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Protect Yourself From The New Strain of Covid-19 Variant-Omicron!

Amidst the spread of COVID-19 across the country, people are facing a lot of issues related to health & other life-related issues. The Indian Government is leaving no stones unturned & taking all precautionary measures to curb the spread of the virus and its variants including the Omicron.

Experts are still learning about this variant & its deadly effects. It has around 50 mutations, which potentially makes the variant more transmissible & deadly. There are almost 50 mutations & 32 are in spike proteins. The virus uses them to enter the human cells. 10 are mutations of exceptionally high relevance.

This deadly virus is surely a “Variant of Concern”, placing the new strain into the most troubling category of Covid variants, along with Delta, and its less strong rivals Alpha, Beta, and Gamma.

The WHO had expressed its concern & said that it is not yet explicit whether infection with Omicron causes more serious disease compared to other variants, including Delta. The known mutations that may withhold immune escape potential and possibly transmissibility advantage. The likelihood of potential further expansion of Omicron at the global level is soaring.

The likelihood of potential further expansion of Omicron at the global level is soaring. The total global risk associated with the new VoC (a variant of concern) Omicron is estimated as very high.

Omicron Variant Safety Precautions

The oncoming of the new deadly Covid-19 variant shows once again that the pandemic is far from over — and Covid-norms to be followed strictly for breaking the chain of transmission:

Following are the preventive measures that you must take in order to protect yourself and your loved ones from the Omicron variant:

  1. Mask yourselves while venturing out of your house
  2. Be in good ventilation in all shared spaces
  3. Maintain social distancing practices when in public places
  4. Wash your hands regularly with soap and water for around 20 seconds and carry a sanitiser with you
  5. As per Govt guidelines, get your shot of Covid vaccine at the earliest

In these Covid times with growing medical needs and rising inflation, we must secure ourselves with a medical health plan. A simple outpatient procedure can make your wallet considerably lighter.

An insurance policy will help you get the best medical care and you don’t have to worry about expenses. A good insurance plan ensures you don’t have to dig into your savings in the time of a medical emergency.

It also helps cut down the cost of medical expenses in cases such as day-care procedures & routine check-ups. At the cost of a small premium every year, you can protect yourself and your family from huge financial losses in the time of a medical emergency.

Health insurance comes with a plethora of benefits that are not just limited to offering financial cover during medical emergencies but also offers you peace of mind.

Even though you are in good health at the moment, health insurance covers more than only illnesses and diseases. Accidents can happen at any time, regardless of one’s age or level of physical ability.

In such a situation, having health insurance could be beneficial. Coverfox.com has tied up with multiple insurers to provide the best health plans including Covid-19 health plans. If you wish to get comprehensive protection we would recommend going for comprehensive health insurance else there are COVID 19 specific policies such as Corona Kavach and Corona Rakshak you can opt for.

 
Corona Kavach Policy (Corona Health Insurance)

This plan grants you a cover against hospitalization due to Covid-19. Although, one needs to get hospitalized for a minimum of 24 hours/full day. This Corona Kavach Policy covers your covid-19 hospitalization cost, bills related to AYUSH treatment that go up to Rs. 5 Lakh & expenses related to home treatment as well.

The expenses of items that are consumable are also covered in this policy. These items include PPE kits, oxygen cylinders, ventilators, masks, gloves, etc. The advantages of the policy under the terms and conditions of the Corona Kavach policy remain the same regardless of the insurance provider.

ELIGIBILITYSPECIFICATIONS
Age of Entry18-65 years
Types of CoverageFamily Floater or Individual
Sum Insured AmountRs 50k – 5lakhs
Discount % on Premium5% for doctors & health workers
 
Corona Rakshak Policy (Coronavirus Health Insurance)

If you are found covid positive & if it’s diagnosed in the policy term period, you receive a lump sum amount on your hospitalization. However, the hospitalization needs to be for a minimum of 72 hours/3 Days. The timeline of this policy is minimum 3.5 months & maximum 9.5 months.

ELIGIBILITYSPECIFICATIONS
Age of Entry18-65 years
Types of CoverageIndividual
Sum Insured AmountRs 50k – 2.5lakhs
Discount % on Premium5% for doctors & health workers

Key Takeaways- During these unprecedented times, you must focus on protecting your as well as your family’s interest & health. This is why it is recommended to own a reliable health insurance plan with COVID-19 cover to avoid any uncertainties. You can select either COVID-19 specific health insurance plans or regular health insurance plans to get the required cover. All you need to do is connect with the customer care executives at Coverfox.com and share your budget and other requirements. The representatives will help you buy the most suitable policy within a few minutes. 

