Mutual Funds - Tax Benefits

Tax-efficient investment means to minimize the tax-outgo on the returns generated from the investment. The lower taxes results in better yields.

Everybody knows that mutual fund investments are inherently tax-efficient. But did you know that some mutual funds are more “tax-efficient” than other funds and that by taking advantage of this you can minimize your taxes on investments.

So, what exactly are those special tax benefits which makes some mutual funds more tax-efficient than others? Or, how some mutual funds score over others in terms of tax benefits?

Broadly speaking, from taxation angle, there are only two types of mutual fund schemes. Funds which invest more than 65% of their corpus in Indian equities are called equity oriented mutual funds and the other mutual fund schemes which invest in less than 65% in Indian equities are called non-equity funds or debt-oriented funds. Within equity oriented mutual funds there is a special class of equity funds called equity linked saving schemes (ELSS).


Mutual Funds Tax Benefits

1. Debt Funds are better than Investing in FDs [Debt Funds vs FDs]
If you don’t have taxable income, you are better off with fixed deposits (FDs). Else, debt funds provide better post tax returns. Why?

Interest from FDs (Fixed Deposits) is chargeable to tax at the maximum marginal tax rate applicable to you. For example, let’s say a one year bank FD provides an interest @ 10 per cent per annum (p.a.) and your marginal income falls either in 30.90% or 33.99% tax bracket. So your post tax return from fixed deposit becomes 6.91% and 6.60% respectively.

As opposed to this, let’s say you invest in short term debt fund (dividend option) which also earns 10% annualized returns and distribute it among the unit-holders in the form of dividends. That dividend income will be tax-free in your hands but the mutual fund will be paying a dividend distribution tax of 14.1625% (which is indirectly borne by you), so you’ll be getting a net effective return of 8.58% p.a. which is a lot higher than the post tax returns from FDs (assuming same pre-tax returns).

However, if you invest in a debt fund with growth option, then the tax treatment becomes slightly different. For example, let’s assume you invest in an Income or a Bond Fund for two years. Appreciation in the NAV of a debt fund is treated as capital gains. Now, at the time of redemption, returns from debt funds are taxed as Long Term Capital Gains (LTCG) if invested for more than a year. Now, based on the option you choose, LTCG is either taxed @ 11.33% without indexation or 22.66% with indexation. Both the options are certainly better than the tax treatment of FDs where you pay tax at tax slab applicable to your marginal income as already discussed above.

Furthermore, just by investing for a little over 12 months (say 13 or 14 months) in debt funds at the end of the financial year, you can reap double indexation benefits thereby further reducing your tax liability. For example, if you’ve invested in any debt fund during the current month (i.e., March 2009) and you redeem the investment in April 2010, you’ll get entitled for double indexation benefit while calculating your capital gains from the debt funds. This is one of the reasons why mutual funds houses used to launch so many FMPs (Fixed Maturity Plans) during the end of the financial year.

Put simply, for similar pre-tax returns, debt funds provide better post tax returns as compared to FDs. Moreover, no TDS is deducted by mutual funds in case of resident individuals.


2. Arbitrage Funds are better than Debt Funds [Arbitrage Funds vs Debt Funds]
Arbitrage funds take advantage of mispricing for the same asset (equity) in different markets (cash and derivatives). These funds seek to capitalize on the price differences in cash and future segments of the stock-markets.

For taxation purposes, arbitrage funds are treated as equity funds. While enjoying the tax status available to equity funds, arbitrage funds deliver almost assured returns of debt schemes. Put simply, arbitrage funds have edge over debt funds because of the tax benefits.


3. Equity-oriented balanced funds are better than debt-oriented balanced funds
Balanced funds are a better way of asset allocation rather than doing the asset allocation yourself by separately investing in equity & debt funds. You get the benefit of automatic reallocation and therefore avoid the hassle of doing it yourself and further avoid bearing associated costs and tax consequences.

However, from the tax angle, balanced funds having more than 65% in equity are better than those having equity allocation less than 65% because in the former case they are treated like equity funds for tax purposes and get concessional tax treatment / tax benefits applicable to equity funds.


4. Equity Funds are better than Debt Funds [Equity Funds vs Debt Funds]
In case of equity-oriented mutual funds (more than 65% in equity) the LTCG (long-term capital gain) is nil and STCG (short-term capital gain) are taxed at concessional rate of 15% (plus surcharge and education cess).

