What is the best way to File your income tax returns online ? Tax filing season is on and most of us will still wake up after few days.
I will talk about efiling your tax returns with govt website and also private websites like taxspanner, taxsmile and investmentyogi which are autorised by income tax department. You can also win some free coupons for income tax filing through some online p0rtals .
Income Tax efiling using govt website
I just want to tell you that incase you are just salaried and have no income from other sources, then the whole process of e-filing is just as simple as filling up details in tax return form at govt website, creating a .xml file and preparing an acknowledgement form using the tools provided by income tax website and then you need to speed post it to Bangalore Income Tax Office.
Step 1: Login to https://incometaxindiaefiling.gov.in/ and download the appropriate software from the website as per your case. This software is nothing but a nice detailed excel sheet (enable the macro’s)
Step 2: Once you have the excel sheet on your computer, fill up all the details (if you don’t have form 16, you can still fill all the details manually). After that verify it once again and then export it to XML (the export button is there in the software itself)
Step 3: Once you have the xml file with you, you need to login to the website (you will have to register for it once). You will see the option called “Upload Return” on left side after login. Click on it.
Step 4: There will be two options called “Digital Signature” and “No Digital Signature”. As most of the people would not have digital signature, just choose the option. Upload your XML file and just create your acknowledgement form called ITR-V , You need to download it . Once you have the acknowledge form, just verify it once again.
Step 5: Just send this acknowledgement form using a regular or speed post (no courier allowed) to “Income Tax Department – CPC, Post Box No.1, Electronic City Post Office, Bangalore – 560100, Karnataka”
Step 6: You will get the receipt of your ITR-V receipt by email in some weeks (takes time) , you can track its status of your ITR.
A lot of people who work in big companies might already have filed their taxes as they get lot of tax filing agents coming in their offices, but for people who still want to do it by themselves, they can take this pain. I personally prefer to to through an agent 🙂
E-filing your tax returns through private websites with Taxspanner or TaxSmile
There are various online websites authorized by income tax department who can file your tax returns . The major reason why you might want to explore these online options are because they are really convenient . One more reason for you to start e-filing your taxes is because in coming years e-filing is set to become mandatory (just like for corporate’s) .
Watch the video given below to now how to file ITR online:
So may be you want to be comfortable with that before it becomes mandatory . There are multiple benefits of filing e-return especially through private websites authorized by income tax department. The additional benefits over govt website include convenience, accuracy, tax planning cum saving, professional support after filing ITR and
1. Processing on real time:
E-filing ensures income taxes are uploaded in the tax system instantly which helps in tax computations processing on a real-time. If PAN details are matching the income tax department and income tax return filed, the taxpayers gets an acknowledgement on e-mail called ITR V.
In case PAN card information is incorrect, the electronic returns get rejected and the taxpayer is intimated for failure i.e. the ITR V copy is not delivered. This ensures the return has been submitted in time.
2. Jurisdiction free:
In case the return is being filed manually and an employee gets transferred to other city than he/she need to transfer his income tax return to the city where he is working presently. Whereas, e-filing is jurisdiction free.
This means your PAN address will be the jurisdiction and same can be continued even if you move out of city or country.
3. Faster refund:
As per the Controller and General Auditor of India, there are 40 lakh pending cases of refund with the income tax department as on 31.12.2010. Refunds are generally received in 10 months in the case of physical tax returns ran.
Whereas, the refunds are getting cleared within 1-2 months in the case of return filed electronically. “We want tax-payers to file electronically as that helps in faster processing of refunds,” Sudhir Chandra, chairman, Central Board of Direct Taxes.
4. Revise return online:
In case the return is filed online before the due date, and taxpayer has missed out on declaring any income or investment. He/she can revise the return online without visiting ITO. If the original returns have been filed physically then, the revised returns cannot be filed online.
If there is refund in the revised return then, you will get the benefit of faster processing and refund.
5. Rectify the mistake online:
In case of physical returns, if there is an error at the time of filing, the mistake cannot be rectified online which means it will be more time consuming and costly too. The process of online rectification is faster and simplified.
However, online rectification is allowed only for the returns filed electronically
300 readers win free tax filing discount coupons
Whats the use of this blog if I cant get some freebies 🙂 . TaxSpanner & TaxYogi has agreed to give 100 & 200 promotional codes (taxspanner – 100 and taxyogi – 200) to jagoinvestor readers which can be used for free tax filing from their website.
I will pick 300 best comments on this article & other articles and all of them get to file free tax return using the promotional code. Note that it will be totally free and there are no charges for you . Apart from taxspanner.com & taxyogi.com, even taxmunshi.com has offered 5 promotional codes to jagoinvestor readers .
Note that these can be used to file only ITR1 & ITR2. Some other websites which can be used to file tax returns are taxsmile.com & taxshax.com.
E-Filing means faster tax refund
Did you know that if you have some refund to get back, then e-filing would ensure that you get it back faster than manual process.
With online filing it saves a lot of time which is taken in other process like generating acknowledgement form, feeding your details from the form and various other things, that itself takes few months. So e-filing ensures that you get your refunds faster. On of the very active members of our forum , Ashal Jauhari confirms this
Dear Rakesh, I’m already e-filing ITRs from the last year i.e. FY 2009-2010. Till date I have not face any problem for me & my friends (mainly office friends). Last year I e-filed some 40+ ITRs & this year the figure is already over 125.
Error has been reduced tp a great extent after e-filing on our parts.
Me or my friends who were calculated refund refunds, got the same last year within 40-50 days of ITR-V reaching Banglore & that too through ECS. Cool isn’t it?
Thanks
Ashal
No need to file return if, you have only salary income and earnings are less than 5 lakhs per annum
If your only income is from salary and its less than 5 lacs in 2010-2011, then you are not required to file the tax returns. Note that this is true only if you don’t have any other source of income. If you have some income from mutual funds, shares or bank interest etc, then you need to file tax return.
So which website is the best one to file your income tax returns online ? Which one did you use ?
What are Chit funds and how do Chit funds work ? There are lots of chit funds in india like shriram chit funds , margadarsi chit funds and I would like to show you how chit funds exactly work and what are pros and cons in Chit funds. Over the past many years there has been large scale frauds and scams done by large chit fund companies. However, a lot of people do not understand the working and wonder how chit fund works.
What are Chit Funds & How they work !
Let’s say there are 20 people who come together and form a group. Each one will contribute Rs 1,000 per month and this will continue for next 20 months (equal to number of people in the group). In this group there will be one organiser, who will take the pain of fixing the meetings, collecting money from each other and then doing other procedures.
So each month all these 20 people will meet on a particular day and deposit Rs 1,000 each. That will make a total of Rs 20,000 every month. Now there will be a bid on who will take this money. Naturally there will be few people who are in need of big amount because of some reason like some big expenses, liquidity crunch, business problem, Beti ki Shaadi etc etc … Out of all the people who are in need of money, someone will bid the lowest amount, depending on how desperate he is for this money. The person who bids for lowest amount wins. Suppose out of total 3 people who bid for 18,000, 17,000 and Rs 16,000, the one who bids the lowest will win. In this case it’s the person who has bid Rs 16,000.
There will also be “organiser charges” which are around 5% (standard) of the total amount, so in this case its 5% of Rs 20,000 , which is Rs 1,000. So out of the total 16,000 which this winner was going to get, Rs 1,000 will be deducted and the winner will get only Rs 15,000, Rs 1,000 will be organiser charges and Rs 4,000 is the profit, which will be shared by each and every member (all 20 people), it comes out to be Rs 200 per person, and it will be given back to all 20 members. So here you can see that the main winner took a big loss because of his desperate need of getting the money and others benefitted by it. So each person actually paid just 800, not 1,000 in this case (they got 200 back). Note that when a person takes the money after bidding, he can’t bid from next time, only 19 people will be eligible for bidding.