Source: coverfox.com

9 income tax saving tips that also help financial fitness

Here is a look at 9 ways one can save income tax and improve one’s overall financial fitness.

 

1. Investment in tax-saving instruments

To encourage saving by citizens, the government has provided certain tax deductions on the amounts invested in specified instruments under section 80C of the Income-tax Act, 1961. Some of the popular specified investment instruments for tax planning are:

  1. Employees’ Provident Fund (EPF)
  2. Public Provident Fund (PPF)
  3. Fixed deposits (tenure of 5 years or more)
  4. Life insurance policies

Investing in these instruments wisely can serve the dual purpose of meeting financial goals and tax savings (up to an investment limit of Rs 1.5 lakh per financial year) concurrently. However, tax savings will be available only if an individual opts for the old tax regime. If one opts for the new tax regime, which offers concessional tax rates, one will have to forgo many of the tax deductions and exemptions available under the old tax regime like the section 80C benefit. For those who have opted.

 

2. Selection of appropriate components in the salary structure offered by the employer

In the case of a salaried individual, one can evaluate the salary structure offered by the employer and opt for those salary components which help maximise tax benefits.

For example, one can opt for House Rent Allowance (HRA) in case they are paying rent, telephone/ internet expense reimbursements, education allowance, food coupons, etc. Accordingly, one can claim appropriate deductions/exemptions.

 

3. Increase in retirement fund contribution

Salaried individuals can look at making an additional contribution towards the ‘Voluntary Provident Fund’ in addition to EPF if the investment limit of Rs 1.5 lakh is not exhausted.

This additional contribution will also be deductible from taxable income subject to conditions. Further, the employer’s contribution to NPS (subject to 10% of salary) will provide an additional deduction to the employee.

However, do keep in mind that the employee’s contribution to EPF and VPF should not exceed Rs 2.5 lakh in a financial year, or else income tax will be payable on the interest accretion on the excess provident fund contributions.

 

4. Tax benefits on a home loan

If a housing loan is availed from a financial institution such as a bank or NBFC or housing finance company to acquire/ construct a house property, then the interest and principal paid on the loan taken can be claimed. claimed only if the old tax regime is opted for. Do keep in mind that the deduction on the principal repayment amount is subject to the overall Rs 1.5 lakh limit under Section 80C.

 

5. Protecting oneself with health insurance

Income tax provisions provide for deductions against premiums paid towards health insurance for self, spouse, dependent children, and dependent parents.

Hence, one can buy health insurance for oneself and family members to help manage medical expenses in case of health emergencies and at the same time, avail tax benefits for the premium paid towards these policies (Rs 25,000 for self, spouse, and dependent children; Rs 50,0000 for senior .. for senior citizen parents, as applicable).

Similarly, if senior citizens are not covered under any health insurance policy, then also they can claim a deduction of up to Rs 50,000 for medical expenses made during the year.

 

6. Claiming an appropriate deduction for medical expenses, tuition fees, etc.

It is important to note that in certain instances even if one doesn’t make any additional investment, tax benefits can be availed in connection with certain expenditures incurred like Rs 5,000 for preventive health check-ups.

However, the deduction for expenditure on health check-up is subject to the overall limit under section 80D which includes the health insurance premiums mentioned above. Also, Also, parents can claim a tax deduction of up to Rs 1.5 lakh under section 80C (under the overall limit of Rs 1.5 lakh) for the tuition fee paid for their children’s education.

 

7. Filing of tax returns within the specified timelines


The importance of filing income tax returns and other statutory forms (as applicable in one’s case) within the specified timelines cannot be emphasised enough. by the tax authorities. Further, filed income tax returns (ITR) are also required to be submitted for various purposes like applying for immigration documents, housing loans, carrying forward losses, certain high-value transactions, etc. Hence, it is important to file one’s ITR within the set timelines to avoid interest/ penal implications.

 

8. New concessional tax regime

A new simplified optional personal income tax regime has been introduced by the government from FY 2020-21 onwards.

Subject to certain conditions, an individual or HUF will have the option to pay taxes at reduced slab rates which are applicable without certain exemptions and deductions. In view of the same, one can compare tax payable under the existing and new tax regime and opt for the regime which is more beneficial from a tax perspective.

