Ankita Sejpal, Author at Turtlemint

Significance of IDV while buying Bike Insurance in India

June 24, 2022June 24, 2022 Ankita Sejpal

Are you intending to buy your dream bike? Awesome! However, there are certain aspects you need to know before you insure your bike. In this article, we shall be talking about one of the most important aspects called Insured Declared Value or IDV of your bike.

What is IDV?

IDV represents the ex-showroom value of the two-wheeler being assessed. It is fixed based on the manufacturer’s selling price, including invoice value and taxes (GST) as applicable. It, however, does not include the insurance and registration charges.

IDV is a function of the below-mentioned factors:

Make and Model of the vehicle
Sub-model and specifics of the bike under consideration
Registration date

IDV is the proxy for arriving at the sum insured for the two-wheeler being assessed under the insurance policy. IDV is fixed at the beginning of each policy year for the vehicle being insured. If the two-wheeler is not brand new, then the IDV is based on the current selling price of the model as quoted by the manufacturer adjusted to the years of depreciation.

Read more to know what Factors Affect your Bike Insurance IDV.

The importance of IDV while buying bike insurance in India

It is mandated under the Motor Vehicles Act, that two-wheelers hold at least a third-party insurance to cover liabilities/claims arising from the counterparty if engaged in an accident. However, there is a growing preference to buy comprehensive insurance considering that the cost of repairs and reimbursements has been rising. Further, many individuals invest in very expensive bikes that reflect their lifestyle. The spare parts and maintenance of such bikes are quite high, and comprehensive insurance comes in handy for the upkeep of such bikes and all bikes in case they are involved in accidents.

There are numerous technical terms that one has to decode whilst availing of a bike insurance policy, one such term is the insured declared value or IDV. IDV is one of the many aspects that influence the premiums of your bike insurance plan in India. Let’s dive deep to understand the nuances.

Depreciation rates applicable

The IDV is subject to depreciation based on the age of the vehicle, the rate at which depreciation is applied is as mentioned below:

Timeline	Rate of depreciation
<= 6 months	5%
6 months – 1 year	5%
1 – 2 years	15%
2 – 3 years	20%
3 – 4 years	40%
4 – 5 years	50%

If the vehicle is older than 5 years, then the vehicle is physically examined and an appropriate IDV is arrived at by the insurer. Upon agreement between the insured and insurer, a contract for bike insurance is drawn.

What is the impact of IDV on your bike insurance?

The value of your IDV has a direct and proportional impact on the bike insurance premiums. If you have a higher IDV, it essentially translates to a higher sum insured, this means that the premiums would be on the higher side.

On the other hand, if your bike is old and has had reasonable wear and tear, the higher depreciation rate would bring down the value of your bike considerably, which would in turn mean that your bike will now be insured for a smaller sum insured. This would in turn translate to a lower premium.

How does IDV matter?

As indicated earlier, IDV is the sum insured for the bike you intend to insure. If your bike were to be stolen in the first 6 months of its purchase, then based on the above table, you would be eligible for 95% of the IDV value as settlement. This means that you could potentially claim back 95% of the ex-showroom price of the bike. This could be a headstart for you if you intend to purchase another bike to continue with your activities without any untoward disruptions.

You must pay close attention to the IDV and ensure that it matches the market value of the vehicle net of depreciation. This will ensure that you are in a position to at least have a headstart in replacing your vehicle in the event it is either stolen or irrevocably damaged during an accident.

Why should you look for a higher IDV?

Although a high IDV would translate to higher premiums, you should always try to negotiate for a higher IDV for your bike to ensure that you would be appropriately compensated. The whole premise of insurance is to pay a certain premium to hedge your risk against an unpleasant event. Although you may feel that the premium hurts you on an intermediate basis, the compensation you will receive during the occurrence of the unfortunate event will make up for every penny spent on your bike insurance.

Hope this brief note on IDV helps you avail yourself of bike insurance that is competent and provides you optimal coverage against any mishap or theft about your two-wheeler.

If you need help in choosing the right policy, contact Turtlemint’s advisor for your bike insurance.

