Everything You Need to Know About Zero Depreciation Car Insurance

If you have a car and you wish to drive the car on Indian roads, you need to have a valid insurance cover on the car. The Motor Vehicles Act, 1988 mandates that every vehicle on Indian roads should have a valid insurance cover on it.

Since car insurance is mandatory, you are required to invest in a policy for fulfilling the mandate. But don’t you want the best coverage for your beloved car?

Buying a car and maintaining it requires quite a considerable amount of money and in case of damages you face heavy expenses to get the repairs done. That is why it is always advised that your car insurance policy should have a comprehensive cover. When you invest in a comprehensive plan, the policy pays for the repair costs which are incurred if your car faces any damage and you are spared from the financial burden. But did you know that in case of repairs, the insurance company pays only the depreciated value of the car’s parts?

Depreciation is a reduction in the value of assets due to their use. In a car insurance policy, as the car is used, the parts face regular wear and tear. This wear and tear is called the depreciation. At the time of claim, the insurance company deducts the cost of depreciation from the value of the car’s parts and then pays the claim. This reduces the claim greatly and you need a comprehensive policy which prevents this claim reduction

A zero depreciation cover is one such comprehensive cover which proves very useful in case of damages suffered by your car. Let’s understand what the cover is all about –

What is zero depreciation car insurance?

A zero depreciation car insurance policy, also known as a bumper-to-bumper car insurance policy, is, in fact, a comprehensive car insurance policy with the addition of the zero depreciation add-on. Now you must be wondering what zero depreciation add-on is. Here’s what it is –

Zero depreciation add-on

A zero depreciation add-on is an additional optional coverage benefit which is available with almost all car insurance policies. You have the choice to add the cover to the basic comprehensive car insurance policy to widen its scope. The add-on benefits you when your car suffers damage and repairs are required. Since the insurance company deducts depreciation from the claim amount, you receive a reduced claim. If, however, you select the zero depreciation add-on, the effect of depreciation is nullified. The insurance company pays the entire cost of the parts replaced or repaired and the claim amount is, therefore, high.

So, if you add the zero depreciation cover to the comprehensive policy, you get a zero depreciation car insurance policy.

Know about Types of car insurance and their benefits

Why is a zero depreciation cover beneficial?

Depreciation eats into the claim amount leaving you, the policyholder, has to bear most of the repair costs from your own pockets. A zero depreciation cover prevents this, increases the claim pay-out and, therefore, saves your money. A zero depreciation policy is, therefore, better than a normal comprehensive coverage.

Read more about How effective is bumper to bumper policy

Things to remember about zero depreciation car insurance

Here are certain facts which you should remember about the zero depreciation cover before you opt for it –

  • The zero depreciation add-on is optional in nature. Only when you include the add-on in the comprehensive policy would your policy become a zero depreciation car insurance policy.
  • Additional premium is payable for selecting the zero depreciation add-on. That is why zero depreciation car insurance premiums are higher than the premiums of normal car insurance plans. However, the additional premium payable for the cover is low and affordable.
  • Zero depreciation cover is available usually for cars which are up to 5 years old. However, some insurers also offer the cover for older cars
  • You can make a maximum of two claims throughout the total coverage period under the zero depreciation cover.
  • The premium for the zero depreciation add-on varies across different insurers. That is why you should compare the premiums of different companies to choose the lowest amount.

Buying zero depreciation cover

If you are buying a new car or if your car is not very old, opt for a zero depreciation car insurance policy for a comprehensive coverage and to reduce your share of the car insurance claim. The cover can be bought either when buying a new car insurance plan or at the time of renewals.

Car insurance claims can amount to very high amounts and so you should be smart when buying your car insurance policy. Choose a zero depreciation car insurance plan and enjoy wider coverage, higher claims and lower out-of-pocket expenses.

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8 Tips You Must Check for Authentication of Bike Insurance Policy

If you have a bike, you should also have a bike insurance policy covering it. The Motor Vehicles Act, 1988 specifies that every vehicle on Indian roads is required to have a valid insurance cover. So, just like you need a driving license to drive, a bike insurance policy is also required.

Just because the policy is mandatory, your dealer usually bundles up a policy when you buy a new bike. You can also choose and buy a bike insurance policy yourself. The online medium has made buying two wheeler insurance plans easy and quick. However, after you have bought the policy, it is necessary to ensure that the policy is authentic so that you can avail a valid coverage. Imagine making a claim under the policy and finding out that the policy is a fake!