 

9. Documentation requirements

While no documents are required to be uploaded while e-filing ITR, one should maintain an adequate record of documents for investments made like PF account statements, passbooks, copies of insurance policies, pension plans, bank statements, etc. for a hassle-free interaction with the relevant authorities.

Source:economictimes.indiatimes.com

How to plan your finances for the New Year 2022

As we inch closer to the new year, forming resolutions becomes imperative in order to set goals for the forthcoming year. Setting a budget, getting finances in check and carefully analysing your savings and investments comprise a key part of the financial aspect of resolutions. However, there are multiple other factors that are kept in mind while making that decision. There are multiple methods and practices along with financial tools that one can use to plan finances carefully and ensure a level of financial wellness.

 

The Guide to Financial Planning this New Year

December is the time everyone starts setting resolutions for themselves and before the new year arrives, here are a few easy-to-implement ways in which you can plan your finances for the coming year:

 

Budgeting: The Foundation of Financial Planning

Almost all financial planning depends majorly on having a budget and following it diligently. It is important to analyse past income sources, expenditure, investments and savings to get a clear picture of your financial standing and then plan accordingly how you want to spend, save and invest your future income.

A fixed budget puts a healthy constraint on your expenditure as well as gives you a number that you should ideally aim to save. Adopting the 50-20-30 rule, as mentioned in the famous book All Your Worth: Ultimate Lifetime Money Plan” by Elizabeth Warren, could be a great way to start as it allows you to have a better, more crisp idea of how to spend your money while also saving a particular amount.

 

Monthly Savings: Your ‘Rainy Day’ Saviour

When setting up a budget, it is imperative that you set an amount aside as savings or “rainy day fund”. A financial resolution that you should strive to include in your list of resolutions is to either save an amount of money every month or have a bigger goal and amount for the end of the month.

A few ways you can save more are by sorting priorities, differentiating between essentials and non-essentials, setting up fixed or recurring deposits with a bank, etc.

 

Building an Investment Portfolio: Your Retirement Companion

Investments assure present and future financial safety. They enable you to increase your wealth while also generating inflation-beating returns.

After you have a fixed plan for savings, the next important step is to figure out how and where to invest. Investing instills financial discipline by establishing a habit of getting away a specific amount each month or year for your investments.

 

Expenditure Control

In today’s day and age, when everything is available at your finger steps, people don’t realize how vastly their spending capacity has increased. The use of mobile apps and mobile-based payments have made it easier for consumers to get things done quickly, and that has changed the way a transaction is perceived now in comparison to earlier. Preferring food delivery overcooking, multiple streaming platform subscriptions, etc are now opted more by the millennial generation.

This in turn has given rise to a lot of expenditure that is non-necessary and can be avoided very easily. Expenditure control can help increase savings and allow more assets to be invested, as the more you save, the more you can invest.

 

Insurance: Your Safety Net

Insurance is essentially a financial safety net that you can rely on in times of distress. It is an extremely important and valuable financial tool. Purchasing insurance is critical because it ensures that you are financially secure in the event of a life crisis, which is why insurance is such a vital aspect of financial planning.

It not only allows financial security but also reduces stress at a later stage in life, especially when things would go south. A prime example of this was the pandemic when an unprecedented crisis struck the world, and it got extremely difficult to manage finances with the increasing costs of medical expenses and aftercare. The peace of mind that insurance provided to people in such a time is also what makes it a widely appreciated policy.

 

Summing Up

These are the most common ways in which you can plan your finances for the upcoming year. Since these methods are evergreen, they are sure to work perennially and also across the years.

Having said that, it’s important to take these methods seriously, as most people are aware of them but tend to overlook them.

Another critical point to keep in mind is to set realistic goals and aspirations to not overburden yourself and keep things going smoothly.

These are a few ways you can ensure your financial wellness, but it is essential to keep in mind that it is a step-by-step process that you need to take one day at a time.

Source: financialexpress.com

 

Why It Is Important To Have A Fire Insurance For Your Business Property?

Being a business owner, you have to take care of a lot of things like overseeing operations, finding innovative ways to grow your business, reviewing financial data, and a lot more. When you are busy planning about all these important aspects, you may not be able to identify every possible risk which threatens the future of your company.