In contrast, for non-equity oriented funds (i.e. debt funds), while LTCGs are taxed at 10% without indexation or 20% with indexation (plus surcharge & education cess), the STCGs are taxed at highest slab rate applicable to you.

Equity funds also score over debt funds as far as dividends are concerned. Dividends declared by all types of mutual funds (whether equity or debt-oriented) are exempt (i.e. tax free) in the hands of investors. However, a dividend distribution tax (DDT) is to be paid by debt oriented mutual funds which is indirectly borne by the investor / unit-holder. On the other hand, Equity oriented funds (i.e., funds with more than 65% in equity) are exempt from paying even DDT.


5. ELSS are better than plain vanilla Equity Funds [ELSS vs Other Equity Funds]
Among the equity funds, Equity Linked Saving Scheme (ELSS) is the best option. These tax saving funds are like other diversified equity funds but with additional tax advantage of section 80C deduction. It is not without any reason that ELSS is considered as best option under section 80C.


6. Gold ETFs are better than investing in Gold [Gold ETFs vs Gold]
Tax benefits are one of the reasons why Gold ETFs are considered as best way to invest in gold.

For the purpose of calculating long term capital gains, holding period of gold ETFs is one year as against 3 year holding period in case of physical Gold. Furthermore, as against Gold, Gold ETF’s are not considered as an asset for wealth tax purposes.


Thus, while investing in mutual funds, always keep in mind the tax advantages of different kinds of mutual funds so as to optimize your post tax returns from mutual fund investments.


Also see:

1. Home Loan Tax Benefits
2. Direct Stock Investing vs Mutual Funds
3. 6 Myths about Mutual Fund Investing
4. 10 Principles of Mutual Fund Investing
5. Income Tax Calculator

Health (Mediclaim) Insurance Policy - Coverage & Exclusions

Before buying a health insurance policy (popularly known as mediclaim policy), you should be aware of some basic features like what does the health (or mediclaim) policy cover and what it does not cover? This post tries to provide you a brief but comprehensive overview of the basic features of the coverage provided by various health / mediclaim insurance policies available in India as of now.


Coverage: Restrictions & Limitations

1. Maximum Cover
Most insurers have put a maximum cap of Rs 5 lakh on the sum insured except for a few insurance companies such as Apollo DKV, Bajaj Allianz, Cholamandalam MS General Insurance and Star Health and Allied which provide coverage up to Rs ten lakh.


2. Sub-limits
Now-a-days, most mediclaim policies come with sub-limits on various expenses like room rent, doctor’s fees, diagnostics etc. For instance, National Insurance Company (NIC) under its Mediclaim Insurance Policy (Individual) has imposed room rent limit of 1 per cent of sum insured per day subject to a maximum of Rs 5000; however, if admitted in ICU the room rent limit is two per cent per day and maximum limit becomes Rs 10,000. Furthermore, the mediclaim policy of NIC also stipulates that total of room, boarding and nursing expenses can’t exceed twenty five per cent (25%) of the sum insured per illness.

What are its implications? Put simply, you’re not allowed to claim more than the stipulated amount under any specific head. It also means that you may have to foot the medical bill partly even if the total bill is below the sum insured. For Instance, if your health policy sum insured is Rupees two lakh, room rent expenses will be allowed only to the extent of Rs 2,000 per day (in the above mentioned mediclaim policy of NIC). Any room rent expenses beyond this would have to be borne by you.


3. Hospitalisation
Usually a minimum hospitalization of 24 hrs is required for filing a claim under mediclaim policies.

However, for certain medical treatments (Day Care Treatments) and minor surgeries the limit of 24 hrs hospitalization is waived off. For example, Apollo DKV Easy Health policy covers medical expenses for 140 day care procedures which do not require 24 hours hospitalisation due to technological advancements.

A few such treatments as per Mediclaim Insurance Policy (Individual) of National Insurance Company (NIC) are listed below:

a. eye surgery
b. dental surgery due to accident
c. dialysis
d. Coronary angioplasty and angiography
e. Kidney stone removal
f. Treatment of fractures / dislocations excluding hairline fractures
g. Surgery of Appendix, Gall Bladder, Pancreas, Bile Duct, Hernia, Prostate and ENT
h. Radiotherapy.


