Top Five Free Personal Finance Apps

Top 4 things you must know about taxes (if you would like to pay less)

Saving taxes every year requires timely planning and systematic approach. Before you begin to save tax, you should know these 4 basic points about saving on income tax

If you pay house rent then you can use it to save tax

Many a times, we are all confused with tax calculations on House Rent Allowance(HRA) and tax benefits on home loan. Planning your HRA can go a long way in your financial planning. HRA forms part of the salary you receive from your employer and is subtracted from your gross income.

Lowest of three is deducted:

Actual HRA provided by the employer

      

      50% of basic plus dearness allowance if situated in Delhi, Mumbai, Chennai or Kolkata, 

      otherwise 40% basic plus DA

     

      Actual house rent paid, minus 10% of basic + DA

Make sure you take rent receipts from your house owner.

You can save tax and grow wealth at the same time

Certain tax saving mutual funds such as ELSS funds, EPF, PPF, NSC etc made in accordance with section 80C of the Income Tax Act give tax rebate. No tax has to be paid at the time of investing, earning and redemption, subject to a maximum limit as prescribed under section. Know more

Some expenses are tax deductible

There are certain personal expense allowances provided by your employer which are eligible for exemption from tax. Some of them are:

Medical expenses including preventive health check ups

Medical Insurance Premium

Education loan interest

Housing Loan interest and Principal

Life Insurance Premium

Dependents Healthcare

Doing good can save your taxes too

Donating to a charitable cause can help you save tax. Section 80 G of the income tax act  allows you to deduct up to 10% of your adjusted gross income by donating to certain charities.

Retirement Planning is critical

Most of us know that retirement is something we must actively plan and save toward. The traditional pension plans that pay lifetime defined benefits are becoming increasingly scarce. Yet the Indians typically don’t know how much to save and don’t save enough, according to numerous polls and experts.

Moreover, retirement today is more than just a matter of accumulating enough money. Increasing life expectancy had made retirement an extended stage of life. People can expect to spend 15 to 35 years or more in retirement. That’s a long time. What kind of retirement do you want to have? How should you spend money during retirement? How can you prepare for it and when should you start?

Getting started… Your 20s and early 30s

Early in your career is the perfect time to start a habit of saving for retirement because you have one huge advantage you will never get again… TIME. A rupee invested early in life can grow, through the power of compounding, far larger than the same rupee invested later in life. Try to save at least 10 percent pre-tax income in your plan, up to the limit the plan allows. Invest aggressively as you are comfortable with and do not cash out your retirement account at any cost.

Your 30 through your 40s

At this stage, you are likely full stride into your career and your income probably reflects that. The challenge to saving for retirement at this stage comes from large competing expenses: a mortgage, raising children and saving for their college, or perhaps financing your business.

As when you are younger, it’s critical to find a way to squeeze out rupees for retirement. Time is still on your side, though you have begun to lose some of your compounding power. Try to invest a minimum of 10 percent of your salary towards retirement.One must have adequate insurance and emergency fund set aside in a savings account to pay for fixed and essential living costs. 3 – 6 months cash emergency fund is ideal.Avoid tapping into retirement accounts for such things as home down payment or college.

Your 50s and 60s

Now is the opportunity to really sock away retirement funds. Try to boost your retirement savings goal up to 20 percent or more of your income. Ideally, you are at your peak earning years and some of the major household expenses, such as mortgage or child rearing, are behind you, or soon will be.

Investing at this stage typically needs to be a little more cautious. Time is starting to work against you, since you have few years of earning power to make up any losses. Planners recommend shifting a portion of your higher risk investments into less volatile assets such as bonds. In addition, most planners recommend maintaining a substantial exposure to stocks. You still have a lot of years ahead of you, both to reach retirement and during retirement itself. You will need some assets that can help you stay ahead of inflation and preserve purchasing power of your income.

What kind of retirement?

