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Top Performing 3 Best Monthly Income Plans 2018

July 11th, 2018 · No Comments · Investment

With the markets evolving so fast, everyone is talking about making things right and even turn them around to make sure that they benefit out of it. The monthly investment plans are the topics right now in the financial markets and there is a lot of discussion going on around them. This article is going to shed some light on monthly income plans and will talk about the top 3 best monthly income plans in the market for the year 2018.

Monthly investment plans are debt oriented hybrid mutual funds which are associated with investing 70 to 80 percent of the total corpus. The investments are made in debt instruments such as debentures, securities and even governments, etc. The remaining part of the investments are done in equity. The main purpose of these monthly income plans is to make sure that they are providing a steady income at very regular intervals. There are two types of options for the monthly investment plans namely the dividend and growth. When someone takes up the dividend options, the fund house offers regular kind of dividends out of the distributed surplus. Let’s take a look at the top 3 monthly income plans.

1)    Birla Sun Life MIP:

The Birla Sun life MIP is a hybrid debt fund with an aggressive approach. The best month income plan should be one like the Birla Sun life MIP. The Birla Sun life Monthly Investment Plan has a wealth 25 plan which is known to have generated a revenue that provided a stead return of almost 0.6 percent in just one year. The Birla Sun life monthly investment plan is one of the few funds which have been able to provide a return rate of 13.25 percent over the past five years. This is a phenomenal success rate for the best monthly income plan and it certainly proves that the Birla Sun life Monthly Investment Plan is one of the best.

With the help of the Birla Sun life Monthly Investment Plan people can start to invest their money in the fund with even a small amount of money such as Rs.1000 and then they would use Rs. 1000 as an investment thought systematic investment plan. There are a total of 6 postdated cheques which can be allowed for investing during the process for the systematic investment plan. The Birla Sun life Monthly Investment Plan is one of the best monthly income plans and has allowed its scheme to allot 70 to 80 percent in debt along with several kinds of money market instruments. Then there is another strategy which calls for investment of about 20 to 30 percent in the equity and other equity related instruments.

2)    Franklin India Monthly Income Plan:

The Franklin India Monthly Income Plan comes in at second on the list of best monthly income plans. The Franklin India Monthly Income Plan is not as aggressive as the Birla Sun Life Monthly Investment Plan, because it is a little on the conservative side. However, the fund has done significantly well for its standings. The Franklin India Monthly Income Plan is functioning as a hybrid debt oriented conservative fund. The fund has a reputation for high return on investments and that’s the reason why you should definitely look at it when you are talking about the best monthly income plans.

The Franklin India Monthly Income Plan has provided a return on investment of about 9.86 percent for the last five years. This is quite amazing considering the markets today. The Franklin India Monthly Income Plan has a minimum investment amount of Rs.10,000 and it also has the provision of investing with the help of short term investment plans, in which case you would have to invest Rs. 500 per month. People can start to invest in the fund with a sum of Rs.1000 and after that invest Rs.500. The Franklin India Monthly Income Plan has a wide range of companies on its portfolio and is certainly a great candidate to consider for the best monthly income plans. Stocks such as HDFC Bank, Axis Bank, State Bank of India, Bharti Airtel etc are all on the radar for the Franklin India Monthly Income Plan. The Franklin India Monthly Income Plan has a portfolio which covers a lot of the major stocks. The Franklin India Monthly Income Plan is currently managing assets which are worth over 412 crores.

3)    ICICI Prudential Regular Income Fund:

The ICICI Prudential Regular Income Fund maybe the last on the list but it surely is not the least. This is a hybrid fund which follows a conservative plan and is quite debt oriented. The ICICI Prudential Regular Income Fund is one of those funds which has invested a lot in debt oriented securities. There is also a lot of exposure to the shares of big blue chip stocks such as the Reliance Digital Industries, Tata Steel, Axis Bank and also Larsen and Tourbo. The ICICI Prudential Regular Income Fund has been very well known for quite a while now and most of its reputation stems from the fact that it has a stellar rate of return on investment, which is why most people invest in funds after all. The ICICI Prudential Regular Income Fund has a return on investment percentage of 8.56 percent, which is very competitive. This return on investment has been generated by the ICICI Prudential Regular Income Fund in the past five years.

Thinking about the future and making investments are always a wise decision to make. However, it is also very important to remember that financial investments can be risky and that they should not be taken lightly at all. Due to the fact that there are a lot of people investing, one must sure and analyze their thoughts well before they start to invest in a particular fund. It is always important to be very sure of what you are doing, especially when you are dealing with financial markets. Otherwise even the best monthly income plan will not help.