Among all, fire accidents are quite common in the workplace. It may cause huge damage to your business property. Cooking was the most common reason followed by carelessness and electrical malfunctions for such a fire outbreak. It’s important for all small business owners to take precautions and minimize the fire risk involved.

 

Find out fire risks at the workplace

A business owner’s policy includes general liability insurance coverage with certain property coverage. He should identify specific fire risks. After evaluating the possible outbreak, you must opt for the right fire insurance among all the policies available.

 

Importance of fire insurance and how it works

When you have fire insurance on a BOP, coverage will be provided regarding:

  1. New property
  2. Lost business income
  3. Physical loss or damage to the personal property of the business
  4. Betterments, office fixtures, and improvisations

​Those who buy fire insurance against their business property will stay protected from the losses incurred during the damage. If the damage occurs, you file a standard fire insurance claim. And the insurance company verifies standard claims prior to issuing compensation.

However, if you don’t know how to follow steps in the process properly, approach the agent as soon as possible.

 

Types of fire insurance

Usually, it’s hard to find different types of coverage specially designed for fire outbreaks at the commercial place but some provision is of great help. To cite an instance, if you know that overloaded outlets may result in fire accidents that may cause damage to the company’s computers or network servers. To deal with all this, you can avail benefits of fire policies providing electronic data loss coverage. This is an upgrade option for BOP which provides the coverage for interruption of computer operations, lost data, and e-commerce operations.

As we all know that fire from any source can destroy computer hardware so the upgrade is highly beneficial for business owners.

 

Advantages of fire insurance

When you have a BOP, it assures peace of mind, provides protection against physical property, and safeguard the future of your company. In case an electrical fire has caused damage to your computers and stock and you are finding it tough to continue business operations, BOP can provide coverage for temporary business interruption.

Remember, your physical property is covered and the business can easily recover in financial terms with the help of the best suitable fire insurance policy. When you fail to insure the possible business risks, there will be limited scope to reopen and start it all over again.

 

Conclusion

All in all, it’s important for every business to ensure coverage against fire outbreaks due to any reason mentioned in the policy. Choose the right fire insurance policy after important considerations.​​

 

Source:reliancegeneral.co.in

 

Be Your Own Santa This Christmas With These Financial Gifts

Christmas is upon us, and it is that time of the year when we eagerly look forward to giving and receiving secret Santa gifts. However, what if this Christmas is a little different from the rest, and instead of expecting gifts, you present yourself some. And, what if they are financial ones that can help you going forward?

Read on to know the multiple financial Christmas gift ideas to help you secure your future and augment your riches. Let’s get started.

 

Mutual Fund Investment

Mutual funds need no introduction. They are one of the most potent financial tools to help you accumulate a corpus for different life goals – short and long term. Thanks to rising financial literacy and innovative campaigns such as Mutual Funds Sahi Hain, they have become quite popular among investors.

This Christmas, you can contemplate investing in mutual funds to achieve your goals.

If you are investing in mutual funds for the first time, you need to be KYC-compliant, post which you can invest in your chosen fund. You can invest through a systematic investment plan (SIP) or lump sum. In the former, a certain amount of money is deducted and invested in your chosen fund on a specific date. On the other hand, in the latter, you invest a chunk of money at one go.

 

Long-term Stock Investment

Long-term stock investment can help you gain inflation-beating returns. Investment in fundamentally strong stocks can help you nullify the effects inflation has on your wealth. Note that stocks are volatile in the short term. Only if you remain committed to them for the long haul can you make real gains.

When markets crashed in March 2020, many investors panicked and took the exit route. However, those who remained committed to their investments enjoyed meaty gains. So, if you are investing in stocks, adopt a long-term strategy and stay committed to your investment, come what may.

 

Building Emergency Fund

An emergency fund is an absolute must, and Covid-19 has further accentuated its importance. While earlier it was advisable to have an emergency fund equivalent to six months’ expenses, given the recent experience, it’s recommended to have a fund close to a year’s expense. You can build it by investing in instruments such as liquid funds that invest in debt instruments maturing in 91 days.

For that matter, you can also contemplate investing in a bank fixed deposit to build an emergency corpus. Make sure the corpus is easily accessible. Don’t chase returns, and capital safety should be your prime concern.

 

Buying Health Insurance

Health insurance prevents out-of-pocket expenses during a medical emergency and prevents drying up of savings. This Christmas, you can gift yourself a health insurance policy to ensure funds are not a paucity in receiving the best possible treatment. You can either buy an individual plan or a floater policy that will cover all the members of your family.