Now next month the same thing happens and suppose the best bid was Rs 18,000 , then winner will get 17,000 (after deducting the organiser fees) and the rest 2,000 will be divided back to people (Rs 100 each) . So each person is paying effectively Rs 900. This way each month all the people contribute the money, someone takes the money by bidding lowest, organiser gets his charges and the rest money is divided back to members. You will realise that the person who takes the money at the end will get all the money except organiser fee, as there is no one else to bid now. So the person will get around Rs 19,000 in the end, if you try to find out the returns which he got out of the whole deal, it will depend on two things, how much lower bids were each month and the fees paid to organiser, if bids and charges are very low, then a person will make more money at the cost of other situations.
So this is pretty much how a chit fund works, there are various versions of chit funds and how they work , but the idea was to communicate the basic model and how it works.
Trusted and untrusted Chit Funds & Some experience
A big question which is in every one mind is “Should I invest in Chit funds?“. Chit funds are not some investment products in which someone invests! By design you can see that it’s only a support structure for needy people who are unsure of their cash flows or some big expenses coming on the way. It’s only for those who can’t get loans from banks or some lender. In which case chit funds provide that structure where one can take the benefit of it. But beware! Whenever someone says “Chit funds”, the only thing which comes to the remind is “Fraud”, “Scam” and “Something Fishy” and its true to great extent as there many chit fund companies which come in market and run with the money. The only condition where I feel one can go for it is if all the participants of the chit fund are known to each other properly and there is high level of trust between them. For example, you can do it with your colleagues at office whom you trust and are friends with for long. But if you dont have liquidity issue and can get loan from a bank, then I dont see any need of doing this.
Good experience
In smaller cities, you can see your father, grandfather and even many housewives form these groups with friends with whom they are from last many years. A lot of people on this blog might have experienced how their father used these networks to get huge cash at the time of need. One of the readers Jagadees shared his experience with me on mail
The great advantage for the village people would be availability of immediate funds in the times urgent need. My father would say that he met all his life obligations like his sister’s marriage, his marriage expenses, my grandpa’s medical emergencies, our education expenses were met solely through this type of monthly chit fund investment.
Bad experience
Greed has no limit. What was created for help to each other under a trusted network is now converted as a business and many people have started opening Chit fund shops where they become the main organiser and pocket the organiser fee. Investors have started looking at these chit fund companies from investments point of view and in greed of high returns, they invest their hard earned money with these chit fund companies and at times there are frauds and scams. Chit fund companies are regulated in most of the states by Central Chit Funds act,1982 and they come under the purview of state governements. RBI has no role in regulating them. But still you know how easy it is to do frauds and scams in India (don’t forget commonwealth & 2G and 3G and 4G scams, wah ! I am futuristic). Let me share with you a horrible experience how an old man lost his 40 yrs of earning in chit fund
My father-in-law when he retired, without telling any of us he put all his money in a chit fund. nobody knows how much & in which chit fund he deposited. That was the time when a series of chit funds went bust in chennai. Pity the chit fund in which he deposited also went bust. he had a mild heart attack. The pain he underwent other than the heart attack was terrible. He was in an ordinary job & after 40 years of hard work he had earned that money.
More than the loss of the money, it’s the shame, foolishness and the iyalaamai to take any action by us, the government kills.we supported him, but he wanted to be independent even after retirement. that objective was defeated by his shear foolishness. none of us ever asked him anything about it. but every day he must have been repenting for that . (via)
Easy & MicroFinance Tool
Can you believe that as high as 5-10% families are associated with chit funds in South India ? For example – The share of households participating in Chit Funds increased by 9% in Andhra Pradesh, 89% in Delhi, 15% in Tamil Nadu and 4% in Kerala between 2003 and 2006. You can see below graph that shows Kerala having 9%+ penetration in Chit funds which means 1 out of every 10 family is in some chit fund.
Source : IFMR research
As per a report from IFMR on Chit Funds , most of the people in smaller places are attracted to chit funds, because of easy availability of easy credit and simplicity of chit funds. In small places banks are not much interested in lending to poor people and poor people see chit funds as perfect way of getting a loan, though at a high cost. So you can also look at them as microfinance tools. All of south India and Delhi is deeply flooded with chit fund companies (thousands of them) and its reach is much above what you are thinking right now.
Should you invest ?
Overall, chit funds are not recommended unless it’s a person group formed by friends and relatives whom you trust a lot. I don’t think one should put money with chit funds which are not among their social circle. It might make sense for people in smaller cities to look up to them. As the last note, these chit funds are not investment vehicles where you park your hard earned money, So please avoid them unless you want to exactly take that kind of risk.
Please share your personal experiences about chit funds , I am sure all the readers who are from smaller places , they have seen it and for sure there father or grandfather had used chit funds at some point of time to fund a financial goal 🙂 .
Do you know who to calculate principle and interest part in your home loan’s EMI break up? Do you know how each EMI is distributed to principal and interest repayments? It is extremely important to have this knowledge because a lot of real life decisions like prepaying the loan, opting for the loan tenure and many more such aspects depend on how your EMI is structured.
Basics of Home Loan EMI’s
What happens in a general scenario? Loan is opted for from a Bank and you start paying your EMIs each month as contracted (see this excellent article on how EMI formula is derived). When you pay your EMIs, some part of it goes towards interest and remaining towards principal repayment. So each month you are reducing your loan by some extent and now as your loan have reduced, you will be paying less interest on your next instalment. In the same way, with each passing month, your loan gets paid by some amount and balancing amount keeps on reducing resulting in paying lesser interest month on month and year on year and the day comes when you fully close your loan. Note that your EMI is generally fixed and internally it’s worked out into ‘interest’ and ‘principal’ repayments.
However, even today, a lot of people have no understanding of the idea that in the early years of repaying the loan, interest component is very high as compared to principal repayment. The longer the tenure of the loan, the interest component will be higher than principal payments and also the rate at which the interest part will come down will also be lower, making sure that in the initial years most of the EMIs goes towards ‘Interest’ and not ‘principal’.
Example of EMI payment
Lets say you take a HDC Home Loan of Rs 30 lacs for 20 yrs tenure, your EMI would be Rs 28,950/month. In the first EMI, the interest part would be Rs 25,000 and only Rs 3,950 will be the principal payment, which means out of total hdfc home loan of 30 lacs, only Rs 3,950 will be reduced in the first month and rest Rs 25,000 will go away in interest. Sounds disappointing? What is EMI disease ?
In the same way After 100 payments (8 yrs and 4 months), when you would be paying your 101st EMI of Rs 28,950, the interest part would still be as high as Rs 19,891 and the principal part would be Rs 9,060. Still disappointed? Now let’s fast forward towards the end, let’s take 200th payment. When you make your 200th EMI payment of Rs 28,950; this time your interest part would be very less at Rs 8,349 and principal would be Rs 20,601. So now, with all these examples I gave, you can see how interest part is very high in initial years. Let’s look at it from a different point now!
Just consider this- For the scenario above; If you keep paying your EMI’s for 2 yrs (24 payments), you will pay total of 6.94 lacs (24 x EMI) from your pocket, but your loan would just go down by 1.05 lacs! And your outstanding loan would be still 28.95 lacs. In the same way in 5 yrs even though you pay around 17.37 lacs (60 x EMI), your loan outstanding would be down by just 3.06 lacs and loan outstanding would be just Rs 26.94 lacs.
The chart below shows the breakup of interest and principal payment for each year for a 30 lacs loan for 20 yrs tenure assuming interest @10%. So each bar is broken into two parts, where green bar represents Interest part and orange bar represents principal part. It is clearly visible that how interest forms a major part of overall EMI in initial years and only in the later years principal part becomes high.
Here is the actual breakup of the EMI in numbers
Pre-payment of long tenure loan
A lot of investors opt for 15-20 yrs loan thinking that they will pre-pay the loan in next 4-6 yrs itself because of their salaries will rise or for some other reasons. In these cases, for the initial years they keep paying loan interest only and not a lot towards principal. When they prepay the loan, they end up paying a little lesser amount then original loan amount. Example, if you take a loan of 30 lacs for 20 yrs tenure at 10% p.a. and prepay the loan in 5 yrs itself, you will still end up paying 27 lacs as loan outstanding, even though you have already paid 17 lacs in EMI in last 5 yrs, Pre-payment penalty would be extra! But the positive side is that there might be a good appreciation in the house value itself.