DISCLAIMER
This article is issued in the general public interest and is for educational purposes only. The blogs should not be used as a substitute for competent expert advice from a licensed professional to best suit your needs.

6 Tips On How College Kids Can Lower Their Car Insurance

June 23, 2022June 24, 2022 Ankita Sejpal

As a college student, you are always looking for options to save money. If you are a kid with a car, the petrol costs must already be burning a hole in your pocket. What is disheartening is that the car insurance premium for a student is higher than that of any adult older than a college student. Here are reasons why the premium of car insurance opted for by college students is higher.

Premiums of car insurance are determined based on a slew of factors which are not favourable to college students

Younger individuals tend to cause more accidents than older people or more experienced drivers, hence age as a factor works against college students.
The driving experience is an integral factor, college students are newbies and hence lack of driving experience drives up the premiums.
No prior violations can contribute to lower car insurance premiums.
The credibility of the individual will also determine the premium; a higher credit score will indicate that the insured can pay the insurance conveniently.
The location where you reside could also determine the car insurance premium rates. Some regions prone to seasonal waterlogging issues, natural calamities, higher theft rates etc., will command a higher car insurance premium.
Accident rates in the area will also determine the car insurance premium.
Car usage is another factor which impacts the premium. Often college students tend to use their cars for long drives and do not practice good driving habits, these factors could potentially impact the car insurance premium.
Interestingly even though gender can determine the premium rates, male drivers tend to be riskier and file more claims on their car insurance. Women drivers are less riskier and the claims against their car insurance are lower. This leads to male drivers having higher premiums.

Also, read How to calculate car insurance premium.

Top 6 tips on how college students can lower their Car Insurance premium:

There are some hacks which can help college students to save on their car insurance. Here are a few of them:

Avail student discounts:
Some insurance companies offer discounts to students subject to certain predetermined criteria. You should compare vendors to ascertain if there are any such provisions.
Good driving practices discounts:
As stated earlier, if you have a clean track record without any violations in the past, then it may result in lower premium charges. Typically, for a student this may not kick-in in the first year, however, with a no-claim track record, the student may build a reputation for good driving practices and this could result in lower premiums.
Multiple policyholders:
If you hold multiple policies on you as a college student like home insurance, life insurance, and health insurance, then your premiums on car insurance could be competitive.
Infrequent driver discount:
If you are a student who drives occasionally, then your premiums could cost you a lot lower. Here again, in the first year, you may not avail of this benefit, however, you can establish a pattern over a few years and show records of less than 25% utilisation of the car’s mileage which will translate to a potential discount in insurance premiums.
College Tie-Up:
Often insurers provide discounts when they tie-up with organisations and provide insurance to a group of individuals within the organisation. An insurer may tie-up with your college/university to provide car insurance at competitive rates. For this, you may have to reach out to the college administration to find out if there is such a tie-up.
Premium linked to IDV:
College students typically buy older or cheaper cars with lower IDV (Insured Declared Value). Thus, their car insurance premiums on old cars tend to be lower. This is because of the lower car value which will result in the insurance company making a smaller payout in the event of damage. The extent of coverage will be lower and hence the premiums would be lower.

For a first-timer college student, it could be overwhelming, so consult your parents and seek their help to choose the most competent car insurance.You can also reach out to Turtlemint Expert Advisors to help you with your car insurance!

5 Ways Practising Yoga Helps You To Lower Your Health Insurance Cost

June 20, 2022June 20, 2022 Ankita Sejpal

Yoga originated in India thousands of years ago when the learned sages and Gurus preached their knowledge of harmonising the body and soul. Today, Yoga has gained international recognition and is celebrated, every year, on the 21st of June. This year too the world International Yoga Day is around the corner and would be celebrated worldwide.

Yoga has been recognised internationally for a very simple fact, the health benefits that it offers. Yoga is a complete exercise that can attune your body and mind and help you stay healthy and fit. Furthermore, Yoga also helps in reducing your health insurance cost.