 

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10 things you should know about House Rent Allowance

April 4th, 2018 · No Comments · Income Tax

House Rent Allowance – HRA

House Rent Allowance is an allowance that an employee gets from their employer so that they can meet their housing requirements. Like, food allowance, a rent allowance is given to the employee so that they can rent out a house for themselves. The home rent allowance is a taxable fund when in the hands of the employee or the person receiving it. The Income Tax Department allows an income tax deduction on the house rent allowance under the Act’s Section 10 (13 A). A tax exemption is granted on the rent allowance received by the employee.

The house rent allowance is a type of income as it is given to an employee by an employer. Hence, it is treated like an income and income tax is imposed on the allowance income. If income tax is imposed on it, then, it is also eligible to get an income tax deduction, accordingly.

 

1. Should receive the allowance

To be able to claim the tax deduction and to be eligible to avail the income tax exemption, the most important thing is to be subject to receiving a house rent allowance from your employer so that you can meet your sheltering needs.

2. Should stay at a rented place

To be able to get the tax deduction on house allowance, the person needs to stay in a rented placed and pay the rents duly. The person will not be eligible for the house rent allowance in case they stay in a house they own. Only rented apartments or houses will be accounted for.

3. How much tax can be exempted?

There are 3 factors that are considered while calculating the deduction on HRA, they are as follows:

  • The rent allowance that is given by the employer.
  • The actual rent that you are paying minus 10 % of your basic salary.
  • 50 % of your basic salary in case you are living in a metro city and 40 % of your basic salary if you are living in a non – metro city.

After the consideration of all these factors, the least amount of tax exemption will be allowed on your house rent allowance.

4. Proof of rent

To show that you are residing in a rented house, you need to have a proof that you are paying rent and residing in that particular house. You cannot self – declare the rent payment proof. You need to have a rental payment proof which is a rent receipt. This rent receipt should be signed by the owner of the house that you have rented and this receipt is supposed to be given to your employer. But, you do not need to give any rent receipt of the rental proof in case you are receiving an amount up to INR 3000 per month as house rent allowance.

5. Paying rent to relatives?

An individual can claim for tax exemptions even if they have rented a place which is owned by a close relative and pay the rent amount to them duly. If you are staying at a home which your mother owns and you are paying a certain amount of rent money per month, then you are eligible to claim the tax deductions for your house rent allowance.

6. I stayed for less than a year on rent

If you were residing in a rented apartment or a home for, let’s say, 7 months and then you shifted to your own house, you can claim tax deductions for the time duration that you rented the place, that is, in this case, 7 months. You will not be able to claim for the whole year, but only for the time that you were staying on rent.

7. Is double tax deduction possible?

No. Double tax deductions are not possible. This arises when 2 people in your household are earning incomes and want to claim tax deductions on the same income. Let us say, you and your mother, both want to claim a HRA exemption on your rent which is INR 50,000. But, this is not possible. So, what you can do instead is that you split up the rent onto your allowances. If, each of you pays INR 25,000 as rent per month, then you can claim the exemption on the amount that your allowance is paying.

8. Will my whole HRA be exempted?

No! You entire house rent allowance cannot and will not be exempted from the tax. You will have to pay the basic tax; you will just be given a deduction. If you reside in a metro city, then the deduction will be 50 % of your salary and 40 % of you salary if you reside in a non – metro.

9. What makes me eligible to claim exemptions on HRA

If you are staying in a rented home and paying your rents duly, you are eligible to claim tax deductions under the Section 80 G G of the Income Tax Act. The deduction is only open to the people who have not claimed any deductions for the rent paid or have not benefited from the rent allowance or the ones who have not claimed the HRA which is Exemption for house rent allowance.

10.  Is tax deduction possible on the interest paid on home loans as well?

Income tax deductions, on home loans, are available on the interest that you pay for the home loan you have taken up under the Section 24 of the Income Tax Act. The interest amount’s deduction is allowed under the Section 24 and the income tax deduction for the principle amount of the home loan taken up is allowed under the Section 80 C of the Income Tax Act. Buying a home is a tedious task; make it easier by getting a tax deduction on the interest for your home loan.

These are the most important 10 things about HRAs you should absolutely be thorough with before putting any claim forward.

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How to increase the returns on your money back life insurance plan?

March 19th, 2018 · No Comments · Investment

Money back life insurance policy covers the risk and delivers financial returns at various life stages. You will also get a lump sum at the maturity along with the bonus. A fixed percentage of the sum assured will be returned during the policy term. The planned expenditures can be met with the help of the payments. Instead of using the money obtained at various stages, you can invest the money to get higher returns. It is possible to get returns higher than the endowment plan by applying the formula.

Why should you choose money back plan?

Money back plan is chosen by policyholders to get returns that will help them meet their expenses at various life stages. You can choose a policy from reputed companies such as LIC, SBI Life, HDFC and Birla Sun Life.

There will be coverage of the risk with the money back plan. If there is risk to the policyholder ‘sum assured’ will be paid to the nominee or beneficiary. The policy will also deliver returns if the policyholder is alive after the maturity date. Hence, there are prospects to create wealth with the help of the money back life insurance plan.

