Every year, when the new financial year starts, employers ask their employees to declare their investments and give an idea about where will they invest to save the tax. There is a page on the companies’ websites, where each employee has to declare their investments. Come of the examples of the target options are life insurance premiums, ELSS investments, Rent, Ulips and home loan-related numbers.
Why do employers ask for this investment declaration?
The employer asks for this information because they want to approximate how much will be your final taxable income (after deducting the tax saved through 80C investments, HRA, Home loan and medical bills. So that they can cut a constant amount of TDS each month.
A lot of employees get a bit tensed thinking, what exactly they should mention while declaring the investments. They feel that at the end of the year, they will have to invest exactly in the same order in which they declared. However, this is not correct. All you need to do is invest the same amount declared at the start of the year into any tax-saving investments option.
For example – If you had declared that you will invest Rs 50,000 in LIC policy and Rs 30,000 in Tax saving mutual funds (ELSS). The total is Rs 80,000. Now your employer will deduct Rs 80,000 from your projected income for the year and arrive at net taxable income and find out how much is the tax you need to pay at the end of the year (projected). Now he will just divide it by 12, and find out the monthly number and start cutting that much tax each month from your salary.
Now when the month of Dec/Jan arrives, your employer asks you for investments proof. Now when you actually give it to them, they recalculate things and see if things are matching with what you declared at the start of the year or not.
There can be 3 scenarios here.
Case 1 – Amount Actually Invested Less than Amount declared in the start
In-case you were not able to invest up to the amount you declared, or you were not able to submit the documents to your employer on time, it means your employer will assume that you will not be able to do so, and that means that they have over estimated your tax saving and the tax paid by employer is lesser (because you owe more tax, due to less tax-saving investments) . In which case, the employer will recalculate your tax liability and now will adjust it with the next 1-2 month salary (Feb/Mar). Which means you get less salary in the last 1-2 months.
But, If you are able to finally invest for tax saving, then at the time of tax filing you need to declare it and ask for a tax refund from the IT department. It’s always a good idea if you can avoid this situation because then it takes a lot of time to get back your refund.
If for some reason, your employer does not cut the tax from your last month’s salary, then you directly owe the tax to govt. This can also happen if you have any other income source, which is not accounted for by the employer, in that case, you need to pay the tax to govt directly. You can do it online using Challan 280 on the IT department website. Then at the end of the year, you can file the returns.
Case 2 – Amount Actually Invested = Amount declared in the start
If you invest the same amount as declared at the start of the financial year, it means that your taxable income would be almost same as computed by your employer and the amount of tax you paid was equal to what you owe to the income tax department. In this case, there is nothing much you need to do. just file the ITR at the end of the year and everything should be pretty smooth unless you have income from other sources.
Case 3 – Amount Actually Invested More than Amount declared
It might happen that you declared only Rs 50,000 investments, but finally invested Rs 1,00,000 into tax-saving instruments, which means you saved more tax. However, your employer has been deducting the tax assuming your declaration for Rs 50,000 only, which means the employer was paying more tax to govt on your behalf. Now, this means you are entitled to get a tax refund and you can ask for it when you file the returns. Generally, it’s a good idea to declare the maximum possible investments in the start, let your employer assume you will do maximum tax saving (so that less tax is paid), and then make sure you actually invest the promised amount. In the worst case, if you fail to do so, better pay the tax at the end of the year or get less salary (be prepared for it)
This article from Bemoneyaware talks about this topic in much detail. Did you get clarity about investment proofs for your employer? Do you have any questions?
Few weeks back, I posted an interesting question on our Facebook Page asking – “Given limited money – which is more important product to buy from security point of view – Term Insurance or Health Insurance ?” .
Lets say there is a guy – who wants both a term plan and a health insurance for his family and he only has Rs 10,000 per annum left with him, now he can either buy a 1 crore term plan for his family or buy a 5 lacs cover for his family. But he will be able to get only one of them from this Rs 10,000 left with him, then which out of term plan and health insurance is makes sense for family and is more useful? Lets see some points, raised by our facebook fans, which will help us to think about it.
1. Death is less probable compared to hospitalization
One of the argument is that, there are far greater chances of getting hospitalized because of some reason then dying. So if you look at this problem from probability point of view, you can be almost sure that in next 5-10 yrs, you or one of your family member will be hospitalized for some or the other reason – big or small. But meeting death is very less likely in comparison. So a lot of people argued that Health insurance is much more important than term plan, if you have limited money.
2. Premiums are increasing fast in Health Insurance and its can be claim every year
Another argument in favor of health insurance over a term plan was that, its a product where you can claim every year and protects your financial life from regular attacks of money sucking illnesses and accidents and anyways premiums are increasing very fast for health insurance (or would increase in future) because of the health care inflation. However for term plan the premiums are coming down over the years (now we might be close to saturation) .
3. Hospitalization Costs can be arranged in worst case
Now some people said that term plan is more important than health insurance and the biggest reason for it was that health insurance expenses are somehow manageable in worst case. You can take a loan, swipe a credit card, ask your friends and relatives or in worst case, sell some of your home stuff.
Life will again be on track somehow. But if you ignore term plan, its a very big risk for your family future, because the amount required by your family cant be arranged by asking it from someone (just imagine you die and now your family would need their monthly expenses for lifetime , your children expenses for current and future, their whole life is at stake now). It would generally run into several lacs or few crores.
High Probability – Low Impact
So its very clear that term plan has a very high impact on your financial life, but less probability of its occurrence , however health insurance has low impact on your financial life (compared to term plan) , but is high on probability and its has potential to occur multiple times in your lifetime.
Balancing both Health and Life Insurance Costs
Another workable option is to divide the money into premiums for both term plan and health insurance, but in this case you will compromise with the cover amount of both the things however small it is. This way you will have both the things in your financial life, even if its small . Do you think its a workable solution ?
Do you have some doubt on Income Tax Return Filing Process or some question whose answer you are not getting anywhere? This post might be the end of your struggle.
Few weeks back, we ran a survey and asked investors to send us their queries and doubts on Income Tax Return Filing, whatever it may be. We then picked up some of the most asked and common doubts which investors face and thought of creating this comprehensive guide which will act like the bible to your ITR related queries.
Nobody in this world likes the annual exercise of filing Income Tax Return. Yet due to legal responsibility, everybody has to file his Income Tax Return. Now before understanding the Income Tax Return filing, let’s understand few common things first, which will help you to resolve your queries on ITR.
1. Permanent Account Number (PAN)
Permanent Account Number (PAN) is a ten-digit alphanumeric number, issued in the form of a laminated card, by the Income Tax Department, to any “person” who applies for it or to whom the department allots the number without an application. PAN enables the department to link all transactions of the “person” with the department.