Surprised? Don’t be! Though indirectly but practising Yoga sure can help you lower your health insurance cost. Here are five ways how –

1. Lower premiums when buying the policy

When you practice Yoga regularly, you can stay fit and healthy. This fitness determines the premium calculation when you buy a health insurance policy. If at the time of buying the health insurance policy, you suffer from a medical complication, the premium of the policy would be increased to bear the increased health risk. However, if you are healthy, you can avoid this loading and enjoy lower premiums.

Infact, some insurance companies also offer discounted premiums for healthy individuals. You can avail of such premiums when you practice Yoga and are healthy.

2. Enjoy no claim bonus

No claim bonus is a reward that health insurance plans offer if you don’t make claims in the previous policy years. When you practice Yoga, you can stay fit and avoid possible lifestyle illnesses and complications. This reduces the probability of claim allowing you the no claim bonus in the policy.

The no-claim bonus can either be given as a free increase in the coverage amount or as a premium discount on renewals. In either case, your health insurance cost goes down. If the sum insured is increased, you enjoy higher coverage at lower rates. Alternatively, you can reduce the premium outgo if there is a renewal discount offered by the insurer.

3. Get wellness discounts

Many health insurance plans offer wellness benefits and discounts when you renew the coverage. If you lead a healthy lifestyle, such plans allow a discount on the renewal premium. Yoga can help you lead this healthy lifestyle and opt for the available discounts. And where there are discounts, the costs ultimately go down.

4. Avoid claim-based loading

Some insurance companies load the renewal premium if you make a claim on your policy in the previous year. This enhances the premium outgo making the plan dearer. However, with Yoga, you can stay healthy and avoid claims. When there would be no claims, there would be no claim-based loading allowing you to keep your health insurance costs affordable.

5. Get the best deal

Lastly, when you practice Yoga and stay fit you get a variety of health plans to choose from. You can compare the coverage across multiple policies and choose a plan that offers the best coverage at the most affordable rates.

There is a reason Yoga is acknowledged worldwide to be a way of healthy living. It improves your body functions, and its systems and helps you stay fit and healthy. In fact, if practised regularly, you can also bid adieu to common lifestyle illnesses. If you also add meditation to your routine, you can improve your mental health too.

So, this World Yoga Day, add Yoga to your lifestyle and witness a positive change in your health. Use this chance to get low-cost health insurance plans which offer a comprehensive scope of protection. Maximise the full potential of this age-old practice and benefit physically, physiologically, mentally and financially.

The Importance of being ‘Insurance Active’

April 27, 2022April 27, 2022 Ankita Sejpal

The importance of having your personal health insurance is widely known, especially after the pandemic, and a good percentage of millennials have considered opting for their own health insurance, it is still widely considered a “Tax-Saving Instrument”. With the large choices available, it is inevitable for anyone to get lost amidst the chaos in the industry. This is where making a good decision is noteworthy. Traditional wisdom says “a work begun is half done” and this is where taking the action of actually opting for the health insurance, instead of procrastinating about it forever is important.

The Government health schemes cater to a specific segment of the society. For others, it is important to have your personal health insurance plan so that it can cover your hospitalisation expenses in a medical eventuality. Medical expenses can neither be postponed nor avoided. Hence planning for the same before the emergency arrives is prudent. This is where Health Insurance comes into play.

Thus, you need to activate your health insurance plan NOW, to battle out medical emergencies without worrying about your financial health.

Importance of activating your health insurance plan NOW:

Here are some reasons to help you understand the very importance of having an active health insurance plan:

