Tag: Beginner Level

CIBIL Report Online – Get your credit score in your email

Posted on by Jagoinvestor

This article will teach you how to apply for your cibil report online . Some months back, I had written an article on CIBIL report which was well taken. A lot of readers applied for CIBIL score and were shocked to see their CIBIL report was messed up because of some past sin committed in area of credit card, home loans, personal loans. A lot of you applied for CIBIL report which took some time, energy and lot of commitment, but majority of readers didn’t take any action and just told themselves “I will apply soon” .. that “soon” never happened and seems like CIBIL heard your prayers. CIBIL scores are now available online. Fill a form and make the online payment in 10 minutes, authenticate some questions and get your CIBIL score online in your email in next 4 days ! . I applied for my personal CIBIL score and I got it in just 2 days in my email . My score was 835 ! . yippee !

Procedure to get your CIBIL report online

Note that you can only get your CIBIL TransUnion Score (Including CIR) by paying Rs 450. You cant get CIR alone .

1. Fill up the online form

The first step is to fill up a form online here . It asks Name, address, Phone details along with Identity and address proof. At the end it would ask your Loan account number (credit card number in case of credit card) . Make sure you fill up the form correctly and also double-check that you are putting correct address, identity proof related number like PAN number , Passport number etc. Once you are done with this step, you move to step two, which is payment online.

CIBIL Report online

2. Make an online Payment

Once you have filled up the form, and click on “Make Payment” button, you will be redirected to the payment gateway where you can make the payment of Rs 450 by credit card, NetBanking or other ways . I would suggest making a payment using net banking , because I used credit card option myself two times and it failed , but with Net banking option, I didn’t face any issue.

Make sure you do not close the page after making the payment, it will redirect you to a CIBIL page where the 3rd step will be performed. Note that before you move to 3rd step , you will get an IDENTIFICATION ID number , please make sure you note it down properly.

Tip : The reason why we keep getting transaction failures (with payments getting deducted) is because of the way the CIBIL website handles cookies. Its always better to clear off everything in your browser before attempting to pay for your report. I found this the hard way after my payments were deducted a couple of times (1 refunded and 1 waiting for refund). Thanks to Vijay for this finding

3. Authentication

Now from security point of view, now you will have to answer 3 questions which would be related to your credit history. Once you answer these questions, your authentication will be successful and you will get your CIBIL score card in your email in next 4 days. You will get this message once authentication is successful

We will e-mail your CIBIL TransUnion Score (Including CIR) within 4 business days*. The On-Line Payment Confirmation is emailed for your record. For any queries on the status of your request, you can write to us with your Transaction Id at [email protected] after 4 business days.

You will get a receipt of payment which you can print right away and you will also get an email with PDF copy of your payment and other details.

What if authentication fails ?

Incase the authentication step fails while applying for cibil report online, don’t worry .. all you need to do is take the print out of the payment receipt (you get it in email also) , self attested photo copies of the required documents (identity and address proof) which you had put in the form in the start , and send it to CIBIL address. You should get back your CIBIL score in next 10 days.

Documents Required & CIBIL address

1. Online Payment Confirmation
2. Identity Proof – PAN / Passport / Voter’s id (Identity proof should be valid and not expired)
3. Address Proof – Bank Statement / Electricity Bill / Telephone Bill / Passport / Credit Card Statement (Address proof should be not more than 3 months from the date of application and should be in your name)

Address

Consumer Relations – Disclosure Request,
Credit Information Bureau (India) Limited, Hoechst House, 6th Floor, 193,
Backbay Reclamation, Nariman Point, Mumbai 400 021.

Data Security ?

While CIBIL says that the whole process to apply for cibil report online is secure and there has been rigorous testing, I personally realised that it’s not 100% secure. First the email id where you want to order the CIBIL score can be any email id , all i need to know is your important documents numbers and your credit history and some numbers , which I feel a lot of people share with their close friends and relatives sometimes . So the real security would happen when you do not disclose your credit related data to anyone .