4. Pre & Post Hospitalisation cover
Besides hospitalization expenses, most healthcare policies also allow you to claim relevant medical expenses incurred during 30 days prior to hospitalization and 60 days after hospitalization.

A few healthcare policies provide wider coverage like Chola Health Insurance Plan covers 60 days prior to hospitalization and 90 days after hospitalization.


5. Domiciliary Hospitalization
Domiciliary hospitalization means the medical treatment is done at home for a period exceeding 3 days for any ailment or injury, which otherwise would require hospitalisation, due to either non-availability of accommodation in the hospital / Nursing Home or if the condition of the patient is such that he cannot be moved to a hospital.

Only a few insurance companies allow domiciliary hospitalization. For instance, while Reliance Health Care Policy and Apollo DKV Easy Health policy allows domiciliary hospitalisation, Bajaj Allianz, ICICI Lombard and National Insurance Company exclude it from the coverage.



Exclusions

It is always better to know beforehand various exclusions and limitations about the mediclaim policies so that you’re aware of the exact scope of the policy coverage to avoid the disappointment later at the time of making a claim. Some of the common exclusions (although vary from policy to policy) are as follows:


6. Waiting Period
Almost all Healthcare or Mediclaim policies carry a waiting period usually of 30 days. Put simply, you can’t make any claim for any diseases contracted within 30 days of buying the health / mediclaim insurance. However, accidental injuries are covered from day one i.e., waiting period is not applicable in case of hospitalization / surgery due to accident.


7. Pre-existing diseases
A fresh mediclaim policy doesn’t cover pre-existing diseases. They get covered only if you don’t make any claim for 4 or 5 consecutive years. In other words, pre-existing diseases gets covered usually after 4 or 5 continuous claim free years.

For example, while National Mediclaim policy, United India Mediclaim, Apollo DKV Insure Health and Bajaj Allianz Health Guard cover pre-existing diseases after 4 claim free years, Royal Sundaram Alliance Health Shield Standard, ICICI Lombard Comprehensive Health and Bajaj Allianz Insta Insure cover them after 5 claim free years.

However, there are exceptions also, for example Reliance Individual Mediclaim (silver plan) and ICICI Lombard Health Advantage Plus covers pre-existing diseases after second year (i.e., from third year onwards), and Apollo DKV Easy Health covers them after a period of 3 years.


8. Temporary Exclusions
There are certain diseases which are covered after 1 or 2 years.

For example, Medi-Classic Individual Policy from Star Health and Allied Insurance Company Limited excludes Hysterectomy, Hydrocele, Hernia, Piles, Sinusitis, Gall stone and Renal Stone removal / treatment etc during the first year AND also exclude Cataract, Joint Replacement Surgery etc during first two years.

In contrast, Mediclaim Insurance Policy from NIC excludes (in addition to other temporary exclusions) all the above ailments (except Joint replacement surgery) during first two years. Besides, it excludes Joint replacement due to degenerative conditions, age related osteoarthritis and osteoporosis during first 4 years of policy.

Similarly ICICI Lombard Health Advantage Plus also excludes (in addition to other temporary exclusions) all the above mentioned medical conditions or treatments during first two years.


9. Permanent Exclusions
There is a long list of ailments that are excluded from the purview of mediclaim policies. Here’s a list of few such general ailments and medical treatments which are not covered:

a. Dental treatment except arising out of accidents.
b. Pregnancy and child births
c. OPD expenses
d. Naturopathy, alternative medicine/treatments including acupressure and magneto-therapy etc.
e. Sexually transmitted diseases (STD) and AIDS
f. All psychiatric disorders
g. Circumcision, cosmetic surgery, plastic surgery unless required to


This is only an indicative list. Further, there are many exceptions to the above list, for example, Medi-Classic Individual Policy from Star Health and Allied Insurance Company Limited allows for treatment under alternative system of medicines (except Naturopathy treatment) but is limited to 25% of the sum Insured, subject to a maximum of Rs 25,000 in the entire policy period.

Similarly, ICICI Lombard Health Advantage Plus also allows OPD expenses, dental treatment etc (but subject to limits specified).


10. Overseas Medical treatment
Medical treatment abroad is also not covered under the health / mediclaim policies.


Also see:

1. Mediclaim vs Critical Illness - Know the Difference
2. Health / Mediclaim Insurance - 10 Practical Tips
3. Why You Need to Continue Your Existing Mediclaim Policy
4. Life Insurance Policies - 7 Basic Features

Mediclaim vs Critical Illness Policies - What’s the Difference?