These transactions include tax payments, TDS/TCS credits, returns of Income/wealth/gift/FBT, specified transactions, correspondence, and so on. PAN, thus, acts as an identifier for the “person” with the tax department.
A typical PAN is AFZPK7190K
First three characters i.e. “AFZ” in the above PAN are alphabetic series running from AAA to ZZZ
Fourth character of PAN i.e. “P” in the above PAN represents the status of the PAN holder.
“P” stands for Individual,
“F” stands for Firm,
“C” stands for Company,
“H” stands for HUF,
“A” stands for AOP, “T” stands for TRUST etc.
Fifth character i.e. “K” in the above PAN represents first character of the PAN holder’s last name/surname.
Next four characters i.e. “7190” in the above PAN are sequential number running from 0001 to 9999.
Last character i.e. “K” in the above PAN is an alphabetic check digit. (More Details on PAN)
2. Tax Deduction Account Number (TAN)
TAN or Tax Deduction and Collection Account Number is a 10 digit alpha numeric number required to be obtained by all persons who are responsible for deducting or collecting tax. It is compulsory to quote TAN in TDS/TCS return (including any e-TDS/TCS return), any TDS/TCS payment challan and TDS/TCS certificates. (More Details on TAN)
3. Financial Year
In India, the Financial Year is defined as a period starting from 1st April of a Calendar Year & ending on 31st March of the next immediate Calendar year. All the income earned by a tax assessee has to be accounted for segregation on the basis of dates in different Financial Years.
4. Assessment Year
The applicable Assessment Year for a given Financial Year is the next +1 year. For example, if a FY is 2012-2013, the relevant AY ‘ll be 2013-2014. All the income earned by you in a FY and taxes paid by you in that FY ‘ll be assessed only in the relevant AY.
5. Form-16
It’s the statement of your yearly income provided by your employer to you after the end of FY. This includes your gross income, deductions claimed by you, net income, tax liability there on, Tax deducted by your employer, any tax liability or refund.
The most important thing to be remember in form 16 is the TAN of your employer should be written clearly & so do your own PAN.
6. Form-16A
Form 16 is issued by the Tax deducting authority where the TDS is applied on your investments (say FD in banks) or non salary cases. Say TDS applied by tenant against rent paid to landlord. Here again TAN & PAN quotation is must.
7. Types of Income
As per Income Tax Act 1961, the income can be classified only under the following heads.
1. Income From Salary or Pension
2. Income from House Property – Rental Income
3. Income from Business or Profession – Say Income to a Doctor or an Agent or Advocate or a Shopkeeper
4. Income from Capital Gains – Income arising out of sell of capital assets like Property, Gold, Art, Coins, Mutual Fund Units, Equity, Precious stones
5. Income from other sources – Any income which can not be classified in the previous 4 categories, comes under this head. Interest income, winning amount in Lottery or Quiz show (example KBC), Horse racing winning, Amount received as Gift from non relatives are some examples.
Now from the above list you can identify that you are having at least 2-3 income sources. Income Tax Deptt. has created different types of Income Tax Return Forms for the combination of different income sources.
Before Discussing Income Tax Return Forms, let’s discuss Income Tax Return itself.
8. What is the importance of Income Tax Return
If your income exceeds the zero tax limits, it’s mandatory for you to file an Income Tax return. During your income earning in the whole FY, there may be a situation that the tax deducted from you is more than the actual liability or there are some losses or deductions which you could not claim during the income earning phase or you paid less tax than the actual liability.
In all such case, you can only save yourself by filing an Income Tax Return. Actually your Income Tax Return form is the account statement of your income, tax liability there on & the tax paid by you. If there is excess tax payment, you ‘ll get refund. If the paid tax is less than your tax liability you w’d have to pay the difference amount.
Below is the official version for Income Tax Return filing essentially.
“The filing of income tax/wealth-tax return is a legal obligation of every person whose total income and wealth tax during the previous year exceeds the maximum amount which is not chargeable to income tax or wealth tax under the provisions of I.T.
Act, 1961 or Wealth Tax Act 1957, as the case may be. The return should be furnished in the prescribed form on or before the due date(s). Penalty of Rs. 5000 is imposable for non-filing of return within the assessment year.
Interest is also chargeable for non-filing or late filing.”
Watch this video to know why you should file income tax return:
9. Types of Income Tax Assessees
As there are multiple source & types of Income, so are types of Income Tax Assessees. Here are few examples –
Individual
Hindu Undivided Family
Firm
Limited Liability Partnership
Association of Persons
Company
Trust
Body of Individuals
Artificial Judicial Person
Local Authority
10. Types of Income Tax Return Forms
On the basis of the income combinations as well as Assessee types as discussed above, the Income Tax Deptt. has issued multiple Income Tax Return forms. these are numbered as ITR-1, ITR-2 ……. ITR-7.
Here is a table to understand the combinations of types Incomes for Individual Assesses & the applicable ITR form. Please do note, ITR-5, ITR-6 & ITR-7 are used by assesses other than Individuals & HUFs, hence not discussed here to keep this matter relevant for general public & common Individual assessee.
Majority of common individual tax payers fall in ITR-1 & ITR-2 category.
11. Online & Offline filing of Income Tax Return
The Income Tax Department is slowly transforming itself. Earlier all the returns were only offline mode. First non Individual & non HUF ITRs were made online filing compulsory. After that for Individuals & HUFs having income more than 10L Rs. were made online filing compulsory.
Now From AY 2013-2014, the income limit has been reduced to 5L Rs. for online filing. So we can safely assume that from next AY i.e. 2014-2015, the online return filing ‘ll be compulsory for each & every tax payer.
12. How to file online ITR
It’s quite easy. Now a days, a person can e-file either self by logging into the official site of e-filing. Apart from this, there are many other private online portals who are helping you to e-file your ITR. (Taxsmile, Taxspanner, Taxyogi, Cleartax are few examples)
Frequency asked doubts on Income Tax Return Filing
We hope that you are very clear about the basic information which every tax payer should be aware about. Now lets see some of the most commonly asked questions on Tax Filing. We collected these questions from one of our surveys and just categorized them into 13 questions. Here are they –
1. I forget (or could not produce in time) to claim HRA/Savings/Home Loan/LTC/Medical Bills etc from my employer. What to do?
Please relax. For all such cases, where either you could not claim on time or forget all together, your return filing is the time to tell the Income Tax department about the same & now you can claim the refund for the excess tax deducted from you. Note that the declaration given to employer is just to make sure that your TDS cut by employer is inline with your plans in a financial year. Incase something does not match, It can be finally done at the time of tax returns filing.
