Rupanjali Mitra Basu, Author at Turtlemint

Is it time to change your car insurance company?

May 17, 2019May 12, 2021 Rupanjali Mitra Basu

Car insurance policies are mandatory as per the rules laid down in the Motor Vehicles Act, 1988. Every car is supposed to carry a valid insurance cover on it to run on Indian roads. The policies come for a specified tenure. Once the tenure is over, the policy should be renewed for continuous coverage. At the time of renewal you have the option of continuing the same policy or switching car insurance to another insurer. You can switch your insurer and still continue to retain the accumulated no claim bonus of the earlier policy. Though switching car insurance is allowed, is it a wise move?

Changing car insurance companies should be done with careful consideration. You should change companies when you find better alternatives elsewhere. When you are careful in choosing another company, you can get better benefits in another policy than those promised by your existing one. So, it is time to change your car insurance company if another company is offering you the following:-

A higher IDV

IDV is the Insured Declared Value of your car insurance plan. It represents the market value of your car after deducting depreciation based on the car’s age. The IDV should be proportionate to the value and age of your car. A high IDV is advisable because it ensures a higher claim payment in case of total loss or theft of the car. At the time of renewal, if you are getting a higher IDV in another policy, switching car insurance would be a good move as you would be able to increase the coverage level and, consequently, the claim pay-out.
Read more about

Lower premiums

One of the main benefits of switching is that you can get lower premiums on another policy. Different insurance companies price their car insurance policies differently. When you compare, you might get a policy with a lower premium than your existing plan. In this case, changing car insurance company would result in the reduction of your premium outgo and it would be a good move. However, when opting for lower premiums, make sure not to compromise on the IDV and the coverage features. Switch only when you get a low premium along with better IDV and comprehensive coverage features in another policy.

Better discounts

Car insurance policies give attractive discounts which lower the premium payable. When renewing the plan, you should hunt for the maximum possible discount offered by insurance companies. If another company is offering a higher rate of discount on its car insurance policy, switching to the company would be a prudent as your premium costs would reduce and you would be able to save money.

Better claim settlement ratio

Claim settlement is of utmost importance as your car insurance policy proves its worth when your claims are settled quickly and easily. Insurance companies have come up with different innovations in the field of claim settlement. They are promising to expedite their claim settlement process with better tools and applications. If another insurance company is offering you an edge over your current company’s claim settlement process, you should switch your plan. You should also look for the claim settlement ratio of different insurers and choose a company which has a higher ratio than your current one.

Better post-sales service

If you switch to an insurance company which has good post-sales services, your car insurance experience would improve. A different insurer might give you regular updates about your policy, information on maintaining your car, notifications of latest developments in the car insurance segment, etc. If you want to enjoy these innovative and enhanced post-sales services offered by another car insurance company, you should change your insurer.

So, when thinking about switching car insurance companies, look for these points. If you find a policy which is better on all or maximum of these parameters, switching would be a wise choice. To switch, compare car insurance policies. Unless you can compare your existing plan with other available plans, you wouldn’t be able to find a plan better than your current policy. So, when renewing car insurance, go online, compare and then switch your car insurer.

Complete guide on how term insurance policy can help you save tax

February 4, 2019May 12, 2021 Rupanjali Mitra Basu

Term insurance policy is an essential requirement for every earning member of the family who has financial dependants. If you have spouse, children or elderly parents financially depending on you, it’s essential to have adequate insurance coverage to protect your family in the event of eventualities. Though the primary objective of buying term insurance plan is for financial protection, it also offers the tax benefits. Let’s take a detailed look at how to save income tax with the help of these online tax calculators for term insurance plans.

Buy term insurance to serve dual aim – protect your family and save tax too!

