The new ULIP scheme is an excellent product provided insured have a goal or objectives in front of him . The new ULIP could be a sought after product for Children’s education, marriage of daughter or to create wealth for initial down payment for home loan. It is neither a pure investment nor a pure insurance product worthy for middle class. Many readers of AT asked whether it would be prudent to buy new ULIP product for the sake of insurance or investment. My views are loud and clear. It is a good product with an objective or goal in mind for the wellbeing of the family. It is neither a cost effective life insurance product nor an efficient investment product, unless continued for long term. It has 80 c tax benefits for the insured. But it has yet to receive tax free status under section 10d of finance Act.
The Unit linked Insurance Plan(ULIP) is a type of life insurance product under IRDA having an investment overtone.. The cash value of a policy varies according to the current net asset value of the underlying investment assets. It allows protection and flexibility in investment, which are not present in other types of life insurance such as whole life policies. The premium paid is used to purchase units in investment assets chosen by the policyholder.
ULIP came into play in the 1960s and is popular in many countries in the world. Now in India once ULIP is taken cannot be surrender till fifth year of subscription is over. ULIP once subscribed must be maintained till full policy term in order to gain benefit.
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In India investments in ULIP are covered under Section 80C of IT Act. However, the concept of having an investment and insurance by the same instrument was challenged by the market regulator SEBI which took up the matter to the Supreme court of India .The Indian government brought down curtains on the two-month long tussle between the regulators by ruling that Unit-linked Insurance Products (Ulips) will be governed by the IRDA
If you use life insurance as an investment instrument, be prepared for slightly lower yields because of increased taxation. The ULIP product is not tax efficient despite it provides 80 C benefit. The service tax on ULIP is now 1.5 percent against 1% on Life insurance.
For example, if you paid an annual premium of Rs 10,000, the service tax (of 10 per cent) was charged on Rs 100. Now, the tax will be charged on Rs 150. “These will be adjusted in the premiums and accordingly the yield will fall,” said a senior official of a life insurance company.
Similarly, the finance minister has also brought all unit-linked insurance plan (Ulip) charges under the gamut of service tax. Until now, only mortality and fund management charges were subjected to service tax. This means, policy administration charge and policy allocation charge, too, would come under the service tax net. According to Nageswara Rao, CEO and managing director, IDBI Federal Life Insurance Company, guaranteed Ulips would attract higher charges, too, after the Budget modification in the service tax.
However, the insurers were waiting for the finance minister to clarify on the continuation of the exempt-exempt-exempt (EEE) tax regime on life insurance products once the Direct Tax Code is implemented from April 1, 2012. “EEE is an important incentive to invest in long-term savings instruments such as life insurance and hence should be retained. However, the speech did not give any clear indication on it,” , commented by an insurance expert.
In the new guidelines, which took effect from September 1, Irda increased the lock-in period for Ulips from the existing three years to five years. And, all Ulips other than pension and annuity products were to provide a minimum mortality cover or health cover. This has resulted in a sharp drop in sales of Ulips, which once had constituted more than 90 per cent of the sales of life insurance companies.
“All products under the new guidelines have been performing very well and this shows if a proper product can be developed, sales will not be an issue,” said an LIC official.Private life insurance companies, on the other hand, have seen sluggish growth in the financial year so far. In the first 10 months, they collected Rs27,865 crore by selling new policies, a modest 5.8 per cent increase as against Rs26,328 crore collected a year before.
Why ULIP plans are avoided now a day by most people? This is due to the fact that in earlier regime most ULIP plans were improperly sold. The insurance officials did hide the fact that it is a long term product and would not yield any profit for at least for seven years, though product could be exited after three years. Many insurance agents sold the product on the basis one time payment . Agents also never clearly mentioned that if policy is exited before seven years a penalty would be charged as the surrender value. If the insurance companies would have trained their agents properly this kind of miss information would not have occurred. Instead of imparting proper training to their agents, insurance companies pressurised their agents to achieve higher target every months. This was done for ULIPS were the bread and butter for insurance companies then. Difference between two regulators forced the government to recast the ULIP. The product is of great value now provided it is understood properly. The ULIP could be bought by young parents while they are in their late Thirties. This would provide them with great satisfaction while sending their children for higher education and during marriage.
