You cannot predict what is there waiting for you in the future. There are always lots of uncertainties and causalities coming up for you in the future and you are always unaware about it. These uncertainties cause a drastic financial crisis to your family and closed ones. You can help your loved ones by planning for your and their future and apply for a term insurance plan. Choosing the best term insurance plan for you can be a tiring task and that you must be well aware of the needs and requirements of your family at the present times and the future.
1.What is Term Insurance?
2.Why buying a term insurance is important?
3.Who should buy term insurance?
4.What is the right time to buy term insurance?
5.How much term insurance to buy?
Related Article – Top Secrets to Choose the Best Term Insurance Plan
6.What should be the policy term?
7.What is covered under term insurance plan?
8.What are riders?
9.What are the tax benefits of term insurance?
10.Can I atleast get my premiums back on completion of tenure?
11.Can I have 2 or more term plans?
A term plan is the purest form of life insurance. It not just ensures your family’s financial security but also gives an option to protect them from critical illnesses. In today’s video, we have answered the most commonly asked question: What should be the policy term? Can I have 2 or more term plans? What is the right time to buy term insurance? and many more.
To get started with personalized Automated financial planning visit – http://bit.ly/Financial-Planning-Tool
Daily Market Analysis on Insurance, Indian Oil Corporation, Renewable energy, Goldman Sachs,
- Insurers to make Life, Health cover norms tougher
On account of both the pandemic as well as the Insurance Regulatory and Development Authority (IRDA) new rules for health insurance on standardization of terms and conditions. Insurers will be making the purchase of life and health cover tougher for millions. In order to account for high payouts on the current ones in a covid affected nation, the insurance business is likely to underwrite strict norms for future policies.
- 25-30% Hike in Term Insurance Prices
Companies have been instructed to conduct physical medical examinations of applicants — a departure from the telemedical assessment. Those with serious ailments or comorbidities will find it harder to get their applications approved. Furthermore, prospective policyholders who are self-employed, students, frontline workers prone to accidents or are thought to be more exposed to potential infection, applicants with annual income less than Rs 5 lakh or those without college degrees can face higher rejection rates. Tighter norms come on top of a 25-30% hike in term prices being quoted by most life insurers.
- Stringent Underwriting Process on Health insurance Side
Patients with long-term illness history can expect more strict application norms as IRDA rules no longer allow for exclusions on pre-existing conditions. Existing mental health ailments could face an even higher rejection rate as the Supreme Court has made it mandatory for insurers to cover costs of mental health treatments as well. For those recovering from Covid, an unofficial cooling-off period of 45-90 days after a Covid-negative report has been mandated before a policyholder can be eligible for either a health or term life cover. This, because “mid-term effects of coronavirus are yet unknown to the medical community”, according to an industry executive. According to Sources India could be headed towards a persona-based risk pricing model. This means, other things being equal, those who are deemed less likely to be in a claims situation would have to pay a lesser premium.
According to latest industry data compiled by the General Insurance Council (GIC), health insurers have received over 14 lakh Covid claims worth over Rs 22,000 crore as on May 14. Life insurers on the other hand have settled death claims worth over Rs 2,000 crore in FY21 on account of the pandemic as per data compiled by IRDA.
- The government hiked subsidy on DAP fertilizer by 140%.
Last year, the actual price of DAP (Di-ammonium Phosphate) was Rs.1700 per bag. Where the central government has provided a subsidy of Rs.500 per bag. Due to the recent price surge of Phosphoric acid, ammonia, etc in the international market. The price of the DAP bag is now Rs.2400. So at Wednesday Meeting chaired by the Prime Minister, the central government has decided to increase the subsidy to Rs.1200 per bag, which is an increase of 140% to ensure that farmers do not have to face the brunt of price rise.
- India climbs to 3rd spot on EY index on impressive show by solar PV segment
Due to exceptional performance on the solar photovoltaic (PV) front. India has moved at the third spot on EY’s Renewable Energy Country Attractiveness Index(RECAI). As per EY’s statement, India’s solar sector is expected to grow significantly post the pandemic, with generation from solar PV forecast to exceed coal before 2040. This change is due to the Indian government’s policy ambitions, which have led solar PV to be the most cost-competitive source of power in the region and improving further. India also committed to setting up 450 GW for renewable energy power capacity by 2030 in the recent climate summit hosted by the US. This will likely increase the share of renewable energy in the overall power generation installed capacity to 54 percent, in comparison to the share in an overall gross generation to 36 percent. In 2020, global renewable energy capacity investments grew 2 percent to USD 303.5 billion. RECAI 57 estimates that future development to achieve net-zero will require a further investment of USD 5.2 trillion.
