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What is Term Insurance?

Term insurance is a very simple life insurance policies that offers a pure risk cover. The sum assured wil be paid only if the holder of the policy dies during the term of the policy. There are no survival benefits on this type of policy. Term insurance are less expensive when compared with other life insurance policies.

What is whole life Insurance?

Whole Life Insurance is a type of Life Insurance. When there is a loss of human life, there is a loss of income for the household. The impact of such a loss can be offset with wholelife Insurance Product. Whole life Insurance is not just for a specified period and does not have end date. Claim is paid to the beneficiary only on the death of the policy holder. There is no survival benefit.

what is endowment insurance plan?

It is a savings linked insurance plan with a specific maturity date.On surviving the term, the proceeds become payable. In case of any unfortunate event by the way of disability or death the sum assured along with the bonus, if any will be paid to the beneficiaries. These types of policies cover the insured only for a specified period.

what is retirement immediate annuity plan?

These types of plans are useful for those who are nearing their retirement and need regular income for survival. In immediate annuity plan the person has to invest a lump sum instantly, and the pension will start.

what is retirement deferred annuity plan?

These types of plans are useful for those who are nearing their retirement and need regular income for survival. It helps in building corpus through payment of regular or single premiums in a policy term. Pension will begin once the term of the policy has expired.

what are child plans?

Child plans help the family of the insured in case of uncertain death of the insured. In this way the future plans of the child are not compromised with be it their wedding or education. There are some plans where a person can buy a child plan which matures when funds are required for the purpose.

What is Health Insurance?

The term health insurance is a type of insurance that covers your medical expenses. A health insurance policy is a contract between an insurer and an individual /group in which the insurer agrees to provide specified health insurance cover at a particular “premium”.

What are the forms of Health Insurance available?

The commonest form of health insurance policies in India cover the expenses incurred on Hospitalization, though a variety of products are now available which offer a range of health covers, depending on the need and choice of the insured. The health insurer usually provides either direct payment to hospital (cashless facility) or reimburses the expenses associated with illnesses and injuries or disburses a fixed benefit on occurrence of an illness. The type and amount of health care costs that will be covered by the health plan are specified in advance.

What is cashless facility?

Insurance companies have tie-up arrangements with several hospitals all over the country as part of their network. Under a health insurance policy offering cashless facility, a policyholder can take treatment in any of the network hospitals without having to pay the hospital bills as the payment is made to the hospital directly by the Third Party Administrator, on behalf of the insurance company. However, expenses beyond the limits or sub-limits allowed by the insurance policy or expenses not covered under the policy have to be settled by you directly with the hospital. Cashless facility, however, is not available if you take treatment in a hospital that is not in the network.

What are the factors that affect Health Insurance premium?

Age is a major factor that determines the premium, the older you are the premium cost will be higher because you are more prone to illnesses. Previous medical history is another major factor that determines the premium. If no prior medical history exists, premium will automatically be lower. Claim free years can also be a factor in determining the cost of the premium as it might benefit you with certain percentage of discount. This will automatically help you reduce your premium.

What do you mean by Family Floater Policy?

Family Floater is one single policy that takes care of the hospitalization expenses of your entire family. The policy has one single sum insured, which can be utilized by any/all insured persons in any proportion or amount subject to maximum of overall limit of the policy sum insured. Quite often Family floater plans are better than buying separate individual policies. Family Floater plans take care of all the medical expenses during sudden illness, surgeries and accidents.

What is IDV in Motor Insurance?

The sum insured for the vehicle is called “Insured’s Declared Value” and should reflect the current market value of the vehicle. Under Liability insurance, Third Party Liability insurance is covered. There is unlimited coverage to Third parties injury and Third party property damage is covered only up to a certain limit.

What is "No Claim Bonus"?

No Claim Bonus (NCB) is the benefit accrued to an insured for not making any claims during the previous policy period. As per current norms in India, it ranges from 20% on the Own Damage premium (and not on Liability premium) and progressively increases to a maximum of 50%.

If, however, a claim is lodged, the No Claim Bonus is lost in the subsequent policy period.

NCB is given to the insured and not to the insured vehicle. Hence, on transfer of the vehicle, the insurance policy can be transferred to new owner but not the NCB. The new owner has to pay the difference on account of NCB for the balance policy period. The original owner can, however, use the NCB on a new vehicle purchased by him.

What is deductible?