So if you are taking loan for longer duration thinking that you would pre-pay the loan very soon, you need to rethink! This makes sense, once the worth of your house has gone up and there is a decent profit. A better option which I can think of is to pre-pay in small chunks each year along with your EMI’s from the start of the loan payment. It would make sure that you principal goes down in big chunks each month.
If you take short term loans, because of the shorter duration, the bigger chunk of the EMI is actually principal part, hence you can look forward to pre-pay the loan incase you wish to.
Free Calculators for Loan Amortization
I have created and found out some loan amortization calculators which you can use for calculating your EMI’s and its breakup into principal and interest for each month.
Use the below embeded Loan EMI breakup calculator (direct link)
By now you must have got a clear understanding on loan amotization and how home loan EMI is broken into principle and interest component. Note that the asssumption for this article was that the loan is on “Monthly Reducing Balance”
Do you know you can complain to Banking Ombudsman incase you have any complaints against your bank in India ? Banking Ombudsman is a body created by RBI to look after banking related complaints. Imagine the scenario’s – You insert your card in ATM to withdraw Rs 500. The transaction fails, but your account is debited by Rs 500. You’re frustrated, you’re irritated, you complain to your bank about the money being debited after the failed transaction. The bank tells you that your money will soon be credited to your account, but nothing happens for weeks… Six months pass by, with all of this up-down in-out stuff, You’ve done all you can, but no body is listening! . Can you imagine getting a compensation of Rs 16,200 because of your bank’s inability to honour the rules set by RBI? Can you imagine, that for not getting Rs 500 within a few days, you can get Rs a 100 penalty for each 162 days you have waited? Yes it can happen! And it has happened! . In this article, I’ll show you the power of the Banking Ombudsman and some case studies which show you that getting your complaints addressed is more easy that you think!
What is Banking Ombudsman ?
The Banking Ombudsman is a senior official, appointed by the Reserve Bank of India to address grievances and complaints from customers, regarding deficiencies in banking services. It covers all kinds of banks – PSU Banks, Private banks, Rural banks and co-operative banks. Even though, it was originally setup in 1995, there were major revisions in 2006 covering transactions related to complaints of ATM cards, debit cards and credit cards, deduction of service charges by banks without prior intimation, unfair practices of banks and non-compliance by direct sales agents (DSA) of banks for services promised while opening an account etc. It was last amended in Feb, 2009 to cover deficiencies arising out of internet banking too.
Today, the Banking Ombudsman covers almost all kind of complaints for banking services. To give you a brief idea about their effectiveness, Banking Ombudsmen received 79,266 complaints in the year 2009-2010 out of which around 94% were handled and just 5-6% of the complaints remained pending for more than three months as on June 30, 2010. There are a total of 15 Banking Ombudsman in our country. You complain to the one which comes under the jurisdiction of the Bank location, i.e., if your bank is in Bangalore, you can complain to the BO from Bangalore region. Incase you or the bank is not satisfied by the decision given by the Banking ombudsman, in that case within 30 days of BO decision, the complaint can be taken forward to Appellate Authority, which is a Deputy Governor of the RBI . Its just like going to supreme court if you are not satisfied by High court decision 🙂 .
What kind of complaints are taken care by banking ombudsman ?
So, the first question that comes to mind naturally is – “Will it be helpful for me?” You wont believe it, but the most basic problems, a common man faces (See an example of what I faced) , like rude behaviour of bank officials, delays in disbursing loans, forcing customers to buy insurance policies for processing loans etc., are all addressed by Banking Ombudsman (BO), and the process of complaining is as simple as filling up a form online or sending in a filled form to a postal address.
The best part is that if you are harassed because of any issue or have undergone through mental agony, you can ask for a compensation upto Rs 1 lac. Also some readers of the blog has acknowledged that banking ombudsman were useful for them (see this , this and this comment) . So let me list down some of the possible scenarios where you can file a complaint with Banking ombudsman.
Levying of charges without any notice or Information.
Charging higher rate of interest linked to BPLR on Housing Loan
Any Loss suffered because of lack of co-ordination from Bank side
Unreasonable credit card charges
Fraudulent transfer of funds by using net banking
Fraudulent transactions against lost credit card
Cheque lost in transit by the bank
Non-updation of CIBIL records
Loss of cheque from Cheque drop box
Closure of any account with providing any information or reason
When bank demands unreasonable proofs for openening of account
Change in terms and conditions without notice or valid reason
Delay in providing any service
Mis-selling of Insurance products
Forcing customers to take insurnace policies for processing Loans
Rejection of Loans
Harrasment to customer or misbehaviour for any reason
Casual approch from Bank on perfoming its duties
I ran a poll with title “Have you even been frustrated with your Bank and wanted to complain? ” on this blog, on which 100 people participated. Surprisingly , around 65% people said that they were frustrated on some issue with their bank and wanted to complain. Only 35% said that they never had any issue with their bank which went to a level that they have to complain about it .
Real Life Cases Solved by Banking Ombudsman
As per the Banking Ombudsman Annual Report 2009-2010 , ombudsmen have resolved thousands of cases and helped common man get justice. I would say, this is a great way to raise your voice and show banks that they can’t take you for granted, just because they are bigger than you in size. A customer has to be treated as per the guidelines, and customer service is the critical part of any service provider. Just to give you some idea, the Banking Ombudsman annual report showcases around 57 different real life cases of how it has helped customers get justice (Page 57-73) . I am highlighting four of those live cases below
1. How a person got compensation of Rs 16,200 because he got less money from ATM
The complainant maintained an account with AB Bank. He withdrew an amount of Rs 500 from the ATM of DH bank on July 28, 2009. The cash dispensed by the machine was only Rs 400. However, his account was debited by Rs 500. The amount of Rs 100 was credited back to his account only on January 27, 2010 (Around 162 days late) & despite lodging the complaint immediately, no penalty was paid to him as per the instructions issued by DPSS, vide its circular dated July 17, 2009. Since the bank had delayed in affording the credit to the complainant’s account by more than five months, the BO directed the bank to pay the penalty amount of Rs 16,200 for the delayed period (Rs 100 for each 162 days) .
2. How a credit card holder got Rs 10,000 in compensation for non-updation of CIBIL records
One credit card holder complained about the bank’s claim against his settled credit card account dues, and non-updation of his status with CIBIL. The bank accepted that although the credit card account was settled three years ago, the status of the account could not be updated in the records of the bank with CIBIL (See a related example) , which was rectified subsequently. Clear negligence was observed on the part of the bank for not updating their records for more than three years, resulting in undue harassment to the complainant. The bank was directed to pay an amount of Rs 10,000 to the complainant as a token compensation for the violation of BCSBI Codes.
The Branch Manager assured him to provide the loan without delay. However after three months the branch returned all the papers stating that the Loan Disbursement Officer was ill because of which they were unable to provide the loan. With the intervention of BO, it was agreed by both the parties, that the complainant would resubmit the loan application and the bank would consider the same again. Moreover, since the complainant had lost Rs 5000 which had been paid as registration fee to the Institute, the bank agreed to pay Rs 5000 as a token compensation and another Rs 5000 as a service gesture. The education loan was sanctioned subsequently by the bank and the student got admitted to the MBA course in the same business school.
3. How a senior citizen claimed Rs 1 lakh in compensation for Harassment regarding the loan he never took
Even though the complainant had no business relationship with ABC bank, he was getting calls/SMS from the recovery agents using abusive language & demanding repayment of some loans which he had never taken. Several complaints to the bank against this harassment calls fetched no effect. The bank pleaded to the BO that the telephone numbers from which he was getting the abusive calls did not belong to any of their recovery agents. Based on this, the BO closed the case under clause 13(d) of BO Scheme (i.e. complaint without any sufficient cause).
As the complainant continued to get the harassment calls, he went in appeal. During the appeal, the bank admitted that the phone numbers from which he was getting abusive harassment calls belonged to their recovery agents and that they had since taken necessary corrective action to discontinue such calls. The AA observed that the bank had not conducted proper due diligence while sanctioning the loan to some third person indicating a major KYC lapse. To cap it all, the bank had misguided the BO resulting in the BO pronouncing a wrong order, damaging the credibility of the BOS. The AA set aside the decision of the BO and directed the bank to pay the appellant Rs 1 lakh towards compensation.