Medical costs are steadily increasing
This one is a fact. Medical inflation is higher than the often-quoted figure of 8-10% and is as high as 15%. (Source: Business Today)
This is due to the rise in the cost of medicines, equipment and advancements in treatment. Yes, a healthier lifestyle reduces your risks of falling ill, but it does not completely eliminate the same. Hence to combat the rising costs of treatment, health insurance becomes inevitable.
Illnesses and diseases are on the rise
According to a 2020 study (Source: Clinical Trials Arena, Sep 2021), India was found to be one of the countries with the highest disease burdens. It forecasted 75.26 million cases of type 2 diabetes and 26,000 cases of endometrial cancer in 2021 and these numbers are expected to increase to 91.72 million and 32,000 cases by 2028.
Diseases are increasing and if they require medical assistance, you need an active health plan to cover the costs.
You can get comprehensive coverage for your whole family
Health insurance plans offer comprehensive coverage benefits that are customisable too. You get coverage for most of your medical costs thereby getting financial security. Moreover, by choosing a family floater policy, all your family members can be insured so that their medical needs are also met by the policy.
There are tax benefits too
Lastly, having an active health insurance policy aids in tax savings too. The premium paid for the policy qualifies as a deduction under Section 80D of the Income Tax Act, 1961. You can claim a deduction of up to Rs.25,000 if you are below 60 and up to Rs.50,000 if you are aged 60 and above.
Moreover, if you also insure your parents and pay their premiums, you can claim an additional deduction of Rs.25,000 if your parents are below 60 or Rs.50,000 if they are senior citizens.
So, with a maximum deduction of Rs.1 lakh, you can save up to Rs.30,000 in taxes if you fall in the highest tax bracket of 30%.

Health insurance plans also allow lifelong renewals so that once bought, you can enjoy the coverage lifelong if you renew the policy regularly. Thus, instead of contemplating which is the best health insurance plan that would suit your and your family’s requirements perfectly, it is a wise idea to opt for a comprehensive plan with benefits that you consider important at this point in your life; and later if the requirements change or other plans come up with more benefits, you can always port your health plan without disrupting the continuity benefits.

So, it’s time to rise and shine and start your health insurance plan today and secure your finances against medical emergencies. Remember, the early bird gets the worm. So “Active Ho Jao” with your health plan.

How has the Life Insurance Industry evolved Post-Pandemic?

April 13, 2022April 13, 2022 Ankita Sejpal

Ever since the pandemic has struck, recent timelines have been divided into two distinct phases – the pre-COVID and the post-COVID era. In fact, the pandemic has completely changed lifestyles, finances and even the economy as a whole. The life insurance segment is no different.

During the pandemic, the importance of a life insurance policy dawned on many and people rushed to insure themselves against the possibility of untimely death. The life insurance industry, thus, witnessed a surge in demand as the premium income increased by 9.74% during the financial year 2020-21 as per the Economic Survey 2021-22. Even the life insurance penetration jumped to 3.2% in 2020 compared to 2.82% in 2019 (where Insurance penetration is measured as the percentage of the total life insurance premium paid in a year to GDP.). (Source: Economic Times)

Thus, to meet the demands of the pandemic era and also to adapt to the changing economic scenario, the life insurance industry evolved.

Do you know how?

Well, here are a few changes that have happened in the industry and also those that are still work-in-progress –

Digitised policy issuance
With the pandemic, most companies were operating online due to lockdowns or with limited employee strength. This worked as a boon for the digital space. Insurance companies were mostly digitally equipped, but this digital awareness gave an impetus to eKYC and online policy issuance.
The regulator recognised the increasing demand for life insurance policies and the challenge of physical policy issuance. As such, it allowed insurers the facility of issuing their policies online through video KYC or eKYC and digital signatures. This made it easy for both prospective and existing policyholders to buy and renew their plans without having to step out of their homes.
Online customer support
Another by-product of lockdowns, social distancing and the work from the home model was the dependence on the online medium to solve customer queries and complaints. Insurance companies took additional efforts to make their customer support department online so that customers can choose from AI bots, WhatsApp messages, SMS, emails and live chats to connect with the insurance company. The insurers also reduced their TATs as online assistance enabled them to track their complaints and grievances in real-time.
The impetus to online sales
Insurers also placed considerable impetus on online sales either through their own websites or through online agents and brokers. This also facilitated the easy sale of the policy with minimal paperwork. Moreover, with the eKYC introduced by the IRDAI, issuance of the policy also became a breeze.
New and innovative policies
While most of the new demand for policies was due to COVID induced deaths, insurers came up with innovative policies that allowed coverage for COVID as well. While life insurance plans automatically covered COVID-related deaths, insurers communicated the same to their policyholders and prospective customers to raise awareness. Moreover, new policies were also introduced that were available online at affordable premiums to allow instant coverage to those seeking protection against the pandemic’s financial repercussions such as Corona Kavach and Corona Rakshak.
The introduction of API
This is a relatively newer concept in the life insurance industry which is still in its nascent stages. As mentioned earlier, this is a work-in-progress. API stands for Application Programming Interface. It can act as a plug-in for life insurance policies across other financial assets and transactions. Life insurers can, thus, tie up with financial service providers and sell their plans through API plug-ins to increase demand. This would also enable an increase in life insurance penetration as the purchase process would be simplified.
A very common example can be found in tour booking apps that offer you additional travel insurance cover at a nominal rate. This is how API works. While you make your travel bookings, you might as well invest in a travel insurance policy to secure the trip at a nominal cost. API plug-ins, thus, help in cross-selling.
In the life insurance industry, API plug-ins can be used when individuals buy mutual funds, stocks, other investments or even when they buy another type of insurance policy from the company. The API interface has the power to disrupt insurance sales and can go a long way in evolving the life insurance industry to the next level altogether.