Authentication of your online bike insurance policy can be done using the following tips –

Tip#1 – Confirm with the insurance company

After buying the policy, call the insurance company to check whether the policy is genuine or not. You would just have to provide the policy number, which is mentioned on the policy document, and the insurance company would give you your policy details if the policy is genuine.

Tip#2 – Authenticate the details of your bike in the policy document

You should check the policy details and match them with the details of your bike. The bike’s engine number, chassis number, year of registration, registration number, etc. are all mentioned on the policy document. Cross check these details to ensure that there are no typographic errors and that the policy covers your actual bike.

Tip#3 – check the policy details

The coverage details of the policy should also be checked. Check the policy document to find out the coverage start date, end date, type of coverage you have availed and the premium paid. Make sure that what you purchased is what you are getting from your bike insurance policy.

Tip#4 – research the insurance company

Before buying a bike insurance policy you should do thorough research about the insurance company from whom the policy is being bought. Find out the background of the company, its promoters and the year from which it has been operating in the insurance sector. Also check the company’s IRDA license number. All insurance companies are required to be licensed with IRDA (Insurance Regulatory and Development Authority) for selling insurance and if the company has an IRDA license, it would be genuine.

Tip#5 Pay using the payment link sent by the insurer

When you buy a bike insurance policy, the insurance company usually sends a payment link on the email address which you entered when filling up the online form. When you click the payment link, you would be directed to the company’s website wherein you can check the details of the policy and pay the premium. Use this payment link to make the premium payment as the link would help you buy the policy from the insurer’s website and also double-check the policy details.

Tip#6 – Buy from a credible source

The online marketplace has simplified the whole process of buying bike insurance plans. However, there are a lot of websites from where you can easily buy bike insurance policies. That is why when you are buying online, you should buy from reputed websites to eliminate the possibility of fake policies. Turtlemint is one such reputed website which is tied up with major insurance companies. You can find a genuine bike insurance policy at Turtlemint’s website www.turtlemint.com

Here’s How you can buy the best bike insurance policy from Turtlemint

Tip#7 – Pay online for creating a payment trail

Try and pay for your policy online using your debit card, credit card, net banking account or any other online mode. When you pay online you create a proof of payment of the premium which would help in establishing the authenticity of your purchase.

Tip#8 – Check your email for the policy e-copy

After you buy the policy online, the soft copy of the policy is sent to your registered email id. Check your email to confirm receiving the policy copy. If the policy copy is not sent, contact the insurance company and insist on the soft copy of the policy which would prove that the policy is authentic.

When buying bike insurance policies you should be careful. You should follow the above-mentioned tips to ensure that the policy which you are paying for is authentic. Only an authentic bike insurance policy would provide valid coverage and pay a claim in case of contingencies. So, always check the authentication of your policy after you have bought it.

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Are traditional life insurance plans a worthy investment?

What comes to your mind when you hear the phrase traditional insurance plans? If policies such as endowment, money back, retirement plans are some of your answers, then you are on the right track. If not, let us try to get some more clarity around the same.

Traditional insurance plans are nothing but a general category for life insurance plans. Since there are a large variety of plans available, putting them into different categories is imminent. Insurance plans have been a good investment/saving option for a long time now. Various plans mean that people could use them for saving for their children’s education, children’s marriage, retirement plans and so on.

Examples of Traditional Plans

Here is a quick list of traditional plans and examples, so that you can better understand them.

  • Endowment Plan
    Endowment plan is a combination of a savings and insurance plan. The premiums that you pay for endowment, a portion of it goes towards securing a life cover while the insurance company invests the rest. In the event that a policyholder outlives the term of a policy, the insurance company would hand over a maturity benefit.
    Depending on the performance of the investments, insurers might even declare bonuses. These can either be paid at regular intervals or on maturity. Though a portion of your money gets into investments, the risk profile associated with it is less and thus are the returns.
    An example of an endowment plan would help you understand it better. By paying a premium of INR 20,000 to 25,000 a person can secure a policy that offers a life cover of INR 10 Lacs and has a term of 30 years.
  • Money Back Plan
    As you would have already guessed by now, it involves some form of payments back to the insured. When you opt for a money back insurance plan, a certain predefined amount of the sum assured is paid to the policyholder at regular intervals. The declaration of bonus remains more or less similar to that of an endowment plan.
    Let us assume a policyholder invests INR 20,000 -25,000 in money back plan. The life cover that he/she would be looking at is about INR 5 Lacs over a term of 20 years. But he/she can expect a portion of sum assured at regular intervals such as once every five years.
  • Whole Life Plan
    These policies offer life cover for a policyholder perpetually until the end. The policy remains valid till the policyholder is alive or in extreme cases until a maximum of 100 years. Unlike term insurance plans, the term is not fixed in whole life insurance.
    The sum assured as per the policy documents along with any accrued bonus is handed over to the nominees in the case of the death of the policyholder. In the event that they live more than a 100 years, the insurer would pay the sum assured and bonus to the policyholder.
    For an example, you can secure a whole life plan by paying a premium of INR 10,000 – 15,000 for a sum insured of INR 3 Lacs for a term of 20 paying years.
  • Retirement Plan
    Your salary cheque might stop coming your way after a certain age or time. Who would take care of your expenses after your retirement? A good retirement plan will ensure that you are not worried about your future.
    Most retirement insurance plans offer policies without any payouts until you reach the age of 60. Should the worst take place, the policy payments are passed on to the nominees. The plan also involves a death benefit where the higher amount of the coverage, 105% of the premiums paid or fund value.