There are various kinds of health insurance policies available in the market. The basic types are mediclaim policies (also called health insurance policies), critical illness policies, hospitalization cash benefit, unit-linked health insurance plans and senior citizens’ health plans.

A lot of people often get confused between general health plans (also called mediclaim policies) and critical illness policies. This post makes an attempt to clarify the difference between the two health insurance products:


Mediclaim vs Critical Illness Insurance Plans: A Comparison

1. Basic Feature: First, while mediclaim or health insurance policy is an indemnity policy i.e., it reimburses your actual medical expenses, critical illness policy is a defined benefit plan i.e., it gives you a lump sum on diagnosis of any of the pre-specified critical illnesses irrespective of your medical expenses. Put another way, for the purpose of critical illness policy, it is totally irrelevant whether you’re hospitalized or not and whether you incur any expenses on your medical treatment or not. The only requirement is diagnosis and not hospitalization.


2. Scope / Coverage: The second major difference between a health insurance policy and a critical illness policy is that while scope of health insurance or mediclaim policy is quite wide, critical illness policies are restricted in coverage.

Mediclaim policies usually cover the entire gamut of ailments except pre-existing diseases and certain other treatments such as maternity and pregnancy, dental treatment etc., the critical illness policies, on the other hand, cover only certain specified diseases like cancer, stroke, renal (kidney) failure, heart attack, major organ transplant, multiple sclerosis and paralysis. The exact critical ailments covered differ from insurer to insurer but are usually in the range of 6 to 12 diseases.


3. Purpose: Another key distinction between the mediclaim and critical illness policy is the purpose of buying the policy. While you need mediclaim policies to defray the hospitalization expenses incurred by you on your medical treatment, the purpose of buying critical illness policy is not only to foot the medical bills but also to compensate the financial loss or hardships that arise from your serious or critical illness.


4. Sum Assured: Whereas the maximum sum assured for mediclaim is usually capped at Rs 5 lakh (although few companies allow cover up to Rs 10 lakh) by most insurers, the critical illness policies provide you with much higher coverage ranging from Rs 5 lakh to Rs 50 lakh.


5. Waiting Period: Both the mediclaim and critical illness plans exclude pre-existing ailments. However, unlike most general health plans or mediclaim policies which carry a waiting period usually of one month (i.e., any sickness or illness contracted during first 30 days from the commencement of the policy is excluded), in case of critical illness plans most insurance companies exclude any critical ailments detected during first 90 days.

Besides, in case of mediclaim policies, there are certain ailments such as hernia, piles, sinusitis, diabetes, cataract which gets covered only after a waiting period of 2 years.


6. Other Exclusions: A few of the insurers also require a survival period of 30 days after the diagnosis of the critical illness i.e., you need to survive for 30 successive days after the diagnosis of the critical illness in order to make the claim. In other words, if you die within 30 days of the diagnosis, your claim under critical illness policy is rejected.

In case of general health insurance policies, for making a claim generally minimum stay of 24 hrs is required except in a few specified cases.


7. Policy Status after making the Claim: While critical illness policy expires, once the claim is made, mediclaim continues even after you file one or more claims; it remains in force till the total amount insured is exhausted.


Please note all the features mentioned above are general and may vary from company to company and policy to policy.

Finally, which health insurance policy – general health (mediclaim) or critical illness policy – is better? Should you go for mediclaim or buy a critical illness policy?

Actually, both policies supplement each other as they serve different purpose and therefore you require both. Imagine you’re diagnosed with a cancer. Now, while your mediclaim policy would be able to take care of your medical bills, what about loss of income if you remain on leave for long and what about post operative expenses? What if you become permanently disabled and bedridden due to paralysis? I hope you got the point.

Also see:

1. ULIPs Vs. Traditional Insurance Plans

2. Health Mediclaim Insurance - 10 Practical Tips

3. Mediclaim Health Policy - 5 Reasons to Renew on Time

4. Mediclaim Policies - Coverage & Exclusions

5. Health Insurance Plans: Section 80D Deduction

7 Must-Know Points about Life Insurance Policies

Life insurance policy is a long term contract and involves substantial investments. Therefore, before buying life insurance, you should be aware of some basic features of these policies. This post lists out 7 such must-know points regarding life insurance policies:

1. Policy illustrations
According to IRDA, no life insurance company can show you an illustration projecting returns in excess of 10 per cent. Besides, the company has to specifically mention that those returns are not guranteeded.