- Adani Green shares hit 5% upper circuit on the acquisition of SB Energy’s renewable portfolio
Adani Green Energy will acquire 5 GW of renewable power portfolio from SB Energy India for a fully completed enterprise evaluation (EV) of $3.5 billion (approx Rs 26,000 crore). SB Energy has a total renewable portfolio of 4,954 MW in four states. This is the largest acquisition in India’s renewable space. The share purchase agreement was signed on May 19 for the acquisition of 100 percent interest in SB Energy from SoftBank Group and Bharti Group, which held 80 percent and 20 percent stake, respectively. The deal is expected to enable Adani Green Energy to achieve its target renewable portfolio of 25 GW, four years ahead of the timeline, and takes the company’s present total renewable capacity to 24.3 GW and operating renewable capacity of 4.9 GW.
- Goldman Sachs set to buy 33% stake in GVK Bio at Rs 7,300-crore valuation
Goldman Sachs is all set to acquire about 33% minority stake in Aragon Life Sciences, formerly known as GVK Biosciences. The deal will value Aragon, co-promoted by the GVK Group and DS Brar, the former CEO & managing director of Ranbaxy Laboratories, at Rs 7300 crore ($1 bn). Existing shareholder Chryscapital will sell its 17% stake along with promoters who will dilute about 16% stake. Aragen is a leading provider of outsourced discovery, development, and manufacturing services across both large and small molecule platforms. The company serves a worldwide customer base that spans the United States, Europe, and Japan.
- Indian Oil Corporation Q4 results: Rs 8,781-cr net profit beats estimates on inventory gains
Indian Oil Corporation Ltd on Wednesday reported a fourth-quarter profit that beat analysts’ estimates by a huge margin as higher crude prices boosted the inventory value of the country’s biggest refiner. It reported a net profit of Rs 8,781 crore for the quarter ended March 31, compared with a loss of Rs 5,185 crore a year ago. Inventory gains are booked when oil prices rise by the time a company processes oil into fuel. Brent crude prices jumped about 23% during the March quarter. Revenue rose 18% to Rs 1.64 trillion. From April to March 2021 average gross refining margin – the difference between the cost of crude oil processed and the selling price of refined products – jumped to $5.64 per barrel against $0.08 a barrel a year ago.
Value Stocks vs Growth Stocks – US Markets
Value stocks have beaten the growth stocks by about 13% in the latest data as per the Russell 1000 Value Index vs Russell 1000 Growth Index. The reason for the outperformance could be the lower valuation and lower PE that the value stocks were trading at.
Alternatively, there exists a massive opportunity in the technology space and bluechip stocks of the US Markets, namely Apple, Netflix, Tesla as they have seen some correction and there seem to be better days ahead due to the strong market share and fundamentals they command.
Also read: RBI Monetary Policy – Fintoo Blog
Global Cues – USA , China and Australia
The USA markets over the past few days have seen some downturn mainly due to worse than expected inflation data (rise in consumer prices) and the possibility of withdrawing some Fed Policies which were initially introduced. The USA markets staged a late recovery yesterday and ended on a positive note.
China on the other hand could not meet their quarterly GDP forecasts which led to selling in their market
Australian markets have been volatile due to its tug of war with China and the sharp fall in iron ore price could prove to be an economic disaster for Australia as they are an exporter of Iron ore to China
GO AIR IPO
The Wadia group-owned Go Air has filed the Draft Red Herring Prospectus for its initial IPO. They would be raising Rs3600 Cr via fresh issue of shares
The airline had started its operations in 2005 and has just over 50 aircrafts in its fleet.
The aviation sector is facing some tough challenges and amidst this chaos , it is to be seen how this IPO fares.
Rise in Unemployment Rates
India’s unemployment rate has increased to 8% in April 2021 as compared to 6.5% in March 2021.