2. Where should I produce Bills/papers/receipts of the things related to Q. 1 above
Please do note that current ITR forms are ‘annexure less’ forms. Which means, that you need not produce any support documents to the Income Tax Department at the time of filing. Just keep the documents safely with you, so that you can produce the same if Income Tax people demand it from you in future. Documentation should be surely done by you, because incase there is a scrutiny case in future, you should have to documentary evidence.
3. I could not file my previous years income tax return on time or forget it .
It happens ! . There are penalty provisions if you do not file your due Income Tax Return on time. To correct the mistake, please file a delayed return now if you have not filed the previous years return. For ITRs related to previous years, please take help of a Tax professional to do the same. Filing late is better than not filing at all. Just contact a CA or tax filing portals, and they will be able to help you. Read this article on Late Tax Filing for clarity
4. I did not get the refund order/cheque . What to do ?
First check your refund status here. In case your refund status is available as cheque issued & the same is not received by you. Please contact at the E-mail or Phone nos. in the shared link. Also you read this article on how to Check your Income tax refund status online & Learn how to use RTI
5. I received the Refund cheque but I misplaced it/delivered at wrong address/wrong bank account number.
A lot of these issues happens because the address you provided at the time of filing returns years back is not the same where you are residing now, and the cheque goes back. For all such cases, you should contact your Jurisdictional Assessing Officer for offline filed ITR or CPC Bangalore for online filed ITRs. For online filed ITR, there is a link within your login window for Refund Reissue Request, use this for refund reissue.
6. How can I calculate my tax liability arising out of capital gains
Relax. You just need to punch in the required data in the excel sheet for ITR e-filing available at the e-filing portal. The sheet ‘ll calculate your tax liability on it’s own. Or you can refer to this article which will guide you on how to calculate capital gains.
7. How can I pay my due taxes as per calculation done by me or ITR excel sheet
Paying your due taxes is very easy. There are 2 ways to it. a) Use your net-banking account . b) Use the Official Portal . Please do note for self payment of Income tax, the applicable challan number is 280.
8. I fall in 20-30% tax slab. Bank deducted TDS @ 10%. Should I pay more Tax
The answer is yes. Bank has merely done it’s legal responsibility. Your Tax liability is more than the work done by bank. So please calculate your actual tax liability by adding the interest income into your gross income & pay your due taxes. Here is a full article on TDS related issues.
9. I forget to put in some data or wrong data was put in during my original return filing. How to rectify it ?
No problem, you can file a revised return to rectify these mistakes. The revised return can be filed before the assessment year is over for your original filed return. Here one important point is that the original return must be filed within due date. Just note this point, that if you have filed your returns and if there are any issues or errors, you can always file a revised return later.
10. I own a house in the same city & reside in a rented accommodation. Can I claim HRA & Home loan benefit simultaneously ?
The answer is YES. If you are actually residing on rent due to your Job or any other issues & the home loan house is also in the same city, you can claim both HRA as well as Home Loan benefits. Read this article for more on this
11. I was earning salary earlier. But now there is no income due to break or because I have become NRI with no Indian Income. Should I still file my ITR for zero income ?
The answer is no. if you do not have income or income is within the zero tax slab, you need not file your ITR. Yes in case, some TDS was there, you w’d have to file your ITR to claim the refund of this TDS amount..
12. My wife is a home maker & investing small money into direct Equity & earning some income. Which ITR should she use ?
First of all make sure her income is under zero tax slab or more than it. In case she is earning more than zero tax slab, she should file her ITR. Now the quantity of trades done by her to earn that income ‘ll decide the applicability of ITR. In normal situations, such earning ‘ll be Capital gains (Here it’s assume that gains are short term in nature due to holding less than 1Y) & she should use ITR-2.
For a very high quantity of trading activities, the applicable form ‘ll be ITR-3.
13. I worked with 2 employers in a FY. How to handle & file my ITR ?
First of all please collect form 16 from both of your employers. Now consolidate the income from both employers & check for an pending tax to be paid. Pay it now. Once all this is over, please file your ITR.
We hope all your queries about income tax return filing is solved in this article. If not, please post your doubts over comment section.
This article is contributed by Ashal Jauhari . A key member of Jagoinvestor community and a Tax expert . He writes on his blog here
Are you scared of using your credit card online on some website because you feel there might be fraud or a security threat? If that’s the case, then welcome to the world of Virtual credit cards, which I will explain in today’s article and also how it can be useful for you.
A virtual credit card (VCC) is an add-on credit card issued on your primary credit card; only it’s virtual and does not have any plastic existence. You can instantly create it, using your net-banking facility by providing your credit card or debit card details. All relevant details like the card number, the ‘VALID FROM’ date, the expiry date and the CVV number are visible online to you and this virtual credit card enables you to transact online with a credit limit of your choice. Also the virtual card does not have any fee associated with it and comes for FREE!
The key details of your VCC like the card number, expiry date etc. are used when you transact online, but your primary card details are never shared with the merchant online, so you never have to be worried about losing your card or having to carry it ‘safely’ in your wallet. There are tons of banks which offer these instant virtual cards these days. Some of them are
ICICI VCC
HDFC NetSafe
Kotak netc@rd
SBI-Virtual Card
Axis Bank e-wallet card
Validity of the virtual card ?
The virtual credit card is valid only for a single use and automatically expires within 24 hours if the virtual credit card is not used, which means that the chances of credit card fraud or misuse are significantly lower than a real credit card. Also understand the if you hold a VISA card, then the virtual card which you will get will be VISA one and if it’s Master Card, then it’s going to obviously be a Master card.
Is virtual Credit Card only for Online Use ?
Yes, as a virtual credit card is not a physical card, it can be used only for online transactions, for which all you need is credit card number, CVV number and Expiry number. Once used the card expires and can’t be used again. If you want to execute another transaction, you will have to generate another virtual card. The maximum limit of your virtual credit card can be as high as your actual limit on the real credit card. When you make the payment on some website using your virtual card, it will appear on your physical credit card statement itself.
Most of the banks issue a card which is valid internationally and you can use them on the websites outside India, however some banks like SBI bank still issue virtual credit cards which are not valid outside India. You will have to check with your bank if it is valid internationally or not.
Can you create Virtual Credit Cards using a Debit Card?
The answer is Yes for most banks. Even if you just have a debit card and not a real credit card (Check out the best credit card in India as per our survey), you can still use your debit card to create a virtual card. There are many people who want to transact online at times, but do not hold a credit card. Now they can create a VCC and use that to transact online. However I just checked my ICICI account and when I want to create a virtual credit card, it asks for my credit card number, so it seems like ICICI bank doesn’t allow VCC creation via a debit card. Anybody created one using debit card in ICICI bank? Let us know!