    Also read about Age vs retirement planning – It’s never too early to start

Benefits of Traditional Plans

We will consider each of the above plans and look at the pros of investing in them.

  • Endowment Plan
    The plan is ideal for someone with low-risk appetite and who is looking from a long-term investment perspective. The longer you stay invested in an endowment plan, the better will be the benefits out of it.
  • Money Back Plan
    The money back plans are ideal for individuals looking at money in the interim period with some liquidity. The plan will help you achieve these goals without any hassles.
  • Whole Life Plan
    A whole life plan is for individuals who are looking to secure life coverage for their entire life. In the event of a death, you can leave behind a legacy for your loved ones.
  • Retirement Plan
    This specific plan is aimed at individuals looking for a corpus fund for their retirement. If long term savings and retirement planning is on your mind, this is the policy to go ahead with.

Drawbacks

 While the traditional plans are good for steady returns, they might not be enough for you to beat inflation and make your money work hard. The average returns of endowment plans range between 4-8 percent annually. If you were to consider the average inflation rate of 5-7 percent annually, you might be left behind a bit.

Another aspect that works against the traditional plans are the long tenures. Most of them work in your favour if you stay invested for 15-20 years at least. If you are looking for some investment options for mid-term or short-term horizons, these plans might not be of great help.

Should You Invest?

At the end of the day, it depends on your risk appetite. If you are someone who doesn’t like to take risks at all and are happy with the steady returns, you can and should invest in traditional plans. However, if you are someone who has a very high-risk appetite, these plans will not cut enough returns for you and you will have to look at ULIP plans and other investment avenues.

For individuals in the middle zone with medium risk-appetite, you can make do with both. You can use traditional plans for a steady return year on year without much risk. And invest another chunk of your money in ULIPs and other modern tools for better returns. This way, you get to keep the life coverage and generate enough returns to beat inflation.

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Age vis-à-vis retirement planning – It is never too early to start

New age millennials are all about planning ahead for stable careers. They have innovative and refreshing ideas for starting their own ventures, are up to speed with the latest developments in their surrounding and believe in smart work. Their age is on their side and they try to reach for the stars. However, when it comes to thinking about retirements, millennials are far from the concept.

Millennials believe that they are too young to worry about retirement and their life after that. After all, when one is in their 20s and 30s, why would they bother about retirement planning, right?

Wrong. Though retirement seems like a far-fetched reality, it is a reality no doubt. You should, therefore, start planning for this reality from an early age, the earlier the better. If you are wondering why retirement planning should be started at the earliest, here are some reasons to help you see light –

  • So that you can benefit from compounding returns

Investments give you compounded returns which means that returns are calculated on the principal you invest as well as the returns earned earlier. This compounding of returns multiplies the returns payable if you keep your investments for a long period of time, the longer the better.  For instance, if you invest INR 5000 every month in an avenue with a moderate return of 12% per annum, here’s how compounding would give you miraculous returns if investments are left for longer periods –

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So, as the term increases the corpus grows substantially.

To grow your corpus you need to give investments time to grow. You can give this time if you start early. When you start early you can give your corpus time to grow before you would need it. Time is money and the power of compounding proves to you the financial implication of time.

  • So that retirement planning becomes affordable

How much corpus do you think you would require when you retire? If you factor in inflation and the decreasing value of money over time you would need a substantial amount when you retire. Say, for instance, INR 1 crore would be sufficient in meeting your retirement expenses. How much savings do you think would be required to create this corpus?