It’s also time to start focusing on what kind of retirement you want and what financial resources you must pay for it. Do you plan to stay home and garden, or travel the world? Work part time? Go back to school? Start a new hobby? Move to a vacation spot? This is the time to start dreaming of what your new life will look like and to start putting price tags on those dreams. Share your dreams with your spouse. It’s important that both of you explore and work out differences. What if one wants to travel and other wants to stay at home?  Calculate what realistic financial resources  you will have to pay for your retirement.

Here is an exercise for you and please feel free to share it with me on apurushothamancfp@gmail.com

Write one paragraph about the kind of lifestyle you would like to have when you retire. Include ideas on how much you think it will cost to maintain this lifestyle.

(Do you want to live on the amount of money you have been used to, more than they are used to, or less than they are used to?)

The role of broker in the claims process - Top 5 things to know

Have you suffered a loss and need to make an insurance claim? Be it personal or business related, the claims process is when a broker really proves their worth. The broker provides an integral service to ensure a smooth and successful outcome is achieved following an insured loss. In case of an unfortunate event you need to make a claim, you will realize the true value of working with an experienced broker.

The broker is a trusted partner ready to communicate with the client.

• When something goes awry, the broker is the client's point of contact. Having a personal relationship with clients means that you can feel comfortable calling your broker to fix your problem. Buying your insurance online or from a large, unknown entity means you do not have a dedicated point of contact. With a broker, you always know who to call, and its easy to speak to your broker to explain what caused the loss.

• The broker is an experienced professional who understands the ins and outs of the claims process. The broker truly takes care of everything for the client. Assisting with completing the forms and collating the necessary documents and information required to support your claim, the broker takes the complexity out and converts the process into simplicity, guiding the client in the right direction. The broker reads the fine print and the fully policy coverage. The claims is lodged with insurer on client's behalf, handling all communication so that the client can focus on running their business smoothly.

• The broker has a strong relationship with the insurer as they work daily with insurance companies. This enables broker to deal better with them and come to the resolution you deserve. Your broker ensures that the claims is presented to the insurer in a clear and legible way to assist in a speedy settlement. To do this broker ensures that the insurer has everything they need to say YES to the claim and in a timely manner

• When things are not as straightforward with a claim, the broker can negotiate on behalf of the client with the insurer to get maximum benefits they are entitled to under their policy. As the broker know the client's policy so well, they can handle the disputes or issues in an expert manner. The broker's knowledge and technical expertise is far superior to that of the claims staff who work in claims departments.

• After a major loss, the broker will make an onsite visit to assess the loss and can also accompany clients for meetings with Assessors and Loss Adjusters when required. A broker provides comprehensive risk management from the start of the relationship. The broker will assess and analyse the client's property or business in order to prevent the losses from occurring in the first place, advising ways of minimizing risks and helping the client to choose the best possible coverage for their needs. The broker will work hard to ensure that the correct cover is given to clients, so that when a loss does occur, they have the adequate cover to protect them financially.

The broker works hard to ensure that the outcome is as they would expect if it were their own loss. We focus on personal relationships in our organization, and when you partner with us, we get to know you as a client and work fully to understand your risks. 

Don't leave anything to chance. Protect the ones you love with Life Insurance

The professional education in an esteemed institute of repute is the dream of every student & parent. Each Parent plans the finance of their child's education right from their childhood.

A group student insurance solution is an effective way to mitigate the following risks for students as well as their parents.

• The risk of the student discontinuing their academic studies in case of unfortunate death of the earning parent

• The risk on student's life due to unfortunate death of any cause.

Considering the above scenarios, a group term insurance plan offering life insurance cover on the life of the parents as well as students will be the way forward.

Insurance on Parents’ Life:  The earning parents’ life can be insured to the tune of course fee of the student. Due to an unfortunate death of the earning parent the student runs the risk of discontinuing his/her course midway. Hence, an insurance cover on the lives of the earning parent’s will ensure that student continues the course (as the future course fees can be paid from the insurance claim amount). This enables the Student to have a secure future.

Insurance on Students’ Life: Though the loss of life of a student can’t be indemnified in any way as far as the parents are concerned, the life insurance cover on the life of the student may give some relief to the parents.