The life insurance industry is dynamic. It changes to cater to the changing needs and preferences of consumers so that life insurance, as a product, can stay relevant in changing times. The aforementioned points are some of the changes that the life insurance industry went through during the pandemic. The future is digital and with new innovations and changes, the life insurance industry would also evolve continuously. As the awareness of life insurance has increased, the industry has a long road ahead to make life insurance an indispensable part of an individual’s portfolio.

Everything You Need To Know About Electric Car Insurance

February 18, 2022February 21, 2022 Ankita Sejpal

Flaunting an electric vehicle has become a new trend all over the globe. Speaking of India, they are gaining a lot of momentum in the entire market. This is because of the number of benefits it covers. Generally, electric cars are low maintenance, easy to drive, noiseless, and help you save tons considering the increasing prices of fuel. In addition, electric cars are excellent for the environment. However, after purchasing one, what about its insurance? Well, here’s a comprehensive guide that lists an overview of everything you need to know about electric car insurance.

Electrical Car Insurance

The demand for EVs is growing at an unprecedented rate. Besides being a green alternative to diesel and petrol vehicles, electric cars can get much cheaper in the long run. However, finding suitable Electric car insurance can be a bit difficult. But once you find it, you enjoy a plethora of benefits. Before diving into the benefits, let’s begin with the basics.

What is Electric Car Insurance?

To level up with the increasing demand, automobile manufacturers are introducing distinct types of EVs. This is to cater to the difference between different requirements of the buyers. With different models come different insurances. Just like the motor insurance policy for diesel and petrol vehicles, the electric car insurance policy provides outstanding financial protection to your car against all liabilities. By selecting the appropriate cover for your Electric car, you can prevent unwanted expenses. This is exactly what is meant by electric car insurance.

Types Of Electric Car Insurance Plan

In India, there are usually two types of insurance policies. These include,

Third-Party Car Insurance Policy:
The 1988 Motor Vehicles Act makes it necessary to hold electric car insurance under this policy. Under the third-party policy, you get insurance against all liabilities incurred due to third-party damage or injury or damage to their property due to your EV. Bear in mind that accidental injuries and damages do not come under this policy.
Comprehensive Car Insurance Policy:
This is an excellent insurance policy that any individual can opt for. The policy offers both OD (own damage cover) and third-party (TP) cover. In case your vehicle suffers damage due to collisions, floods, accidents, riots, storms, or vandalism, your car will be covered.

What Are The Advantages Of Electric Car Insurance?

Here are 5 advantages to ensure your electric car with a Comprehensive Insurance Policy.

Safeguard against Third-Party Liabilities:
Your insurance policy covers liabilities in cases where you meet an unfortunate situation. Suppose you are the reason for an injury to the third-party property, your policy covers the costs incurred in repairing.
Prevent Law-Mandated Penalties:
Because the Comprehensive policy involves the law-mandated liability cover, individuals get protection against non-compliance penalties regarding car insurance.
Prevent Hefty Repairing Bills:
As the Comprehensive Cover provides an OD facility, it covers the maximum part of the repair bills. This indicates that individuals don’t require to pay any hefty repairing bills for the cases covered in the plan.
Obtain Personal Accident cover:
With the PA (personal accident) cover, you can obtain financial compensation against several uncertainties like bodily injuries, accidental death, total/partial disabilities, etc. due to an accident. Note that this is an add-on and must be purchased separately from the plan you choose.