There will be good returns on the investment and the risk appetite will be very low. The policyholder will get income tax exemption on the premium contributed towards the insurance plan under Section 80C. The returns delivered by the insurance plan are exempt from tax under Section 10 (10D).

It is easy to contribute the premium for the money back plan. The policyholder can choose monthly, quarterly, half-yearly and annual premium as per his convenience.

To increase the overall returns of the money back plan, the money can be reinvested in various financial products. As the tax-free money back can be invested as per the convenience of the policyholder, it is possible to generate higher returns. The returns will be higher than the endowment plan and you can make the most of your money.

Returns on money back plan

Usually, the returns on the money back plan will be lower than the returns on the endowment plan. The premium contribution towards the money back plan will be higher than the endowment plan.

The bonus paid by the money back plan will be lower than the bonus paid on the endowment plan. Even though the money back will help you meet the regular expenses in a very efficient manner, the overall returns will be less than the endowment plan.

You can re-invest the regular returns of the money back plan to get higher returns after the maturity date. The returns can be invested in fixed deposits, national savings certificate, equities and mutual funds. You can also explore debt funds and hybrid funds to generate better returns. The sum of the proceeds of the re-investment amount plus the maturity proceeds will be higher than the returns obtained by the endowment plan.

Reinvestment of money back returns

The money back that you get from the policy at fixed intervals can be reinvested in the following plans:

  • Fixed income or debt instruments
  • Hybrid investments/balanced funds
  • Diversified equity funds

Of all the three different options listed above, the returns from the diversified equity funds will be high. You can choose best performing funds as per the Crisil’s rating and you can manage excellent returns on regular basis.

You will get tax exemption on returns by investing in equity funds for more than one year. The long-term capital gains on the equity gains will be 10% if you get more than Rs. 1 lakh returns as LTCG gains. If your LTCG gains are less than Rs. 1 lakh per annum, the returns are 100% tax-free. The LTCG gain taxation was introduced in the 2018 budget and it is applicable for the financial year 2018-19. Hence, you can make use of the LTCG gains by investing your money back returns in equity funds.

Investing in stock market

If you have a fair knowledge of the equity market, you can participate directly by buying shares and debentures of various companies. The historic performance of the company and other parameters will help you assess the future prospects of stocks.

Conclusion

The returns of a traditional money back policy will be less than the endowment policy. You can increase the returns by plowing back the proceeds of the money back returns to other investment options. Thus, you can improve your overall returns when you combine re-investment returns with the maturity proceeds. You can invest the money back proceeds into various funds as per your risk appetite. With the fixed deposits, the risk will be the least. As you choose balanced funds, you can get a moderate appreciation of the capital. By investing in very high-quality diversified funds, you will enjoy higher returns. Thus, you can increase returns on the money back life insurance plan.

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A primer on child insurance plans in India

March 15th, 2018 · No Comments · child plan

Parents consider their children as the most precious parts of their lives. They would go to lengths to ensure that they should live a fulfilling, comfortable life and enjoy a respect in the society. That is why many parents are now seriously planning for the future life of their children even before they reach teenage. Investing in a good child plan is one of the best ways to secure the future of your child as these plans are specifically designed to meet their diverse needs during different milestones years. In order to select the best plan, you need to have a good, in-depth knowledge of a child plans. Here’s a primer that can help you when you plan to invest in a good plan:

An Introduction

A Child Plan is a purpose specific insurance plan specifically designed to cover the financial needs of your child as they grow up and would require monetary assistance during different milestones of their lives like higher education, marriage, starting a new business etc. There is a provision for multiple payouts ensuring the steady flow of funds instead of a single time lump sum amount.

Objectives

The main objective of these plans is to build a comfortable corpus over a long period of times that your child should have an easy access to sufficient money when s/he will need it during the milestone years. Depending upon their specific types, these plans invest money in different investment products like government securities equities debt, etc. so that it can keep on growing with the time. A lump sum amount is paid on the maturity. Demise cover is also paid by such plans.

Benefits of investing in a child plan

The major difference that offers child investment plan a cutting edge above other plan is that in the event of parent’s demise the child will get a lump sum amount but the plan will not be stopped. It will not only continue until maturity but also the child will not be liable to pay any further premiums as all the premiums will be borne by the insurance company.  Waiver of the Premium is actually the distinguished feature of this plan that offers it a unique character.

When will child realize the benefits?

Going by the above statements the child is entitled to get lump sum amount on 2 occasions- at the time of demise their parents and at the maturity date of the plan. In order to make the plan all the more beneficial, many companies also allow multiple payout options to take care of different milestone of a Child life.

Major Types of Child Plans

Two major types of child plans in India are endowment plans and ULIPs or Unit-linked Insurance Plans.