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Showing posts with label INSURANCE FOR SECURITY. Show all posts
Showing posts with label INSURANCE FOR SECURITY. Show all posts
Saturday, April 30, 2011
Saturday, February 20, 2010
HEALTH CARE POLICY IS A MUST FOR ALL FAMILY MEMBERS
Health care insurance cover is a must in today's society. When we were young civil Hospitals were taking care whenever common people were falling ill.The hospitalisation were in- expensive. I still remember the birth of my only son in 1967 at panbazar civil Hospital then turned Medical College. The total delivery charge in a paying cabin by legendary Doctor Rajkumar Das was Rs 165/- only. Today child delivery cost goes up to thousands.Sometime the cost nears onelakh rupees.The Health care cost has become prohibitive. A minor surgery now a days has become unaffordable. To protect the family and to keep tension away all persons ,who can afford ,should take health cover.It is not only essential,it is a must for self employed persons and their family members, beside retired persons.
Fortunately all the employees and their families are mostly covered by their employers.But many companies and government do not cover old parents of their employees. The medical expenses are gen rally higher during old age and as such special care should be taken by the children for their parents. unless insurance cover is taken by late fifties, very often insurance companies hesitate to issue cover to older persons who have crossed sixty years of age. But recently the central government have issued directives to insurance companies to issue the policy to senior citizens after due health check up.
HEALTH INSURANCE IS OBTAINABLE BOTH BY INDIVIDUAL POLICY OR BY GROUP POLICY. GEN RALLY GROUP POLICY IS ISSUED TO CORPORATE, SOCIETY AND ESTABLISHMENT. Generally individual policy is costlier and group policy is cheaper. In India both public sector insurance companies and private sector insurance companies issue health care policy. The premium of nationalised insurance companies are little less than private sector companies. Premium paid by people get income tax deduction up to Rs 15,000/- and additional amount of tax rebate is available for the policy of their parents. In lieu of the premium the insurance coma pies covers the insured in case of critical sickness and accident.
Beside group and individual insurance cover Special Plans are also available for elderly persons, veterans of armed forces etc. Medical insurance covers expenses of the hospitalisation, doctors fees and medicine etc only on hospitalisation of patient.No medical expenses are paid for treatment at home.But the expenses of domiciliary treatment are also available under certain condition. The cost of treatment are generally reimbursed and under certain condition cashless options can be also availed. This policy is popularly known as "Mediclaim Policy". In addition to general health care policy another policy known as "Critical illness cover" are also available under separate or as additional cover on payment of additional premium. whenever any claim is preferred under the critical illness cover a lump sum amount of insured amount is paid beside usual medical reimbursement to take care of prolonged medical requirements etc. The policy stands terminated after such payment is released. the critical illness cover is available for Heart illness, kidney treatment, cancer etc.
The health care policy is beneficial to member of the insured in many ways. According to a specialist of insurance the benefit under health cover are manifold.
"Benefit however depends on the policy you choose and the coverage it provides. Here is a list of basic coverage provided by most of the health policies.
It helps securing a better future by paying a fraction as an expenditure today called the premium.
It reduces saving huge amount of financial losses, risk of financial breakdown in case of expensive medical and post-illness care.
It certainly induces a sense of security to the insured.
It provides financial security to the family members.
It covers your hospitalisation and medical bills.
It also covers disability and custodial bills.
You can avail tax benefits on the premium paid under section 80D of the Income Tax Act.
The best factor, you can also opt for medical policy even after the age of 60, now a days."
Before taking a health care mediclaim cover it would be better to study the cost of premium of various companies. Every insurance company charges different premium. The nationalised companies charge similar premium but their service vary area wise. Before taking policy try to find out which company provide better service. All the insurance company now a days settle claim through a settlement agency known as TPA.(Third party Administrator). The settlement of claim is always problematic. You need to take help of your agent while filling up the claim forms. So while taking insurance cover it would be wise to buy through a well known and efficient insurance agent or adviser who would help his clients in actual time of need, when claim is preferred.