What Does The Electric Vehicle Comprehensive Policy Cover?

The comprehensive car insurance policy tags a number of benefits with it. The plan covers losses and damages in the following circumstances.

Damages to your vehicle in an accident
Third-Party injury
Damage to third-party property
Damage to the car in case of explosion and fire
Natural calamities include storms, floods, earthquakes, etc.
Injury of the owner and accidental death
Losses incurred due to theft
Man-made disasters like vandalism, riots, etc

Cost Of Electric Vehicle Insurance

Generally, the cost of electric vehicle insurance is a bit higher as compared to conventional petrol and diesel vehicles. Because the insurance price is entirely based on the price value of the vehicle, electric vehicles have a higher premium as well. This is because of the price with respect to the internal combustion of engine-powered cars.

Conclusion

Upon conclusion, it is important to know the insurance policy’s other factors, terms, and conditions before opting for it. Bear in mind that different companies offer different insurance benefits, costs, and features. Depending on this, make sure you don’t go for the cheapest premium available. This is because the cheapest premium might not offer the level of policy cover you are seeking for. Cheaper premiums do not cover personal accident cover, breakdown cover, legal cover, level of voluntary excess, etc. Hence, make sure you make well-informed and wise decisions before finalising with an insurance company.

Disadvantages of letting your Car Insurance Lapse in 2022

January 5, 2022January 5, 2022 Ankita Sejpal

The New Year brings along new promises, new challenges and new beginnings. It motivates everyone to make better life resolutions. If you are a car owner, make a new year’s resolution in 2022 to not let your car insurance policy lapse at any time. Yes, it’s common to break the New Year’s resolution, but this is one resolution you should earnestly try to stick to. A car insurance cover is very important and there are many disadvantages of letting it lapse. Take a look at why you must keep your car insured at all times and also why it is disadvantageous to let your policy lapse in 2022.

Importance of car insurance

Let us begin by understanding why car insurance cover is so important. A car insurance cover offers many types of protection such as: it covers the third party liabilities, it pays for own damage and it also covers legal costs. This is why you must get a car insurance plan on priority. However, getting the plan alone is not enough. It is equally vital for you to renew the plan on time and keep the policy from lapsing.

Disadvantages of letting your car insurance lapse

2020 and 2021 have both been very challenging years for people across the globe. The pandemic hit families and while some people faced death and destruction within their closest circles, others faced financial troubles due to job losses, business failures, etc. 2022 is therefore the dawn of a fresh start and everyone is trying to stay motivated. At such a time, you should also look to start a new and resolve to make the correct financial moves. A good way to do so is by keeping your car insurance plan active at all times. If your car insurance plan lapses, you can face many financial challenges, apart from legal challenges, too. Here are some ways in which allowing a car insurance policy to lapse can be disadvantageous:

Legal trouble
You can get into serious legal trouble if you do not renew your car insurance policy on time. The law in India makes it compulsory for every car owner to have an active motor insurance policy when he takes the car out on the streets of India. If you are caught driving your car without a valid motor insurance plan, you will be fined heavily and may even be arrested.
No third party cover
As a responsible motorist, it is your job to take care of any third party who may get injured in an accident involving your vehicle. It is also your job to ensure you pay for the damages incurred to the third party’s vehicle or property. When you have a valid car insurance plan, the insurer compensates the third party on your behalf. However, if it stays lapsed, you have to bear all the third party liability expenses from your own pocket and that can become very expensive.
No own damage cover
Much in the same way, you won’t get any compensation from the insurer for damages to your own vehicle, too; if your policy is in a lapsed state. Repairing your car can be an expensive thing to do, so avoid having to pay the bills yourself by simply renewing the motor insurance plan on time.
No personal accident cover
Most motor insurance plans have an in-built personal accident cover. This is important because it offers financial support to your family if anything happens to you. However, the sum assured is not paid out when the policy remains in a lapsed state.
Loss of no claim bonus
Lastly, if you do not renew your coverage within 90 days of lapse, any accumulated no claim bonus that you might have would become zero. This is especially bad if you have accumulated a considerable bonus, say 30% or 50%, which can give you premium discounts on renewal.