4. How A person got Rs 6,500 as interest for Failed ATM transaction
In a case of failed ATM transaction where the account was debited though no cash was dispensed it was observed that as per BO’s orders the amount was credited to complainant’s account, but the bank did not pay the penal interest in terms of extant RBI instructions for the delayed period credit of approximately 2 months. The bank was directed to pay penalty at Rs 100 per day amounting to Rs 6500 .
Proof that it works !
How Trivikram got his wrongly wrongly credited money to different amount .
I got my money back after complaining the issue in Banking ombudsman.
Last year May I transferred money through internet banking to wrong account. After realizing I called my bank officials and requested not to transfer. But it’s already transferred they need to contact with payee bank. The other bank people not given any information as I am not a account holder. I tried through my friend they told that it’s transferred back to my account. Almost three months I tried hard back and forth in both the banks but no use.
This month (5/04/2011) I got to know about Banking ombudsman through one of my colleague and I raised the issue with all my details. Today I got my money back:-).
Ankur on comments section mentions how he got his interest back by
Hey Manish,
some good news… i finally got my intrest back for arnd 20 days. though the amount was meagre but yet it was fruitful. i had known 3 persons who applied for this scheme and we 4 guys got 6000/- back in total.
now i believe that BO(directly got a call from the branch manager to come and collect the cheque 🙂 ) do works and finally thx to you guys for guidance.
I had approached IT ombudsman for IT refund. After chasing IT officials for 2.5 years the experience with Ombudsman was inspiring. Not only I got the money back but with interest.
The only catch is that one needs to be patience and keep all proofs ready. Best way is to keep copy of letters send by post, copy of emails etc.
Regards
Atul
Procedure of Complain ?
There are two ways of filing your complain .
Online Complaint : You can complain to Banking ombudsman online by filling up the form here . Once you fill up the form , you can also upload your proofs like bank rejection letter, banks reply or anything else (it has to be PDF or TXT format only)
Offline Complaint : You can also complain in offline mode to Banking Ombudsman. Just download this form and fill up the complaint. You should provide your contact information, name and address of the bank against which you are lodging the complaint, documentary evidence and the compensation you need. Once you have filled up the form, you can send it to the Banking Ombudsman address which comes under your jurisdiction (Download the list of all 15 BO)
Should you complain ?
I dont see any reason why you should not ! . If you are frustrated anyways and the service is free and also does not take much time and effort to complain, then you should definately go ahead and complain to Banking Ombudsman for something which you feel you should get justice for. Forget about who will win and who will loose for a moment, but I would encourage you to atleast take the first step and be the part of this initiative atleast. If you case is genuine, I beleive banking ombudsman will help you for sure, It can take time, but dont let this get you get stopped . Go ahead .
Share your experience! . A lot of readers have never had a bad experienced with their banks (like me) , so its your responsibility to share your bad experience in comment section and make them aware about what had happened in your case and how bad it was. Also share what are you doing now ? Will you file a complaint with Banking Ombudsman ?
How will your retirement look like? Have you thought about anything on retirement planning ?
This is something, which you should spend some time on. Our parents and grand-parents might not have given much importance to their retirement, they might have just took it as it came to them, but can we also afford to do the same with our retirement? Would you like your retirement to take shape just like your parents?
Lets discuss it and take some food for thought from this article today. This is the 3rd and last article in the series called “Financial Planning and Social changes in India” . You can read other two parts here and here .
In our country, where a very small number (less than 10% of the workforce which is in the organised sector) has access to some social security like provident funds, but the rest – almost 90% of the workforce – has no social security, Retirement Planning is a major issue .
If you take care of your retirement planning, your future will probably be much better and in control than without doing anything. It has become extremely important to plan for one’s retirement and at least take a step towards it. I will list down some pointers which shows why retirement in future India will be much bigger and serious issue.
Look at all the points in totality and you will realize that planning for own’s retirement is not just an option but a necessity these days.
1. Increase in life expectancy in India
One of the major problem while doing retirement planning is to assume how long the retirement will last. This has a direct relation with life expectancy. As a country develops, its healthcare and overall life style level improves and life expectancy increases. You can see the life expectancy in India is moving up and up with each passing decade .
It was 49 yrs in year 1970 , increased to 64 yrs today in 2011 and is set to increase upto 73-76 yrs in 2040-50 (projections) .
Now this life expectancy of 76 yrs does not mean that everyone will die at age 76 , it’s an average . If you personally have a better life style , better health and better medicare access compared to a average Indian, chances are you will have a much more life expectancy which will cross 85-90 yrs .
Leave future, even today you can see more and more people living upto an age of 80-85 . So, you can safely assume that you will have to accumulate enough money which can last atleast 30-35 yrs after your retirement, else make sure you die with your money itself 🙂 .
Overall the conclusion is “Longer life in future will mean more money required in retirement compared to today. Simple !”
2. Increase in Dependency Ratio
Dependency ratio means the ratio of Old age population vs Young population. To calculate it, just take total population above Age 60 and divide it with population between 15 yrs – 60 yrs and you will get Dependency Ratio.
You will be surprised to know that right now in 2011 , the dependency ratio is around 5% in India, but in year 2050 this ratio will rise to 15% , which shows you that more and more people are going to be in the old age group compared to young population . See the chart below .
This is not a small issue. More and more people will be shifting to this “retired” category in coming decades with more load on the working population.
At this current moment, we are one of the youngest country today with as high as 50% population below 25 yrs of age , but will this continue forever? With more population control measures at government and public level, these numbers are going to be different in future.
Hence the conclusion is “More and more people will come into retired category as percentage of population in coming future”.
3. Decline of joint family structure
If it was 1970 , you could have safely assumed that you will be probably spending your retirement with your grown up kids , playing with your grand children, but is it happening anymore in these changing times?
More and more people are moving in different parts of country in search of education, jobs and settling there compared to old times. Parents on the other hand dont choose to move most of the times as they feel connected to the same place where they have spend all their life and more than that , they have their social groups at those native places.
Very rarely I have seen that parents leave those places where they have spent 30-50 yrs of their life .
Bigger opportunities in life and a complex life style has resulted in smaller family size and its going down each decade. As per research reports of National Family Health Survey , Ministry of Health and Family Welfare (MOHFW), Government of India , average household size in the year 1992 was 5.7, which means each family had 5.7 members, this came down to 5.4 in 1998 and as per last reports of 2007 , average family size is 4.8.
Now imagine this, each family having approx 4.8 members , that’s today ! . Will it shrink further to 4.0 in coming decades , what do you think ? I think if it does not go down , it will definitely not go up ! . Thats my personal opinion .
This clearly shows that families size are shrinking on average. More and more parents these days are living in their home town where they raised their kids , but kids have moved to other places and settled elsewhere. By no means I am saying that not living together has resulted in less love or less harmony , NO !
All I want to say is people are living separately and “expecting” to live separately now a days. This will only rise , and not come down by the time you retire.
So the conclusion is “There are higher chances that you will be living separately and not with your kids , by choice or by society structure , unless you are living in smaller towns and villages.”
Change in perception about Retirement Planning
Now leave all the factors we talked above. Lets look at how people today feel about their retirement in coming years. I ran a poll on this topic which was taken by as high as 412 unique participants and you will be amazed to hear that as high as 83% said that they would like to be self-dependent and want to save all the money they would require in their retirement.
Around 10% said that this is the first time they are having any thoughts about their retirement after seeing the poll and just 7% people expect to be fully or partially dependent on their children for their retirement. Which shows us that as high as 93% readers on this blog who participated in the poll want to be self dependent and plan their retirement themselves.
Look at the poll results below .
Best Investment for your Retirement ?
So whats the best Investment you can do today which will make sure you live happily in retirement? If you thought that it’s some financial product or a strategy to make some extra bucks, you are wrong ! I am talking about your Health here.