Flexible Administration: The Institute can administer this scheme as Master Policy Holder representing itself on behalf of the Students & their parents. The premium can be collected by the institute from the students.

The following Example illustrates a scenario

Assumption : Parent aged 47, student studying in 2nd year, another 5 lakhs needed to complete the course (includes tuition fees, exam fees, transportation, hostel fees etc) 5 lakhs group life term cover for this parent at very cheap premium of Rs.1,665 per year. In case of an unfortunate death of the parent (due to any cause) insurance company pays Rs.5 lakhs to the student's guardian. This will ease the financial burden and ensure that the student can complete his/her education.

Benefits for the Institution

Institution secures student studies. Students could continue the course by paying all the fees. Students from 1st year to final year can be covered for their outstanding course fee.

Institution creates goodwill among students and society

Group TERM Life Insurance – Employer- Employee - FAQ's

Group life insurance is typically offered as a piece of a larger employer or membership benefit package. By purchasing coverage through a provider on a “wholesale” basis for its members, the coverage costs each individual worker/member much less than if they had to purchase an individual policy. Those receiving coverage may not have to pay anything “out of pocket” for policy benefits or they may elect to have their portion of the premium payment deducted from their pay check.

Group Term Insurance Plan will generally have the following structure:

• Provides life cover to groups of people
• One master policy covering all members of the group
• Annually renewable term insurance plan
• Addition and deletion of members anytime during the year
• Sum assured payable to nominee on death of the covered member
• Employees can be additionally covered by riders e.g. accidental/ critical illness / disability
• Offers flexibility to cover the spouse of the member
• Simplified –Enrolment process
• Easy claim settlement process enabling speedy & quick settlement.
• Get additional protection by opting for Group Critical Illness Plus Rider that provides Rider Sum Assured in case diagnosed with any of the 19 Critical Illnesses

Advantages of the GTLI Plan

• Your Employees can enjoy a Life Cover at a low cost
• A Life Cover is a strong retention tool and loyalty building measure for employers
• You can avail tax deductions on the premium paid, as per prevailing tax laws
• The administration process for addition and deletion of members is simple
• Coverage without the need for a medical examination for Life Cover up to the free cover limit*
• Coverage to your employees in case of an unfortunate event
• *Free cover limit is the maximum amount of Life Cover that can be offered without any medical tests. This limit varies from group to group.

Benefits To employer

• Life cover for all the group members under one policy.
• Easy and hassle free financial help to the employee's family, in case of an unfortunate event
• Cost-effective method to buy a high cover at a low premium
• GTI cover for future service gratuity liability
• Serves as strong retention tool
• Premiums paid by the employer is tax deductible u/s 37 (1) of the Income Tax Act, 1961
• Simple procedures for addition and deletion of members in to the policy

Benefits To employee

• Adequate financial support to loved ones against his accident, illness or untimely death
• Convenience of no medical tests till free cover limits
• Cover for housing or vehicle loans given by you to your employees
• Premiums paid by the employer not treated as perquisite
• Death benefits exempt from tax under Section 10(10D)

FAQ'S

How does GTLI plan work?

This plan is offered through a Master Policy that is issued to Employer. As the Master Policyholder or the group administrator, you pay premiums that cover the members of your group. The members of your group are covered for a period of one year.

How will the Employee’s nominee receive the lump sum amount?

As the Master Policyholder, you can choose the lump sum amount that will be provided to the Employee’s nominee*. It can either be a flat or graded cover amount.  When all members of the group have the same Life Cover, it is called the flat cover. On the other hand, when different individuals are offered different Life Cover on the basis of pre-decided grades, it is known as a graded cover.

*Nominee is the person who will receive the Life Cover amount in the absence of the member.

What is the minimum number of members needed under this plan?

Formal group should consist of minimum 10 members. An Informal group should have at least 50 members.

How much premium can I pay at policy level?

You have to pay a minimum premium of `10, 000 p.a. at the policy level*.