Real Life Situations when you can use Virtual Credit Card ?
When you are transacting on a website, where you do not feel very confident about security, but still you have to transact anyways due to some reason. Check out this fraud
When any friend of yours ask you for your credit card, where you want to “NO” , but still can’t say NO. You can now create a virtual credit card and give the details to him.
When you do not have a real credit card, but only have a net-banking facility, you can still create virtual credit cards and use them.
You can also use these virtual cards where you just want to try out the service , but by default the website starts charging the card on renewal basis. If you use virtual card, it will anyways get cancelled after one use and there will be no renewal charges later – Here is a real experience.
Do you feel virtual credit cards to be of any use in your life? Are you already using virtual credit card or planning to use them? Please share it with others!
One of our readers Yogesh asked on our Jagoinvestor forum, about the claim process in case of multiple health insurance policies. I then realized that this is one the biggest doubt in the mind of investors and it needs to be cleared. Another doubt which is there in many minds is what is the claim process and the documents required if one wants to claim from multiple health insurance companies.
In this article, I will explain you the rules regarding heath insurance claims from multiple companies and some important points, along with the claim procedure too!. Recently IRDA came up with IRDA (Health Insurance) Regulations 2013 and overall it has made the claim process more easy and customer friendly, which we will see in some time.
A lot of people can end up with multiple health insurance policies with them. It may happen that they have a health cover from employer, and side by side they have taken a separate health insurance plan (which is a good thing) . Also there might be a case that a person had a old health insurance plan taken years back and now he has taken extra cover through a different plan . Another case can be when a person has taken more than two health insurance plan so that parents are also covered and immediate family like spouse and kids are in another policy. So these are few reasons why a person can hold multiple health insurance plans.
Declaring your existing Health Insurance while buying a New Policy
Before we move forward, its extremely important to understand that when you take a new health insurance policy, you always have to declare your old health insurance policies which are currently in force. This would include all those policies for which you are paying the premiums yourself from your pocket. If you are not paying the premium from your pocket and if your employer is paying it, then you don’t need to declare it in the new policy. Note, there are certain Insurance Companies which do not demand such information. In such cases, you are not required to inform about this.
This is extremely important because if you do not disclose this fact, you are violating the terms and conditions of the health insurance contract and in case of investigation this could be termed as mis-representation. Now we will discuss the rules regarding claiming from multiple health insurance policies .
Claiming from multiple health insurance policies
A lot of things have changed few months back. So we will discuss both “before” and “after” rules, so that there is no confusion left.
Before the Regulations (Previous Rules)
Before the regulations came into effect , there was something called as “Contribution Clause”, which said that a customer has to inform all the health insurance companies he is insured with and all the insurance companies will contribute the cover amount in the ratio of their sum assured (read how much health insurance is good enough). Obviously the assumption here is that the insurance companies are aware that you also have a cover with someone else , which you must have declared with them at the time of taking the policy .
For example , if earlier you had two health insurance plans with 3 lacs sum assured from company A and 1 lacs sum assured from Company B , and if you had a claim of Rs 2 lacs. Then you had to ideally inform both the insurance companies about the claim and they will settle your claims in the same ratio of the sum assured. So 1.5 lacs (75%) was to be paid by company A and 50,000 (25%) had to be paid by company B because of the “Contribution Clause” . Its a different matter than customer never told one insurance company about the cover with another companies and the company which got the claim request happily settled the full amount, even if it was not supposed to . This kind of rules earlier made sure that it was not in customer interest and lot of hassles was there if he had more than two policies. But after the regulations it has changed !
After the Regulations (Current Rules)
Now after the regulations are into effect, the claim rules are very easy . Now the contribution clause will not be applicable if your claim amount is less than the sum assured of the insurer where you are claiming. However , if your claim amount is above the sum assured of the policy, then the insurance company will impose the contribution clause. You are free to choose which insurer to catch for your claim. So let us revisit the same example we took some time back.
3 lacs sum assured by company A
1 lacs sum assured by company B
Claim amount = Rs 2 lacs
Now with the new regulations , you are free to catch company A or company B to settle your claim, but now
If you go to Company A for settlement – Then your claim amount (2 lacs) is less than the sum insured (3 lacs) , so company A has to fully settle the full claim of 2 lacs and they cant tell you that the contribution clause will apply.
If you go to Company B for settlement – But, if you choose to go to company B for settlement , then your claim amount (2 lacs) is more than the sum insured with them (1 lacs) , so company B , has the right to apply the contribution clause and then they will only pay 50,000 to you (25% of their share , remember they have only 1 lacs sum assured out of your total 4 lacs) and will ask you to claim the rest from company A .
Now imagine the different scenario where your claim amount is 4 lacs
In-case here in this same example, if your claim amount is 4 lacs, then your the contribution clause will apply because your claim amount is more than the sum insured of 3 lacs and 1 lacs both, so it does not matter which company you approach first, the contribution clause will come into effect .
Better to have a Large cover with single insurer
Which now explains why its advantageous to have a big enough cover from a single insurance company (like say 10 lacs sum assured from one company) , rather than having small covers from multiple insurance companies like (4 lacs , 4 lacs and 2 lacs from 3 companies) . You will face a lot of documentation issues if your claim amount is large because then the contribution clause will apply. ( Read 17 Most asked questions in Health Insurance)
I hope these examples has made it clear to you about the the rules for multiple health insurance policies claims . In-case you have more than 2 policies , still the same rules will apply.
What is the Claim Process in case of multiple health insurance policies?
Here there can be two cases – Reimbursement Claim or Cashless Claims , but for this article, we are looking at reimbursement claims procedure. Even in case of cashless claims , if its from more than one insurer, reimbursement is involved anyways, because – The final approval for any Cashless claim comes at the time of discharge. Hence, only one claim can be made through cashless. All the other would have to be made through the reimbursement mode. Now lets see what is the procedure involved in claim process.
In case of single claim
Intimate the health insurance company at the time of hospitalization
At the time of actual reimbursement, fill up the claim form
Attach all the bills, receipts, discharge documents, prescriptions, diagnostic tests, including films required by them in ORIGINAL
Keep tab on the claim status. The TPA or Insurance Co. could ask for additional documents for settlement of the claim. You need to provide such documents.
You will get the claim in around 30-40 days depending on Insurance Co. to Insurance Co.
Incase of multiple claims
Intimate all the health insurance company at the time of hospitalization
Now you first have to choose the company from which you will claim first.
