such as road accidents, vehicle theft or third-party liabilities that may occur while driving. While having a valid third-party (TP) car insurance is mandatory for all vehicles plying on Indian roads, few owners are aware that in a standard comprehensive car insurance only an own damage (OD) cover is payable. Other losses like engine damage due to floods or depreciation on value of parts replaced are not covered in own damage cover, which can significantly increase the owner’s liability in many scenarios. Let us have a look at a few indispensable car insurance add-on covers that are recommended to enhance the overall financial protection for your car and to ensure you enjoy a stress-free ownership experience.


Nil Depreciation Cover

As your car ages, its value depreciates with time, and you may not be able to recover the full cost of replacement of car parts. At the time of insurance claim, this results in partial recovery of the cost of parts replaced and can lead to a substantial liability in case of medium to major damages. A Nil Depreciation add-on cover protects you from this depreciation and expands coverage of repair cost to the fullest extent possible.


Engine Protection Cover

While modern cars are considered to be highly reliable, there are susceptible to hydrostatic lock related damages when the car is driven through flooded areas which can lead to huge expenses. Choosing an engine protection add-on cover assists in recovering the cost of repairs to your car’s engine in such situations and also includes scenarios where engine damage arises out of leakage of lubricant oil in case of underbody vehicle damage.


Return to Invoice

If your is stolen or damaged beyond repair, it can cause a lot of mental stress and burn a big hole in the pocket. A Return to Invoice cover (RTI) add-on cover provides full reimbursement of the final invoice value of the car in such situations.

In addition to the above add-ons, other important covers include EMI protection, Consumable cover, No Claim Bonus Protection cover, Tyre, Key & Rim protection cover. It is advisable to compare car insurance policies on more than cost grounds and opt for these add-on covers as per car’s requirement and protect yourself from myriad expenses that can occur in different driving conditions.


Source: Reliancegeneral