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A mutual fund is a professionally-managed trust that pools the savings of many investors and invests them in securities like stocks, bonds, short-term money market instruments. Investors in a mutual fund have a common financial goal and their money is invested in different asset classes in accordance with the fund’s investment objective.
Mutual Funds unlike fixed deposit, Bonds and other Government securities do not provide guarantee of returns. Their returns are directly related to the performance of the underlying asset in which they invest like shares, debentures etc which are known for the risk associated with them. The unit value may vary with the performance of the company. In addition, changes in macro level policies & regulations may also affect sectors in Indian economy thereby affecting mutual fund performance.
Net Asset Value is the market value of the assets of the
scheme minus its liabilities. The per unit NAV is the net
asset value of the scheme divided by the number of units
outstanding on the Valuation Date.
NAV = (Fund
Assets-Fund Liabilities)/Outstanding Shares
An SIP allows an investor to invest regularly. One puts in a small amount every month, quarter or year depending on the plan chosen, that is invested in a mutual fund. An SIP allows one to take part in the stock market without trying to second-guess its movements.
ETFs are mutual fund units that investors can buy or sell at the stock exchange. This is in contrast to a normal mutual fund unit that an investor buys or sells from the AMC (directly or through a distributor). In the ETF structure, the AMC does not deal directly with investors or distributors. ETFs therefore trade like stocks and experience price changes throughout the day as they are bought and sold. Buying and selling ETFs requires the investor to have demat and trading accounts.
Yes, non-resident Indians can also invest in mutual funds.
When an investor sells a mutual fund unit back to the fund house, it is called repurchase or redemption and is based on the Net Asset Value of that fund.
The purchase price / Purchase NAV is the price at which Investor buys the unit of a scheme. Units are allotted to customers on the basis of the amount invested divided by NAV as on Investment date.
Repurchase or redemption price is the price or NAV at which a mutual fund repurchases (buys back) / redeems its units from the unitholders. It may include exit load, if applicable.
Systematic withdrawal plans allow investors to withdraw any amount of money from a mutual fund whenever they want. SWP is somewhat the reverse of SIP. If you invest lump sum in a mutual fund, you can set an amount and frequency at which you will withdraw regularly.
Systematic transfer plans are an automated way of moving or transferring money from one mutual fund to another periodically. This plan is chosen when one wants to invest a lump sum amount and safeguard against market volatility. The most common way of doing STP is to transfer money from a debt fund to an equity fund during times of growth, and from equity to debt during turbulent times.
Health insurance is an insurance product that provides cover for medical and surgical expenses of an insured person, in case of a medical emergency. However, you are required to pay a premium to avail health insurance policy. You should purchase health insurance so that you don’t lose your lifelong savings while paying for medical bills in a critical situation.
Yes, a person can have two health insurance plans. Having two health insurance plans is perfectly legal, and many people have multiple health insurance policies under certain circumstances. However, the total sum assured of multiple term insurances cannot exceed Human Life Value (HLV). One has to declare all the previously purchased policies to the new insurer. Failure to declare the existing term insurances would result in rejection of claims.
It is a medical condition/disease that existed before you obtained a health insurance policy, and it is significant, because the insurance companies do not cover such pre-existing conditions, within 48 months of prior to the 1st policy. It means, pre-existing conditions can be considered for payment after completion of 48 months of continuous insurance cover.
The policyholders can cancel their health insurance plans during the free look period or anytime after the free look period. Health insurance companies offer a free look period for 15 days after the policy document is received. Cancellation of your policy within the free-look period will get you a refund of your premium. If you apply for cancellation of the policy beyond the free-look period then the policy cancellation and amount refunded will be processed as per the underwriting of the policy and what has been defined in the cancellation clause.
It is advisable to buy health insurance in the early years of life as it comes with many benefits. Upon doing so, you may gain a lower premium amount, no waiting period, better options, accumulate bonus, lower rejection rates, and others.