So, if any insurance advisor approaches you with an illustration depicting more than 10% returns or verbally assure you high returns, just show him the door without any further argument.


2. Riders
Riders provide you options to customize your policy as per your needs at a small additional cost. There are various riders available with the life insurance policies which includes waiver of premium rider, major surgical assistance rider, disability benefit rider, accidental death benefit rider, guaranteed insurability option rider and critical illness rider. However, the total premium for all riders put together can’t exceed 30 per cent of the premium for the base policy.


3. Nomination
You are recommended to nominate a person while buying a life insurance policy. The purpose of nomination is to authorise a person to receive the amount if anything unfortunate happens to you. If you wish you can change the nomination at any time subsequently.

However, remember that while nominee gives valid discharge to the insurance company, he doesn’t acquire the absolute right over the policy proceeds in case there are other legal heirs.


4. Free-look period
Do you know that even after purchasing a life policy, a period of 15 days (from the date of receipt of policy document) is available to you during which you can review the policy and if found unsuitable, return it back to the insurance company and get a refund.

As per IRDA regulations, it is mandatory for all insurers to grant at least 15 days of free look period to the insured after the date of receipt of policy.

So, always make it a point to go through the detailed terms and conditions of the policy document by reading the fine-print and satisfy yourself that it meets your requirements and if not, then just dump it and get a refund. Furthermore, if you find any details missing or any wrong information, you should return the policy.


5. Grace Period
Additional period of time after the due date provided to the insured during which premium can be paid is called grace period. Usually, a grace period of 15 days is allowed in case of monthly payment of premium and one month in case of all other frequencies (i.e., quarterly, half-yearly or annual payment of premium).

The policy remains in force during the grace period. In other words, claims made during grace period are payable but after deducting the unpaid premium. Besides, no interest is charged for making premium payment during the grace period.

So in case you ever fail to pay your premium with in due date due to any reason (cash crunch or could not remember the due date) make sure to pay it with in the grace period allowed so that your policy doesn’t lapse.


6. Policy Lapse & Revival
If you ever forget to pay the premium within the due date or the grace period permitted by the insurance company, your policy lapses. In case of Ulips, rules are a bit different. For further details, please read “How to Get Rid of Life Insurance Policies”.

However, even in case of lapse of life insurance policies there is a way out. Usually, a period of six months from the due date – including grace period – is allowed during which you can revive the policy by just paying the overdue premium along with interest. Furthermore, even after the period of six months, you can get the policy reinstated but generally insurance companies insist on fresh medical check up.


7. Suicide Clause
If you commit suicide within one year from the date of issue of policy, you are not entitled for any life insurance claim. For example, in case of a term plan, nothing will be paid back to your nominees and in case of Ulip only the fund value will be refunded.

Thus, if you’re contemplating suicide make sure that you commit it only after the first policy anniversary date. Hey, just joking, please don’t take it literally.


RELATED POSTS:
1. Amazing Fact about Life Insurance – Term Plans
2. Ulips – Top 5 Secrets
3. Ulips Vs Traditional Plans
4. Section 80C – A Complete Guide
5. 5 Common Life Insurance Myths
6. How to Get Rid of Life Insurance Policies

Smart Way to Use Credit Cards - 10 Tips

I hate to pay cash; credit cards are much easier and convenient. Rather than using sparingly, I use my card at every possible opportunity.

Well, through this post, I would like to convey the message that credit cards are not bad thing per se. Put simply, credit cards are not as bad as we make them out to be. There is a right way to use credit cards and a wrong way. It’s only when we misuse credit cards, they become a source of our financial misery. So, let's see how to use credit cards effectively and wisely so as to make the best use of them.

Here’s a list of 10 tips for making the most of your credit cards:

1. Widen the usage
Try using your credit card for all your day-to-day small regular purchases; it helps to keep a written record of your minor purchases – which helps you in budgeting - otherwise you’ve to remember all the cash expenditure made during the day till you write it down.