The amount of savings required to accumulate a specified corpus depends on the investment tenure. The higher the investment tenure, the smaller would be the amount that you would need to invest. Let’s understand with the help of an example –

Say you need INR 1 crore at the time when you retire at 65. Here are the monthly savings which you would need to do when you start at different ages to accumulate the corpus (assuming an interest of 12%) –

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So, you see, as you delay your investments, the monthly savings required to achieve the target corpus increases. While INR 1500 is quite affordable, INR 9900 or INR 20,000 per month might not be.

Given these two reasons, you can fathom why planning for retirement should start at the earliest. There is no time like now. Even if you are young, retirement planning should feature in your to-do list so that when retirement actually arrives you would have the financial security of knowing that you have amassed a substantial corpus to take care of you.

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Division of property in the absence of a Will

While you create wealth and assets for your family, do you know how your wealth would be divided among your family members after your demise?

After death, the wealth and property of the deceased are, usually, shared by the family members. However, how the property would be shared often leads to confusions and family tensions if there is no written guideline about the same. A Will, therefore, is required in these cases. A Will is a legal document which specifies the division of the assets of the deceased. It states the property owned by the deceased and gives guidelines on how the property is to be distributed and among whom. A Will, therefore, expresses the intention of the deceased with regards to their property’s division and helps in the allocation of the deceased’s assets. But what if there is no Will?

If there is no Will, the distribution of property depends on the religious laws governing the family. Let’s understand what such laws state –

Distribution of property without a Will as per religious laws

  • In the case of a Hindu family, the property is divided equally between the male’s wife, mother, and children
  • In case of a Christian, the widow would get 1/3rd part of the property and the remaining 2/3rd would be divided between the children
  • For a Parsi family, the widow and each child get an equal share. If there are parents, each parent would get half the share received by one child
  • In case of a Muslim family, only 1/3rd of the deceased’s property can be distributed through a Will. The remaining 2/3rd would be distributed as per their personal succession laws.

Nomination and the role of a nominee

You must have come across the term nomination and appointing a nominee when making investments. Do you know what it means?

Nomination means appointing a nominee to collect the proceeds of your investments in case of your death. A nominee is the designated  person to whom you have given the right to collect your investment proceeds in case of your death. Though the nominee can collect the proceeds, he might not necessarily be the rightful heir. For instance, you might nominate your siblings to collect the money but the rightful heirs would be your children and/or spouse. A nominee acts as a custodian for the asset collected. The nominee should collect the asset and transfer it to the rightful legal heirs of the deceased. However, in many cases, the legal heir is appointed as the nominee in which case the nominee also becomes the beneficiary.

Lack of nomination and property distribution

If a nominee has not been appointed and there is no Will, various documents would be required to obtain the deceased’s property. The legal heirs of the deceased would have to submit a succession certificate which is required to be obtained from a court of law. A succession certificate is a legal document which authenticates the legal heirs of the deceased and gives them the right to get the deceased’s property transferred in their name.

Availing a succession certificate

As stated earlier, a succession certificate is a legal document and so to avail it various steps are required. These include the following –

  • You have to file an application with either a district court or with a High Court who has jurisdiction on the asset to be transferred
  • You would have to mention the name of the person wishing to avail the certificate and his/her relationship with the deceased, name of legal heirs, complete details of the death of the individual and the details of the assets which are to be transferred
  • A copy of the death certificate of the individual should also be submitted
  • Once applied, the court would give notice in the newspaper for a specified period. If no one contests the application for succession, an order is passed by the court to issue the succession certificate
  • A court fee is payable for the court’s services which are expressed as a percentage of the value of the assets which are to be transferred subject to a maximum limit
  • Once the certificate is granted, the deceased’s property can be collected by the legal heirs and transferred in their name

So, understand what a Will is, how it helps and how the property stands to be divided in the absence of a Will. Try and make a Will so that there would be no hassles in the division of your property between your family members after death.

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Are you buying maternity insurance? Check these things first!

One of the biggest blessings during a lifetime is that of becoming parents. The very idea of giving birth to your little one can be both emotional and blissful. However, there is another aspect to parenthood that one must not forget about, the additional expenses.

The moment you start planning for a kid, you must also plan your finances as well. The simple reason is that there are a lot of risks and complications that might come along with motherhood. And of course, raising a kid requires lots of proper financial planning.

The availability of health insurance for pregnancy is the first check that one should do. You must also plan for the additional expenses that you will have to take care of immediately after the birth of your child. There is no denying that parenthood comes with a flurry of emotions and if you have to worry about the expenses as well, it can be a bit overwhelming.

Having a maternity insurance plan will ensure that you are not bogged down by such expenses. There are several medical insurance plans which offer maternity benefits. While it is good to have those benefits, they will in most cases leave you wanting for more. Or you might end up still paying from your pockets.