Compare different plans and choose the one that best fits your needs. Also, while filling up the proposal form, provide accurate information as any wrong information could result in claim denial. If you live in a metro, it’s wise to have a policy with a sum insured of a minimum of Rs. 5 lakhs. On the other hand, if you already have a health plan, review it to ensure that the sum insured is adequate.

 

Conclusion

Buying yourself these Christmas gifts can hold you in good stead in the years to come. They will help you accomplish your goals and ensure a smooth ride amid turbulence. Merry Christmas!

5 Most Common And Avoidable Tax Saving Mistakes

Morgan Stanley’s advertisement on tax-saving showed a catchy line, “You must pay taxes. But no law says you have to leave a tip.” The ad highlighted the importance of not ignoring the opportunity to legally save on taxes. Because, the lower amount of taxes you pay, the greater is your disposable income.

 

Mistake 1: Delaying Tax Saving Planning Till March

Many people delay executing a tax-saving plan until the end of a financial year, i.e., March. However, this is far from a good strategy. The truth is that the sooner you start working on your tax-saving planning, the better.

 

For instance, if you invest money in your PPF account in the first month of the financial year, you will receive a lot more tax-free interest for the year than investing the money in March.

Similarly, starting financial planning early in the financial year allows you the convenience of investing in an ELSS fund via the SIP route. Otherwise, you will have to put a large chunk of money later in the year. And this can be pretty troublesome from a cash flow perspective. Moreover, you may also end up borrowing money from credit cards to invest, which is a horrible idea.

So, don’t make the mistake of waiting until March to start your tax planning.

 

Mistake 2: Tax Saving Is Only About Investing

People often assume that tax saving is only about investing money in tax-saving products. It happens because much of the marketing effort is attracting your attention to products like ELSS, tax-saving fixed deposits, insurance policies, etc.

However, investing is only one part of sound tax management. The other important part that doesn’t receive due attention is how you manage your spending. Income tax laws allow for several deductions from your taxable income for certain expenditures that you make. For instance, payment of children’s tuition fees, health insurance premium, repayment of home loan, education loan, and house rent are expenses that quality for a tax deduction.

As a taxpayer, you need to explore all such tax-saving options to determine what works best for you. The more prepared you are with the tax laws, and the sooner you act on them, the better are your chances of minimizing your tax outgo.

 

Mistake 3: Not Evaluating Enough On Tax Saving Products

You can evaluate every tax-saving investment option on three broad parameters. The first parameter is liquidity, which simply means the ease you can access and withdraw your money when you need it. In this regard, you must have a clear understanding of the instrument’s lock-in period in addition to the premature withdrawal rules, including its taxability and penal charges.

The second broad parameter when evaluation a tax-saving financial product is the risk of losing money. Some investments are inherently volatile. And these are generally the investments that have some component of equity in them.

INSTRUMENT UNDERLYING ASSET CLASS RISK (LOSS OF CAPITAL) EXPECTED RETURNS *
Public Provident Fund Debt No 7 – 8%
Equity Linked Saving Scheme (ELSS) Equity Yes (Moderate) 12 – 14%
Sukanya Samriddhi Yojana Debt No 8%
National Savings Certificate Debt No 7%
Post Office Time Deposit Debt No 7%
Bank Tax-Saver Fixed Deposit Debt No 6 – 7%
National Pension System (NPS) Equity & Debt Yes (Low) 8 – 12%
Unit Linked Insurance Plans Equity & Debt Yes (Moderate) 7 – 12%

* Estimates Based On Historical Performance; May Not Sustain In The Future

That said, it is also crucial to factor that the presence of equities allows instruments like ELSS, ULIPs, and even NPS to offer inflation-beating returns over the long run. So as an investor, you need to ask yourself how comfortable you are in tolerating some volatility in the portfolio to make more returns.

Finally, the third parameter you need to consider when picking tax-saving products is their post-tax returns.