Fortunately most employers take care of their employees.But self employed persons like consultant , Doctors, Actors, lawyers, singers artist must take medical cover. The most self employed people remain busy and so forget to take care of their own health. Unfortunately not so many people get health care facilities after retirement. They need to
take Mediclaim policy when they are on the verge of retirement at 58 years. Health covers are not luxury.It is a necessity of life. Let us all be prepared for the health care for health is the actual wealth.
-----------------------------------------------------------
Fortunately all the employees and their families are mostly covered by their employers.But many companies and government do not cover old parents of their employees. The medical expenses are gen rally higher during old age and as such special care should be taken by the children for their parents. unless insurance cover is taken by late fifties, very often insurance companies hesitate to issue cover to older persons who have crossed sixty years of age. But recently the central government have issued directives to insurance companies to issue the policy to senior citizens after due health check up.
HEALTH INSURANCE IS OBTAINABLE BOTH BY INDIVIDUAL POLICY OR BY GROUP POLICY. GEN RALLY GROUP POLICY IS ISSUED TO CORPORATE, SOCIETY AND ESTABLISHMENT. Generally individual policy is costlier and group policy is cheaper. In India both public sector insurance companies and private sector insurance companies issue health care policy. The premium of nationalised insurance companies are little less than private sector companies. Premium paid by people get income tax deduction up to Rs 15,000/- and additional amount of tax rebate is available for the policy of their parents. In lieu of the premium the insurance coma pies covers the insured in case of critical sickness and accident.
Beside group and individual insurance cover Special Plans are also available for elderly persons, veterans of armed forces etc. Medical insurance covers expenses of the hospitalisation, doctors fees and medicine etc only on hospitalisation of patient.No medical expenses are paid for treatment at home.But the expenses of domiciliary treatment are also available under certain condition. The cost of treatment are generally reimbursed and under certain condition cashless options can be also availed. This policy is popularly known as "Mediclaim Policy". In addition to general health care policy another policy known as "Critical illness cover" are also available under separate or as additional cover on payment of additional premium. whenever any claim is preferred under the critical illness cover a lump sum amount of insured amount is paid beside usual medical reimbursement to take care of prolonged medical requirements etc. The policy stands terminated after such payment is released. the critical illness cover is available for Heart illness, kidney treatment, cancer etc.
The health care policy is beneficial to member of the insured in many ways. According to a specialist of insurance the benefit under health cover are manifold.
"Benefit however depends on the policy you choose and the coverage it provides. Here is a list of basic coverage provided by most of the health policies.
It helps securing a better future by paying a fraction as an expenditure today called the premium.
It reduces saving huge amount of financial losses, risk of financial breakdown in case of expensive medical and post-illness care.
It certainly induces a sense of security to the insured.
It provides financial security to the family members.
It covers your hospitalisation and medical bills.
It also covers disability and custodial bills.
You can avail tax benefits on the premium paid under section 80D of the Income Tax Act.
The best factor, you can also opt for medical policy even after the age of 60, now a days."
Before taking a health care mediclaim cover it would be better to study the cost of premium of various companies. Every insurance company charges different premium. The nationalised companies charge similar premium but their service vary area wise. Before taking policy try to find out which company provide better service. All the insurance company now a days settle claim through a settlement agency known as TPA.(Third party Administrator). The settlement of claim is always problematic. You need to take help of your agent while filling up the claim forms. So while taking insurance cover it would be wise to buy through a well known and efficient insurance agent or adviser who would help his clients in actual time of need, when claim is preferred.
Fortunately most employers take care of their employees.But self employed persons like consultant , Doctors, Actors, lawyers, singers artist must take medical cover. The most self employed people remain busy and so forget to take care of their own health. Unfortunately not so many people get health care facilities after retirement. They need to
take Mediclaim policy when they are on the verge of retirement at 58 years. Health covers are not luxury.It is a necessity of life. Let us all be prepared for the health care for health is the actual wealth.
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