Note that reaching destination is important, but after reaching the destination if you don’t feel joy and happiness and are not able to enjoy the fruits later, all the hard work you will put for reaching for destination will go waste.
You will be living for 25-30 yrs minimum in your retirement, Now if you have all the money , but no proper health at the end, you will not be able to eat what you want, you will not be able to roam around places , you will not be able to enjoy each moment of your life , what’s the use of all your hard-earned money in that case ?
I would say all your efforts will be waste. This is one serious point I want you to take home today. Think about it.
People who are neglecting their health and financial life today are living in illusion that future has a lot for them. Start working on your health today, do a daily SIP investment in your health through exercising in gym or working out in park or at least jogging. lumpsum investments in health does not work , It can only work in your financial life.
I want you to download this e-book called Food and Thought right now.
What do you think about retirement after 30-40 yrs ? I want to hear your action plan for your retirement in comments section. Do you think the points made for Retirement Planning by me makes sense ?
How many times have you come across a situation when you wanted to know the returns from your Policies , It can be Endowment Plans, Money-back plans, Pension plans or a ULIP plan . You might be some money going out of your pocket in some years and money might be coming in your pocket in some years, which would eventually translate to some return overall . In this video tutorial, we will see how you can use MS Excel and use a tool called IRR (Internal Rate of Return) to find out the returns from your policies.
When can you use IRR?
Actually, IRR is a tool which you can use in any kind of situation where you are paying some premium across some fixed time frame, like per year or per month or any period with equal gaps! , not random payments with unequal gaps.
For the sake of simplicity, I have taken the case of yearly payment in this article. In the above video, I have covered 4 types of situations, like See More Financial Calculators
Endowment plans with maturity amount
Moneyback plans with money coming back to you in between
Pension Plans
ULIP Plan
Important Points
There will be years when money goes out of our pocket, we have to put negative value. For example, if we pay a premium of 20,000, we will pay -20,000.
In years when we get some money, we have to put positive value, like if we get 20,000 in some year, we have put +20,000.
If we pay a premium of Rs 20,000 in some year and we also get 25,000, eventually, the money coming to us is Rs 5,000, so we put +5,000 for that year.
Bonus Quiz to test your understanding!
Ajay bought a pension plan with maturity tenure of 15 yrs , but his premium paying term was only 10 yrs . So he does not have to pay anything after 10th year .
He is paid the premium of Rs 40,000 each year for 3 yrs, but after that he missed paying premiums for 4th and 5th year. He revived his policy in 6th year and payed 6th year premium along with 4th & 5th year premium with 8% interest (8% interest on 80,000) in the 6th year and thereafter He continued paying the premiums after that till 10th year . After the maturity period of 15 yrs, he has two options
Option A) Get 4,00,000 lump sum + pension of 25,000 for next 40 yrs , starting from 16th year
Option B) Take the lump sum of 10 lacs and Policy terminates
Question : Which option should Ajay choose ? which one is better than the other ?
Lets see who gives the right answer !
So now if someone tells you that you can invest Rs XXX for Z yrs and get amount Y for next ABC yrs you can find out how much IRR its turns out to be , if its claims to be a safe fund and IRR is more than 9-10% , you can clearly see that its a pure cheating ! .
Your Homework
Now go back and take out your ULIP’s , Insurance Plans and use this method to find out what is the return you are getting out of those policies , are you satisfied with it? if not , its time to rethink if you really want to continue those plans or not . Take Action !
So , go ahead and calcualte the IRR for your policies and ULIP’s and Share your examples and numbers with everyone on the comments sections , I will personally verify each one’s number and confirm if those are right or not . Happy IRR’ing !
Do you remember your first stock market trade and how you behaved at the time? Just like you, even I, have made some really stupid mistakes in stock market Investment.
Today, I would like to share some mistakes (only the big ones 🙂 ) which I made during my first trade in stock markets. Its worth discussing, how I could have avoided those mistakes. You can learn from them too!
Mistake 1 : Buying on Others Recomendation.
27th Nov 2007 : I had just got my spanking new trading account and I was so eager to trade and make lots of money(How to start in Stock Market) .
I saw an Orkut community recommending GTC India – a “Buy” Recommendation. There were several good reasons discussed there, and an extrapolation on how it can reach from current price of 600 to 2000 in some months. It looked like a “don’t-miss” trade. I bought 10 shares @ 560/-.
Mistake : Buying only on recommendation and not analysing the opportunity well, over relying on others recommendation, buying a company which I do not understand enough .
Learning : Never buy, just on recommendation! Do your own study and analysis. When you buy on others recommendation, you don’t take responsibility if there is any loss, which is dangerous in markets.
Hear others but listen to your self. See other factors like market trends, sector view, global markets, future prospects et al. Once you are fully confident that its a good trade and you feel comfortable with it… go for it.
Mistake 2 : Being too greedy
After 3 days : Just after I bought the shares, it went up from 560 to 800 in 3-4 days. I thought that its moving as expected, and bought 10 more shares at 800. Within another week, it went up more to 950! Now, I was flying!
I bought 10 more shares @955 again, to reach the target of 1500+ . My average buy price was now 772 . I was feeling little bad for not buying 30 shares directly @560 in the start .
Mistake : Greed! Pure & simple… This is a very common mistake, a big mistake at that – so big that it will be among the top mistakes investor and traders do. Buying more wasn’t wrong. It was the intention behind the buy. There is nothing wrong in increasing the position once it moves to your target, but it has to be backed up with strong reasons and study.
It should be a trade with high probability of success. In my case, it was not. It was just a recommendation from someone in an orkut community, with a couple of lines, explaining, why it will go up .
Learning : There was no need to buy more shares that point in time. I should have just sat back and watched. The Stock market is just like our life, you need to have a level of satisfaction in your life and stock markets.
If you want more and more and more, you might not get anything. In fact, you can lose heavily. Because of greed, I invested more than I could afford to lose. I took an unwanted and unaffordable risk, because I only saw profits and never the potential losses.
Mistake 3 : No profit booking on Time
After 1 week : The prices were not moving now. It was going up a bit then coming down again and was stuck in a range of 900-1000. It went up to 990 once. For a time being there was doubt in my mind if it will not move up to 2000 and will return back to my buy price levels.
Mistake : No profit booking. There was a sharp rise in shares price from 550 to 900 in just 2-3 weeks and that is rare. It doesn’t happen to every stock, it was an excellent return, but i did not book profits.
Instead of making the best of the situation and taking the (not so bad) profits, the market was offering me, I wanted more and more and lost even what I was getting. The reason was Greed, again.
Learning : The better thing to have done, was to book profits, at least partially… Situations change in markets, I never checked on any news regarding the company after i bought the shares, and I was never updated about it. Every time you get some good profit, its a wise idea to at least book some partial profits out of it (Unless you have really strong reasons to hold it for long) .
Mistake 4 : Having Ego
In next 1 week : Prices now started coming down. It came to 900 first, I was scared and told myself that I will book profits once it goes back to levels of 950+. It never did! Then it came back to 800 and I regretted not booking a profit at 900 and said to myself again “I will book it for sure when it comes to 850.”
Guess what? It never did! Then it went up a bit again and went up to 850 . I forgot my promise to myself & allowed my greed to take over my promise. It went down again after that and now it was near my average buy price. This was the time I was feeling, “What a big fool am I, for not booking Great profits!”
Mistake : Ego ! Fear of losing part of profits, another mistake was the fear of not making any profits and fear of losing some money . Fear! Fear! Fear!
Learning : “When your boat starts sinking, you don’t pray… just jump” Once you are doubtful, surrender to markets wish. See what markets are showing you, not what you wanted to see. Markets are supreme and no one can be smarter than the markets.
Leave your ego at your home, when you go in front of Markets. The markets tell you what’s going to happen, not vice versa. Accept that you are wrong and you made a mistake. Then move on.
Mistake 5 : No Patience
After few days : Then the prices started falling and plummeted to 600 (my original buy price). Now I was in loss. I was proven wrong, but I just couldn’t accept it. I kept trying to prove myself right by holding it and hoping it would come back up. Yea, you know… It never did 🙂 .