INSTRUMENT TAXATION
Public Provident Fund Tax-Free
Equity Linked Saving Scheme 10% Tax Payable On Long Term Capital Gain Exceeding ₹1,00,000
Sukanya Samriddhi Yojana Tax-Free
National Savings Certificate Interest Earned Is Taxable
Post Office Time Deposit Interest Earned Is Taxable
Bank Tax-Saver Fixed Deposit Interest Earned Is Taxable
National Pension System 60% Maturity Is Tax-Free; Rest 40% Goes To Annuity Which Is Taxable
Unit Linked Insurance Plans Mostly Tax-Free Except Where Annual Premium Exceeds ₹2,50,000

Investors generally check for tax benefits in terms of the deduction it allows. For example, a PPF or ELSS offers deduction under Section 80C. NPS provides a little more.

But what’s equally important to understand is the taxation on the income earned by that asset. And also how the maturity proceeds and early withdrawals will be treated from a taxation perspective.

Understanding these aspects can not only help you zero in on the right investment product, but it can improve your post-tax returns as well.

A big problem with not having an acceptable awareness or knowledge of tax-saving instruments is the inherent inefficiency in the planning process. This inefficiency often passes down as a legacy from parents and other well-wishers.

Consequently, many investors continually invest in LIC policies and other small saving schemes that typically struggle to beat inflation. While such investments with subdued returns can help you save some taxes in a particular year, you may end up wasting a lot more in potential returns on your money by investing in these products.

 

Mistake 4: Investing In Insurance-Cum-Investing Products

Every year in March, millions of Indians blindly invest in traditional life insurance plans like endowment and money-back policies to save taxes.

Such is the last-minute rush that life insurance companies have effectively marketed the month of March as India’s tax-saving season. And it should come as no surprise that insurance companies rake in around 20% of the entire year’s traditional life insurance policy sales.

Now, from a utility perspective, these insurance-cum-investment plans offer meager returns and often struggle to catch up with the long-term inflation rate, which is about 6%. Not just that, these products deliver lower returns than what a PPF, National Savings Certificate, or other small savings schemes offer.

Additionally, these insurance plans come with an investment commitment that runs from 10 to 20 years, and any attempts at a premature withdrawal or policy closure attract a heavy penalty.

 

Mistake 5: Not Diversifying Your Tax Saving Investments

All the tax-saving products come with lock-in requirements. As a result, they seldom align with your short-term financial goals. That is why you must understand how these investments fit within your overall long-term financial goals.

Most individuals rarely look at their investments in PPF, EPF, and other instruments as part of their overall financial portfolio. In effect, such investors grossly miscalculate their asset allocation.

Consequently, they invest less in the equities and miss the chance to accumulate a bigger corpus in the long run. While they think they are in a particular risk profile, unfortunately, their investments are stuck in a different risk basket.

 

Conclusion

Tax planning investments are no different from conventional investments. The basic principles such as asset allocation or diversification apply to managing tax-saving investments as well. Now that you know the most common and avoidable tax-saving mistakes, you can reflect on how you work your tax-saving activities.

Source:etmoney.com

Do I Need A Term Insurance If I’m Healthy

You often plan for your rainy days, your financial goals, your retirement, but forget to value what you really have, i.e., the present. You need to invest in your present in order to secure your future. This means that even if you are healthy today, you need to invest in a term insurance plan in order to ensure your family’s financial security in your absence. You don’t know what happens to you or your loved ones the next minute. There’s a possibility that your health deteriorates in the future or when you get old. Thus it’s good to buy a term plan now before it gets too expensive or you become uninsurable. Besides, here’s a list of reasons that shows why is it important to buy a term insurance plan irrespective of the state of your health.

 

 
Easy to understand

 As compared to other life insurance plans, term plans are easy to understand. All you have to do is pay your premiums and get insurance coverage for the term period chosen by you.

 

Affordable

If your budget is tight, then it’s ideal to buy a term insurance plan as it costs less than other insurance plans. Moreover, term insurance is good for a person who has a low income but needs higher coverage.

 

Tax benefits

This is yet another significant benefit of buying a term insurance plan. Not only premiums paid for term insurance are less, but they are also eligible for tax benefits. You get to enjoy tax benefits on the premiums that you pay towards the term insurance plan as per Section 80C and Section 10D of the Income Tax Act, 1961. Tax benefits under the term insurance plan are as per prevailing tax laws that are subject to time to time amendments.

 

Lower premium rates

The premiums paid for term insurance plans are much less as compared to other plans. Therefore, buying a term plan is the best option for someone who gets a moderate income and is the only breadwinner in the family.

 

Spousal cover

You get the option to cover your partner under the same policy.