In last few months we have seen that there have been many complaints from hundreds of people on how they could not get a loan because of their low CIBIL score or some bad past record . Banks are seriously looking at these scores now and make sure you at least have a look at your CIBIL score once . So if you have any credit card or loan , you should apply for CIBIL score and have a look at it.

Try out ordering your CIBIL report online and let me know if you were successful or not . Also share your experience with CIBIL in comments section.

The reason why premiums of Online Term Insurance Plan are cheap !

Posted on by Jagoinvestor

So let’s just come to the point directly! Why the hell on this earth are these Online Term Insurance Plan premiums so cheap? Sometimes even 25-30% of what an offline term insurance plan costs.

So now, think hard! What are the factors which make Online Term Insurance Plan premiums so cheap?

Online Term Insurance Plan

You will hear most of the agents, planners and even media personalities tell you that its lower because the agent commissionis saved and other administrative costs are not present in online term plans, but that’s not the biggest reason because if agents commission is just 25% of the premiums in 1st year and there after it’s in single digits for rest of the term.

So if agents commission’s absence was the reason for lower premiums than it should be just 10-15% lower than offline term plans.

Current Online Term Insurance Plan in the market

At present, there are a total of 10 Life Insurance companies who are providing online term insurance plans and their premiums differ from each other. The cheapest premium seems to be from Aviva iLife for most of the categories.

For example for a 30 yrs old male, term insurance for 1 crore for a 30 yrs term would cost only Rs 8200.

  1. Aviva iLife term insurance
  2. ICICI iCare term insurance
  3. Kotak e-preferred Term Plan
  4. Aegon Religare iTerm
  5. Metlife met protect
  6. Future Generali Smartlife
  7. HDFC Click 2 Protect
  8. IndiaFirst anytime
  9. DLF Pramerica – UProtect
  10. Edelweiss Tokia – Life Protection

The real reason why online term insurance plan premiums are so cheap is that the segment which buys online is perceived to be less risky! It’s about the target market category. A person who is net-savvy is perceived to be less risky than a person who is not net-savvy and then it’s assumed that he will have access to better health care a better lifestyle and more chances of outliving his non-net-savvy counterpart.

So a govt employee from Jaunpur buying a term plan directly is seen differently than an IT professional from Bangalore taking an online term plan.

So on average, a person from a big city like Mumbai, Bangalore, Pune, Hyderabad and other big cities having an ability and access to buy online has a different profile, then a person who belongs to a tier-4 and tier-5 city who is not net-savvy!

Both have different risk profiles, different mortality rates and hence premiums vary a lot.

Commissions and Admin costs?

Not to forget the agents’ commissions and administrative costs which are saved when an online term plan is issued. Those also help in saving the cost to some extent. As each and every company has its own claim record, their own underwriting rules (rules to decide the premium) and depending on how aggressively they want business :), the online term plans premiums can vary a lot across insurers.

You should check this article from money life on the Term plan and their premiums pricing. So I hope you must have got a clear understanding of why Online Term Insurance plans premium is so cheap compared to other Offline Term plans.

Health Insurance is Wealth Insurance

Posted on by Jagoinvestor

Does Health insurance or Mediclaim Insurance really protect your health ? Ask yourself this question and deep down in your heart you will hear someone shouting , No Idiot ! , There is no policy which can protect your health ! . Health can only be protected by right diet , right exercise and right lifestyle (download this ebook). Unless you are doing any of these your health can’t be insured. So what is Health/Mediclaim Insurance, when it does not protect your health ?

In reality, what we all fail to realise is that Health Insurance is actually “Wealth Insurance” . When you buy a health insurance policy, all you are doing is protecting your wealth from those scenarios which would ask for a lot of money from your wealth. So you have to understand the importance of buying a health insurance policy. (You can buy it from Coverfox website)

I was talking to some one few days back in Goa (Yes, I go on vacations too) who rejected to take a mediclaim policy because of higher premium due to his diabetes. I told him that I hear something out of his decision of not buying a health insurance plan. He was surprised to hear this because he didn’t say anything else other than “I will not take health insurance” . So I told him what I heard.