It went lower and lower and lower and I was just praying & hoping that it’d return back to a level where I’d be happy to sell it. It never did! It went up to 300 and I sold it all in frustration. Then, I saw it go down to 250 and bounce back to 500! Now, I was feeling like I was cheated by the market for not giving me the right opportunity to exit.
Mistake : Impatience, Fear and not cutting my losses short. I exited at a very bad time, at almost the lowest price then. There was an opportunity for me to exit at small loss, but taking a loss hurts the ego and it did. Not cutting my loss in time was the result, of my not defining my loss early enough.
I should have had thought of it earlier. Then, I’d just pull a trigger, when it reached that level, without emotions. Fear overtook common sense, Fear overtook logic .
Learning : I should have defined my Target and Losses before taking the trade. I should have been realistic and logical. I should have waited little mo.re time and then exited at a better price. I should have consulted someone, better than me (At that time though, even a street dog could have given a better advice than me :))
Price of GTC INDIA after this Incident : It never went above my price levels after that and went to Rs 55 after couple of months , even today (Nov , 2010) , its hovering below Rs 65 only .
Conclusion and Summary
My first trade was not at all planned and “no plan” is “a plan to fail”. Fear ! Greed ! Emotion! Ego ! Impatience! These are the elements of Failure in Stock markets. Manage them well and you’ll do better !
Are you confused about many things when it comes to Health Insurance in India ? Are you afraid of rules and regulation in Mediclaim policies ? Don’t you have a clear idea about how will you deal with various things in Health Insurance and delaying your decision of taking a Health Policy ?
Today we will look at most frequently asked questions in Health Insurance try to answer those questions.
1. Can a person get claim from his own company and spouse company if they are covered under both companies ?
Yes, if both husband and wife are covered from their employer, they can claim from insurance provided to them by both the companies.
For e.g. if husband is covered for 1 lac under group insurance policy from his company (and her spouse is also covered under her husband company policy), and the same situation exists vice versa, both of them are then, actually covered for 2 lacs each; 1 lac from their company and 1 lac from their spouse’s company.
Now if something happens and husband gets hospitalized and expenses are 1.8 lacs, then husband can make a claim of 1 lacs from any one of the company and remaining 80k from other company. If you have cashless facility then you just show both health cards. If you don’t, you can get reimbursed by insurance company.
One important point worth noting is that during reimbursement, one should apply for the reimbursement first to his parent company and then to the one of his spouse. See some hidden health insurance policies
2. Do we have to notify the company about any illness or habit developed in between?
No, we are not required to notify the company regarding any complication or health issue. If the policyholder is hospitalized, the company will automatically come to know of it. Otherwise, no need to inform the company about any such policy.
If you notify the company, your premium for year after notification will increase, if it is under their list of illness to be checked. If you don’t notify the company and when you go for a claim, they will come to know that it was developed earlier and the claim will be settled accordingly and from next year onwards they might put loading on it (All these reasons vary from company to company).
So whether you tell them or not, it’s the same thing. They have doctors panels with whom they check your details before giving you the claim.
3. Does Health Insurance cover everything from accident, surgery, normal hospitalization ?
Yes, Health Insurance covers you for everything, provided you were hospitalized, be it for any reason; due to accident, illness, or disease. If someone met with an accident and he is hospitalized, then his mediclaim policy will pay for his bills, no exceptions.
Watch this video to know what are the things to look for while choosing a health insurance plan:
4. What are the advantages of sticking to one Health Insurance company for a long time ?
The plus point of sticking with one company is that if someone is suffering from any pre-existing disease at the time of commencement of policy, those complications will be covered after 4 years. Until portability is introduced in India, this is the single biggest advantage to stick with one company for long.
Another advantage is that when you have a continued policy from any insurance company, after few years you get bonus or discount in premium.
For example: Suppose you have a policy of 3 lacs and you are with the same insurer for past 4 years you can get a bonus of 50% i.e. you pay premium for 3 lac only but you get coverage of 4.5 lacs. Similarly some companies don’t offer bonus but they offer discount in premium i.e. for coverage amount of 3 lacs you pay lesser premium than actual amount.
So if you don’t have any serious problems with the insurance company then it is better to stick to one company.
5. Can NRI’s take health insurance? Can they travel to India for treatment and claim? What about emergency situations ?
Yes NRI’s can take Health insurance in India. They can definitely travel to India for treatment and can claim it. however they will have to show their residence proof, ITR and a few other documents. If they don’t have those documents, then they are not eligible to get insured in India.
The cost of treatment in India is different and cheaper than countries like USA, UK and other European countries. The premium amount computed depends on Indian conditions and parameters. So if a NRI has health insurance form Indian company, that person would be paying premium as per India actuaries and obviously cost of treatment in his residing country would be higher than India.
For example:
If a person get dengue and he is very critical and requires urgent hospitalization, the cost of treatment in India would come up to 1-2 lacs (and this is on higher side.) The same treatment would cost around 10-15 thousand dollars in US so this burns a hole in insurance companies’ pocket.
6. How to claim successfully in case of emergency and planned hospitalization?
The most basic fundamental for a smooth claim process is keeping all your documents up to date. If you have a past history of illness, make sure that you submit those documents too, because the TPA department will come to know whether it’s a pre-existing disease or not.
While submitting your documents make sure that all the documents are proper and there is no missing document pertaining to your illness. This will just give a chance to TPAs to make excuses and you will have to run for your money.
It’s worth noting that in case of planned hospitalization, if you inform your mediclaim company in advance and take prior authorization, everything will be settled by the mediclaim company or TPA, without the policyholder been required to submit any document.
7. Is it better to take accidental policy separately or mix it with term insurance as a rider?
If your accidental policy is a rider with some Term insurance (9 most asked questions about Term Insurance) then you must take care that it covers everything what accidental policy should cover. Generally when a policy is offered as a rider it does not cover each and every aspect.
For example: An accidental policy offers insurance against partial disablement, loss of limbs, hands and many other parts. But in a rider, many insurance company offers insurance against permanent disablement only and not for partial disablement and loss of body parts.
Also note that, because accidental rider is much less if taken with Term Plan as compared to the personal accidental policy taken stand alone. Under term plan, accidental death benefit could be taken for as little as Rs.1000 for a cover of upto 15 lakhs where as in a stand alone policy the same amount will be available for a premium of around Rs.2000. So it depends.
8. What are the top most things one should check in the policy documents ?
The first thing one should have a look at, is to check what the exclusions in the policy are. This is because, we get information on what is covered but no insurance company will give information on what is not covered and this creates a problem at the time of claims. So to avoid any surprises, one should have a thorough look at exclusions as well.
For example: A new circular was passed by many insurance companies few months ago in which they provided only Rs.20-24 thousand (different companies had different rates) compensation for cataract operation. Earlier there was no limit on it.
So sometimes in list of coverage for health insurance we just read the tabular format given by companies but don’t go inside to see the details and this can land us in soup sometimes. Many insurance companies now provide Maternity benefits but they limit it to coverage of only Rs.20-30 thousand, we just see that maternity benefits are given but sometimes fail to notice how much coverage is given.
9. If there are no loading charges, can premium still change on renewal?
This is a very big question with very easy answer..If you check the premium structure of any of the mediclaim company, either there premium is increasing every year or they have premium slab for different age groups; something like for age 30-35 premium is 4200 and from age 36-40 its 6700.
So under this second policy, when the policy holder moves from age 35 to 36, his premium suddenly jumps by Rs.2500 and this is not loading.
So yes, premium can/will increase irrespective of loading after certain age.
10. Is it a good idea to split health insurance into 2 policies? Tips?
No logic for doing this except personal preference. If you are taking another mediclaim policy just to increase your cover, why not get your cover amount enhanced in the existing policy/company.
Get another mediclaim policy only if certain other company is offering feature/features which your existing policy does not and you have surplus funds at your end to afford 2 separate mediclaim policies at a time. No other reason to, otherwise.
11 . During the course of my treatment, can I change the hospitals?