Restrictions that were imposed by various State Governments due to the second wave of Covid 19 and the inability of the economy to absorb the labor force has resulted in about 7.35 million job losses.
EPFO Update – Insurance Cover upto 7 Lakhs
The Employee Provident Fund Organisation has announced that if an active salaried individual dies of Covid19, their family members will be offered a sum of up to 7lakh rupees as insurance cover.
This cover is provided under the EDLI scheme and the ceiling is Rs. 15000 for the purpose of calculation.
RBI cancels license of United Co-operative Bank
RBI has canceled the license of United Co-operative Bank based in West Bengal. Through an order dated 10th May, the central bank has prohibited the co-operative lender from carrying out banking business.
The reason for canceling the license was that the Bank did not have adequate capital and earning prospects were slim. The bank also failed to comply with various regulatory requirements. In its present capacity as well, the bank would be unable to pay its depositors in full and its continuance would further prejudice the interest of the depositors.
If you are looking for tax savings this season, then look no more. We have come up with an interesting blog on the evergreen topic of whether ELSS is better than any other tax-saving scheme. And what’s more interesting is that we have also summed up answers to every Why of yours. So what are you waiting for? Let’s skip this journey to the main content.
What options do you have for tax saving instruments?
Income Tax Act allows a deduction from the gross total income if the taxpayer invests in allowed tax saving instruments. There are multiple options in which the taxpayer can make the investments and save the tax impact.
Section 80C of the Income Tax Act prescribes various modes through which the taxpayer can save the tax which is as follows:
ELSS refers to Equity Linked Saving Scheme which are mutual funds that invest 80% or more in equity. These are very attractive from viewpoint of returns but carry little more risk as compared to other saving alternatives.
PPF refers to Public Provident Fund which requires the taxpayer to open the PPF account in any of the authorized banks. Lock-in period is 15 years with partial withdrawal allowed once in a lifetime.
Life Insurance Premium
Life Insurance Premium paid towards self and family are allowed as a deduction under section 80C of the Income Tax Act.
These are 5 years term deposits that can be maintained with any bank. However since the interest rates are falling, Bank Fixed Deposits are a little lesser attractive from the perspective of tax saving.
NSC refers to National Saving Certificate as another tax-saving instrument that has a lock-in period of 5 years. It has a guaranteed return which changes periodically.
ULIP refers to Unit Linked Insurance Premium which can be said as a combination of mutual fund and insurance. This is more of an insurance product with investment component in it.
Why ELSS is better than any other tax-saving instruments?
- Higher returns as compared to other conventional investment instruments
- ELSS has wide exposure to the stock market which makes it a very lucrative and attractive option for tax saving as well as wealth building.
Even though there was some impact on the stock market due to pandemic, the stock market has bounced back up. This has resulted in a huge surge in absolute returns derived by the ELSS especially.
In all, ELSS comes with higher returns even if not guaranteed, around 12-15%. In every sense, it beats the inflation rate.
High liquidity due to the lowest lock-in period
ELSS has the lowest lock-in period of 3 years which can be termed as lowest as compared to other tax-saving investments which are a minimum of 5 years.
Since ELSS has the lowest lock-in period, it is suited best to short-term to medium-term financial goals also. Hence, it allows the investor to manage the liquidity position in a short time span.
Highly flexible mode of investment
ELSS allows you to switch between the mutual funds pertaining to the same AMC (Asset Management Company) or any other AMC. Some of the ELSS also allow switch options within their AMC as a mandate action discretionary upon the investor.
Single Demat account required
ELSS investment needs to be made through a Demat account which can also be used for investing in shares and securities. So investors get to invest in various types of instruments in a single Demat account. This helps the investor to keep a single control over investments.