A separate maternity insurance plan is what you should be looking at. In any metro city, a good hospital would charge you anywhere between INR 70,000 to INR 1 Lac for pregnancy. And things can get a bit out of hand if the doctor recommends a C-section.

The Need for a Maternity Insurance Plan

The prices of medical procedures are constantly on the rise. Without proper planning, it will be a daunting task for you to get through maternity. While one should always pray for a smooth and complexity-free pregnancy, there are a lot of factors which are beyond your control. An emergency during pregnancy will easily deplete your savings quickly.

On the other hand, if you have the best maternity health insurance plan, you can concentrate on taking care of your spouse or give the much-needed time to the new member of the family. Rather than constantly worrying about arranging funds.

Among the various types of inflation that our country witnesses, medical inflation is one of the steepest. The 15-18% inflation means that charges will only get higher in the future.

If you plan properly and well in advance, you no longer would have to worry about the expenses. Here is all that you need to know about the coverage of a maternity insurance plan.

  • It offers hospital benefits.
  • It includes pre-hospitalisation cover up to 30 days and post-hospitalisation cover up to 60 days.
  • The plan covers charges such as room charge, consultancy charge, nursing charge, cost of medicines, ambulance charges etc.
  • It offers coverage for pre/post-natal expenses, complications during or post pregnancy and expenses related to a normal or caesarian delivery.
  • It also offers coverage for the new born baby between 1 to 90 days.

However, the plan doesn’t offer coverage such as medical expenses during pregnancy and expenses that are associated with pre-delivery tests.

Factors to look Into

Before you proceed with buying a health insurance plan for your spouse, here are some things that you should be aware of. Of course, the above-mentioned features should also be on your watch list. It would ensure that you buy a maternity insurance plan that fits into your needs seamlessly.

Waiting Period

Most insurers require policyholders to serve a waiting period before receiving the benefits of a specific illness. Maternity is no different. On average, insurers must serve a waiting period between 2-6 years before making claims. It is thus recommended to buy one at the earliest. Yes, there are a few plans that have 90 days waiting period. But in any case, you will have to serve a waiting period.

Premiums

The premiums for a maternity insurance plan are slightly on the higher side when compared with a health insurance plan. Yet, if you consider all the benefits that it offers, one wouldn’t mind paying the higher premium.

Perks

Most employers offer health insurance plans with maternity benefits. You must do a quick assessment and if you feel it might suffice, then there is no need for a separate plan. If you already have a health insurance plan with maternity benefits, you can claim your employer’s plan and not use your individual plan. And eventually, apply for a no claims bonus and save considerably on renewals.

Best Maternity Health Insurance Plan

Here is a collated list of some of the best plans that you can find across the country at this point in time. The list includes the feature and benefits of the plans.

MaxBupa – Heartbeat Family Floater

The plan offers excellent maternity benefits under three plans, Silver, Gold and Platinum. It offers coverage for maternity as well as baby care post-delivery. It has a unique feature where it covers vaccinations for the very first year. You can avail the benefits of two deliveries.

Royal Sundaram – Total Health Plus

It offers maternity benefits and covers any complications that can arise out of delivery or pregnancy. The only downside to the plan being the waiting period of 3 years. Thus, you would need to plan well in advance.

Cigna TTK – ProHealth Plus Plan

It offers maternity benefits, vaccination charges for the first year and coverage for the newborn. The maximum sum insured is INR 10 Lac under this plan and offers INR 15,000 as normal delivery expenses and INR 25,000 for c-sections. It has a waiting period of 48 months, thus planning is essential.

Apollo Munich Family Floater

The easy family floater plan is available as Standard, Exclusive and Premium. The Exclusive and Premium plans offer maternity coverage while Standard is a normal health insurance plan. The plans include expenses related to maternity and coverage for new born baby from 1-90 days.

Star Health Wedding Gift Pregnancy Cover

This is one of the best wedding gifts that you can hand over to someone. The plan covers two deliveries, both normal as well as C-Section and other pre and post-delivery related expenses. Since it has a waiting period of 3 years, it serves as an ideal wedding gift.

Proper planning has saved the day for ages and will continue to do so. You can also reap the benefits of planning. Plan your pregnancy well in advance and do not forget about the insurance aspect of it. You must buy a maternity health insurance plan well ahead of time so as to get through the waiting periods.

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Covering your family under health plans is a must. Here’s why

Medical expenses are skyrocketing as medical inflation is on the rise. New treatments are constantly being developed with latest technology and these treatments are expensive. In fact, even a mere hospitalisation can amount to tens of thousands of rupees even if you have to undergo a minor surgery. Given the increasing medical costs, do you think you can afford a medical contingency yourself?