 

Financial security

It is important to have a term insurance plan if you are the only breadwinner in the family as a term plan offers coverage to your family if something unfortunate happens to you.

It offers financial coverage that takes care of your family’s financial liabilities in your absence. Thus, if you don’t want your family to compromise on their lifestyle in the future, then it’s good to buy a term insurance plan for your family.

 

Flexible premium payment option or term

A term insurance plan also gives you the flexibility to choose your premium payment option. Premium payments can be made either monthly or annually, depending on the choice of the policyholder. Also, you get the flexibility to choose your premium payment term that ranges from 5 years to 40 years.

 

Rider benefits

Term insurance plans also come with add-on coverage options if you want to enhance the coverage of your policy. You can easily get a rider by paying some additional cost along with the basic premium of the policy.

 

Whole life coverage

A term plan offers financial security for a longer period of time. You get the life coverage option of up to 80 years along with in-built death and terminal illness death benefits.

 

On the whole, investors need to know that term insurance plays a very important role in your financial planning.

Source:canarahsbclife.com

7 Ways Smart Spenders Save and Invest Their Money

Spend today, or save for tomorrow? The former gives us a rush of instant pleasure, while the latter helps us build a solid future for ourselves and our families. However, what’s the point of putting in long hours at the office if you cannot enjoy the fruits of your labour – at least partially? The key lies in maintaining a balanced approach between saving and spending so that one act does not cannibalise the other. Also, it’s essential to invest in mutual funds through SIP’s to let your ‘savings’ compound and grow over the long term. Here are seven things all smart spenders tend to do. You should, too!

 

1.    They save first

While reckless spenders indulge themselves to their content the day their paychecks hit their accounts, smart spenders save for their financial goals first. They’ve usually got a well-documented financial plan in place,

and with it, they have a fair degree of awareness about just how much they need to put away each month to make these dreams a reality. Having saved first, smart spenders enjoy the luxury of ‘guilt-free spending’.

 

2.    They have a written budget in place

The boring old budget is the bedrock of the smart spender’s financial plan. By earmarking sums of money each month for things such as home purchases, dining out, electricity, fuel, and the like, they inadvertently follow the tried and tested ‘coffee can’ system of bucketing monthly spending.

If they exceed their budget in one category in a given month (say, a great play hits but the tickets cost a bomb), they cover the deficit by scrimping on another one ( clothes bought for one month never killed anyone!).

 

3.    They ‘sleep’ on large purchases

Smart Spenders avoid the infamous “buyers regret” syndrome by delaying the impulse to make big-ticket purchases before properly thinking them through. Tempting as that 100-inch flat-screen TV seems to them as they stroll past it in the mall, smart spenders will rarely succumb to the impulse buy.

Instead, they’ll head home and contemplate the purchase decision and its ramifications with the mind. If it still seems good tomorrow, they’ll head right back to the mall and buy it!

4.    Occasionally, they observe ‘fiscal fasts’

 

Smart spenders are known to go on self-inflicted ‘fiscal fasts’. These purchase hiatuses could last from a few weeks to a few and can be very cathartic indeed. By restricting themselves to only spending on ‘needs’ and not ‘wants’ for a few weeks in a year, smart spenders effectively deleverage themselves – scaling back on money-draining, costly credit and stabilising their financial situations in the process.

In doing so, they also build their willpower to resist impulse purchases that could potentially set off a vicious cycle of unhappiness-inducing credit.

 

5.    They don’t bother with ‘keeping up with the Jones’s

Smart spenders understand that buying things merely to impress others is utterly futile, and akin to a never-ending race with a constantly shifting goalpost. They buy things with the singular intent of making themselves happy.

They never overextend their finances and spend their future incomes by taking on expensive personal loans or strapping on EMIs on their credit cards. In other words, they spend what they have, and for themselves alone.

 

6.    They know that saving isn’t investing

Smart spenders understand that saving money alone won’t make them rich unless they invest it fruitfully. Instead of procrastinating their investments, they deploy their savings into mutual fund investment plans through SIP’s, to secure their financial futures. Without curtailing their financial freedom, they invest in mutual fund SIP’s, which allow them to amounts as small as Rs. 500 per month.

 

7.    They believe in ‘tax-saving’ wealth creation

Smart spenders invest in tax-saving mutual funds and enjoy ‘tax-saving wealth creation’. They start their SIP’s into tax-saving mutual funds early on in the financial year and enjoy deductions under Section 80(C) in the process.