What is the minimum amount of Life Cover offered?

The minimum amount of Life Cover is Rs.5,000 for each member.

At what age can a member start this plan?

The minimum age of entry for a member should be 15 years. But, the maximum age of entry should not exceed 79 years.

How long does the policy last?

The policy lasts for 1 year. It can be renewed thereafter.

How frequently can I pay the premiums?

You can pay the premiums monthly, quarterly, half-yearly and yearly.

More Terms & Conditions

SERVICE TAX: Service tax, if any, shall be as per the Service Tax laws and the

rate of service tax as applicable from time to time.

GRACE PERIOD FOR PREMIUM PAYMENT:

A grace period of 30 days from due date of premium will be allowed for payment

of premiums

REVIVAL OF POLICY:

If the policy has lapsed, it may be revived within a period of 30 day - 3months from the

date of first premium or the next Annual Renewal Date whichever is

earlier,

WAITING PERIOD:

For employer-employee groups there will be no waiting period. However, for non

employer-employee groups waiting period will be 45 days from the date of

commencement. During this waiting period, no death benefit shall be payable.

SUICIDE CLAUSE:

In case of death of a member due to suicide, within 12 months from the date of

inception of the policy or date of entry of the member into the scheme

whichever is later, claim payable shall be 80% of the premium paid in respect of

that member, provided the policy is in force.

However, in case of employer-employee groups where the participation is compulsory, this clause shall not be applicable.

COOLING-OFF PERIOD:

If policyholder is not satisfied with the “Terms and Conditions” of the policy, he/

she may return the policy to the Corporation within 15 days from the date of

receipt of the policy stating the reasons of objection.

On receipt of the same the Company shall cancel the policy and return the amount of premium deposited after deduction in respect of the following:

a. Recovery of proportionate charges towards risk premium.

b. The stamp duty.

Child insurance plan – Top 3 things to consider

We all love success stories. They are born from the seeds of small trees. Then over the years of care, they leave a trail of achievements, memories, prized milestones and eventually become a source of inspiration for the generations to come. A secure life needs a child's ambition easier and towards a crystal clear goal without hindrances. 

Let's go back to the day when your child was born. You probably had and still do have big dreams for the child. Let us guess that you wished that your child does better than you in every possible way. Then you are a parent who is thinking the right things such as financial planning for your child’s education. Yes indeed, what better gift than education for your child. Unfortunately, then comes some challenges, the costs of higher education in the near future will go up by 10 percent every year, which means that the cost of education shall double every 7 years. It will be four times of what it is today in 15 years. Do not let inflation bog you down. To ensure that your child does better than you, you need stay ahead of inflation by implementing simple practices and investing in smart financial instruments. 

Secure a steady habit of starting early, saving regularly for the long term. So you can benefit from growth of returns over the years.How do you do this? One of the best ways to financially secure your child is to invest in children's plans from a life insurance company that are designed to guarantee your child a steady future.

Here are 3 things you can do

• The plan which allows you to save over the long term in a disciplined manner. The earlier you start saving the better

• Secondly invest according to your risk appetite. Go easy and there is no pressure. If you can take a higher risk for higher returns, then opt for a unit linked insurance based child plan. However, if you feel that you do not have the appetite for market uncertainties look for a solution that offers short returns on maturity. Remember if you stay invested for a longer term, you will benefit from the power of compounding.

• Thirdly, do look for premium funding benefits offered by life insurance companies. You need a solution that can guarantee that your child’s dreams are not interrupted in your absence. Under this benefit, in case of an unfortunate event, a lumpsum amount is paid to the family to take care of immediate education expenses. In addition, all future premium amounts are funded by the life insurance company. This way the policy does not stop and your child receives a lump sum amount on policy maturity to meet higher education milestones.

So, proud parents, plan today and get your child high up to the wall of fame.

How much life insurance do I need?

One cannot pinpoint the ideal amount of life insurance to buy exactly. But one can make a sound estimate by considering financial situation and by imagining what your loved ones will need in the coming years.