  • Endowment Plans: Under endowment plans the insurance companies generally pass on a small percentage of their profits to your child plan and add it in the form of Bonus. For example, your insurance company has invested in some debt funds and made some profits. In that case, a small part of those profits will e added to the plan in the form of the bonus.
  • Child ULIPs: Child ULIPs have a dynamic approach and utilize a strategy that is focused on benefiting from changing markets by rotating their funds wisely and periodically in equity products. Understandably, with the rewards, these plans also carry some risk. High entry charges of these plans mean that you have to pay higher amount while investing during the starting years but the amount decreases during subsequent years.

In both the plans the life cover and payment of lump sum amount in the case of parents’ demise and h policies are continued without requirement further premiums. The family also receives an amount equivalent to the life cover + Bonus (in the case of endowment plans) or Marked linked value (for ULIP Plans)

How to invest in a child plan

  • Chalk out the major goals of your child’s life journey like higher studies, admission in a foreign university or starting a business
  • Evaluate the financial need to take care of the above milestones
  • Depending upon your child’s life plans try to evaluate the plan term and align it with the milestone years of your child’s life
  • Once you have jotted down the above, you need to calculate the time that you have in your hand.
  • Fix the amount of the life cover and settle for the one that is sufficient to provide for immediate as well as future needs of your child
  • Keep your budget in mind. The goal should be to remain invested until the maturity of the plan without experiencing any financial troubles to meet your regular expenses.

Conclusion

A  child plan s specifically designed to meet the various financial needs of your child during different years of his life. However, in order to take a wise decision, you need to have a good knowledge of these plans, various benefits they offer and the liabilities or limitations. Though this primer can help you with our homework it is advisable to check with a certified and experienced financial planner before investing in the ideal plan that suits your budget and requirements.

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How to file ITR online

March 9th, 2018 · No Comments · Income Tax

As the last date for filing the Income Tax Returns is approaching, many people are really worried as they don’t have sufficient knowledge of the process required for filing ITR. Any slight mistake in the process of filing ITR may render the entire exercise futile. Hence, before you file the ITR it is important to have a good knowledge of the filing process. Here are some of the salient points that can prove to be helpful throughout the process.

Forms and their relevance

One of the major issues is to choose the ideal form for filing your e-returns. Here are different categories to choose from depending up your candidature

•    ITR 1(SAHAJ): If your source of income is salary and interest,

•    ITR2: It is ideal for those Individuals and Hindu Undivided Families who don’t have the income coming from profession or business

•    ITR3: It is suited for those Individuals and HUFs partners in the firms who don’t carry out the business or profession under any proprietorship

•    ITR4: It is designed for the HUFs and Individuals who derive income from a profession or a proprietary business

•    ITR4S (Sugam): Suited for the individuals and HUFs who derive income for proprietary business

•    ITR5: It is suited for AOPs, LLP, BOIs and the Firms

•    ITR6: Ideally designed for those companies that are other than the ones who claim exemption (section 11)

•    ITR7: This form is for the persons or companies who are required to furnish the return under section 139 (4B) or sections 139(4C) or sections 139 (4D)

Mandatory Documents and details

In order to ensure a smooth experience while fling your IT returns you need to have the following details/documents ready with you. Here are a few details and document that you had to have in your hand

•    Bank Account details and Pan Number

•    Income realized by Salary

•    Rent receipts in order to claim HRA

•    Form 16

•    Pay Slips

For the income from house/property

•    Property address

•    Complete details of co-owner with their share in the property as well as PAN details

•    Home loan interest certificates

•    If you purchased an under construction property you need to have the date on which the construction was completed

•    For the rental properties, the name of tenant and rental income needs to be mentioned

Stocks and Equity

  • If you realized capital gains via stock trading then you need to produce stock trading statement and purchase details

•    In case of capital gains sale of the property, you would need sale price, purchase prices, registration details, capital gain and other relevant details

•    If Mutual funds are sources of your capital gains then you need to produce the details of the mutual fund statement, sale, and purchase of equity fund less, debt funds and SIPs

Step by step instructions for E-file

•    After logging on to income tax website (https://incometaxindiaefiling.gov.in/) you need to proceed ahead

•    In the user ID use your PAN

•    You will see the tax credit statement or form 26AS. It is important that your TDS as per the form 16must match with the amount in form 26AS

•    Go to income tax return forms click it and select the financial year

•    You need to download the ITR form that is applicable to you as per the different forms give earlier in this article. If the total amount of your exempted income is more than Rs.5000 then you should go for ITR 2.