Why choose ELSS over other saving instruments?
|Type of Instrument||Linked to the stock market since almost 80% or more is invested in equity||Government-backed saving instrument||Combination of equity/Debt exposure and a portion of insurance where insurance is the core service area||5 years term deposit with any bank|
|Lock-In Period||3 years||15 years||5 years||5 years|
|Risk %||Moderate to high||Low since the returns are guaranteed by the government.||Moderate to high due to a combination of equity exposure and insurance portion.||Low since they carry a fixed rate of interest|
|Return||Highest return in the brackets of the tax-saving instruments around 10-13% or even more provided high-risk appetite is assumed||Fixed-rate of return is prescribed by the government which may or may not be changed periodically. However the current rate of return revolves around 7.10%-7.60%||Even if the ULIPs have absolute returns of 10-12%, most of the portion of returns is allocated towards mortality costs etc. hence it impacts the effective return in the long run.||Fixed Deposits have interest rates of 6.5% -7% currently. Due to falling interest rates, it is difficult to predict whether the bank FD rates will pick up 0r further go down which may seriously affect the effective return|
This gives us the fair idea that investors should go for ELSS if they have a moderate to high-risk appetite and desire to earn lucrative returns. ELSS is a dynamic form of investment that can be used as a tax-saving instrument as well as a wealth-building tool. It is always up to the discretion of the investor whether to go for a decent rating and moderate returns, which is a good combination of risk-reward ratio. Nevertheless, it comes at a low cost and also can be invested in lumpsum or SIP which makes it easier to maintain liquidity. In all, a win-win situation for the investor.
Saving taxes is everyone’s predominant motto when it comes to investments. Thankfully, the Income Tax Act 1961, has allowed various types of investment avenues to be exempt from the purview of income tax. If you choose these avenues for investment, you can earn tax exemptions and deductions on the amount you invest, the returns generated and the benefit you get.
When it comes to insurance too, you can earn income tax exemptions. Both in the case of life insurance and health insurance plans, tax exemptions are available. Let’s explore how –
Related Article: Retirement through Equity Linked Savings Scheme
Life insurance and tax benefits
Premiums and tax benefits
The premiums paid for a life insurance policy are tax-free under Section 80C. The premium is deducted from your gross total income and, thus, lowers your taxable income. The maximum limit which you can claim as an exemption is Rs.1.5 lakhs. The premium can be paid for a policy taken by yourself, your spouse, and your children’s life.
Furthermore, the premium that you pay should not be more than 10% of the sum assured of the life insurance policy. So, if your policy is for Rs.5 lakhs, your premium should be Rs.50,000 or less to be eligible for tax exemption.
One thing which you should remember is that your premiums would be allowed as exemptions only if you hold your life insurance policy for a specified tenure. ULIP plans should be held for at least 5 years while other life insurance plans should be held for at least 3 years. If you do not hold the plans for these specified durations, the exemption allowed would be reversed back in the year you surrender the plans.
For premiums paid towards a pension plan, Section 80CCC would be applicable for claiming an exemption. The limit and other exemption conditions would be the same.
Policy proceeds and tax benefit
The maturity benefit or the death benefit which you receive is also tax-free in your hands. These benefits would not attract any tax under Section 10 (10D). Furthermore, there is no upper limit on the number of benefits that qualify for tax-exemption. Any amount you receive would be tax-free given the premium paid is below 10% of the sum assured. If the premium exceeds 10% of the sum assured, the entire maturity benefit would be taxable in your hands. The death benefit, however, would not be taxed even if the premium is above 10% of the sum assured.
Related Article: Unheard Facts of Budget 2021
Annuity/pension plan proceeds and tax benefit
Under pension plans, whether traditional or ULIPs (Unit Linked Insurance Policy), the tax treatment of the policy proceeds is different. You have the facility of withdrawing 1/3rd of the proceeds in cash when the plan vests. This withdrawal is called commutation of pension and it is tax-free under Section 10(10A). However, the remaining 2/3rd portion of the policy proceeds, which are paid as annuities, are taxable in your hands. The annuity pay-outs you receive would be taxable at your income tax slab rate in the year in which you receive the pay-outs.