Besides, try using your card in every other possible manner e.g., paying your utility bills like telephone, paying various subscriptions and membership fees, train and airline reservations, online buying, paying insurance premium etc. That way you’ll get free credit period and free reward points without any extra spending. In addition it will save you a lot of botheration.


2. Become more conscious of your spending
Do you know why you tend to overspend while using your credit cards? The reason is psychological. It is technically called payment decoupling which means that the pain of paying gets decoupled – and postponed to a future date – from the pleasure you gain by shopping. Moreover, you won’t have to feel that pain every time you use card. Rather it will be felt only once in a month while making payment for the credit card dues.

Therefore, spend consciously i.e., by becoming aware that while using credit cards we are always prone to overspending.


3. Pay your dues on time and in full every month
Never wait for the last date. It is always better to clear your monthly credit card dues well in advance so that chances of disputes of late payment are avoided.

If you wait till the last date, cost of missing out is much higher than the additional credit period of few days.

Ensure that not only you pay your dues in time but pay the dues in full as well. In case of an emergency (which should be a temporary and rare occurrence), make sure that at least you pay the minimum amount due. And as soon as your finances are streamlined, pay the balance without waiting for your next bill.


4. Don’t accumulate cards
Don’t accumulate credit cards, even if they are free for life. Even if you don’t transact, you remain exposed to high level of risk in case of card loss or theft. Therefore, keep one or at the maximum two cards.

The basic purpose of having a credit card is the convenience of single payment mechanism which gets defeated in case of multiple cards.

Having two many credit cards will require that you put more time and energy in maintaining them. Besides, it increases your risk exposure because probability of getting stolen or misplaced increases with the increase in the number of cards. And if by error you delay payment on even one of the cards, it will undo all the benefits you gained by having so many cards, each one for a specific and different purpose. Above all, by having too many cards makes it a lot easier to fall prey to your temptations and buy worthless stuff you may never use.

Retain only one all-purpose credit card or keep at the most two. Cancel all others.


5. Never borrow on credit cards
Raise your awareness levels and feed it permanently in your sub-conscious mind that credit cards are not a source of additional money. They are just tools to use your already existing money more efficiently.

If you are really short of money and need it desperately, go for personal loans. You may not be aware that these kinds of loans are also available against your credit cards. The effective rate is just about fifty percent of what you pay on revolving credit or cash withdrawals and is almost at par with what the banks offer on plain vanilla personal loans. Moreover, the processing time is minimal and that too without any documentation. The only requirement for availing these loans is long term relationship with your card issuing Company and good payment track record.


6. Monitor your credit limit
Try to have an optimum credit limit because if you keep it too high your risk exposure – in case of unauthorized use of your card - is increased and if you keep it too low, there always remains a chance of exceeding it thereby inviting penal charges.

Therefore, set a credit card limit you are comfortable with. Further, keep a regular tab on it and reject all proposals for credit limit increase.


7. Dig into the fine Print
Try to avoid falling prey to credit card traps. Many of the traps are hidden in the terms and conditions so before starting to use the card, make it a point to go through the terms and conditions thoroughly. The time spent in reading the fine print can save you lots of money and hassles in future.

Understand that there are no free lunches in this world. If you are getting anything for free, always ask, what’s the catch?


8. Monitor total usage
Are you aware that once your annual credit card spending cross Rs 2 lakh, you are required to specifically mention it in your tax return? Therefore, always monitor your total card usage during a financial year and if you a borderline case, try to keep it a little short of Rs 2 lakh to avoid mentioning the details in the tax return.


9. Never pay credit card surcharge
The practice of asking for credit card surcharge is quite rampant in India particularly in case of consumer durable shops. If merchant establishments demand a surcharge for using your credit card, never make a transaction and report it to the credit card company because as a general policy, vendors are not allowed to add a surcharge to credit card purchases.


10. Don’t get obsessed with cash backs and reward points
Avail cash-backs and reward points, wherever possible, but don’t get obsessed with them. Just think of them as bonus.


Conclusion
In a nutshell, credit cards are double-edged swords. They can be a blessing or a curse depending upon how you use them. If used prudently, credit cards are a powerful money management tools. But, if used poorly, they can ruin your life.

Finally, how do you use your credit card? Are you a regular or occasional card user? What’s your own experience with credit cards? Are you a smart and intelligent credit card user or a sucker? Please share your views in the comment section below.