•    In case the ITR 1 or ITR 4S is applicable then you can complete the entire process online. For that, you need to use quick e-file ITR

•    For an easier experience, our can download the excel utility and fill in the required details with the help of your Form 16

•    By clicking on the calculate tax tab you can check the tax payable amount

•    If applicable then click on Pay Tax and fill the challan details

•    Click on the validate tab to confirm the data that you have provided in the worksheet

•    There would be options to generate the XML file and then save it to the desktop

•    Go to the portal and click on upload returns you can upload the saved XML file there

•    You will be asked to digitally sign the file via a dialog box with 2 options. Click on yes if you have obtained the digital signature. In case if you haven’t then click on No

•    It will generate the ITR Verification ITRV the acknowledgment form that you can download or print

•    After downloading print it and sign using the blue ink

•    Send it to Income tax department CPC, Post Bag No. 1, electronic city, Bangalore (Please match it with the current address)

 

Conclusion

Due to the obvious reasons, an accurate detail about the income taxpayer is needed for filing ITR and any discrepancy or mistake in the same can interfere with the smooth processing. Hence, it is very important to know about the accurate process of filing IT returns in order to take full benefits of the easier, simpler processes introduced by the government.

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Best Government Pension Plans in India for 2018

March 8th, 2018 · No Comments · Pension

Investments are a great way of creating a nest egg and ensuring a level of financial safety against the uncertainties of the future. A Pension plan, also known as a retirement plan is accumulating a part of your savings and receiving a stipulated amount as pension when you retire. Even though having substantial savings may seem like a great option but the savings can deteriorate fast and even faster in case of emergencies. Pension plans might seem a thing to be considered for the future but with new schemes being introduced each year, it is evident that the sooner you invest, the more beneficial it gets.

Types of Pension Plans

Just like any other investment plan, there are various kinds of pension plans available in the market. Based on their structures and benefits these can be divided into:

1. Deferred Annuity: Under a deferred pension scheme, you accumulate a corpus through multiple premiums or a single premium over policy. Once the stipulated term is over the pension will commence.

2. Immediate Annuity: With an immediate annuity, the pension payment begins instantly. The subscriber deposits a lump sum amount and the pension will start based on this amount.

3. Annuity Certain:  Under the annuity certain, the recipient a certain annuity for a certain number of years, the duration can be chosen by the recipient at the beginning of the scheme. If the recipient dies before the stipulated term, the annuity is paid to the beneficiary nominated by the pensioner.

4. With cover and without cover pension plans: The with cover pension plan includes the life cover whereas the without cover pension plan implies that there is no life cover involved.

5. Guaranteed Period Annuity: Under the guaranteed period annuity the recipient is paid the annuity for certain periods such as 5,10,15 years, whether or not the recipient survives the stipulated term period.

6. Life Annuity: As per life annuity scheme, the recipient receives the annuity until death and if the spouse is added to the scheme, the pension will be paid to the spouse of the policyholder in case of death.

7. NPS: The National Pension scheme is a voluntary contribution retirement savings scheme designed by the Government of India for people who want to invest in a pension plan.

 

Why do you need a pension plan?

A pension plan doesn’t only provide the stipulated amount but is also a sound investment plan, as your money grows manifold due to the compounding interest that makes a great impact on the final savings. A pensions plan when chosen judiciously helps assist in the retirement phase. The Government of India has launched plans focusing on the benefits of pension and encouraging people to invest for more financial security for their future.

National Pension Scheme

Keeping in mind that the life expectancy in India has increased in the past decade, Government of India established the Pension Fund Regulatory and Development Authority (PFRDA) in 2003. The National Pension Scheme (NPS) was launched in 2004 with an objective to promote awareness regarding pension and provide a retirement income to the citizens. Although this scheme was introduced for new government recruits but was later amended to include all citizens.

Under NPS the subscriber is allotted with a unique Permanent Retirement Account Number (PRAN). Currently, the withdrawals from the MPS are exempt from income tax but only if the amount is up to 40 percent of the corpus and upon reaching the age of 60 years. If the subscriber wishes to exit the NPS before the stipulated time (i.e. before reaching the age of 60), only up to 20 percent of the corpus can be withdrawn and the rest converted into an annuity. Under the NPS scheme, the subscriber can make early withdrawals for a maximum of three times and at an interval of not less than a period of five years. The scheme limits early withdrawal amount to 25 percent of the contribution.

According to the budget of 2017, withdrawal of 25 percent of the corpus by the subscriber has been exempt from income tax effective from April 1, 2018.

NPS also has provisions for the citizen to route his/her through their employer or deposit it directly.

Atal Pension Yojana

In the year 2010-11, the government of India launched the Swavalamban Scheme. This scheme failed to gain much popularity mostly because it doesn’t have guaranteed pension options at the age of 60. Atal Pension Yojana (APY) was announced in the budget for 2015-16 with provisions of a fixed pension ranging from Rs 1000 to Rs 5000, provided the subscriber joins between the age of 18 and 40 years. It was stipulated in the scheme that the Government would contribute 50% of the subscriber’s contribution or Rs 1000 (whichever is less) for those who have entered the scheme before 31st December 2015. According to the yojana, the contribution amount varies for the subscriber depending upon their age. For example, is a subscriber joins the Yojana at the age 18, for a monthly pension of Rs 5000/-, he/she would have to contribute Rs 210 monthly whereas for the same plan the contributor would have to pay Rs 1454 monthly at the age of 40. Hence showing that it is beneficial to enter the scheme early and be rest assured about the financial safety at the time of retirement.