Health insurance and tax benefits
Health insurance plans also provide tax relief for the premiums that you pay. Health insurance premiums are exempted from tax under Section 80D. You can avail a maximum of Rs.1,00,000 as an exemption from health insurance premiums. Here’s how –
|If you buy a policy covering you and/or your family||You can claim a maximum exemption of Rs. 25,000|
|If you are above 60 years of age and buy a policy covering you and/or your family||You can claim a maximum exemption of Rs. 50,000|
|If you buy two policies – one covering you and/or your family and another covering your dependent parents||You can claim an exemption of Rs. 25,000 (for the policy on your family)+ Rs. 25,000 (for the policy on dependent parents) – Rs. 50,000 (total)|
|If you buy two policies – one covering you and/or your family and another covering your dependent parents and your dependent parents are above 60 years of age||You can claim an exemption of Rs. 25,000 (for the policy on your family)+ Rs. 50,000 (for the policy on dependent parents who are senior citizens) – Rs. 75,000 (total)|
|If you are above 60 years of age and your dependent parents are also above 60 years of age and you buy two policies – one covering you and/or your family and another covering your dependent parents||You can claim an exemption of Rs. 50,000 (as you are a senior citizen)+ Rs. 50,000 (for the policy on dependent parents who are senior citizens) – Rs. 1,00,000 (total)|
So, both life and health insurance plans provide you tax relief. While the premiums for both these plans reduce your taxable income, the policy proceeds of life insurance plans give you tax-free returns too. So, the next time you are investing in an insurance policy, know its tax implication.
Awareness about Term Life insurance has increased manifold. Many people are either already insured or wanting to insure themselves. Buying term insurance is very convenient nowadays. With the ease of online insurance plans and Low-cost insurance, it has become an important part of a long term personal financial plan. While the loss of a near & dear one is emotionally devastating, term life insurance at least helps you to ensure that the financial loss does not worsen the tragedy.
We can calculate insurance cost online with few clicks based on some general questions but your final premium is based on your health and medical history and other factors. While applying for Life insurance policy, insured has to disclose facts & various personal details like age, height & weight, Income, health, habits etc.
Cost of insurance differs from person to person. Mainly life insurance cost depends on mortality rate. Any factors Which increase the chances of mortality increases your cost of insurance. Higher the risk higher the cost. There are many factors which affect mortality. Few of them are not in your control. These include your age, health & medical history of yours and family or whether you have any pre-existing medical conditions. However, you can control or change few of your unhealthy habits which will reduce your cost of insurance.
Your height and weight are one of the most important factors which affects your life insurance cost. Insurance companies needs to determine whether you are healthy person by calculating your BMI (body mass index). Based on this insurer decided if you are overweight or underweight as per their pre-decided measurement of weight in proportion to your height. Overweight / Underweight puts insured at more serious health issues like diabetes, stroke, heart attack etc. If you are able to control your weight and maintain a healthy BMI i.e. balanced weight as per your height, you will be able to save more on insurance cost.
2. Smoking & Drinking
Insurer ask question in the application form about your drinking and smoking habits of individual. If you are smoker then question like how many cigarettes you smoke in day and if you are drinker then question will be asked about how many units of alcohol you drink per week / day. There is substantial difference in life insurance premium for non smoker and non drinker individual’s.
3. Adventurous Sports
Any individual who enjoys and involved in activity like trekking, bungee jumping or sky diving, car racing etc. are classified as highly risky and can result in high life insurance cost.
4. Working in a Risky job
Your job and current profile also plays a crucial role in deciding insurance cost. If you are working in merchant navy or mining job or as pilot or any other high risky job, it increases professional hazard. Insurer charges lesser premium to people who works in administrative job and higher premium to people who working either in high risk job or may be posted in an area where life risk is very high.
5. Taking Drugs
If you are habitual of taking illegal drugs like Marijuana, cocaine etc. it will impact your life insurance cost. If you are tested positive during pre medical test for insurance either you are asked to produce more documents to prove you don’t consume drugs or, your insurance policy application could be denied outright. Once your application is rejected, for life time while applying for any policy after that you have to mention reason for rejection of the previous policy.
6. Lying on your Insurance Policy
Insurance is contract of utmost good faith. As insured you are expected to disclose all the fact related to your life insurance policy. Any act of non discloser is deemed as intentional and if found at the time of claim, will result in rejection of claim by insurer. So It’s advisable to disclose all the fact and personal details while filling the application form.
Nowadays hectic and stressful lifestyle has affected health of many people. Working for extended hours, junk foods, poor diet, no time for exercise etc. its established that they are associated with poorer health. Insurer evaluates various factors like your height & weight and medical condition, if not found healthy, increase your cost of insurance.
These were the 7 habits that you should control to reduce your insurance cost drastically.