In general, you should find the ideal life insurance policy amount by calculating long term financial obligations and then subtracting the assets. The remainder is the gap that life insurance will have to fill. But it can be difficult to know what to include in your calculations, so there are widely calculated thumb rules meant to help you decide the right coverage amount.

Here is a rule of thumb meant to help you decide the right coverage amount:-

Debt, income, mortgage and education

This encourages you to take a detailed look at debt, income, mortgage and education, the four areas that you should consider when calculating your life insurance needs.

Debt & Final Expenses – Add up your debts, other than your mortgage, plus an estimate of your funeral expenses

Income – You need to decide for how many years your family would need support and multiply your income by that number. The multiplier might be number of years before your youngest child graduates from high school.

Mortgage – Calculate the amount you need to pay off your home loan.

Education – Estimate the cost of sending your kids to college.

How to find your insurance coverage number?

Follow this general philosophy to find your own target insurance coverage amount:

Financial obligations minus liquid assets

Calculate obligations: Add your annual salary (times the number of years that you want to replace income) + your mortgage balance+ your other debts + future needs such as college and funeral costs.

From that, subtract the liquid assets such as: savings + existing college funds+ current life insurance

Here is a situation and the goal:-

Rajeev has a life insurance cover of only Rs.20 lakhs. Rajeev would like to insure the living expenses for the future 30 years for his family. He wants that his family should receive 90% of present household expense inflation adjusted every month. Rajeev’s monthly household expense is Rs.40,000 per month. The investment will be made in debt fund @7%. The inflation rate is 5.5%.

The total insurance corpus requirement will be Rs.1,05,71,384. After excluding the existing insurance of Rs.20 lakhs the estimated net insurance corpus required is Rs.85,71,385.

Tips to keep in mind

• Rather than planning life insurance in isolation, consider the purchase as part of an overall financial plan.

• The plan should consider future expenses such as college costs, future growth of your income and assets. Once this information is known, then you can map the life insurance need on top of the financial plan.

• Remember your income likely will rise over the years, and so will your expenses. While you cannot anticipate exactly how much either of this will increase, keep a cushion that makes sure that your spouse and kids can maintain their lifestyle.

• Talk your numbers through with your spouse. How much does your spouse think the family would need to carry on without you?

• Consider buying multiple, smaller life insurance policies. For instance you could buy a 30 year term policy to cover your spouse until your retirement and a 20 year term policy to cover your children until they graduate from college.

Is opting for personal accident cover important?

Most of us acknowledge the significance of having a life insurance policy to cover the risk of death and health insurance policy to take care of medical and hospitalization expenses. However not many of us pay heed to the importance of opting for personal accident cover, perhaps because our existing insurance plan already cover accident risks. One does not generally pay attention to provision for an unexpected accident that could affect us physically as well as financially and the families.

What is personal accident?

As you know, accidents never take a holiday unlike us. It will never take a holiday and never know when it will happen. It could be a road accident, travelling in a train or plane or while walking one falls down or it could be an accident while playing a game. Somebody would get disabled for a short period or somebody would get disabled permanently, lose their eyesight, lose their ability to speak etc

How is personal accident different from health insurance?

Personal accident has the ability to destroy lives. Personal accident occurs mostly on an average statistically to younger people. These people probably have no insurance cover. They are less likely to have life cover and health cover. Particularly with bike riders, most of the accidents happen and cause fracture or damage.in all those situations, personal accident cover provides the cover. So, it is the most essential. The benefits are paid out on death or permanent total disability/partial total disability. Personal accident policy must be taken by anyone who may be hospitalized due to the dangerous nature of work/dangerous commute/exposed to a dangerous work environment/ who want to ensure peace of mind against the possibility of general accidents.

Health insurance acts as a financial aid at the time of hospitalization to mitigate the overall expense incurred. The benefits are paid out after the hospitalization process. The ambulance costs are covered and so is the hospital rent. Health insurance must be taken by anyone prone to hospitalization because of health issues.

