Insurance Sector Update

Sector Update: Insurance

Ø       Most of the travel insurance do not cover adventure sports. Adventure sports like river rafting, long distance biking, para-gliding etc are becoming popular in India. These activities are part of the exclusions in most of the travel insurer. Bajaj Allianz General Insurance offers cover for any injury that occurs during adventure sports under a professional trainer / assistance. ICICI Lombard General Insurance do not cover it in travel insurance but the company offers it as add on cover. They insist that tour operators should be recognized and should follow all safety precautions.

Ø  Life insurance has emerged as the most preferred investment option for Indians with an income up to Rs 25 lakh, according to a survey. 75% of affluent population of the country, who hold investments other than cash, have put their money in life insurance while only 33% invest in equity mutual fund.

Ø   The IRDA is likely to revamp the Indian Market Terrorism Insurance Pool due to changing circumstances. It was formed in April 2002, after terrorism cover was withdrawn by international reinsurers after 11 September, 2001 attack on the US.

Ø    The IRDA has raised the concerns over the high attrition rate of of agent. In 2013-14, the total no. of agents appointed by life insurers was 7.25 lakh but those terminated was as high as 6.59 lakh. To tackle this issue, the IRDA had earlier reduced the pass percentage from 50% to 35%.

Ø   Crop insurance schemes are available now for farmers in Kerala. The weather based crop insurance scheme (WBCIS) and the modified national agriculture insurance scheme (MNAIS) are being extended to farmers in the state for the ongoing crop season. Paddy, plantain, cashew, sugarcane, mango and tapioca are covered under the schemes.

Ø   Union government of India’s move to increase the foreign investment cap in insurance sector will boost the finances and improve the innovation in products.

If you have doubt about any investment product and want more information regarding investment or you need investment services, feel free to ask us. We also conduct the seminar on investment and financial planning. If you are interested for seminar in your city just drop the mail.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

Available Tax Saver option in Section 80C

When we talk about tax planning, most common term flash in mind is Section 80C. The Section 80C offers various options to fulfill people’s different need. In Jan-March quarter most of the person rush for tax saving instrument and often make wrong decision in hurry. They don’t even realize that they have invested their money in those products which is really not suited them. The right time to make tax plan is the beginning of fiscal year (April-May).Today I am throwing some light on those products which are available in under section 80C.

Provident Fund: It is the very common and popular in service class people. As employer deduct the some portion of money for contribution in provident fund from employee’s salary. PF gives 8.5% per annum and is very secure in terms of safety. Employee can liquidate it at the time of retirement. However, partial withdrawal is also permitted with some condition. 

Public Provident Fund or PPF: It is very good option available with low risk and offer tax free return after maturity. It offer return market linked for current year it is 8.8%.The lock-in period is 15 year but partial withdrawal is possible after fifth year.

Bank Fix Deposit: The 5 year bank fix deposit is also available. Various bank offer return 8-9% this year (See earlier blog). The return is taxable as per one’s tax slab. The lock in period is 5 year. It is low risk product but keep in mind the post tax return also before investing in fix deposit.

National Saving Certificates or NSCs: It offer 8.5% return and is very safe investment. The lock in period of these instruments are 5 and 10 years. The person can choose any maturity 5 or 10 year based on their need.

Senior Citizen’s Saving Scheme: It offer 9.3 % return and added in taxable income. It is the most suitable option for senior citizens (above age 60 year) as it gives regular interest income in each quarter. It has no risk and very safe investment option. The lock-in period is 5 year.

Insurance Policies: It is long term product and lock in period depend on plan’s maturity. It has highest degree of safety but its average return around 6-7% only.

ULIP or Unit Linked Insurance Plan: The return is market linked as no fix return offer. Partial withdrawals possible. It is in the form of bundle which offer insurance, tax exemption and return also. The cost and charges is high compare with other products. The risk is depend on which option you have chosen.

ELSS or Equity Linked Saving Scheme: It is market linked product. There is no fix return. The lock in period for this product is 3 year. It has shortest lock-in period among all Section 80C options. It is high risky investment product.

NPS or National Pension Scheme: It is retirement goal oriented product. No withdrawal allowed before retirement. The return is market linked and it has very low expense ratio means low cost product.

Besides the above mentioned investment products which are in under section 80C, there are some expenses also eligible in under this section.

Home loan repayment: Principal portion of EMI is eligible for deduction till Rs 1,00,000 limit.

School Fees: Tuition fees of up to two children in a recognized educational institute for eligible for Section 80C

Home Purchase: During the purchase of home whatever stamp fee and registration fee you pay is also deductible from taxable income.

There is also other option available for tax deduction other than Section 80C which we will discuss later. If you want more clearity on these products pleas ask through email

Regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com