As you can see, all these factors can lead to you incurring heavy financial losses. A car insurance plan is quite affordable and all you have to do is renew it on time to keep the policy active. By renewing on time you can safeguard your vehicle and your finances in an easy and hassle-free manner.

So, this 2022, ensure that you keep your car insurance coverage active so that you can not only enjoy the coverage but also comply with the traffic rules and avoid possible penalties.

Are Guaranteed Income Plans of Life Insurance Worth it?

November 29, 2021May 3, 2022 Ankita Sejpal

Life insurance policies are designed for one thing – to help mitigate the financial risk associated with premature death. To this extent, term insurance plans cover the risk of premature death and provide pure protection against the associated financial risks. However, many policyholders want their life insurance policies to double-up as a savings tool too. This is where guaranteed income plans come into the picture.

Let’s explore –

What are guaranteed income plans?

Guaranteed income plans are life insurance solutions that provide insurance cover and savings under the same policy. These plans come as endowment plans or money back plans with a death cover during the policy tenure. If the insured dies during the term, a guaranteed death benefit is paid. On the other hand, if the life insured survives the policy tenure, guaranteed income plans pay a maturity benefit.

Usually, the benefits payable under these plans are fixed or guaranteed. That is why they are called ‘guaranteed income plans’.

Should you invest in guaranteed income plans?

Guaranteed income plans are suitable for investors looking for insurance protection and guaranteed savings from a single instrument. Here are some pros and cons of these plans which you should consider before investing in them –

Advantages of guaranteed income plans

Guaranteed income plans score on various fronts. Have a look –

Guaranteed returns
Firstly, as the name suggests, guaranteed income plans give you guaranteed returns either on premature death or on maturity. Moreover, many plans offer additional returns in the form of bonus additions, guaranteed additions, boosters, loyalty additions, etc. These additional returns enhance the benefits and give you better returns, that too, guaranteed.
Long-term savings
Guaranteed income plans are, usually, long-term life insurance plans which help you save in a disciplined manner. Thus, if you opt for these plans, you can create a long-term savings corpus for your financial needs.
Help in fulfilling financial goals
Guaranteed income plans help you fulfil your financial goals, even when you are not around. The death benefit paid under these plans provides your family with a financial corpus to meet their needs. On the other hand, the maturity benefit gives you an accumulated corpus which you can use for the different financial goals that you have, like child’s education, retirement planning, buying a home, etc.
There are specialised child and pension plans too that are offered as guaranteed income plans. These plans are so designed that they cater to specific financial goals and help you fulfil them easily.
No investment risks
Guaranteed return plans do not invest in the equity market which is highly prone to volatility risks. Instead, they guarantee the returns and protect your investment from any type of market risk.
Insurance protection
These being life insurance plans, guaranteed income plans offer much-needed insurance protection. This insurance cover provides financial security to you and your family as it promises a benefit in the case of premature death.
Tax benefits
Lastly, guaranteed income plans help in saving tax. The premiums paid for these plans are allowed as a deduction from your taxable income. Premiums up to 10% of the sum assured, subject to a limit of INR 1.5 lakhs, are allowed as a deduction under Section 80C. Moreover, the returns that you earn from the policy and the maturity benefit received are completely tax-free under Section 10(10D) if the premium was up to 10% of the sum assured.
In the case of death too, the death benefit is completely tax-free allowing your family the facility to use the full benefit paid on death.

Disadvantages of guaranteed income plans

When it comes to the disadvantages, there is only one aspect that works against guaranteed income plans. This aspect is the sufficiency of returns. There is a risk of inflation-beating the returns generated from these plans. After the long-term saving, if the returns do not keep pace with inflation, you might not be able to create a sufficient corpus for your financial goals.