I told him that I hear from him that he is ready to lose a big part of his wealth in few years if he is detected with any further illness . I told him that I hear that he didn’t want insurance company to pay for his medical bills , but was ready to bear the cost on his own. If he has to spend 5 lacs , he will pay it . If its 15 lacs , he will pay it ! and even if its 30 lacs (after 12-15 yrs) , he will still pay it .

Protecting Wealth is much easier than Protecting Health

I told him that by choosing not to buy a health insurance plan, he is accepting that he is ready to bear a big cost in future incase the situation demands . A lot of people do not think about health insurance like this. While this is the internal truth that the job of health insurance is to protect your wealth and not your health, a lot of people just fail to look at it this way .

So if you love your Wealth , buy health insurance.

For health , you can take other routes like eating right food, physical exercise daily , having a positive and a good life style (see this post from subra)  .. But the sad thing is protecting your wealth is much easier than protecting your health 🙂

What are your views on this ? What have you done to protect your health and wealth ?

10 different ways of generating regular income

Posted on by Jagoinvestor

Do you want to generate regular income for yourself by investing a lump sum amount in some financial product ? It can be because of any reason like retirement , unstable income from job/business or just wanting to have your own income flow. In this article we will see 10 different ways of creating regular income in India our of which 5 will be safe methods and 5 would be risky (hence chance of high income) .

Income Generation

5 Safe Ways

Below are 5 safe way of generating income , in which the principal and the return are almost assured . It’s suggested for those investors who can not take any risk in their financial life .

1. Post office Monthly Income Scheme

One can invest a lump sum amount in POMIS and get monthly income for next 6 yrs. The return one can get is around 8% and the income can be given in form of monthly interest for next 6 yrs. One will get back his principal amount along with a  5% bonus at the end. One can invest only upto 4.5 lacs for an individual account and 9 lacs in a joint account.

2. Monthly interest from Fixed deposits

The most famous option is to open a fixed deposit with monthly interest payment. This is simple and one of the safest option one can take . the interest rate will depend on the tenure for which you open the Fixed deposit. One can expect a interest of around 7-8% . The interest income is taxable.

3. Annuity from Insurance companies

One can also buy annuity plans from LIC or pvt insurance companies. The returns on these plans will depend on the pension tenure and which option you have taken while buying the product (return of principal amount or not). The return of these plans are very low and sometimes not even known in advance like in case of NPS . One should get into this only if you are not capable of doing anything else with your money

4. Govt long-term bonds

One can buy long-term govt bonds with maturity of around 25-30 yrs and paying a half-yearly interest at around 8% (this varies from time to time). These are real long-term bonds and at the end of the tenure you get back your principal amount . These bonds are govt way of raising money for public and you can consider these bonds as one of the safest instruments. These bonds are also tradable in secondary market, so you can also sell them if you want to get rid of them.

5. Senior citizen Saving Scheme

One of the best option for senior citizens above 60 yrs of age is to put their money in senior citizens saving scheme and get interest of 9% per year which is payable quarterly. SCSS is only for 5 yrs after which they mature, they are extendable by 3 more year after that. Note that even investors in age group of 55-60 can invest in SCSS, provided they have opted for VRS (voluntary retirement scheme) and the funds are coming from their retirement benefit.

5 Risky Ways

Now we will discuss 5 risky ways of generating income, these options have some risks like fluctuations in your assets pricing and volatility in the income , but for this reason one might end up with much superior returns and high income compared to safe options . It’s suggested for those investors who are more pro investors and are ready to take high risk.