Related Article: Types of Health Insurance policies amid COVID-19
Life insurance plan is one of the best types of investment that a person can make to ensure the better future of their family and the members that are dependent on you. Life insurance provides you the financial support that your family members require when you are not around to take care of their needs. The financial support is provided in the form of the life insurance coverage.
There are two types of life insurance plans available in the market. The first one is the whole or permanent life insurance plan and the other one is the term life insurance plans.
Before applying for the life insurance plans you must first ensure which one of these policies is the best suited for you. The whole life insurance plans are for the people that have a higher income range and can afford to pay a higher premium for the life insurance plans. The whole life insurance policy is the way to reduce the net taxable amount of the individual’s income so that the tax is reduced and it is a part of a smart financial planning method.
Term life insurance plan are comparatively cheaper than the whole life insurance as the premium to be paid for these term life insurance plans are less and for a fixed duration of time. There are several pros and cons related to each one of these life insurance coverage plans and you should choose the one that fulfills all of your needs for the future without risking the financial stability in the present.
How can you choose between the two different life insurance coverage plans?
It can be a tough task for you to choose between the life insurance plans that is best for you as each of these life insurance plans have associated benefits with them. You should take a closer look at all of the aspects that are related with both the life insurance coverage plans. We’ll introduce you to both the term insurance plans and whole life plans and you can decide which one of these is the best one for you.
Related Article :- Top Secrets to Choose the Best Term Insurance Plan
Term life insurance
- It is the life insurance coverage for a fixed period of time.
- It is often called as the “pure life insurance” as it provides the financial support and help to your family when you are not alive and cannot take care of your family.
- It covers the premature death of an individual and provides the death benefit to the beneficiaries. Usually, there is no maturity benefit.
- The term insurance can be purchased for a time period of 5, 10, 20, or 30 years.
- The premiums of the term insurance are way cheaper and cover provided is huge as compared to the whole life insurance plans
- You can add additional benefits to the term insurance plans and make it more beneficial for your family by adding various riders to your term insurance plans.
- Term life insurance provides your family financial support at the times when the dependents are at the most vulnerable financial stage and need money for a better future.
Whole life insurance
- They are also known as the permanent life insurance plans.
- The whole life insurance coverage plans provide you the lifelong death coverage.
- It also includes an investment factor in these type of life insurance plans as the called as the cash value of the life insurance plans.
- These plans can be used as a tool for estate planning. It ensures smooth transfer of wealth to beneficiaries.
- You can opt for this life insurance plan to cut out your net taxable income and thus the less tax return is to be paid.
- You can easily borrow money from the banks on the basis of the cash value of your life insurance policy. You have to pay back the borrowed money and the due interest on time else the cash value and death coverage of the life insurance policy will decrease. And if you surrender the policy then you can no longer receive the death coverage.
- The borrowing of the money is easier and tax free against the whole life insurance policy.
- Whole life insurance helps you to provide financial coverage until you turn hundred years old but you have to pay the premium regularly.
- Some of the companies also provide bonuses every financial year.
Related Article :-Why Do You Need Critical Illness Insurance Plans?
These are some of the features that are provided to a person when she or he applies for any of the life insurance policy. From the above features, it is easier to extract the information that the individuals having a higher net worth and are looking for a way to reduce their taxes from the business can opt for whole life insurance but for an average income individual, the term life insurance is the best option.
Health insurance policy has become a fundamental requirement of every individual, thanks to the inactive life lifestyle most people tend to live today. This too is a reason why people are really worried about their health as a matter of fact. Therefore, they consider a lot of options when thinking of buying any health insurance policy.
Health insurance plans protect you during an unanticipated medical crisis and help in balancing your family’s finances during such a difficult time. Medical insurance has indeed become an obligatory thing to have today considering the rise in medical expenses and an increase in the number of diseases. A medical emergency can arise at any time and affects an individual and his family both financially and emotionally. Thus, financial advisors advise that it is prudent to buy health care policy and insurance plan in advance.
With the evolution in human being’s mindset, they have started contemplating the radical aspects of their life and the health care necessities. And the best thing is that they have started acknowledging the fact that they indeed need health insurance whether its rationale or not.