According to a survey conducted by the National Sample Survey Office in 2013-14, 36 million Indian households faced medical expenses which exceeded their annual per capita consumption. (Source: https://www.livemint.com/Home-Page/gTErhKxOcHv2BIa89RzonM/ThestaggeringcostsofIndias-healthcare-system.html ). The numbers say that 36 million households faced severe medical contingencies which put a strain on their annual household budget. Given the increasing medical costs, the numbers are not surprising. What is surprising though is that these families did not have health insurance to protect against the medical expenses.

Health insurance policies prove to be a blessing when faced with a medical contingency which threatens your finances. The plan covers medical expenses and gives financial relief to you. Though a health insurance plan is important, covering your entire family under a family floater health insurance plan is as important as buying the plan itself. Do you know why?

Here are the reasons why –

 

  • Medical emergency might strike any loved one

Medical emergencies don’t come announced. When they strike they can strike any of your beloved family members. If any member falls ill and requires medical assistance, you need to pay for the medical expenses incurred. So, the financial burden of medical emergency remains on your head even when you don’t fall sick but one of your loved ones do fall sick. That is why a family floater health plan is needed. It takes care of the medical expenses of any of the covered member if the member falls sick.

 

  • The plan provides an umbrella coverage

Family floater health plans cover all members under a single plan. There is a single sum insured and a single premium which is payable. Thus, you don’t have to undertake the hassle of buying separate health insurance plans for each family member and remembering to pay multiple premiums regularly. The plan is also a cheaper alternative than buying separate health plans. Moreover, the plan extends umbrella coverage for all family members. Any member can use the sum insured independently as and when needed. Thus, all members are secured of the coverage, jointly as well as independently.

 

  • You also get tax benefits

Health insurance premiums paid towards a family floater plan give you tax saving benefits. The premium paid is allowed as a deduction under Section 80D of the Income Tax Act. You can claim a deduction of up to INR 25, 000 by paying a premium on the health insurance plan covering yourself and your family members.

Read more about All you need to know about income tax.

Given these benefits, a family floater health insurance plan is a must which should cover yourself, your spouse and dependent children. If you have dependent parents, you should buy a separate floater cover for them. Coverage for all family members is essential in today’s age when medical contingencies can strike anyone. When buying health cover for your family, however, the following points should be borne in mind –

  • The sum insured should be optimal considering the members covered and the expected medical costs.
  • If affordability of a high sum insured is an issue, you can buy a normal floater plan with an affordable coverage and then supplement it with a top-up or super top-up family floater plan. These plans would increase the coverage level while the premiums would be low
  • Buy a plan with comprehensive coverage benefits suitable to the needs of your family members. For instance, if you are a young couple and would be starting a family in the future, look for maternity cover in the plan.

Keep these points in mind and buy a comprehensive family floater plan. Gift your family access to quality healthcare without the medical costs becoming a burden on your head.

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Got more questions with regards to Family health insurance? Check our our video

 

Healthcare costs are rising. Do you have health insurance?

The National Sample Survey Office (NSSO) conducted a health survey in the first half of 2014 to find out the burden of healthcare costs in India. Here’s what the survey found –

average hospitalization

Source: Livemint

This was way five years ago in 2014. In recent times, India’s health minister, Mr J. P. Nadda stated that India’s expenditure on health sector has increased. Compared to 1.2% of the GDP in 2013-14, it has increased to 1.4% of the GDP in 2017-18. (Source: The Economic Times )

These numbers indicate that healthcare costs have increased. Along with such costs, lifestyle ailments have also increased over the last decade. More and more individuals are facing some of the other forms of illness for which medical assistance is needed. Medical inflation has also become a common phenomenon and treatments and medicine are gradually becoming unaffordable for the common middle-class masses of the country. How can average individuals, therefore, afford quality healthcare in an age when diseases have become common?

The answer is quite simple actually – through a health insurance plan. Health insurance plans are designed with an aim to pay for medical expenses which seem unaffordable. Given the increase in life expectancy, increase in the incidence of ailments and the high medical costs having health insurance has become a must. The plan promises to take care of the expenses which incur if you are hospitalised for a medical contingency. Here are some of the most important benefits provided by health insurance plans –

  • Different variants

Whether you want a plan to cover your hospital bills or a plan to pay you a lump sum benefit in case of a critical illness, health insurance offers you a solution for every healthcare need. There are indemnity health plans which pay your medical expenses, family floater plans to cover your whole family, top-up plans for increasing your coverage at affordable rates, critical illness plans for covering dreaded illnesses and other plans for different needs making health plans universally relevant.