6. SWP from Mutual funds

One can invest in Equity mutual funds or debt mutual funds and opt for a SWP (systematic withdrawal plan) which will liquidate a fixed number of units or portion out of mutual funds and credit it to your bank account. This is reverse of SIP and can be one of the ways of generating an income. Note that SWP might attract exit load if started immediately , so its better to start a SWP after a year or two. Note that the investments in mutual funds might be volatile if it’s a equity mutual funds. If one does not want too much of volatility , better invest in debt funds.

7. Monthly Income plans of Mutual funds

There are mutual funds which are of category Monthly income plans (MIP). These mutual funds have inbuilt structure of providing regular income (not always montly, purely depends on dividend declaration) . These MIP’s can be little volatile as they have a little part in equity also. The dividends are tax-free in hands of investors.

8. Dividends from Equity shares

If you are a stock lover, you can invest in long-term stocks which have good enough dividend paying history. Note that in this way the income is not always guaranteed through dividends, but if you diversify your investments across 10-12 stocks , then you can be assured that there will be regular flow of dividends from some of the other stocks. Also the actual value of your investments can fluctuate as it’s a risky investments . But for people who understand stock markets and are patient with their investments , it can be a good option.

9. Dividend from mutual funds

For those who cannot invest in equity directly ,they can opt for long-term mutual funds with dividend payout option , this will make sure they get a dividend income from mutual funds , but that will happen only once a year . It wont be a monthly payout . One should diversify across 3-4 funds to make sure the dividends are coming from different funds.

10. Rent from Real estate

One can also invest in real estate and generate an income through the rental income. While the value of property will appreciate , one will also get a regular income, but understand that this is high maintenance option and you will have to keep on monitoring your asset. There are risks like not getting good tenants and not getting right tenants for months . It’s best to take a property in the middle of city which would be in demand rather than outskirts .

Which of these options was yours favorite ? Can you suggest more ways of creating regular/irregular income in India

Is someone misusing your Financial Documents ?

Posted on by Jagoinvestor

Is it a total truth that you are too careful with your documents? Did someone recently asked for your PAN Xerox (extra) copy without any reason and you gave it without thinking much? Do you handover your Driving license or passport copies to some agent without giving it a second thought? If yes, you need to be careful because this can land you in trouble in big way. There has been a lot of cases reported on this blog by your fellow readers which you can learn from. Let me take some of them.

financial documentation

How one relative misused the pan card for taking loan

A lot of people handover their documents to their relatives without thinking much. They feel they are helping the other person, but you never know how the other person can misuse your documents and get you in trouble. Read this case

One of my cousion taken a two wheeler loan in 2005, and i had given my pan card duly self attested at the time of taken loan.
Now i had applied for 2 wheeler loan in 2010, it got rejected upon applied to CIBIL report i came to know that i m the coapplicant of the two wheeler loan taken by my cousion in 2005. But unfortunetly he died in 2010 . So i had made the complete payment including all bouncing charges as well as the principal amount dues on him. But as i am the co-owner as per the bank records my name also reflect as an overdues amount (Defaulter) in your CIBIL Report which is harming my credit Worthiness in the market. I just spoke to the HDFC CUSTOMER CARE DEPT they said your loan is clear and had been reported to CIBIL upon checking again with CIBIL ,now report shows as settled . I had made full payment still its showing settle please help me out what i need to do now Please note that i do not have any direct dealing with the bank in the above said loan i just made a mistake of giving my sign in the reference column for which i have paid a price of making payment of RS 6322 to bank. (source)

How one friend used friends reference to make his co-applicant

Friends are forever, until they take advantage of your trust. A lot of people give their documents to their friends for being a reference (guarantor), but they themselves don’t understand what does guarantor mean? Read this below case to know what happened with one person

One of my friends took a car loan from a nbfc 3 years back and he wanted a reference for this loan (i now realize there is no such thing as a reference for a loan) i obliged and gave him a duplicate copy of my pan card. For atleast 2 years i have been applying for credit cards and getting rejection letters from all the banks. I finally was fed up with this and decided to get my cibil report and was shocked to see that i was the co-applicant for the car loan my friend had taken 3 years back. He had defaulted on this loan which was reflecting on my cibil report and that being the main reason for me not getting any credit card.