Fill up the claim form
Attach all the bills and documents required by them in ORIGINAL
Take additional attested copies from Hospital for the no. of insurance companies you are likely to claim from.
Insurance company will issue you a statement saying that they have all the original proofs and documents and they have settled the claims
once the claim is settled by first company then you move to the next company, you need to get a claim settlement summary (which mentions about the claim made, deductions made, and claims settled etc.) then you move to the next company
Fill up their claim form
Attach the claim settlement summary
Attach Attested copies.
Create a covering letter explaining that you have earlier claimed from Company X, and the details of documents enclosed.
If you still want to claim it from more companies , take the claim settlement document from 2nd company also.
Repeat the process with all companies from which you want to get the claim. You will get the claim in some days or weeks
How will the claim be paid
The first Insurance Company will apply deductions and limits as per the terms and conditions of the policy against the claim made and make the payment.
The second Insurance Company will also apply deductions and limits as per the terms and conditions of the policy against the claim made as if the claim is originally made to this Insurance Company, and arrive at the payable claim amount. Once this amount is arrived, it will deduct the amount already received from first insurance company.
Does Sequence of Claim matter in-case of multiple companies ?
My friend told me that the amount of claim you get back at times can be different depending on the sequence of claim. Mean if you settle your claim from company A first and then Company B , it might happen that you may get less money back compared to when you first approach company B and then company A .
But there is a catch here, this situation assumes that the insurance company does not apply the contribution clause, which actually happens in reality. Mahavir Chopra shares with me that in real life , the claim cases they handle, they have observed that companies do not bother to apply contribution clause even if it applies. So the companies in real life in maximum cases, the health insurance companies settle the claim or reject it as per the situation and condition.
Now coming to the main point which I wanted to tell you. Lets say that someone has two health insurance policies with him.
Policy 1 – 2 lacs sum assured (but with some limits and sub limits applied) Policy 2 – 1 lacs sum assured with NO LIMITS or restrictions
And lets say that his hospital bill was 2,50,000 in total as explain in the chart below. So now he has two choices , Either claim from Policy 1 and then Policy 2 , or reverse that order and first claim from Policy 2 and then Policy 1 . In both the cases he will get back different amount. Lets see those.
Learning – In case you have 2 policies , and there was a case where you have to claim from both of them, always claim first from the company which has LIMITS and restrictions, and later from the company which does not impose any limits, this will maximize your claim amount in total.
Important Note – In case where contribution clause is applied, even in that case the conclusion remains the same, the case 2 claim amount in that case is 1,14,000 (unlike 1,71,000 without contribution clause) . You can check out the workings yourself.
Some Good practices and points to remember
If you have a group cover from your employer, it would be a good idea to apply for the claim from them first, because the claim process is faster with group cover , the preexisting illnesses are also covered there in initial years and lastly, the number claims there is not going to impact your premiums .
Its always a good idea to have a single company cover of a higher amount, rather than having small covers from many policies, If you have small covers from different companies, it would be a good idea to consolidate your cover in a single policy or maximum 2 policies, not more
The same thing claim rules will apply in-case of Top up and Super Top up health insurance policies, because there you claim from more than 2 health insurance companies.
Conclusion
At the end, I would say that its always good to have a big enough cover for yourself so that you don’t have to deal with multiple health insurance companies. You can have the separate cover along with your employer cover if you want. So, How many health policies do you have currently ? I hope you are now clear about the claim procedure from multiples health insurance policies ?
Do you have a loan and want to close it as soon as possible? I know the answer is YES! . Everybody wants to get rid of debt and want to enjoy a debt free life. But, what if I give you a good enough reason to not close your loan and keep paying your EMI on time? And if I suggest you do that even if you have a lot of spare cash which you can use for paying of the loan. Lets see …
There are many people who are paying their previous loans, but when they apply for some new loan, its getting rejected because they have some bad credit record in past either due to settlement of some debt or because they have a bad payment record. This creates a very frustrating atmosphere, where you want to do something which you instantly make you a “good” customer. A big myth people have is that just because they have a loan going on, they are having a bad credit score, and because of this myth, they want to close off their existing loan.
I was holding two home loans since 2000. I am a well paid professional drawing good salary, however due to frequent transfers my Post dated cheques were not replenished resulting in non-payment for over 6 months, Also due to some signature error a few times, cheque bounces happened, but they were repaid and corrected .
I dont posses any credit card. only debit cards were used regularly for any financial transactions. 6 months back a personal loan enquiry got rejected due to very bad credit score ( 450 only). so immediately I wound up all the loans ( 4 months ago). now I am loan free and no credit card holder. how long will it take to recover my credit scores ?
You would see how Nagarajan closed his loan thinking that his loan eligibility would increase because his credit score will improve. However what he did was totally wrong and the right thing was to just continue paying his existing loan. Lets see why.
Paying EMI regularly is a Opportunity to show your repayment capability
If you look a little deeper, you’d realize that your existing EMI payment is one of the only ways you can showcase your repayment capability. When you make EMI payment on time, this information is updated to credit bureau (CIBIL etc) by your existing lender and if done on a regular basis, it affects your credit score in positive way and also improves your credit report . Your Days Past Due (DPD) section in CIBIL report also gets positive because your recent information for last 36 months is there in the credit report.
So now I hope you are clear about the importance of paying your EMI on time on regular basis. Its one of the only ways you can build your repayment record and improve your credit score. Do you have a credit card or some kind of loan? If yes, then it might make sense to keep paying their dues on time just for making sure that you build your repayment history!
Can you share some thing related to this from your financial life ?
Some months back, when we were working with a Mumbai based client of ours, we noticed that one of his expenses of “Eating Out” was extremely huge. Their explanation was they were never able to control the number of times they went out. So we thought how about limiting the amount spent somehow ?
Envelope budgeting system
Today I am going to share Let me share with you all a simple and effective budgeting system which has been in use for centuries – worldwide! . It’s called the “Envelope Budgeting system”.
The common problem across families is that they keep spending money on various things from a single card or pool of money. The basic idea here, with this system is to label your different expenses, categorize them if you will, and keep an envelope with money dedicated to that category, in it.
When you need to spend on a category, voilà, you take the CASH for its respective envelope and spend. Let me give an example. Suppose your expenses are as below.
[table]
RENT
Rs 10,000
GROCERY
Rs 6,000
VEG+MILK
Rs 3,000
BILLS
Rs 3,000
MAID-SALARY
Rs 2,000
MISC
Rs 1,000
Total
Rs 25,000
[/table]
5 Simple points regarding Envelope Budgeting System
1. Once it’s gone, it’s gone
When you take some money out of an envelope, and spend it, it’s gone! You will be left with some remaining amount for that particular month. Now all you have to spend that month is the leftover. So spend it wisely.