Here are some of the key benefits of this type of product:

• No medical tests & documentation
• Substantial cover for lower premium
• Worldwide coverage
• Can be bought by individual or by family
• Easy and certified claim process
• 24x7 support service

What are the major exclusions under personal accident policy?

• Pre-existing diseases
• Suicide, attempt to suicide or intentionally self-inflicted injury, sexually transmitted conditions, mental disorder, anxiety, stress or depression.
• Being under influence of drugs, alcohol, or other intoxication or hallucinogens.
• Participation in actual or attempted felony, riot, civil commotion, crime misdemeanour.
• Committing any breach of law of land with criminal intent.
• Death or disablement resulting from pregnancy or childbirth.
• Professional sports team in respect of specific benefit or inability to perform.
• Participation in any kind of motor speed contest.
• While engaged in aviation, or whilst mounting or dismounting from or travelling in any aircraft, other than as a fare paying passenger in a scheduled airline.
• Underground mining & contractor specializing in tunnelling.
• Naval, military or air force personnel
• Radio activity, nuclear risks, ionizing radiation

What are the major documents required to file a claim?

• Claim form duly signed
• Identity proof
• Accident proof – FIR, financial police report, state electricity board report, factory inspection report, forensic report etc
• Cause of loss – Viscera report, post mortem report (if conducted), Medical report of certificate
• Disability certificate from Government medical board, fitness certificate, medical prescription
• Death certificate in case of accidental death
• Hospital discharge summary, bills, receipts, medical practitioner certificate, medical or clinical or pathological or diagnostic records.                    

How do I determine if personal accident coverage is right for me?

Depending on your specific requirements, you can pick out a personal accident insurance plan that’s relevant to you. Depending on the insurance provider you choose, you may even be able to customize it to suit your specific needs.

Travel Insurance – 4 tips to travel hassle free

It is a fact that no one knows about the future uncertainty or insecurity. But if you have a travel insurance plan, that part is taken care of and you could travel happily. The travel assurance provides you the cover for medical or other expenses such as cancellation due to sudden illness or death during travel.

Travel insurance breaks down into four main categories

Medical Insurance 

Medical Evacuation

Trip cancellation/Interruption 

Luggage insurance

Now there are a plethora of companies that would offer you quotes for comprehensive plans or you can order them individual “A la Carte”. Today I am going to focus on 3 categories.

Medical Insurance

If you already have medical insurance at home, start there. Some policies will cover you for travel within your home country, but not abroad or you might be limited to certain providers. For example, there might be plenty of providers in India, but may be not too much in Thailand. Here is a tip. Ask your provider for a list of affiliates in your destination.

Medical Evacuation Insurance

Now if you are going skiing or trekking or something prone to accidents in a remote destination, you might want to consider getting medical evaluation insurance. For example, if you fall of the cliffs, the medical evacuation insurance will only cover the cost of transporting you from wherever is that you are to a hospital. Now you can get a policy that can take you to the nearest local hospital or you can extend it as much as you want to take you to the exact hospital at home wherever it is that you want to be treated. Keep in mind rates tend to go up every decade for over every fifty years old. So insuring your parents on the cruise ship versus your teenager on school vacation are two varied different stories. Another thing to keep in mind is to keep all the receipts. Sometimes one may have to pay out of pocket and submit your claim when you go back home.

Trip cancellation/Interruption

This type of insurance kick in only when major events occur. Things like a tsunami, or a terrorist attack or the death of a family member. Although the last one is not always a given. So, the policy fine print should be read carefully. Things to check for are to make sure that your airline company or tour operator is covered. Some surprisingly are not covered.

Luggage Insurance

Are you travelling with some expensive items in your luggage and afraid about getting stolen?

If there is a luggage insurance, one does not need to worry about the cost of stolen luggage during transit or travel. This also includes documents like your passport, your visa etc.

What if some insurers provide you travel assistance along with luggage insurance? There might be times when you need an emergency cash transfer or required travel desk information about the country you are travelling to, such as immunization requirements etc. Hence one needs to check for these with the insurers before heading for travel.