Yes it is possible to shift to another hospital for reasons of requirement, of better medical procedure. However, this will be evaluated by the TPA on the merits of the case and as per policy terms and conditions. Note that it would be prudent if you check the network hospital list and go to the best hospital in the beginning itself rather than changing midway.
12. What are the situations under which one may be denied cashless hospitalization?
If there is any doubt in the coverage of treatment of present ailment under the Policy if the information sent to TPA is insufficient to confirm coverage
When the ailment/condition is not being covered under the policy.
If the request for pre-authorization is not received by TPA in time. In such a situation, the Insured can take the treatment, pay for the treatment to the hospital and after discharge, send the claim to TPA for processing.
In case the hospital in not on the panel of the company or the disease/illness is pre-existing and not covered for 4 years.
13. Whom can I approach in case of a conflict with insurance company with regards to my claims?
The Grievance Redressal Cell of the Insurance Regulatory and Development Authority (IRDA) looks into complaints from policyholders. Complaints against Life and Non-life insurers are handled separately. This Cell plays a facilitative role by taking up complaints with the respective insurers.
Policyholders who have complaints against insurers are required to first approach the Grievance/ Customer Complaints Cell of the concerned insurer. If they do not receive a response from insurer(s) within a reasonable period of time or are dissatisfied with the response of the company, they may approach the Grievance Cell of the IRDA.
Private Insurers:
Shri K.Srinivas, Asst. Director,
Insurance Regulatory and Development Authority
Consumer Affairs Department
United India Tower, 9th floor, 3-5-817/818,
Basheerbagh, Hyderabad – 500 029.
E-mail ids: [email protected]
Public Sector Insurers:
Mr.R.Srinivasan, Officer on Special Duty
Insurance Regulatory and Development Authority
Consumer Affairs Department
United India Tower, 9th floor, 3-5-817/818,
Basheerbagh, Hyderabad – 500 029.
E-mail ids: [email protected] . As claims/policy contracts in dispute require adjudication and the IRDA does not carry out any adjudication, insured’s are advised to approach the available quasi-judicial or judicial channels, i.e., the Insurance Ombudsmen, Consumer for or the Civil courts for such complaints.
The list of Insurance Ombudsmen along with their contact details are available on this website under the heading ‘Ombudsmen
Here is the link
If you have a good broker from whom you have purchased the policy, then they will help you in coordinating with health insurance companies.
14. What is the difference between Critical illness insurance and normal health insurance ?
In a critical illness policy you are covered for certain mentioned critical illnesses only. Some of coverage’s are Kidney disease, brain tumor, and major organ transplant and many more depending on the companies.
If you have normal health insurance you will definitely get covered for critical illness but in critical illness you won’t get coverage for normal disease like malaria, typhoid.
For example: If your age is 25 and you buy normal health insurance from any XYZ company and let say its premium is Rs.3000 for cover of 3 lacs but if you buy critical illness policy for 3 lacs the premium would be less because considering your age the changes of you getting a critical illness is lesser than any normal disease.
Similarly for old age person the premium for critical illness insurance will be more than normal health insurance because chances of getting that critical disease are more at older age. One other option would be to avail critical illness rider in term plan itself.
15. What is the benefit of critical illness policy?
So as you grow older it is advisable to have another critical illness policy along with normal health insurance. So those at old age when undergo major operation or transplant, this critical illness policy can be used and for minor disease normal health insurance is used.
Image source: Slideshare.net
The reason for this is e.g. if you have normal health insurance of 5 lacs and you undergo tumor surgery with other complications and the expenses are around 4 lacs and after sometime you get hospitalized because of ill-health then you have nothing left in your health insurance.
16. What is Domiciliary Hospitalization?
Domiciliary Hospitalization means medical treatment for a period exceeding three days for such illness/disease/injury which in the normal course would require care and treatment at a Hospital/Nursing Home but actually taken whilst confined at home in India under any of the following circumstances, namely:
i) The condition of the patient is such that he/she cannot be removed to the Hospital/Nursing Home or
ii) The patient cannot be removed to Hospital/Nursing Home for lack of accommodation therein
For smooth claim process, just take care that all your documents are in place and to be on a safer side have a report from your family doctor, stating that this person cannot move to nursing home/hospital due to such and such reasons.
It just provides the proof and makes the process simpler. Note that every company does not offer this facility, you should check your policy document.
17. Some important exclusion under health insurance policy.
1 Pre-existing diseases i.e. Any condition, ailment or injury or related condition(s) for which insured person had signs or symptoms and/or was diagnosed and/or received medical advice/treatment within 48 months prior to his/her health policy with the company.
Pre-existing diseases will be covered after a maximum of four years since the inception of the policy
2. Any disease contracted during the first 30 days of inception of policy except in case of injury arising out of accident
3. Certain diseases such as cataract, piles, hernia, and sinusitis etc. are excluded for specified periods if contracted or manifested during the currency of the policy.
4. Injury or Diseases directly or indirectly attributable to War, Invasion, Act of Foreign Enemy, War like operations.
5. Cosmetic, aesthetic treatment unless arising out of accident.
6. Cost of spectacles, contact lenses and hearing aids
7. Dental treatment or surgery of any kind unless requiring hospitalization
8. Charges incurred at Hospital or Nursing Home primarily for diagnostic, x-ray or laboratory examinations, without any treatment.
9. Naturopathy or other forms of local medication
10. Pregnancy & childbirth related diseases
11. Intentional self-injury / injury under influence of alcohol, drugs
12. Diseases such as HIV or AIDS
13. Expenses on vitamins and tonics unless forming part of treatment for disease or injury as certified by the attending physician.
14. Convalescence, general debility, run-down condition or test cure, congenital external diseases or defects or anomalies, sterility, venereal disease.
Do you have all your mutual funds investments in different companies and are looking for aggregating them at a common place? If so, there’s some good news for you. Now you can convert all your existing Mutual funds into demat form, which means that you can now have it electronically stored in your demat account, just like shares! Note, that once your mutual funds are in demat form, you can sell them either through stock broker platform (your demat account) or through the normal way of selling it through your Depository participant (like you do, right now.)
Advantages of converting your Mutual funds into demat form ?
1. Centralization : Once you convert mutual funds in demat form, you will then get just a single statement for your holdings. Right now, if you have investments in say 10 AMC’s, you must be getting statements from all those AMC’s. How to choose a good mutual fund
2. Monitoring : Once you have all your mutual funds at one place, you will be able to monitor them better, & you can see the performance at one go. Compare that to when they were at different places; we tend to be lazy to look at all of them and just keep ignoring them.
3. Fast transactions : : If you have all the mutual funds in demat form, you will be able to sell those mutual funds in stock markets whenever you need money. Mutual funds are now, tradable in stock markets, so you can buy and sell them in stock exchange in real-time. If you don’t have them in demat form, selling them would not be as convenient.
Steps to convert your Mutual funds into demat form
a) Obtain and sign DRF : The first step, is to ask your demat provider (like ICICIDirect, Sharekhan, Reliance Money) for a ‘Dematerialization Request Form’ (DRF) for conversion of mutual funds units held in physical form into demat form. Obtain it, duly fill it and sign it. You should be able to find the DRF form at your demat provider website. [DDET Click here to see a Sample DRF form][/DDET]
b) Sign all the statement of Accounts from your Mutual Funds : You will have to collect the statements from all the AMC’s which have the mutual funds names which you want to convert, once you have them, you have to sign it. You will get all these statements in your email box most probably. This step is important to make sure you have documentary proof that you own those mutual funds and have their names, so if you have investments in 5 different AMCs, you should collect all 5 statements.
c) Submit and Acknowledgement: Submit the duly filled and signed DRF along with and Account Statement issued by the Mutual Fund House to the Depository Participant. Acknowledgement will be given by the Depository Participant for the document acceptance, subject to verification.[DDET Click Here to see all Important points before submitting a Dematerialization Request]
1. The investor should check with their Depository participants (DPs) for the dematerialization Request Form to convert mutual funds units held in physical form into demat form.
2. The details in the DRF, i.e. Name(s), holding pattern and signature should match with the details as appearing in the account statement.