The scheme ensures that a monthly pension as stipulated in the respective scheme would be paid to the subscriber and in the event of his/her death the pension corpus would be returned to the nominee.

Under APY the applicant must have a bank account with facility of auto debit for transferring the contribution periodically. The people who subscribe to the policy have the option to increase or decrease the pension amount during the stipulated years although the switching option shall be provided once in year during the month of April.

Pradhan Mantri Vaya Vandana Yojana

The Pradhan Mantri Vaya Vandana Yojana was launched in 2017 and is available until 01st May 2018. This scheme was introduced for senior citizens and can be purchased online as well as offline through LIC. Under this scheme, the pensioner is entitled to the decided pension at the end of each period (monthly/quarterly/ half-yearly/ yearly) as chosen by the pensioner for the policy term of 10 years. The PMVVY provides a return of 8.3% per annum for the term. In case of the pensioner’s death, the accumulated amount under the policy is paid to the nominee and upon the survival of the pensioner at the end of the policy term. The pensioner is entitled to the purchase price and the final pension installment.

This scheme was created keeping in mind the varied needs of the people. Various provisions contribute to a certain flexibility and freedom to choose a suitable structure of the plan.

The pensioner can purchase the scheme at a lump sum purchase amount and he/she can also choose the pension amount or purchase price.
The minimum and maximum Purchase Price under different modes of pension are:

Mode  Min Purchase Price            Max Purchase Price

Yearly            Rs. 1,44,578/-            Rs. 7,22,892/-

Half Yearly   Rs. 1,47,601/-            Rs. 7,38,007/-

Quarterly      Rs. 1,49,068/-            Rs. 7,45,342/-

Monthly        Rs. 1,50,000/-            Rs. 7,50,000/-

Tips to choose the right pension plan

As daunting as it may sound, choosing the right retirement plan is very crucial. Keep the following tips in mind while deciding on the pension plan that suits your requirements.

  • Needs: It is important that you understand and foresee how much you and your dependents would require after retirement to maintain your standard of living. Understanding this would give you a ballpark on how much you need to invest.
  • Research: Diligent research is pivotal. With various instruments of investments available in the market, it is important to read and comprehend the terms and conditions of each plan before making the plunge.
  • Analyze: Study each plan to figure out which pension plan suits you and your family’s needs the best. Needs of each individual are unique and require the plan that meets those needs. Never purchase a pension plan solely based on the trend or because someone you know recommended it.
  •  Look beyond the tax benefits: While this is a common factor encouraging people to opt for a pension plan, it has more benefits than tax saving. Financial security and stability in old age is a commodity that no one can put a price tag on and needs to be considered as a vital and sensitive matter.

Old age and the uncertainties that come along with it are unavoidable. But financial crisis in old age is completely avoidable provided sound investment decisions are taken at the right time. And no matter what’s your age, the right time is now. A pension plan is not just a safety net that provides a certain income after retirement but also enables funds in case of emergencies. This not only ensures a stress-free and hassle-free life once you retire but also a life of dignity during that phase.

 

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Do insurers automatically pay the maturity benefit of endowment plan?

February 28th, 2018 · No Comments · Insurance, Investment

 If the insurance policy comes with survival benefits, the insurance company will not pay the maturity benefit automatically. Hence, the maturity benefit of the endowment plan will not be processed automatically. The insurance company will track the records of policyholders and will send reminders on important matters related to insurance policies at regular intervals. The current generation policyholders will enjoy the mobile alerts as well. The insurance company will also send documents that are required to be furnished. The policyholder can fill those forms and they can submit relevant forms to manage the claim.

Insurance benefits

There are many benefits associated with the insurance policy. It covers the risk and offers financial benefits. You can buy  endowment policy by paying a regular premium or annual premium. Most of the insurance companies allow policyholders to choose monthly, quarterly, half-yearly and annual plans as per the feasibility of customers.

The insurance plan covers various kinds of risks such as life, disease, and accident. Even though the life cannot be equated to the money benefit offered by the policy, the insurance plan will preserve the financial status of the family despite the loss of the breadwinner. The emotional loss of the policyholder cannot be compared with any kind of monetary benefit and it is a void which cannot be filled by any other offer.

The insurance policy offers a guaranteed amount which can be received by the policyholder in the event of the death or risk associated with accident or disease. A lump sum will be paid to the policyholder or beneficiary. If the policyholder dies, the amount will be paid to the nominee or beneficiary. The beneficiary should submit the policy claim form, death certificate, police report and other documents as required by the insurance company.