  • Comprehensive coverage

Health plans have evolved in recent times and provide all-inclusive coverage. You can find attractive coverage features like sum insured restoration, OPD coverage, coverage for AYUSH treatments, air ambulance cover, etc. in modern day health plans.

  • Affordable premiums

With the different variants and comprehensive coverage offered you might think that health insurance plans would be expensive. You are wrong. The premiums for health plans are quite affordable given the coverage offered. Moreover, there are different types of discounts as well which are allowed by health plans. These discounts further help in reducing the premium considerably and making the health plan easily affordable.

  • Tax benefit

Health plans also give you a tax advantage. The premiums paid to buy health insurance policies are allowed as a tax deduction under Section 80D. You can avail a maximum deduction of INR 25, 000 in one financial year. This limit increases to INR 50, 000 for a senior citizen. Moreover, if you pay the premium for a health plan covering your senior citizen parents, you can avail an additional tax deduction of INR 50, 000. Thus, health plans not only provide unparalleled coverage, but they also help in saving your taxes.

Now that you know that health insurance is important, how can you prepare yourself against any medical contingency?

If you are still wondering how here are the steps which you need to take –

  • Get a health insurance cover

The point of stressing on the importance of health insurance is to educate you that health insurance is needed for high healthcare costs. Thus, the first step is, obviously, to buy a health insurance plan.

  • What is the role of health insurance plans?

Health insurance comes into play when a medical contingency strikes. If you are hospitalised or undergo a day care treatment, the plan becomes active and pays the expenses incurred. Even the ambulance costs, pre-hospitalisation expenses, post hospitalisation expenses, organ donor expenses are also covered under the plan. Thus, the plan plays an active role in paying medical expenses.

  • What kind of cover can you expect?

Health insurance plans come in different variants. The cover depends on the variant selected. If you buy an indemnity health plan for yourself or your family you get coverage for the medical expenses which are incurred. If, on the other hand, you buy a critical illness plan you get coverage against major illnesses. Disease-specific health plans cover specific ailments while senior citizen plans are meant for senior citizens and their healthcare expenses. So, the type of plan you select would determine the cover you would get.

  • What are the types of health insurance plans?

Health insurance plans come in different variants. These include the following –

  • Individual plans which cover a single individual
  • Family floater plans which cover all family members in one plan
  • Critical illness plans which cover major illnesses
  • Disease-specific plans which cover specified illnesses
  • Senior citizen plans which cover senior citizens
  • Top-up and super top-up plans which help boost the existing insurance coverage
  • What is the right cover you need to buy?

The cover should depend on your requirements. If you want to cover your whole family, buy a family floater plan having sufficient sum insured. For your senior citizen parents, buy a senior citizen plan. A critical illness plan is also a must to protect against the rising incidence of major illnesses. When you buy a plan, make sure to have the coverage features which are required.

  • Do’s and Don’ts when buying health insurance
  • Cover all your family members when buying the plan
  • Choose a sum insured which is suitable for your coverage needs
  • Compare different plans before buying one  to choose the best plan
  • Understand the coverage and exclusions thoroughly
  • Don’t judge a plan by its premium alone. Always choose a plan based on its coverage and not on premium

 

Do you know what is day care treatment do check out our short video below:

  • When to buy health insurance?

You should buy health insurance at the earliest. Buying the plan at a younger age ensures comprehensive coverage at the lowest premium.

The increase in medical costs cannot be avoided but you can prevent these costs from eating into your savings by buying a health insurance policy. The policy would give you financial security in a medical emergency and take care of the costs incurred. You can, therefore, have mental peace and also quality healthcare at your disposal.

Read more about How to save income tax in 2019

How to save income tax?

The tax saving season is in full swing as the financial year closes on 31st March 2019 and you want to explore all possible avenues to save as much tax as possible. While the new Interim Budget 2019 has made some very good changes, these changes would be applicable from the next financial year (1st April, 2019 onwards). You would, therefore, have to file your taxes on 31st March, 2019 as per the existing tax norms.

Many of you approach seasoned tax practitioners to help you prepare your taxes while some of you like to file your taxes yourself. Whatever be your choice of tax filing, one thing which every one of you looks for is the way to save the maximum possible tax outgo. So, for all of you taxpayers, here are some of the ways of saving your tax outgo this 2019 when filing your returns for the financial year 2018-19–

  • Utilize Section 80C to the fullest

Section 80C is a blessing for taxpayers as the section helps you reduce your taxable income by INR 1.5 lakhs. The section lists some expenses and investments which are tax-free in nature. If you have incurred such expenses and/or make investments in the tax-free avenues, you can claim a deduction of up to INR 1.5 lakhs under this section. Some common instances of tax-free options under the section are as follows –

  • EPF and PPF investments
  • Life insurance premiums paid
  • Tuition fee paid for up to two children
  • Home loan principal repayment
  • Mutual fund ELSS schemes, etc.