3. The form is duly filled and signed by all unit holders as per the holding nature and is complete in all aspects.
4. All the schemes as available in a folio are mentioned in the DRF and the unit balances as specified are matching with the closing balances available in the folio. No partial units or selected schemes available in the folio will be accepted for conversion.
5. Units requested for dematerialization should be should be free from credit hold, lien or any other hold. In case any units are under hold for want of credit status, conversion will be processed only after clearance of such hold.
6. Dematerialization request should not be submitted if the units are lien or locked for any Income Tax or other legal purpose.
7. Rejection letter will be sent by the Depository Participants if the documents are not in order, units are under lock, or rejected by the Registrar during the conversion process providing reason thereof.
8. Investors can check with their Depository Participant on the status of the request if no intimation has been received within twenty-one days.
9. No separate confirmation letter will be sent by the Registrar for successful transfer of physical units in demat form.
10. Post dematerialization of units the investors can only transact through the stock exchange platform. They will have to approach their broker for purchase / redemption of units.
11. Physical requests received by the Registrar of DSP BlackRock Mutual Fund for purchase/redemption of units will be rejected.
d) Processing : The Depository Participant will process the application for conversion of physical units into electronic form. For this, the DP would sent the request form and Statement of Account to the Asset Management Company (AMC) / Registrar and Transfer Agent (RTA).
e) Confirmation : The AMC / RTA will after due verification, confirm the conversion request sent by your DP and credit the mutual fund units in your demat account.
Selling Mutual funds in Demat form
Note that converting the mutual funds will require you to have a demat account first, so incase you don’t have a demat account , you will not be able to convert them , because unless you have a demat account, how can it be stored . Now once you have converted the mutual funds in demat form , you can sell them through your demat account in stock market , which would attract brokerage as per defined by your Depository participant, however you can also sell your mutual funds through the normal old way where you put a request for sell through a Redemption Form .
Conclusion
This is one of those simple and small steps, towards simplifying your financial life. Once you do this, it can motivate you to take further steps in automating many things which will improve your financial life. Dematerialization of mutual funds will make sure your documentation will improve . Let me know if you plan to do this on comments section .. also lets discuss if anything is not covered in article . Has anyone done this already ?
Have you already bought Life Insurance ? Though you might have done the sin of being underinsured, I would say its fine, because today we are going to look at detailed steps of buying Life Insurance and we will also learn a lot of things.
Almost everyone has his own set of doubts regarding Life Insurance contracts, but in this article we will not just look at detailed procedure of buying Life Insurance, but also see why most of the people have the doubts which they have. This is probably going to be the last article on Life Insurance you would need.
So here we go. Today for the savvy life insurance buyer, it is possible to buy the policy on the web – it saves money for sure.
Choose company that suits you
The first step in buying Term insurance is to shortlist the company from where you wish to buy the product. There are many companies in India selling life insurance and almost all of them have a Term cover available. Let us call them companies A to M.
Now let us say you like to deal only with A, D, F, G and H. Visit these companies’ websites and find out how much a term insurance for you costs. If you are 35 – look for a policy that will protect YOUR INCOME till the age of say 55 years (choosing age 65 will increase the premium) if your retirement age is 55.
However, if you think you will be earning till the age of 65 years, choose a 30-year plan.
Formalities to fulfill
If you are savvy and patient enough, you could fill up the form online – and a person will get in touch for the formalities. Or you could call up and ask for an agent. On an average the agent will not be very well qualified – but most of them will try to dissuade you from buying a term insurance.
Just say, ‘give me a term insurance form’. There will be other documentation like income proof (3 years IT return), one photograph, pan card etc.
#Filling the form
Next is the process of filling the form. This is one crucial thing that people are normally too lazy to do – so they delegate it to the agent. The life insurance form, the medical insurance form and the embarkation form when you are landing in the US or Israel should always be filled by you personally!
You know about yourself – not the agent whom you have just met. Many of them are worried that you will not be eligible to be insured. So in order to protect their commission (and to please you) will take short cuts, be careful.
#Fill details accurately
Every word, every column in the life insurance form is crucial – that is the reason why they are there in the form. All details should be accurately filled. Make sure that the name in your passport, pan card and the life insurance form are EXACTLY the same.
To the authorities K Balakrishnan is not the same as Balakrishnan Kumar. It may sound trivial, but let me assure you your nominee will not find it amusing.
Besides, check your height, weight (I have seen some agents argue with the doctor to show a few kilograms less and some doctors oblige!), number of cigarettes you smoke, the amount of alcohol you drink, parents illnesses before they were 65, and also your own medical history.
Watch this video to know the steps to buy LIC term insurance plan online:
Faith binds customer, insurer
Let us start from the very beginning. The Life insurance form that you are filling in is called a ‘Proposal form’ – which means you are proposing that you want a life insurance cover. Life insurance business is based on utmost good faith.
The Latin word for utmost good faith is Uberrimae Fidei – which means you (the applicant) is under a basic duty to disclose all material facts and surrounding circumstances that could influence the decision of the other party (the insurance company) to enter the agreement.
Non-disclosure or a partial-disclosure makes such agreements voidable – the insurance company can choose to ignore it, but they have a right to cancel the contract.
As per the contract, you are proposing and giving all your details that are asked for in the form. This includes your age, height, weight, your smoking and alcohol consumption habits.
#Be Truthful
You should be truthful because of two reasons – one it is necessary to be truthful. The second perhaps the more important reason is when you are not truthful and you were to die, your nominee will not get any money. If a person has taken a policy just say 8 months before the claim happens, there is almost a 100 per cent chance that the claim will be investigated.
Here the company literally looks at the application with a fine comb and anything that has not been correctly stated will be used against the claimant.
If for example: A person dies in a road accident – and what has been hidden was say blood pressure – Insurance companies have said ‘his blood pressure may have caused him some inconvenience while crossing the road…’
Think about your nominee
One very important thing which most life insurance buyers forget is that by lying on the proposal form they are telling a lie to their nominee, not to the life insurance company! If on death the claim amount is not paid (IMMEDIATELY), it is almost like the policy did not exist.
Cross-check copy of application form
Apart from the critical questions, there are some other questions like caste, spouse’s name, spouse’s occupation and children’s names, especially if the nominee is more than one person.
When the company issues a policy, they are bound to send you a copy of the application form – please check whether it is the same form which you had filled. A while ago I heard of a case where the agent had changed the form – and removed the illness clauses before submitting the application to the company.
As the case involved an employee of the company – the critical illness claim was paid without a murmur. What helped was the fact that the client had kept a copy of the application!
Take your time
Please remember even if you are paying a small premium (term premiums are not large), the sum assured is normally a critical amount and your dependents are waiting for that cheque to carry on their lives. It is quite all right for a person to spend some more time while taking a policy but any delay at the time of claim settlement is bound to unnerve the dependents.
Everything that you say in the form – your job, income, past illnesses are all critical to the whole process of underwriting of your policy. The life insurance company also collects data – if it finds that a certain occupation is prone to a particular type of illness, they may ask you to go through some more tests before they issue a policy.
Understand the contract
There is a big difference between a mutual fund ‘investment’ and a ‘life-insurance’ contract. In case of a mutual fund, the asset management company is making an ‘Offer’ to you. This means if you issue a valid cheque, units will be allotted to you. They are making the offer, and you are accepting.
In case of an insurance contract, you are ‘Proposing’ saying that you want life insurance. If your cheque goes through, then the life insurance company calls you for a financial and a medical underwriting process.
If they are satisfied that your life is a normal life, they will issue you a policy. Once a policy is issued by the company it means you have a contract that is binding. On you the liability is to pay the premium regularly, and on them is a duty that in case of death, they should pay the sum assured amount to the nominee.
This is critical and a very important contract which you should understand reasonably well.
Conclusion
Life Insurance is an important decision in life and each step in this whole process is critical to make the whole decision successful and free of any hassles later. Lets look at the whole steps once again through the diagram.
(This article appeared on moneymantra.co.in and has been republished on this blog with their permission. The article is written by PV Subramanyam who also blogs at www.subramoney.com)
Best Investment for your Retirement ?
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