If you still want only spend more than what the envelope contains, you just break the system. Better stop following it then. It’s not for you
2. Don’t transfer between envelopes
Just because you have some money left in some category, does not mean you can spend it on another category. This system is all about controlling your expenses in individual categories. Whatever is left in some envelope should go to your investments. It’s like a bonus leftover.
3. If you fail to follow, invest 10x the amount as penalty
It’s human to fall off the wagon. At times you will deviate from the plan and spend more money other than you allocated. In this case, you should penalize yourself for breaking the rule, by investing 10x the extra amount into some investments. For example, you have Rs 3,000 allocated to “Eating Out” you spend Rs 5,000 in a month. Then you are using an extra Rs 2,000. You should penalize yourself by investing Rs 20,000 (10 times) in some thing to offset this crime. This will be a good spin on just desserts!.
4. Emergency expenses, but settle later
Ideally your expenses should be planned and the money should come from the envelope, but you will have to spend sometimes on your credit/debit card (read various credit card cashback offers), which is fine at times, but make sure you settle things back when you are back at home.
5. Guilt-free shopping
The thing I like about the envelope budgeting system is the “guilt free spending.” Once you have allocated the money to different categories, then you can spend up to the limit, without thinking much. That’s the best part.
TIP : Libin informed me in comments section that there is an Android app called Easy Envelope Budget Aid (EEBA) for this envelope system ! ..
Yes, many times I feel bound but I know what I have got by following this system. Be it getting rid of a loan (worth Rs.2 lacs), renovation of my home (worth Rs.2.5 lacs), be it car (Alto), money for Jewelry (worth Rs.1.5 lakhs), 40 k cash as gift to near & dear ones in a span of 6 years. Right now I am saving for my daughter’s school admission.
I agree that I never spent for grocery, maid salary & rent being in a joint family but still I wonder that I was able to achieve these targets when my present salary is just around 26k and when I started following this system 5 years back, it was much less.
I started this as I had no choice, but believe me I am now addicted to this system.
It’s not for everyone
A lot of people use this envelope system and are pretty successful in following it for months and years. However many people start this, but fail somewhere in middle and are not able to continue. Its all about how serious you are about controlling your expenses and being disciplined. Do you think this Envelope system will work in your case ?
Is your health insurance cover enough at the moment? May be No! And you might want to increase it now. But if you feel that your health insurance coverage is sufficient right now, even then, it will need an upgrade after another 5-10 yrs.
Healthcare inflation is on rise in India and there is no way you can live with the tiny health insurance cover for rest of your life.
So let’s check 8 ways you can upgrade your health insurance cover.
If you have bought your own personal health insurance before 2010, in all probability, you have sum insured coverage of less than Rs.4-5 Lakhs.
While it’s great to hear that you at least have your own independent health insurance, and are not dependent on your employer health cover, it’s high time you realize that with the skyrocketing healthcare inflation, the sum insured you have is too low to even cover one hospital bill, leave alone cover you for your hospitalization expenses in your retirement years.
The amount of health insurance coverage you need has already been addressed in one of my earlier posts. What we are going to discuss here are the options available when one is looking for upgrading his/her coverage
8 ways to upgrade your Health Insurance Policy
There are various ways you can increase your health insurance cover. Below are some of them mentioned.
#1. Upgrade later, when needed
Though this may look like the most cost effective, ‘smart’ thing to do, mind you, this is the diciest options of all. Health Insurance companies will accept your upgrade request till you are young and healthy. No one wants you to enter their portfolio or books, once you are old, grumpy or dying.
Jokes apart, even if one of your family members suffer a chronic ailment like Diabetes, Thyroid etc. or worse make a claim in the health insurance policy, your chances of upgrade in the policy are almost zero.
If you are not aware, let me clarify – whenever you apply for an upgrade, you will have to make a fresh application to the Insurance Company for the upgrades giving declaration of any new diseases contracted etc. The insurance company will then evaluate the upgrade request similar to a new application and decide.
All said and done, even if the upgrade is approved, all waiting periods are applied to the upgrade part of the policy, from the year of upgrade, and not retrospectively.
#2. No procrastination. Upgrade your cover now
This is by far, the most ideal option if you have a lifetime health insurance plan and your family is reasonably healthy. Just apply for an upgrade to the highest coverage available first, before you try anything else, including a Top-up plan.
Yes, you will have to request for the upgrade at the time of renewal by filling an application, which will be subject to approval of the Insurance Company. If you one of you family members have had a claim for a chronic disease, you must explore upgrade for all the other members. If you are all covered under a floater, you can apply for a separate plan (explained in point 4).
If you are covered under individual plans, ask for upgrade for the remaining members in the same plan.
#3. Port your health insurance cover + upgrade
If the sum insured you have is the highest available with the current Insurer, you can explore the option of porting your policy to another product within the same insurance company, or another insurance company, which has higher coverage plans.
Note, for portability, in most cases, you need to apply to the new insurance company, 45 days in advance. While applying for portability you need to request for your preferred sum insured in the proposal form. Of course, you will get portability only for the existing sum insured and not for the upgraded sum insured. The waiting periods will start again for the upgraded part of the coverage.
#4. Buy second Health Insurance policy
If the sum insured you have availed is the maximum sum insured offered by the Insurance Company, and portability is not possible as explained above, another option is taking a second health insurance policy from another Insurance Company.
If you ever claim above the sum insured of Policy 1 you can always claim from Policy 2 for the rest of the claim. Ensure you inform about the existing policy in your proposal form for the new policy.
#5. Top-up Cover
Though Top-up plans are recently a popular option to increase your health insurance coverage, you need to understand how they work, before you sign-up for such plans. The policy provides a high coverage with a threshold amount upto which you cannot make any claims.
For instance, you buy a 10 Lakh cover with a 3 Lakh threshold (also called deductible) – you will be able to claim in this policy only when you have made claims of above Rs.3 Lakhs.
There are primarily two types of top-up health insurance plans :
1. Top-up health insurance:
Per claim deductible: Here the top-up coverage will trigger only when one hospitalization claim crosses the threshold sum insured.
For instance, if in the plan in the above example, there are 2 claims in a year of Rs.2 Lakhs and Rs.3 Lakhs each, the top-up coverage will not trigger since none of the 2 claims crossed the “per claim threshold” of Rs.3 Lakhs. On the other if there is one claim of Rs.4 Lakhs, then the top-up policy will pay the remainder Rs.1 Lakh, as per the terms and conditions.