So, make sure to use Section 80C to the fullest to claim a deduction of INR 1.5 lakhs on your taxable income.

  • Buy health insurance and utilise Section 80D

Premiums paid for health insurance policies are also allowed as a tax deduction under Section 80D. The limit of deduction is up to INR 25, 000 if premiums are paid for you, your spouse and dependent children. This limit increases to INR 50, 000 if you are a senior citizen. Moreover, if you pay premiums for the health plan for your dependent senior citizen parents, you can claim an additional deduction of up to INR 50, 000. So, buy a health insurance plan for yourself and your senior citizen parents and save tax on up to INR 1 lakh of your taxable income under Section 80D.

Here is a video to know how to save additional tax benefits:

  • Use loans to claim tax deductions

Home loans and education loans also give you tax saving advantages. Besides the principal repayment of your home loan, the interest component is also allowed as a tax-free expense under Section 24. The limit is INR 2 lakhs. Moreover, if the property is rented out, the entire interest paid on the home loan on such property is allowed to be tax-free. You also get an additional limit of INR 50, 000 on the home loan interest paid if you are a first-time homeowner under Section 80EE.

Besides home loan, education loans also give you a tax benefit. The interest paid on such loans is allowed as a tax-free expense under Section 80E.

So, if you have these loans, they can help you with tax saving.

  • Save tax on your savings account interest

The interest that you earn on your savings bank account and post office savings account is allowed as a tax-free income up to a limit of INR 10, 000 under Section 80TTA of the Income Tax Act. This limit increases to INR 50, 000 if you are a senior citizen.

  • Donate

Donations not only give you mental satisfaction of doing charity, but they also help you save your taxes as well. Money donated to recognised charitable institutions is allowed as a deduction under Section 80G. 50% or 100% of the donated amount is allowed as a deduction depending on the charity selected. For instance, charities which allow 50% of the donation as tax-free deduction include the following –

  • Prime Minister’s Drought Relief Fund
  • Indira Gandhi Memorial Trust
  • Jawaharlal Nehru Memorial Fund, etc.

Similarly, charities allowing 100% of the donation as a deduction are as follows –

  • Prime Minister’s National Relief Fund
  • An approved university/educational institution which is of National eminence
  • National Defence Fund established by the Central Government, etc.

So, donations also give you tax advantage which helps you in saving tax.

You can, therefore, use these above-mentioned ways to reduce your tax liability. Be aware of the relevant tax deduction sections when you file your taxes this 2019 and save the maximum possible tax outgo. Moreover, with the new changes introduced by the Union Budget 2019, the financial year 2019-20 promises great tax savings for the middle-class earners. So, from the new financial year starting from 1st April, 2019, here are the ways which would lower your tax liability –

  • Claim tax rebate if your net taxable income is up to INR 5 lakhs

The highlight of the Union Budget 2019 is the introduction of tax rebate for individuals having a net taxable income up to INR 5 lakhs. As per the proposed rules, no tax would be payable in such cases giving middle-class taxpayers complete tax relief. So, if you have an income of up to INR 7.5 lakhs, you can claim a full tax rebate by lowering your taxable income using the following tax-saving measures –

  • By utilising the full potential of Section 80C and reducing your taxable income by INR 1.5 lakhs
  • By investing in NPS scheme to avail a further deduction of INR 50,000
  • By claiming a standard deduction of INR 50,000 if you are salaried

Thus, these measures help you lower your taxable income by INR 2.5 lakhs bringing it down to INR 5 lakhs or below. When your net taxable income falls within INR 5 lakhs, you get a full tax rebate and have to pay no tax.

  • Get the benefit of enhanced standard deduction limits

The Interim Budget 2019 also enhanced the standard deduction available to salaried individuals to INR 50,000 from the existing INR 40,000. So, you can get an additional tax saving on INR 10,000 of your salary income and reduce your tax outgo.

So, in the new financial year April 1st, 2019, pay heed to the changes introduced by the Interim Budget, 2019 and save the maximum possible tax outgo. In fact, if you can bring your taxable income within the INR 5 lakh limit, you can even escape the tax burden altogether. Good news, isn’t it?

 

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