How to Choose Best Health Insurance?

Do you have Proper Health Insurance?

Health insurance is the vital part of every individual financial plan. We also call it mediclaim policy also. In India, it comes under general insurance category. In our country the penetration and awareness of health insurance is still very poor. In metro and big cities now people are considering it. In my personal opinion, it should be compulsory for every individual as without good health all wealth have no mean.

Why it is so important?

Healthcare costs are increasing day by day in our country. The annual growth rate of increasing cost is around 15% to 20% YoY. Any emergency hospitalization due to any illness or accident makes a big hole in your pocket. I feel very surprise when people say purchasing health insurance is wasting your money as there is no return if you do not get hospitalized. Health insurance is a protection tool, it is not for investment. It should be your first priority that protect your family and yourself with proper amount of mediclaim policy.

How to choose good health insurance?

Choosing good and proper health insurance is not easy task for everyone. If you do not have enough time and resources, contact any IRDA certified and skilled health insurance planner. There are more than 25 general insurance companies exist in our countries so it becomes very difficult to choose the best one. For health insurance buyer premium would be the first criteria to judge the policy. But your focus should not be only on premium amount there is another important factor you must judge that is claim settlement ratio. You should check the claims settlement ratio of particular insurance company. There is no mean of cheap premium if company do not settle the claim in proper time. If settlement happens after a long waiting period that is also the concern.

Health insurance companies publish this data quarterly or annual basis. IRDA does not report the claims settlement ratio in its annual report whereas in case of life insurance IRDA publish the same. Choosing a health insurance is vital for your financial plan and choose it very carefully. Only cheap premium should not be parameter for purchasing the health insurance. You should consider the other important factor like settlement time taken by the company, settlement ratio etc. After all it is for you and your family’s wellness.

If you want more information regarding investment or you have any other query about investment feel free to ask us.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

www.artofinvest.com

www.arvindtrivedicfp.blogspot.in

Some Tax Saving Instruments

Some Tax Saving Options under section 80C & 80D

The tax season has already begun. With the new year many people has started to make the tax plan and want the optimal use of available tax option for tax saving. As per my personal view, tax planning should be start more early after the beginning of financial year. At the last moment, we often make wrong decision in hurry of tax saving. Here we are going to explore the suitable options under most popular income tax section 80(C) and section 80(D).

Section 80C allows tax exemption to everyone irrespective of under any income group on certain spending and investment. It means if you invest or spend in products under section 80C your income reduce upto Rs 1 lakh and you have not to pay any tax on this Rs. 1Lakh. If you are in 10%, 20% or 30% tax bracket you clearly save Rs 10,000 , Rs. 20,000 and 30,000 respectively.

If you are conservative investor then debt instruments are suitable for you and if you are moderate or aggressive investor then you should invest in equity category products. First, we are going to discuss some equity option available for tax saving and decent return.

Equity instrument for Tax saving

Equity Linked Saving Scheme (ELSS): It is diversified equity mutual fund which invest majority of corpus in equities across all type of companies like bluechip and value stocks. It is the only more popular instrument which is available for tax saving in equity category. It has 3 year locked in period which means the amount you have invested in these types of schemes cannot be withdraw before 3 year completion.

The return from ELSS is total tax free in the hand of investors. ELSS category has generated 22% CAGR average return over last 10 years.

It is good for those who have vision for long term corpus building and tax savings. By investing in ELSS schemes you can save tax and get the benefit of equity market both.

Debt Instruments for Tax saving

Debt instrument promise the fix return but of course the return is often less compare with equity return in long term. There are many options available in this category.

Public Provident Fund (PPF): It is the best instrument available in debt category. The return on this instrument announced every year. For FY 2013-14 the return is 8.70%. It has lock in period of 15 years and the return is total tax free so it is safe instrument for higher tax bracket investor.

National Saving Certificate (NSC): It is available for 5 year and 10 year period. The return for 5 year NSC is 8.60% compounded half yearly and for 10 year NSC the return is 8.80% compounded half yearly. The tax is applicable on return as per your tax slab. It is also the safe option for conservative investors who do not fall in any tax slab.

5 year bank fix deposit: At present banks are offering 9% compounded quarterly. The return is taxable here also as per your tax slab. It is also for the suited those who are not in any tax bracket. It also offer safe and fix return.

Life Insurance Premium: In this category ULIP and endowment policy often recommended by agents or advisor as it offer lucrative commissions to the agents. The main difference between ULIP and endowment policy is that in endowment policy investment decision taken by the company which often invest in debt product and in ULIP the investment decision taken by investor himself. These types of plans offer insurance and investment both. Historical returns of endowment policies are between merely 5% to 6%. ULIP comes with high inbuilt cost which makes it less attractive than other investment instruments.

Mediclaim Policies Premium:  Apart from above mentioned you can claim some tax exemption for your medical insurance policy cover under section 80D. It allows deduction up to Rs 15,000 for premium paid to purchase health insurance cover for yourself, wife and children. You can also claim more Rs 20,000 apart from this Rs 15,000 if you purchase medical cover for your dependent parents

In today’s life in view of increasing medical cost day by day, I personally advise to all of you to cover yourself and your parents with medical cover. It would be very useful for your medical emergency and tax saving.

Once again my best wish to all of you for good financial health and physical health on the eve one year 2014. For more detail and any other query related investment, you can contact me through my email.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com