The minimum entry age for a health insurance plan is 18 years and the maximum ranges between 65-69 years.
After a claim is filed and settled, the policy coverage is reduced by the amount that has been paid out on settlement. For Example: In January you start a policy with a coverage of Rs 5 Lakh for the year. In April, you make a claim of Rs 2 lakh. The coverage available to you for the May to December will be the balance of Rs.3 lakh.
The major difference between the two is that Mediclaim only pays for the medical expenses in case of a hospitalization. It does not cover pre or post hospitalizations and it mostly does not cover day care treatments as well. In case of health insurance, however, one can get cover for almost all kinds of illnesses including hospitalization charges, ambulance charges, tests conducted etc. But the premiums of insurance are also much higher than mediclaim insurance. Mediclaim insurance policy does not have any add- on coverage and also provides no flexibility. The sum assured does not exceed Rs 5 lakh, and it also does not cover critical illnesses whereas with insurance one can have a much higher upper limit and one can also get extra critical illness cover.
Insurance companies have tie-up with several hospitals as part of their network. In a 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 allowed by the insurance policy or expenses not covered under the policy have to be settled by you directly with the hospital. Cashless facility is not available if you take treatment in a hospital that is not in the network.
Yes. When you get a new policy, generally, there will be a 30 days waiting period starting from the policy inception date, during which period any hospitalization charges will not be payable by the insurance companies. However, this is not applicable to any emergency hospitalization occurring due to an accident. This waiting period will not be applicable for subsequent policies under renewal. In the case of pre-existing diseases, the waiting period increases to two years.
The policy will be renewable provided you pay the premium within 30 days (called as Grace Period) of expiry date. However, coverage would not be available for the period for which no premium is received by the insurance company. The policy will lapse if the premium is not paid within the grace period.
Yes, you can change your health insurance policy from one insurance company to another without losing the benefits you have accumulated. This includes credit relating to the waiting period for pre-existing conditions that you have gained with the old insurer.
Any number of claims is allowed during the policy period unless there is a specific cap prescribed in any policy. You can make as many claims upto the sum insured under the policy which is the maximum limit. The amount received would be deducted from your total policy cover.
Yes, premiums paid under any health insurance policies are entitled for income tax exemption under section 80D of the Income Tax Act.
If you have already been diagnosed with a medical condition, it will be considered a pre-existing disease. In this case, you may have to wait for a specific period (waiting period) until allowed coverage. Based on your insurer, you may be required to pay a higher premium or face policy denial.
If you want to buy health insurance, you need to submit the documents like aadhaar card, voter ID, driving license, and pre-medical check-up report (in some cases). The documents are required for age proof, identity proof, address proof, and medical check-up.
Term insurance is a life insurance product, which offers financial coverage to the policyholder for a specific time period. In case of death of the insured individual during the policy term, the family/dependents of the policyholder receive a pre-decided sum of money. If the policyholder survives the insured period, there is no maturity benefit.
Term insurance is an important step in your financial
planning. In case of your demise during the policy term, the
claim amount from the insurance company will financially
protect your family throughout their lifetime. It also helps
them to take care of liabilities and loans. It also offers a
high cover for a relatively smaller premium.
● The most salient feature of Term Insurance is its
affordability. The premium for the plan is the cheapest as
compared to other insurance policies.
● Term policies can be purchased very easily offline and
through online.
● Term Insurance policies are flexible and provide a premium
option of monthly, quarterly, annually or semi-annually.
● Term insurance gives purely death benefits to the
insured.
● Term insurance is completely tax-free, i.e., beneficiaries
don’t have to pay any taxes on the claim amount of death
benefit.
It is advisable to buy a term plan before turning 30. The premium of the plan depends on your age. The younger you buy the lower the premium you are charged. What’s more, this premium, once fixed, does not increase with your age. Thus, when you buy a term plan in your 20s, you get to enjoy lower premium outgoes which increase substantially when you delay your purchase.