The insurance company will process the claim form and the benefit will be delivered to the nominee. The money will be credited into the bank account of the nominee or it will be paid through the check as per the option exercised by the nominee.

Types of endowment plans

There are two types of endowment plans.

  • Traditional endowment plans
  • Unit-linked endowment plans

Traditional endowment plans – There will be guaranteed returns with the traditional endowment plan. The benefits are offered at the maturity date. The reversionary bonus will be announced by the insurance company based on the profits earned on annual basis. There are non-guaranteed benefits which are offered with the participating plan.

Unit-linked endowment plans – The maturity benefit will be offered over a period of time with the unit-linked endowment plans. In addition to the fund value (NAV), the unit-linked plan will also earn additional profits at regular intervals. There will be a very high risk with unit-linked plans and the returns are in proportion to the risk.

Steps to file the death claim form

The maturity benefits are offered to the insurance policyholder after submitting the claim form. The claim will not take place automatically.

  • The insurer should get information about the death of the beneficiary (through beneficiary)
  • The claim form will be delivered to the beneficiary
  • The claim form will be signed by the nominee or legal heir or assignee
  • The statement provided by the last medical officer should be attached to the claim
  • Death certificate and certificate of witness
  • Discharge voucher (if required)

Steps to file the maturity claim

The survival benefits are available under various types of endowment plans with a term ranging from 5 years to 30 years. The claim form or voucher will be discharged by the insurance company to the policyholder through the post. The form will be sent at least one month before the maturity date.

  • The policyholder should fill the claim form and should sign the form
  • The necessary documents should be attached
  • The signature of the policyholder is mandatory

The insurance company will process the documents and will request additional information or documents (if necessary). The claim proceeds will be credited to the beneficiary’s account at the earliest.

Submission of the policy documents

The policy documents along with the original policy should be submitted to the insurance company for processing the claims. The maturity benefits are exempt from tax under Section 10 (10D) of the income tax act.

Conclusion

The maturity benefit is an important feature in an endowment plan or the money back plan. The policy should be bought by an individual to offer protection to the family members or dependents. It is an instrument for goal-based savings as well. If the policyholder dies, the sum assured plus bonuses will be paid to the nominee after submitting the claim forms to the insurance company. If the policyholder is alive, he/she can submit the original policy along with required documents so that the claim will be processed and settled immediately. However, no automatic processing of the claim will take place with the endowment policy.

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4 Major Reasons Why Child Plans make good sense

February 21st, 2018 · No Comments · child plan, Investment

The fast-paced world of today requires a proactive financial management to take care of the important events and milestones of the life. Its effects can be seen in the investment products as well as investors. One such product is insurance. Instead of yesteryears insurance plans that major emphasized on the breadwinner’s life the modern options offer varying levels of protection to different members of the family. A particular insurance type that has seen dynamic changes both in terms of the number of players, as well as policy details, is child plan.

The major difference between traditional and modern child insurance plans

The modern child insurance plans help the policyholder to build adequate financial provision for taking care of their children’s lives and meeting future milestones irrespective of your life term. As opposed to the yesteryear plans that offered limited choice menu and were designed to offer safety and lump sum payout after a stipulated period of time or occurrence of events, the present child plans offer maximum stability, multiple options, customizing the plan as per your needs and choosing from a wider set of different investment strategies that align with our needs.

How to find the best Child Insurance Plans?

The recent surge in the child plan products has certainly offered many benefits for the policyholders. These benefits go far beyond the increased number of players in the market. The insurance companies are constantly introducing the plans that are innovative and designed with a futuristic vision. At the same time, they also align best with the practical aspects like cost-efficiency and timely access to financial benefits. A well-managed financial route is assured by the multiple timely payouts to take care of different milestones of your child’s life. Obviously, when selecting the insurance plan for your child you would like to go for the best child insurance plan but one thing to keep in mind is that there is no single best option that suits every parent’s needs. It would be wiser to evaluate your financial condition, objectives, and specific financial portfolio you would like to build to take care of your child’s life.

 

Here are the 4 major reasons why the child plan makes a good sense

Better Premium Management

One of the major benefits offered by Child Insurance Plan as against the term insurance is that in the latter the premium is paid by the insurance company on policy holder’s behalf in case of demise of the policyholder. Term insurance plans, on the other hand, may fail to meet the objectives during such an event as the insurance is not continued. Understandably the terminal insurance is less costly than child insurance plans but this saving may eventually become costlier as the premiums are stopped after the demise of the policyholder and that does have an effect on the ultimate benefits. Besides, the child insurance plans allow a better fund management and utilizing as they offer sufficient funds to your children at regular periods instead of a single time lump sum payment.