What should you do?

Other than the one disadvantage that guaranteed income plans have, there is no other drawback. So, if you are risk-averse and want to create a risk-free corpus for your financial goals, you can opt for guaranteed income plans. The tax angle gives additional benefits and helps you create a tax-efficient corpus too. So, understand what guaranteed income plans are all about and then choose one if it matches your needs.

Tips to Save Motor Insurance Premium

November 29, 2021December 8, 2021 Ankita Sejpal

A motor insurance policy is a must for every Indian citizen if they have a vehicle in their name. So, if you own a bike or a car, invest in a motor insurance policy for your vehicle to comply with the legal formalities.

Buying a motor insurance policy means paying a premium for the coverage. The premium of the policy depends on a lot of factors like the make, model, and variant, age of the vehicle, registration location, etc. However, there are a lot of ways in which you can save on the motor insurance cost. Do you know how?

Here are some tips to save motor insurance premiums –

Utilise the NCB to the full
For every claim-free year that you experience in your motor insurance policy, you get a no claim bonus (NCB). This bonus allows you to claim a discount at the time of renewing the policy. The NCB starts at 20% and goes up to 50%. You can accumulate the NCB if you don’t make claims in successive years. However, even a single claim reduces the accumulated no claim bonus to zero. So, while renewing, utilise the no claim bonus to the fullest. Also, try and avoid making small claims as they would nullify the NCB.
Choose a voluntary deductible, if economical
A voluntary deductible is when you undertake to pay a part of the claim yourself. Though this involves an out-of-pocket expense on claims, it allows you a premium discount. So, if you are a good driver and your claim experience is low, opt for a voluntary deductible. Weigh in the deductible amount and the premium saving and if the deductible proves economical, opt for it to reduce the premium.
Install safety devices in the vehicle
Safety devices bring down the chances of accidents and provide a layer of safety. This also leads to lower claims for the insurance company and so, the company offers a premium discount. So, safety devices not only lead to safe driving, but also help in premium savings.
For example, if your vehicle has an anti-theft device, your insurance premium would be lesser than a vehicle without one.
Buy online
Many insurers offer discounts if you buy the policy online. So, if you buy the policy online and there is a discount for the same, you can reduce the premium that you pay. Since online plans do not have any third-party intervention, they are usually cheaper than their offline counterparts.
Opt for third party plans if feasible
The Motor Vehicles Act, 1988, the Act that governs Indian traffic rules, stipulates the need for a third party policy on every vehicle. This policy protects you against third party liabilities if your vehicle causes a financial loss to any individual or property. However, if the vehicle itself suffers any damage, no claim is paid.
Third-party plans have restricted coverage and are not usually recommended. However, if you have a very old vehicle or if you use your vehicle sparingly, you can make do with a third party policy whose premium is very low.
Try the new ‘Pay-as-you-go’ policy
A new policy has been introduced in the motor insurance market called the ‘Pay-as-you-use/go’ policy. Under this policy, you have the flexibility to switch your coverage on or off depending on the usage of the vehicle. When you are using the vehicle, you can turn the coverage on and when you are not using the vehicle, you can turn the cover off. So, rather than paying the premium for using the vehicle throughout the year, you can pay the premium for the actual time that you use the vehicle and save on motor insurance costs.
Use your membership to your advantage
If you are a member of a reputed automobile association, you become eligible for a premium discount. So, use your membership to claim a discount and lower the premium cost.
Compare and buy
Last, but definitely not least, compare before buying motor insurance plans. More than a dozen insurers offer motor insurance policies and the pricing of each insurer is different. When you compare, you can check the premium charged by different insurers and then select a policy that charges the lowest premium without compromising on the coverage. It would, thus, help you reduce the premium cost and save.

Which of these tips would you use?

You can use a combination of these tips to bring down the premium of your motor insurance policy. All you need is a little knowledge and a look into the policies available in the market. Compare the available plans and look for the best deal. Then buy the best motor insurance policy which offers the most suitable coverage without charging a bomb.