2. Super Top-up health insurance:
As the name suggests, this is a better version of a top-up plan. Here the coverage will trigger even if the sum total of all claims made in a year cross the threshold sum insured. In the above example, where there are 2 claims made, both the claims will be paid, upto the sum insured of Rs.10 Lakhs.
Unfortunately, there is only United India which provides this plan (albeit, with a lot of reluctance) HDFC Ergo and Max Bupa are in the process of releasing such a plan, soon. Watch this space.
#6. Critical Illness Plans
In most cases, a high coverage of health insurance is required due to contraction of a critical illness like Cancer, Paralysis, Heart Attack, Kidney Failure, Bypass Surgery etc.
A Critical Illness Plan provides a lump sum benefit irrespective of the actual expenses incurred provided the insured person is diagnosed for a listed ailment and survives for 30 days. Taking coverage of around Rs.5-10 Lakhs for critical illness is a good option. The only flipside of this plan is risk of suffering an ailment not listed in the policy.
Ensure you take a policy which covers an extensive list of illnesses, at least till the age of 70. There are plans which provide coverage for a list of 20 ailments.
#7. Defined Benefit Plans
Defined Benefit Plans provide fixed compensations against list of surgeries, irrespective of the actual costs incurred. For instance one plan pays a fixed benefit of Rs.1.00 Lakh for Angioplasty, Rs.2 Lakhs for a Bypass Surgery. These plans pay such claims based on minimal photocopied hospitalization papers.
Additionally these plans provide a host of other fixed benefits including fixed amounts per day of hospitalization etc. These plans are different from Critical Illnesses which are based on diagnosis, while these plans are based on actual hospitalization and surgeries.
#8. No Claim Bonus Plans
Given a choice, if you are going for a fresh cover, go for plans which provide No Claim Bonus (Increase of sum insured every year) rather than No Claim Discount (decrease of premium). This helps an assured increase of your coverage every year till you don’t make a claim.
Most good plans provide a bonus of at least 50% of the base cover. Of course, this is not a long term as one claim completely wipes out this bonus at the time of renewal of the policy.
Watch this video to know 9 rules to keep in mind while buying a health insurance:
Top-up Vs. Super Top-up Vs. Upgrade Existing Policy Vs. Buying additional Policy
Most Insurance advisers recommend a top-up plan to increase your health insurance cover. In terms of convenience of purchase and claims, we would recommend upgrade of the same health insurance policy, as the best option. This is ofcourse, provided you are happy with the policy terms and services.
The second best option would be to compare available options of Super Top-up with option of Additional Mediclaim Policy. If the premium is more or less the same, we would recommend additional policy more than a Super Top-up.
After all the above options, look for the option of a simple top-up to increase your cover. Be sure you are aware of the fact, that this option is more useful in the very long term (6-10 years), since it will trigger only when your one claim goes above the threshold/deductible mentioned in the policy.
Other Important points when you plan for upgrading health insurance
1. Upgrade deadline
If you observe around you, lifestyle ailments are spreading like an epidemic across India, thanks to the sedentary lifestyle we live.
You will observe that most of the ailments start cropping up in the late 30’s or early 40’s. If you/your family are in your early 30’s and already have health issues (overweight, underweight, breathlessness, borderline high cholesterol etc.) it is recommended that you go for the highest coverage on mediclaim immediately, rather than get a restricted cover in case you suffer from a chronic ailment in the interim of your plan to increase coverage.
In any case, ensure you upgrade to desired coverage by the time you reach the age of 40 years.
2. Option of stepping up your upgrade plan
If you are in your early 30s, and you cannot afford a one-shot upgrade is too heavy on your current financial budget, create an upgrade plan. Spread the desired upgrade amount across your age upto 40 and upgrade the amount in a manner that you reach the upgraded amount by 40 years. For instance, increase your sum insured every year by say Rs.1 Lakh.
3. Upgrading Features of your plan
Moving to a plan with better features. If you are happy with the sum insured, but not with the features (limitations like room rent limits or co-pays etc. or maybe the network of hospitals) and you are looking at an upgrade, you need to first look at the same insurance company, and check whether they have an advanced plan you are looking for.
In case you like a plan from another Insurance company, you would have to opt for portability with this new Insurance Company 45 days before renewal of your existing policy. Do remember, in the real world (outside the IRDA guidelines) there are limitations on who can get portability, especially if your family is older than 45 years, has a claim history, or a chronic disease.
Go for any options you like above, the bottom line remains – TAKE ACTION. TAKE ACTION NOW. You have too many priorities in your life at home and work, to really be able to remember and act on this even tomorrow.
This article is from Mahavir Chopra of Medimanage. This article first appeared on medimanage blog
Do you have any idea about your income tax refund status ? Have you filed your Income tax return long back, but have no idea when will you get your tax fund?
This is one issue faced by millions of tax payers in India. They file an income tax return where they claim back their income tax refund, but have no idea what happens to their cases after that!
For months and years, they keep waiting for the refund status, but they have no idea when they will get their money back. Ideally they should get it back in few months, but in many cases they wait for as long as 3-4 yrs.
In this article, we will see how you can find out your income tax refund status online and how you can use RTI application to find out the status of your tax refund and speed up the process of getting it back.
How to find income tax refund status online
If you have filed income tax return asking for your tax refund, and you have no clue about the current status, the first thing you do is track its status online. All you need is your PAN number and assessment year for which you have applied for refund. Here is what you need to do
You can also track your income tax refund status by contacting the help desk of SBI at 080-26599760 or contacting the Aaykar Sampark Kendra at 0124 2438000
File RTI application for income tax refund status
If you are not able to do much and you feel that just finding out online status is not helping you and you want to now get 100% clarity about your tax refund status, the next step is to file RTI application against income tax department.
We have earlier seen how one can use RTI to find EPF withdrawal or transfer status and how their issues were solved within weeks and months of filing a RTI against EPFO. So your next step is to file RTI in your tax refund case also. But you should wait for at least a year before you file for RTI against the income tax department.
Note that the RTI application has to be addressed to CPIO officer. Now the next question is how to find out the CPIO information. It’s actually not organized in a clean manner, but you need to start by going to this website https://www.incometaxindia.gov.in and then on that page you need to choose your state (your jurisdiction) from the drop down and click on “go.”
It will take you to the next page where you need to click on “CPIO/CAPIO” and play around to find out the exact place where they have dumped all that information. Below you can find a RTI template which you can use.