Related Article: Types of Health Insurance policies amid COVID-19
That being said let us look at some reasons why you really need to buy a medical health insurance plan.
- Insufficient corporate health policy
The importance of health insurance plans cannot be overlooked as the medical costs are rising with passing days. In certain cases, your company’s insurance coverage won’t even be able to cover the expenses of a normal mild sickness i.e. two or three days of medical treatment in a hospital. Also, when you change your job or get retired, your company’s insurance policy will discontinue. So it is sensible to buy an individual medical plan.
- Rise in the prevalence of fatal diseases
Unfortunately, the whole world is fighting with life-threatening diseases. The alarming rate of increased heart diseases to swine flu to AIDS has created a state of chaos everywhere. As the medical costs are skyrocketing, with escalated demand for healthcare services and insufficient access to the topmost medical services (especially for the low-income group), medical health insurance is taking another course of action to fight lethal diseases.
- Improved Healthcare and financial planning
Medical emergencies and accidents can take place without any kind of prior warning and a good health insurance policy will certify that you are secured for medical emergencies. It is hard to guess how much you will splurge on health care around the year but if you have a medical insurance plan then it will definitely help you with sudden medical conditions expenditures. You can buy an individual as well as a family plan policy (covers the entire family). Normally, the family health plans are much cheaper than the individual’s one.
- Cost Benefits
Under Section 80D of the insurance act, you can get an exemption for your premium payment. The health insurance limit deduction has been increased from Rs15,000 to Rs25,000. The new limit for a senior citizen is Rs50, 000.
- Monetary Worth
Along with handling the hospitalization expenses, medical insurance companies also provide day-to-day hospital allowances for incurred spending on food expenses, going back and forth from home to hospital, and other regular hospital charges. Several insurance companies have started to include domiciliary treatment in their insurance coverage.
- With this guide, you must have got a clear idea as to why it is so important to get yourself adequately insured. So without further delay, buy a health insurance plan for yourself and your family.
Health planning is very important as you may never know what is beheld in the future and you are always unaware about the uncertainties and casualties in your life. This is why it is recommended to every individual to have a health insurance. Health insurance is beneficial for you at the time of any medical casualty and you need money for the treatment. The health insurance, for which you are paying the premium, provides you the coverage to support you financially in handling all the bills of the hospitals, treatment of the medical illness and the expenditure of the post treatment procedures.
Well there are various other health insurance plans that are offered to you when you are working in any company. These are group health insurance plans that are provided by the employer to you for any unfortunate events and hospitalization or any medical expenditure and treatments. This may seem like a great plan but do they really provide you enough coverage or are they reliable? These are some of the questions you should ponder over before taking the health insurances provided by your employer.
The employers are bound to provide the health insurance to their employees if they plan to resume functioning post lock down. Let us understand whether we should solely depend on medical covers provided by the employers.
The cancellation of the health insurance by the employer
There are various conditions and criteria on the basis of which the health insurance plans provided by the employer are subjected to cancellation. The employers have to provide a prior notification to his or her employees about the cancellation of the health insurance, but under some circumstances there are exceptions where the employees may or may not provide the notification about the cancellation of the health coverage.
The changes in the trend is seen hugely in the working group of people with respect to the health coverage provided by the employer
The working group of people in the present scenario are now not referring much to the health coverage provided by the employer as they are learning the other ways from which they can get health insurance with known coverage and with some additional benefits as well.
They have more options with them as compared to the working people few decades back. There are various options to join the health insurance coverage of their parents as a dependant when their parents’ health insurance is at the edge.
Here are few of the major reasons that will encourage you to drop the health coverage plans by the employer and move onto the other available options
- You do not have any control over the health coverage provided to you by your employer. The employer can provide the employees any random amount and it is all based upon his relationship with the employees. It may sometimes happen that the amount you are offered at the beginning of the job is sufficient for you at that particular age but when you grow; the health insurance may or may not be sufficient enough for your family of four. There can be conditions like when you change your job, and your new employer is providing you a little less coverage for the health than in your previous job, the coverage is reduced but the requirements of the individual and the family is still the same.
- Health coverage is provided until and unless you work under the same employer. Changes in the job will result in the cancellation of your health coverage and you can no longer access the health coverage plan from your former employer. Many of us are currently facing this problem after being laid off from the job owing to lockdown amid COVID-19. These people are not only without a job now but also without a health insurance plan. So solely depending on employer’s health insurance plan is not a good idea.