Like i mentioned earlier i had given my friend a copy of my pan card but i had never signed any loan application form, so i followed up with my friend (who still claims that i was supposed to a reference for this loan) and also with the customer care at the NBFC (who i must say were extremely rude). I managed to get the loan application form from the NBFC and i’m a cent percent sure that my signature has been forged on the form. Now my friend (would not want to call him a friend anymore) claims that the person who gave him this loan never told him about me being a co-applicant and he always thought i was only a reference. (source)

How an agent used documents of someone to to take advisor license

We call a lot of agents to home to buy financial products ,we give them our financial documents without realising that it can be misused if we dont want to go for the product later , we never ask it back . Read the following case based on this.

It has come to my notice that an advisor license was taken in my name in MetLife, Asansol Branch under Sales Manager by the name Mr. Debrup Banerjee. This person had approached me for a Life Insurance policy and had some papers signed by me. The Policy never materialized, but the papers (EPIC, PAN Card, Photo) was used to take out a License in my name. In fact, I was working in Bihar Sharif when the IRDA Exam was taken. A more serious and criminal act on part of Mr. Debrup Banerjee was to open an account with the Axis Bank in my name using the same papers. SMS alerts from MetLife has brought these misdeeds of Mr. Debrup Banerjee to my notice. I would request you to take necessary steps to declare the Advisor License, taken by Mr. Debrup Banerjee for MetLife, null and void. (source)

Make sure you take care about whom you are handing over your financial documents to. People can misuse it and take advantage which can get you into trouble later and you will come to know about it only when things are out of control.

LIC of India policy status on SMS

Posted on by Jagoinvestor

Do you want to get your LIC Policy Status and  details by SMS ? If yes, now there is some good news for you , you can get basic information about your LIC policy very easily by sending an SMS. You can get general information like Bonus amount vested till date , details of nominations etc by just send one SMS t0 56677. This is a free service from life corporation of India (LIC)

ASKLIC <Policy No> PREMIUM/REVIVAL/BONUS/LOAN/NOM

where –

Premium – Instalment premium under policy
Revival – If policy is lapsed, Revival amount payable
Bonus – Amount of Bonus vested
Loan – Amount available as Loan
NOM – Details of Nomination

Example

AskLIC 8955940009 NOM

One can also get LIC pension related information by SMS

LICPension <Policy No> [STAT /ECDUE/ANNPD/PDTHRU/AMOUNT/CHQRET]

Where-

a) IPP Policy Status, (STAT)
b) Existence Certificate Due, (ECDUE)
c) Last Annuity Released Date, (ANNPD)
d) Annuity Payment thru (CHQ/ECS/NEFT) (PDTHRU)
e) Annuity Amount (AMOUNT)
f) Cheque Return Information (CHQRET)

What is Your LIC Policy Number?

The LIC policy number consists of nine digits and can be found at the top left hand corner of the schedule of your policy bond. Did you knew this information ? Kindly share if this worked for your LIC policy .

Non Convertible Debentures – What are NCD in India ?

Posted on by Jagoinvestor

We recently saw few Non convertible Debentures coming into market like Shriram Transport Finance NCD, Muthoot Finance NCD and Manappuram Finance NCD. A lot of investors wanted to invest in these NCD’s and many did. But does each of the investors understand what NCD is and how it works? What are the risk factors associated with NCD in India? Let’s look at it…

Non convertible debentures (NCD) in India

To understand non convertible debentures, it would be a good idea to understand convertible debentures first. As the name says convertible debentures are those debentures which are converted to normal equity shares after a specified term. Till that time these debentures earn regular income in form for interest but once they are converted to equity shares, they are just like normal shares.