You should ask for name and designation of the officer who is supposed to process your income tax refund claim
Also ask for the officer official address and his contact number
Also ask for how long the refund is pending with the officer and the reason for the delay
Ask if some senior authority has instructed for delay and the certified copies if any
Also ask for the name, telephone number and address of the higher officer with whom you can file the first appeal
These above mentioned 5 things if asked in RTI, will be enough to move the earth below the concerned authorities feet and they might act faster on your case, because in most of the cases there are no valid reasons for delay. The delay is created just because of lethargy and at times in expectation that someone will visit them and bribe them to process the request!
Note that only the concerned person can file the RTI, no one else on his behalf can file it. In case you have tax refund for different years, better file separate RTIs for each. Do not mix them into one.
Tips while filing for Income Tax Refund
There are few well known mistakes people do while filing returns, because of which income tax refund delays happen. Let’s see those points and make sure you don’t do them.
1.Make sure your give permanent Address
A lot of salaried people, who live on rent, give their present temporary addresses while claiming tax refund, and when after 1-2 years their tax refund cheque arrives, in many cases the person has moved out of the current location. This causes the cheque to return back and the person is not there on the given address.
So make sure you always give the permanent address where you or your family lives and there are almost no chances of cheque returning back.
2. Give accurate Account Details, IFSC code
There have been cases where the account number given was inaccurate by 1-2 digits or the IFSC code was wrong, and that created the problem. This small thing can result in lot of frustration later, so double-triple check these details.
3. Try to do E-filing of your tax returns, if possible
As far as possible, try to file your income tax returns online and apply for tax refund, because the tax refund is much faster if e-filing was done. In case you are filing offline manually, make sure you fill form 30, contact your CA if you want to delegate this totally to someone else!
Conclusion
If you have been waiting for your tax refund from years, it’s the time to file a RTI application for it and find out why your income tax refund has been delayed for so long.
Have you even seen cases where when a person wants to get a home loan, and the bank or the lender says that taking some kind of ULIP policy or some other kind of insurance product is mandatory if you want the loan to be approved? Most of times, banks impose this restriction in the final stages of loan approval process because that’s the time when most of the customer will not reject the option and will forcefully go for it, because they don’t want to lose the home loan for this tiny roadblock.
If you are thinking about 50 lacs of home loan, you will not get stopped by this 40,000 per annum premium policy. Here is a case which was discussed on our jagoinvestor forum.
I recently planned to buy a home. So, after market research I approached SBI bank. But the manager informed by saying that ‘I need to take SBI Insurance along with home loan’ else will not sanction SBI home loan. Please let me know whether is it the case with SBI home loans?
Cross Selling is Unfair – IRDA
Some customers falls for these kind of gimmicks, but in reality there is no compulsion to buy any kind of product with home loan. It’s just a marketing gimmick and a way to exploit people. IRDA itself has clarified in its circular that this kind of bundling or forced selling is not fair and should be stopped. However banks still continue to ask customers to buy the insurance along with home loans and ill treat them.
Tying is defined as two or more products packaged together where at least one of the products is not sold separately while Bundling occurs when products are packaged but are also available separately. There could be various issues of concern for the consumer that arise from cross-selling. Packaging two or more products could become unfair to the consumer when it impedes his or her choice or makes price comparisons difficult or impossible.
One of the major concerns is bringing in transparency to prevent unfair commercial practices. At the same time, cross-selling facilitates service providers to use existing channels to reach out to those who are looking to buy insurance products. It is, however, necessary to ensure that the consumer is not put to any kind of disadvantage because of the packaging.
J. HARI NARAYAN
CHAIRMAN (IRDA)
So what’s the way out? It might be, that if you are careless on documentation front, the bank might sell you the policy and you come to know about it very late; like it happened in this case where Axis bank sold life insurance along with home loan to this guy. While you always have an option to go to consumer court over the issue, that comes a little later.
What way you can settle this at the bank level itself? The main idea is to communicate to bank officials that you are not a easy bait and are an informed investor who knows his rights as a customer. Below are a few things you can do in a situation when bank tells you “Sir – Insurance is compulsory along with home loan, else it will not be processed”
What to do when forced to buy insurance along with home loan ? Lets see 4 tips which you can use when you are told by your lender that some kind of policy is mandatory to buy along with home loan.
Option 1 – Directly tell them, you know the rules
One of the simple things you can do is tell them straight forward that you know the rules on this, you are aware about the RBI circular that these practices are not fair and ask the bank for an explanation on how they are still doing it. Also tell them, that you have yourself helped another friend of yours to get a home loan without the bundled insurance when XYZ bank asked for it. You can tell them that you have already filed for RTI to IRDA and asked for this, if they want you can bring the RTI reply from IRDA. This first tip itself should be enough for your home loan provider to come to the right path.
Option 2 – Reject the Offer and Wait – They will come back
When you show desperation, they know you will do anything for getting a home loan and that’s one reason why they put forward such idiotic restrictions of taking policies. Another thing you should do in these kind of situations is that you can just reject the offer totally and tell them that you really are not so desperate to get the home loan, you can wait for some months or you already know other bank officials who have not put forward such kind of restrictions . In all probabilities, they will just come on track or if not that time, they will be back to you later saying – “Sorry Sir, we take back that restriction .. blah blah… ” This is exactly what happened with Muthu Krishnan which he shared on this blog some time back
IDBI tried to con me in similar manner. I told them that I don’t need their loan. After two days, they called back and offered loan without insurance which i accepted. Though you are absolutely desperate for loan, do not show it to the banks. The banks are very desperate to disburse loans as it is their livelihood and not ours. They will come around to our terms.
Option 3 – Ask them to give it in writing
The next option is to look at the bank official and ask him to give in writing that “Buying the Policy is mandatory along with Home Insurance” and also tell them you are thinking of inquiring about this with banking ombudsman because you have already filed a case for your friend and got compensation for this. If they are not ready to give it in writing, tell them that you don’t need home loan from them anyways, but you will still file a complaint with Banking Ombudsman to see what can happen and politely ask the official if he can also share his Name, designation and Employee id for additional information.
Option 4 – Take the Policy and return back in Free Lookup period
This is the last option, but if you feel that other options are great but you are victim of family pressure and at this time just need to go ahead even though you are disgusted by this force game, just go ahead with policy and pay the premium for first year. Then be a little alert and make sure the moment you get policy documents, just initiate the process of returning back the policy within the 15 day free look-up period . For those who do not know, the free look up period starts from the day you get the policy in your hands, not from the day you bought the policy. This helpful tip was shared by one of the person who shared his case with ICICI mis selling.
Conclusion
Any kind of loan should not be bundled with other products. Most of the bank officials try to pressurize the customers just to meet their deadlines and targets. So do not fall for forced selling and act like an informed and powerful customer.
Have you come across a situation like this? Can you share?