- A fresh health insurance after retirement seems impossible. As long as you are serving the employer and fulfilling his needs, you will be insured with the health coverage. But at the point of time when you retire, the benefits of the health insurance plan exists no more. You may think of purchasing a new and fresh health insurance plan but without any regular income and some medical conditions, it seems to be an impossible task to get a new plan.
- The health insurance provided by the employer is not a necessity but an expense. The employer can cut short these group health insurances whenever he or she wants as the provision of these health insurances is not an obligation for the employer. It is just another expense for the employer to gain the tax credits and prevent him or her from paying any tax penalties.
- The extent of the coverage is not known by the employees. It is seen in most of the work places that the employees are unaware of the time period for which the health coverage is provided by their employer. You remain relaxed depending completely on the health insurance plan that you are offered by your employer without even knowing the nature of the health coverage and the extent of the coverage provided to you.
It is now made easier to port your group health insurance to personal health insurance under the scheme of IRDA and you will also gain the benefits of the waiting period as well. Do you still rely on health coverage provided by your employer? It is highly recommended that you get yourself adequately covered outside employer’s health insurance and treat the employer’s health insurance plan as just the add on benefit.
It is always best to do your tax planning at the start of the new financial year. However, this year most of us could not make the required investments in the beginning owing to cash crunch. This inability was the outcome of the lock-down amid Covid-19. But now as we are in unlocking phase, we should also pay attention to the financial chores that we had put on hold. It is suggested that you do not end up investing randomly without proper evaluation of tax incidence of the same. If you take a detailed look at the tax saving products plying the market then life insurance must have caught your attention with its dual-sided benefits of tax exemption and extending protection to near and dear ones.
We usually insure ourselves against events and circumstances which we rather not think about, on a happy go lucky day. Thus, the main objective of getting insurance is ensuring protection against any untoward happening. Many people take up insurance for the sole purpose of tax saving. People are often seen jumping into buying life insurance policies as and when they get into a new job after completing education. Their main goal remains to gain tax exemption from the premium amount paid. However, this becomes detrimental in the long run as the disposable income of individuals gets diverted from the best possible options besides insurance. This leads to a high opportunity cost.
Term insurance is better equipped to protect the smile of your loved ones without being too heavy in one’s pocket. It provides financial stability to your dependents in case of your premature death. As against the high sum assured amount allowed, the premium paid is extremely low and within your affordability perimeter. With limitless sum assured amount, you can be sure of maintaining your family’s happiness even when you are not around anymore. So, this needs to be linked with the idea of having an objective of protecting a smile via insurance. Tax benefits are also promised as the claim is tax-free and premium is eligible for 80c deduction.
Child Insurance :– The towering cost of education is becoming the biggest cause of worry for Indian parents. This gets heightened by an inadequacy of knowledge, below average savings and a late start. A child insurance plan offers a lump-sum on the policyholder’s death to his children. The future premiums due are waived and the money is invested by the insurance company on behalf of the policyholder. The child is endowed with money at specific intervals as previously planned under the policy. This is one of the best options to look after a child’s well-being even when his parents are not around. Child insurance policies can either be traditional or market-linked. The premium paid on child insurance plan also counts for deduction u/s 80C while the benefits received are tax – free u/s 10(10D).
Must read – Types of Health Insurance policies amid COVID-19
Endowment Policy :– This refers to be a particular form of life insurance which pays a lump sum on the passage of certain time (i.e. its maturity) or on the death of the policyholder. Apart from lending a shoulder in times of crisis, the endowment plans also provide simultaneous growth of money invested. Thus, it serves as the optimum combination of insurance and investment.
ULIPS :- ULIPs provide the best of both worlds. They help in capital appreciation by investing the premium in the capital market and also insurance protection. Moreover, tax saving benefits are also available for both the invested premiums and the returns generated.
It is advisable to contact an insurance advisor as given the multiple policies available in the market it is easy to get confused. However, if you are confident enough to proceed on this path alone then make sure you have done enough research on the subject matter so that you end up with the plan best suited to your needs.
Stay Safe, Stay Insured !