Hence non convertible debentures (NCD’s) are those debentures which are not convertible to equity shares. NCD in India more or less work like company fixed deposit, where you are lending a company to get some interest income and your money back after few years. You need to check the rating of that bond. Such debt bonds are normally rated by credit rating agencies like CRISIL. A good rating indicates reasonable assurance of safety and return of principal as well as interest.

Non convertible Debentures can be secured or unsecured

A NCD can be a secured NCD and unsecured NCD.

 Secured Non convertible Debentures (NCD) are backed up by some assets which can be liquidated for paying off the bond holders incase something goes wrong. For this reason, the returns on secured NCDs are lower than unsecured NCDs. See a discussion on Tata Capital secured NCD on our forum

Unsecured Non convertible Debentures (NCD) are the ones which are not backed by any assets and incase company is in financial crunch, there can be an issue in paying back the bond holders. Only after the payment is made to every entity which has some security, the unsecured NCD bond holders have any chance of getting back their money. So that’s the reason why these NCD’s have high interest rates.

The transparency in NCD is another issue, a lot of companies have come up with NCDs to raise capital, but a common man does not have time and ability to study the NCD and how safe it would be. Look at the following comment:

Can an NBFC disburse all the money it raises? Investors also do not know how much the company has borrowed. The only document for analysis is a (dated) balance sheet. In addition to public offerings, NBFCs constantly tap the ‘private placement’ market for debt. So investors don’t know the total debt burden. There was a subsidiary of India Infoline which raised money through the NCD route. How could investors know that the proceeds were going to be utilised for a subsidiary? In the 1980s, there was a craze for fixed deposits from leasing companies, thanks to high interest rates and fancy incentives paid to investors and intermediaries. The lure was the promised rate of return and not credit quality. The same herd mentality is on display now. At some point, there will be some defaults. – via moneylife

Features of NCD’s

  • They are listed on stock exchanges. Hence, provides liquidity to holder.
  • The tenure of NCDs can be anywhere between 2 years and 20 years.
  • NCDs are rated by rating agencies such as CRISIL.
  • If you buy a NCD that pays interest then the interest will not attract TDS
  • The debentures are generally offered in four options: monthly, quarterly, annual and cumulative interest

Taxation on NCD

Taxation on NCDs is just like debt funds. If you sell your debentures before a year, the profits will be added to your income and you will pay taxes at the same rate as per your income tax slab. But for any profit made by selling it after a year, you will pay tax of 10%, if indexation is not done, or 20% if the indexation is done.

Did you invest in any NCD ? Did you knew how NCD worked ?

ncd in india

Best pension plans in india – Disadvantages and Advantages

Posted on by Jagoinvestor

What are pension plans and how do you identify the best pension plan in India? Is it the LIC pension plans or some pension plan policies from pvt companies or some unit linked plan from companies claiming to provide you with Rs. ‘X’ for ‘Y’ numbers of years once you retires? In this article we will see some of the disadvantages of pension plans in India and how they work.

Pension Plans in India

A lot of investors think that retirement pension plans are the only way to go; and if they do not invest in these products today, then they will miss out on something. In this article let’s talk about pension products. Before I move ahead I would like to coin two terms used in Financial planning which are very easy to understand.

Accumulation Phase : Accumulation Phase is that period of your life, where you invest regularly each month and “accumulate” the Wealth. You start getting pension later in life.  So when you invest your money in ULIP’s, Mutual funds, Direct Stocks or anything else you are into accumulation phase.

Distribution Phase : This phase refers to period when you start withdrawing money from your already accumulated wealth for consumption purpose. So at the time of your retirement or even before that, when you start taking out certain amount per month for next ‘N’ years, that’s called distribution phase.

Best Pension plans in India

Two major categories of Pension Plans

Let me start by taking about pension plans and their types. There are mainly two type of pension plans at broad level.