Deductible or “excess” is the amount over and above, which the claim will be payable. There is a normal standard/compulsory excess for most vehicles ranging from Rs 50 for two-wheelers to Rs 500 for Private Cars and Commercial Vehicles which increases depending upon the cubic capacity/carrying capacity of the vehicle. However, in some cases the insurer may impose additional excess depending upon the age of the vehicle or if there is high frequency of claims.

What are the documents that are required to be submitted for a Motor Insurance claim?

Generally, the following documents are required to be submitted. However, read through your policy to see the complete list—duly filled in claim form, RC copy of the vehicle, Original estimate of loss, Original repair invoice and payment receipt. In case the cashless facility is availed, only repair invoice would need to be submitted and FIR, if required. For theft claims, the keys are to be submitted. Theft claims would also require non-traceable certificate to be submitted.

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Mutual Fund is a pool of investments collected from a large group of people. It offers returns to the investor by investing in various securities such as stocks, bonds, money market instruments, etc. Mutual Funds have become a huge entity in the financial services industry which is filled with lots of investment options. They offer multiple benefits to the investors. Broadly, mutual fund schemes can be classified as Equity, Debt or Hybrid. Among these, there are many sub-categories such as Largecap, Midcap, Multicap, Liquid, Balanced and so on. Mutual Funds are also considered one of the safest and most convenient ways to create wealth in the long term. Here are some of the benefits offered by mutual fund investment:
  • Professional Fund Manager who manages the investment
  • Flexibility
  • Liquidity
  • Tax benefits
  • Low cost
  • Diversification
  • Highly regulated
Fixed Deposits of banks have been the choice of traditional Indian investors who preferred safety over anything else. Company FDs offer a similar option to the investors, with an advantage of slightly higher returns with safety intact. Here are some of the salient features of Company or Corporate FDs:
  • They offer interest rates of at least 1-2% higher than the traditional bank FDs. Also, they do not have a base rate structure and hence each company FD will have a varied interest rate.
  • They have investment tenure of 1-5 years.
  • There are few deposits which offer higher return for investors who can afford to put in greater risk. These FDs are usually rated by reputed agencies like CRISIL, ICRA or CARE. AAA rated deposits are the safest. Less rated deposits can offer higher returns but carry some risk as well.
  • Taxation is the same as in bank FDs.
Initial Public Offering (IPO) is an offering by the company to reach out to the public for need of capital i.e. a company is going from private to public. The companies use this capital for various purposes such as expansion of base, purchase of machinery, etc. Companies are required to strictly disclose all their financials and future plans during the IPO process. Many of the IPOs have turned multi baggers and created huge wealth for the investors. Here are some of the benefits of IPOs:
  • Opportunity to claim early stake in a company
  • Listing gains
  • Convenient to invest
  • Most of the times, investors can sell shares at any point of time after listing.
Bonds are fixed income products which are popular with risk averse investors as they provide safety of capital with returns in the form of fixed periodic payments and the eventual return of principal at maturity. Most investors, regardless of age should have at least a small amount of their portfolio allocated to fixed income products like bonds. This adds safety and consistency to a portfolio. Here are some features of bonds:
  • Safety of capital.
  • Regular fixed returns
  • Appreciation of face value when interest rates go down.
  • Liquidity
  • In event of company bankruptcy, bond holders are preferred over share holders.
Non Convertible Debentures (NCDs) are debentures which cannot be converted into equities or shares. They tend to carry higher interest rates than Convertible Debentures as NCDs do not offer the conversion option. NCDs are best suited for those who seek high returns with medium risk. An NCD can be categorized into Secured or Unsecured. Secured NCDs are backed by the issuer company's assets to fulfil the debt obligation unlike unsecured NCDs. The NCD issues are rated by credit rating agencies like CRISIL, ICRA, FITCH, and CARE to ensure the company's ability to service the debt on time & lower default risk. Secured NCDs offer slightly lesser interest rate compared to non-secured ones due to the safety factor involved in this.
Capital gain bonds are part of Section 54 EC of Income Tax Act, 1961. Any long term capital gains arising from transfer of any capital asset would be exempt from tax under this section. In order to be eligible for exemption, the capital gain realized should be invested in these bonds within 6 months. Here are some features of these bonds:
  • REC (Rural Electrification Corporation Ltd) and NHAI (National Highways Authority of India) are the capital gain bonds which offer this exemption.
  • Investment tenure is 3 years.
  • Maximum of Rs. 50,00,000 can be invested in these bonds.
  • Interest rate offered is 6% p.a.