Maximum Financial benefits

One of the major concerns of a parent is that their children should get the sufficient amount of funds to take proper care of their milestone events like higher education, marriage etc. The child plan allows you to maximize the financial benefits by providing you the flexibility to choose ideal payout duration for ensuring best benefits for your child.

Adequate and timely access

Every parent cherishes certain wishes for the future life of their children. Besides, the smart children of today’s era are pretty clear about the future course of their lives. One of the major requirements to make these wishes come true is the timely access to the financial help. The high level of customization and wider choices offered by a child plan allow you to exercise better control over preparing the right financial route map that is designed to take the best care of your child’s future.

Extra Riders

Deciding on the ideal insurance plain, not an easy task and many time you may come across the plans that look pretty good but may lack a few specific options/benefits that you require. Especially when it comes to the future of your child you would like to avail some extra security. The good thing is that many child plan products come with riders that can be availed and added to the plans to increase the security level. The best thing is that these riders are availed at nominal costs.

Conclusion

There are a number of reasons that make a child plan the best choice for the caring parents. However, they should be very cautious while selecting the ideal option that should meet their expectation and fit well into their budget. There are many plans that assure high returns or more flexibility. But it is more important that you should be able to afford such plans. Another thing to keep in mind is that the insurance plans are long-term investment products and thus you need futuristic thinking for making the right decision.

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Make Retirement The Best Phase In Life – Plan Now!

January 23rd, 2018 · No Comments · Insurance, Investment, Pension, Reiretment

Retirement is the new phase of life where there is no income and more of free time. This is the no-earning phase of life where you are done with most of your responsibilities and job formalities, and dreams of a carefree retirement years. It is the time when a retiree gets to enjoy their life and dreams which are always kept aside due to responsibilities and formalities. It is in your own hands to live a stress free retirement life. You can build your future life on your own terms, and thus it is wise that you plan your phase of retirement in advance. Put your savings into retirement plans and get economical coverage in the phase of retirement.

Make sure your retirement policy is good enough that you and your family receive a regular income as pension in your phase of retirement. A good retirement policy allows you to choose the retirement age and date in advance.

Early Retirement-

There are many who opt for an early retirement and live their post retirement life. Early retirement is not only for super rich people, but there are many others who just wish to end the formal life and enter the free phase of their life, i.e. the phase of retirement. There are many who feel satisfied with their life at an early age and make a shift, while managing a life where they save enough for their retirement.

If you plan to retire early from your job, then it is better to create a corpus for the phase of retirement in your life. Early retirement is not for you if you live your month on your pay cheque.

Senior Plans-

There are various plans available for senior citizens only. There are special slabs for senior citizens when it comes to income tax, including one slab for people who are over 80 years old. Most banks provide almost 0.5 per cent higher deposit interest to senior citizens on deposits which are below Rs. 1 crore.

The Senior Citizen Savings Scheme (SCSS) is only for those who are above 60 years of age. Under this scheme, one can invest between Rs 1000 to Rs. 15 lakh which pays an annual 9.3 per cent per annum returns, payable on March 31, June 30, September 30 and December 31 each year.

There is a 5 year lock-in period, which can be extended for further three years.

Special Benefits-

There are special concessions to seniors on financial instruments and travel. State Road Transport Corporations have discounted fares for senior citizens. Indian Railways also provides 30 per cent concession in all classes and trains, and also has separate counters for senior citizens to purchase tickets. The benefits does not just end here, state-run telecom service providers, BSNL and MTNL, also provide discounted tariff for senior citizens.

 Things to remember while working on retirement plans:

a)  Buy your insurance plan at an early age to yield more benefits in the phase of retirement.

b)  This is the stage when you end up earning and move into the stage where you start to capitalize on the cash build-up. It is important to understand that your plan should meet your future requirements and the cost of premium is easy for you to afford.

c)   Understand your retirement goals better like if you might plan to travel or the health relates expenses. The vision for your future lifestyle helps you a lot to think about the sort of pension you need.

Types of retirement plans-

In India, the basic retirement plans offered by the insurers are the ones where the policy holder gets a fixed return as mentioned by the insurance company along with the minimal deviation in your phase of retirement. While there are some other plans too, where the insurer invests in debt or equity; in this case the returns depend upon the market situation.

You can choose from any of the below mentioned retirement policies available in India-

  • Immediate Annuity Plan-

This is the policy for those who have lump-sum cash. In this scheme, you will get the pension right form the day of payment.

  • Deferred Annuity Plan-

In this scheme, the policy holder will pay the premium for certain years while he or she is working and would start to receive the pension amount after retirement.

Conclusion-

Retirement plans or Pension plans are for the senior citizens of the family. It is a kind of financial and emotional stability to the policy holder. This way you will not have to rely on someone else to meet your basic needs in the phase of retirement. It gives you dual benefits as it insures you and gives a fixed pension amount once you retire. But it is wise to do some research on the various retirement products available in the market.

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