Deffered Annuity Plans : Most of the pension products in india are sold by LIC and all the private companies are deferred pension plans. These plans have accumulation phase inbuilt in itself and hence you first pay premiums for ‘X’ number of years. Once you retire, then you start getting pension income. You can see these types of plans all over the market. Some examples are LIC Jeevan Tarang, LIC Jeevan Nidhi, Bajaj Allianz Swarna Raksha ROC , New Pension Scheme (NPS)

Immediate Annuity Plans : These products are called immediate annuity plans because they start paying you the annuity right from day one once you make a lumpsum payment. So if a person wants a monthly pension and has huge lumpsum money, he can buy an immediate annuity plan and start getting pension. It’s a simple product which is not so much popular in India like deferred annuity plans. Some of the examples of immediate annuity plans are  LIC Jeevan Akshay , ICICI Pru Immediate Annuity , HDFC Immediate Annuity .

4 reasons why you should not buy deffered annuity plans

Let me tell you 4 strong reasons why you should avoid buying pension plans in India .

1. There are better options for growth of your wealth

The accumulation of your wealth happens in a pension plan for many years, but it’s not the best way your money can grow, ultimately if you had to invest your money in equity (underlying asset class), you have simple and no-cost options like mutual funds, index funds. Also you can choose to put money in real estate. A regular SIP in an equity diversified mutual funds should give much better returns then accumulation in a pension plan (read unit linked products).

2. No predictable returns for annuity

The core function of a pension plan is to give you pension. But do you know how much returns you will get out of your pension plans when time comes for retirement? A lot of pension products do not give a clear idea on how much will you get at the end. What is the return earned is around mere 4%? What will you do? The same is true for NPS.

One major (I mean MAJOR) DRAWBACK is you have no clue what will happen once you finish the accumulation stage and go on to the withdrawal stage. Let us say you have accumulated Rs. 500 lakhs in a NPS account. They allow you to withdraw say 50% of the amount and the balance has to be invested BACK in an annuity. Let us say you ARE FORCED to invest Rs. 250 lakhs in an annuity which pays Rs. 11,000 per month as a pension…looks good? Well depends on what you are capable of doing with your own money!

says PV Subramanyam in this article 

At this point of time, the better alternatives would be old fashioned products like Post office monthly schemes , Fixed deposits with monthly payouts or even senior citizen savings scheme. these all give near inflation returns atleast .

3. Rigidness and no flexibiity

Almost all the pension products are rigid in taxation and what you can do with your money at the end. Under current laws you can withdraw only 1/3rd of your accumulated money tax-free, where as there is long term capital gains at the moment is 100% tax-free. Also it’s compulsory to buy annuity for the remaining money. What if I want all my money for some reason at the end? What if I don’t have a requirement for income later?

These problems won’t be there if you accumulate your money in plain vanilla mutual funds or PPF or other simple investment products.

4. High charges

Who does not know how ULIP’s and other similar products have charged so high costs for initial years without giving clarity to customers. These annuity plans also have high allocation charges many times and customers do not know about it and can’t do much later when he acknowledges it! So why do you want to pay high fees for these products?

Conclusion

It’s suggested that you invest in some instrument which does not have any rigidness on what can be done with your investments at some later stage, like Mutual funds, Direct Equity, PPF, Index Funds, Real estate or even old fashioned products like FD, NSC, KVP… You can create your own accumulation stage and when the time comes for “distribution phase” (pension), you can always buy some immediate annuity plans or create your monthly income through ways of renting out property, getting FD interest or plain dividends from stocks or any combination of these. I hope you have got a fair understanding of what are pension plans in India.

iCare : new online term plan from ICICI Pru

Posted on by Jagoinvestor

ICICI Prudential has launched their new online term plan called “I-Care”, which will replace its old term plan called the “i-Protect” (read iprotect review). This new i-Care term plan has some interesting features like no medical examination till the age of 50 and up to 1.5 crores of sum assured can be taken.