RELATED POSTS:
1. Credit Cards - 8 Security Tips
2. Credit Cards - Traps to Avoid
3. Credit Cards Cash back Offers - What’s the Catch?

Term Plans - Top Most Amazing Fact about Life Insurance

It is rightly said that common sense is the most uncommon thing in this world. Honestly, common sense is not so common in today’s world. Well, this post about life insurance term plans just tries to prove the above maxim as correct.

Here is a list of 10 basic questions you should answer before buying or investing in life insurance:

1.Which is the most simple form of life insurance?
A: Term plan

2. Which is the cheapest form of life insurance cover?
A: Term plan

3. Which is the most basic and purest form of life insurance?
A: Term plan

4. Which is the best form of life Insurance?
A: Term plan

5. Which life insurance plan is easiest to compare?
A: Term plan

6. Which is the most affordable form of life insurance?
A: Term plan

7. Which life Insurance plan your agent or advisor refuses to discuss or discourages you to buy?
A: Term plan

8. Which Insurance Plan is the least sold?
A: Term plan

9. Which life insurance plan is easiest to terminate?
A: Term plan

10. Which is the best gift you can ever give to your family?
A: Life Insurance term plan


Isn’t it amazing? Despite being the best form of life insurance, term policies are least sold. Even though the term plans are most effective form of life insurance, only a few people are aware of them.

Finally, which life insurance plan should you opt for? Decide yourself!

Hey! What are you waiting for? Call your insurance advisor right now and ask for the quote for the term plan. Obtain at least 4-5 quotes from different insurance companies, make a comparison and just buy the cheapest term policy. Please don’t delay. I promise that you’ll never ever regret this decision.

But before you buy it, I should tell you the only flipside to these life insurance policies is that if you happen to live beyond the end of the term, you get nothing. This fact is difficult to digest and consequently taken advantage of by the insurance agents to misguide you about the true purpose of life insurance.

But, tell me do you expect to receive the money back on the comprehensive insurance cover you buy for your car? It is similarly with the pure form of life insurance. Understand that life insurance as a form of protection is the single most important financial product you – as a bread winner – can have for your family. I hope that I’m able to drive home the message. If you still have any doubts, please write in the comment box below.

Also see:
1. Amazing Facts about Income Tax
2. Complete Guide to Section 80C Tax Planning
3. Top 10 Factors about ULIPs
4. SBI Life-SMART ULIP: Review
5. 5 Common Myths about Life Insurance
6. Understanding Life Insurance: Ask Yourself a Few Questions

Section 80C Tax Planning - A Complete Guide

March – the last and final month allowed for tax savings – is here again. And, like every year you’ve yet to start with your tax savings. If you’re clueless as to where to begin, don’t worry. The Money Quest is here to help and guide you so that you don’t repeat the same mistakes over again.

I’ve already covered almost every aspect of section 80C tax planning. So, this post has nothing new to write about, but to act as a guide for preparing section 80C TAX PLANNING STRATEGY to minimize your tax outgo.

1. The first step is to find out the optimum way of tax planning. So, understand how to do section 80C tax planning.

2. Know the various tax saving options available to you under section 80C of the I.T. Act and also various limitations and restrictions imposed under section 80C.

3. There’s more to tax planning than section 80C. So, look beyond section 80C of the Income Tax Act because there are many other deductions available to you under section 80 other than 80C.

4. The most crucial part of tax planning is choosing the investment instrument based on various criteria like type of return (fixed vs. variable), risk involved, duration and taxability of returns.

a) The best section 80C investment is ELSS. Before investing, understand how to invest in ELSS.

b) If you are looking for a debt option under section 80C, PPF is considered as best. Know how PPF stands vis-à-vis NSC and if you decide to invest in it, keep in mind various tips for realizing the full potential of PPF before opening an account.

c) There is yet another mutual fund debt option available under section 80C. Before investing, know the pros and cons of section 80C mutual fund pension plans.

d) Insurance is a bad choice from section 80C point of view. Nevertheless, if you want to invest in Ulips, understand that Ulips are better than traditional life insurance plans. Besides, before investing in Ulips also go through and learn the Ulip secrets, top most Ulip factors and the best Ulips based on IRR.

5. At last, please make an INFORMED DECISION. To avoid regretting later, make sure that this time you don’t pick up the wrong investment product under section 80C.