Smart spenders usually choose ELSS mutual funds over traditional tax-saving instruments, which give them the dual benefits of tax saving and wealth creation.

 

Source:finedge.in

6 Benefits of Health Insurance.

A health insurance policy is primarily designed to cover you financially in case of a medical emergency caused by illnesses, accidents, or hospitalization. It has long-term benefits that make taking a health insurance policy a definite goal in your annual financial plan.

Let’s look at how a health cover can benefit you.

 

Hospitalization Cost

One of the most pertinent benefits of a health insurance policy is that it covers expenses for hospitalization, whether it is for accidental injury, daycare expenses, capping on room rent, or illness.

 

Pre-and Post-Hospitalization Expenses

When an individual takes treatment at a hospital, there are a series of visits by doctors along with the diagnostic tests that are required to be done for you before you get treated as well as after. These expenses are considered by certain health covers also transport costs.

 

Cashless Treatment

Generally, insurance companies have tie-ups with hospitals, known as network hospitals that offer cashless treatment to the insured in case of hospitalization. These hospitals reimburse the expenses related to treatment availed by the insured. This means you can avail of treatment at these hospitals without paying anything for the medical expenses.

 

Health Check-Ups

Health insurance plans are designed to primarily take care of financial stress in case of a medical emergency. However, insurers also want people with good health in their portfolios. To ensure an individual is aware of their health, most health insurance plans offer preventive health check-ups every year

 

No Claim Bonus

Health insurance not only covers the medical expenses of those who have to seek hospitalization for illness or accidental injury but also rewards those who do not have to avail the benefits of health insurance and do not make a claim in the policy period. A “No Claim Bonus” can be earned up to 100% of the original sum insured in the policy.

 

Income Tax Rebate

While an individual pays the insurance premium for health insurance, there is an immediate financial benefit in the form of income tax rebates on premiums paid by an individual. In India, health premium rebates are as follows:

. Health insurance for self and family (spouse and children) is INR 25,000.

.If an individual or spouse is 60-years old or more, the deduction available is INR 50,000.

Source: forbes.com

In Your Thirties? Avoid These Common Retirement Planning Mistakes!

Are you in your thirties right now? Your retirement may seem a long way away today, but this is really the best time to start planning for it – if you haven’t already. A multitude of factors is increasing the need for maintaining structured, disciplined, and committed action towards your retirement portfolio. Here are four mistakes to avoid on your journey.

Planning only for your Child’s Education

There’s nothing wrong with aspiring for a great education for your child, but it would be a mistake to shovel away every last saved penny towards your child’s education, without paying heed to your own retirement. Remember, you’ll be able to avail education loans for your child’s education, but not for your own retirement. The interest on these loans is fully tax-deductible too. Also, would you really like to become a financial burden on your kids at a time when they’re just finding their feet in their careers?

Being a Low-Risk Taker

When it comes to Retirement Planning, don’t think twice – just divert your regular retirement savings (such as Mutual Fund SIP’s) into an aggressive investment such as a mid-cap-oriented equity fund anyhow. When it comes to Retirement Planning, high risk/ high return Mutual Funds Sahi Hai! If you allow your individual risk tolerance to dictate your choice of retirement savings avenue, you could end up retiring with lakhs of rupees – if not crores – less. Be careful, as a 5-6% difference in annualized returns compounded over three decades, is a lot more than you think.

Choosing the NPS over Mutual Funds

Sure – the NPS is a low-cost investment and represents a massive improvement over traditional endowment life insurance plans and fixed deposits, but they need more reforms before they can become your one-point retirement solution. For one, the NPS bars you from taking more than a 75% exposure to equities. In addition, your equity allocation is mandatorily slashed by 4% every year after your 35th birthday, and this can hamper your long-term returns. While the NPS is definitely worth considering, make sure that the lion’s share of your retirement savings still flows into Mutual Funds.

Getting stuck into a Pension Plan

Buying a pension ULIP is an avoidable step on your retirement planning journey. After all, when your pension ULIP matures, you’re permitted to withdraw just 1/3rd of the funds tax-free under section 10(10D) of the income tax act. The remainder, you’ll need to put away in an annuity that’ll give you a post-tax annual yield of just 5-6%, depending upon your tax bracket, and the option you choose. Just stick with regular Mutual Funds or bluechip stocks during the accumulation phase.