Experts usually propose that sum assured in term insurance should be at least 10 times of your annual income, while 15 to 20 times is always a better option to avail. But, you should calculate your term insurance cover as per your need or calculate the term insurance premium that you need to pay for the cover you want to buy.
There are numerous factors which affect your term insurance premium. Life insurance premium varies depending on various factors such as age, annual income, the amount and tenure of insurance coverage, health condition and whether you are a smoker/non-smoker.
Term insurance plans provide dual tax benefits. The premiums you pay are tax-free under Section 80C and the benefits are also tax-free under Section 10 (10D). So, buying a term plan also lets you do tax planning along with fulfilling the financial security need.
Yes, You can buy two or more term insurance plans to fulfill your insurance needs. It is possible to have more than one beneficiary for the insurance plan. If you have two insurance plans, it isn’t necessary to nominate the same beneficiary for both the insurance plans. However, one has to disclose complete information about the first insurance policy to the second insurance company.
Usually Term Insurance do not change once the policy is issued.
In case of term plans, money is given only in case of death of the policyholder (death benefit) and you can get a term plan of about a crore with as little as Rs 500 per month. In the case of traditional life insurance, premiums are higher as they include an investment component as well. On the maturity of the policy, even in case of policy holder’s survival, the insurance company pays out some maturity amount against the investments made. Generally traditional plans are not advisable because both the life cover and investment returns are very low while the premiums are high.
A term life insurance plan offers a life cover and promises to pay a sum assured if the policyholder dies within the policy period. If he outlives the term, there is no maturity benefit. An endowment plan offers a life cover as well as a savings option. Your nominee gets the death benefit in case of your unfortunate demise. If you outlive the policy period, you get a maturity benefit. Thus, a term plan is less expensive than an endowment plan. The sum assured in a term insurance plan is higher than in an endowment plan. Term life insurance aims at only providing financial help to your nominees in case of your demise whereas The endowment plan aims to help you save for your future goals. It provides guaranteed returns and caters to the need of future savings.
Non-Resident Indians (NRIs) are eligible to avail of a term insurance plan in India. They could purchase the insurance either on a visit to India, or via online means. Documents required for the same are attested copy of passport, application form, age proof, documents specifying the health conditions, income proof and first premium.
Claim Settlement Ratio (CSR) is the ratio of the number of claims received by the insurer versus claims settled by them during a financial year. A high CSR implies that the insurance company does its best to resolve the settlement claim filed by your nominee.
Term plans are the purest form of insurance covers available in the market. There are many reasons that justify such an attribute of term plans. The most popular reason is lower premium costs and lesser bifurcations of the premium. When you purchase a life insurance policy, the premium you pay is divided into three parts, i.e., cost of insurance, administrative charges and investment. A term plan premium is bifurcated into two parts – cost of insurance and administration charges. Since all your money is allocated towards insurance, term plans do not offer maturity benefits.
Typical scenarios where insurance claims get rejected are:-
● Incorrect Information in the Application Form
● Non-Disclosure of Medical History
● Not Filling the Insurance Proposal Form Yourself
● Not Updating Nominee Information
● Policy Lapse Due to Non-Payment of Premiums
● Not Disclosing Existing Insurance Policies
● Not specifying nature of job
Term Insurance Riders are add-on benefits with your term insurance plans. With these riders, you can avail extended benefits with basic life cover.
Yes, there are multiple options available for you to pay your premiums. You can pay your premiums monthly, quarterly, half-yearly or yearly in instalments or you can also pay it in one lump sum. However, a monthly premium is the most convenient because the amount is relatively small and it is easier to monitor and be prepared for a more frequent premium payment. When you consider factors such as taxation, risk mitigation, and affordability, paying insurance premiums in regular installments makes more sense. However, if you can afford single premiums and have high liquid money, it is a pretty good option.