Features of I-Care Term plan

The biggest surprising feature of i-care term plan is that there is no medical examination for customers who are up to 50 yrs old. For all the health related information the company will depend on the declaration made by the customer as there won’t be medical tests applicable. This will make sure that the policy is accepted as soon as possible as there is no medical examination in between. Also there is something called “Policy acceptance” in i-care, which means that once you submit the application online and make the payment, it will be reviewed and finally it will be accepted, after which your insurance coverage will start. Some other features of i-care policy are as follows.

ICare term plan

Additional features

  • There will be high cover available to those people who have active home loan in their name.
  • The premiums once declared will not be increased later, as there is no medical exam later.

Riders in i-care term plan

There is only one rider in i-care term plan just like iProtect had and its accidental death rider. So here are two options one can go for while buying i-care term plan.

iCare Option 1 – Sum Assured

If you take option 1, then you just have a basic sum assured cover which will be paid in case of death. Even if you die in accident you will still get the basic sum assured.

iCare Option 2 – Sum Assured + Accidental Death Benefit

In this option, if one dies due to accident, then the nominee receives extra money equal to sum assured (subject to maximum Rs 50 lacs). This means that; if a person has taken second option with sum assured of 80 lacs, then he will get 80 lacs on death if the death is due to anything other than by way of accident. But if the death is due to accident, then nominee will get Rs 1.3 crores (80 + 50)

Below are the indicative premiums for both the options.
ICare term plan

Note : Please make sure you read the terms and conditions properly (mentioned in the 5th and 6th page of the embedded doc above).

LIC online term plan is coming soon

Posted on by Jagoinvestor

LIC online Term Plan is soon coming to markets ! . There is some good news for all those who would either like to take up a term plan or who are looking to upgrade (increase) their life insurance cover! It is recently disclosed by LIC that Term Plans will be sold online and offline and the premiums will be cheaper than the current rates offered.

LIC online term plan

I personally never thought that LIC would come up with online term plan because of its dependence on agents’ network for selling its products. But this is a good move from LIC as their share of term plan market is eaten away by private insurers from last few years. At the moment, a person has to pay a very high premium for term plan through LIC. For example, the premium for 25 lacs cover with LIC term plan at the moment is around 7,000 – 8,000, whereas it’s around 3,000-3,500 in companies like ICICI iProtect & Kotak e-preferred.

“We are in the process of designing a pure term product which would be sold through both online and through agents,” LIC’s ED- marketing S Roy Chowdhury. “The rates will be lower than what is charged at the moment,” he added.

LIC uses mortality table 1994-96 at the moment

Do you know why LIC premiums are higher? One of the reasons is that they follow old mortality tables which has older death experience ratio. A lot has changed in last 10-15 yrs and we have much better access to health care and lifestyle, which has changed the number of death. Most of the new companies in Life insurance use the latest mortality data but LIC is still using old data and that’s pushing their premiums. Now LIC is planning to revise the mortality rates based on the last 10-15 yrs of experience and hence the premiums would drop down from its current level.

Note that mortality experience are different for different age groups and classes, so it’s not necessary that mortality rates will go down it might happen that mortality rates for age group 25-35 goes up because of the bad lifestyle and new age ailments (stress, junk food, etc). So keep that point in mind. (9 most asked questions about Term Insurance)

How cheap will be LIC online term plan ?

LIC online term plan will be cheaper than the current term plan they offer but expect it to be 15%-25% lower than current premiums. Do not expect a very steep decrease like 50%-60%, because LIC is a very different ball game than other life insurance companies. LIC has accessed in each corner of India and the new online term plan they will launch will be targeted at a very big group and scattered across various cities. It will be offered online and also offline (through agents).

How will this impact Insurance Industry ?

With whatever little I know I can see that urban class will welcome this move with open heart and a lot of people who trusts LIC like anything and even a lot of people who are not big fan of LIC will wait and watch for this online term plan from LIC and would like to go for it only. This move will lead to more sales of LIC term plans in bigger cities and reduce the term plan selling of different other companies (to some extent).

What do you think about LIC online term plan . Are you going for it ? Are you waiting for it ?