Term insurance plans are pure insurance plans that only offer death benefits. That means, if you survive the policy term, you will be paid nothing in return. Term insurance premiums are not invested anywhere. It’s basically an essential cost you are making every year to secure your family’s financial future when you are not around. As you make every financial decision, be it insurance or any investment, tax planning has to be part of the buying process. Part of the money that is spending to buy life protection cover can save you some amount of tax.

Term insurance as a tax saving tool

Life insurance products are one of the most effective tax saving schemes available in the market. Let’s see how to save tax using term insurance plans. Here are the host of tax benefits offered by term insurance plans.

Premium Invested: Tax Exemption U/S 80C till INR 1.5 lakhs p.a.

You can avail tax benefits on the premiums you pay on term insurance every year. Premiums paid on life insurance policies up to INR. 1,50,000 qualifies for tax deductions under Section 80C of the Income Tax Act, 1961.The deduction is available in respect of policy bought in your own name, spouse name or in the name of children (deduction is allowed for all children irrespective of the fact whether they are minor or major, dependent or independent and married or unmarried). There are certain clauses applicable for the deductions.

In case your term insurance policy is issued on or before 31^st March 2012, your tax deduction eligibility is limited to 20% of the sum assured.
In case your term insurance policy is issued on or after 1^st April 2012, your tax deduction eligibility gets restricted to 10% of the sum assured.
In the case of disabilities as mentioned in Section 80U or suffering from any ailments listed under Section 80DDB of the Income Tax Act, 1961, then the 10% mentioned above would be increased to 15%.

PS: However, for term insurance plans, the sum assured would always be higher than 10 times the premium.

Maturity Benefit: Tax exemption U/S 10(10)D

The maturity benefit of any life insurance policy is tax free in the hands of the policyholder under section 10(10)D of the Income Tax Act 1961 provided the premium is at least 10% of the sum assured for policies issued before 1^st April 2012 and at least 20% of the sum assured after that. However, most term plans do not have maturity benefit. Thus, it applies only to those few term plans which have a maturity benefit.

For example, Term Plan with Return of Premium. In this variant of Term Plan, the total premiums paid during the policy tenure is returned to the policyholder on policy maturity as Maturity Benefit. In this case, the maturity benefit would be tax-free U/S 10(10)D provided the sum assured is more than 10 times the premium paid, which is usually the case in Term Plans.

Read more about types of life insurance plans.

Death Benefit: Tax-free in the hands of the beneficiaries

The death benefit, a huge lump sum amount paid out under term insurance (i.e. sum assured chosen by you), is fully exempt from income tax in the hands of beneficiaries. There is no restriction on the amount received by the beneficiaries as a death benefit.

Health Rider: Tax exemption U/S 80D

In case you have availed critical illness or an additional accidental death rider or any other health rider under your term insurance plan; then you can claim tax deductions under Section 80D on the additional premium that you are paying for the rider. Section 80D of the Income Tax Act, 1961 allows tax benefits on premiums paid for health insurance. However, the maximum cap for tax deduction is INR. 25000 p.a.

Though how to save tax would be an integral part of any investments that you make, it’s not the only criteria. Buying term insurance is a crucial financial decision. Hence, it’s important to consider various other important elements like exploring a suitable plan, selection of right coverage and the right term etc. Ensuring family’s future financial stability is the primary purpose of availing any term insurance plan. Tax saving benefit is an added advantage for availing the term insurance plan.

Conclusion

With the host of tax benefits offered, term insurance is definitely considered as the most effective tax saving scheme. Take help of online tax calculators to strategize your taxes while you make insurance and investment decisions. Though the primary goal is to adequately insure yourself, knowing all the tax provisions and planning taxes with every investment you make can help you save more!

Budget 2020- How it has impacted your finances?

February 2, 2019May 12, 2021 Rupanjali Mitra Basu

Everyone had huge expectations from the Interim Union Budget 2020, especially because there hasn’t been any change in the last year in the slab. Let us analyse what are the new changes and how the new budget will impact us.

Changes in the Tax Slab:

^ The health and education cess = 3% of the Income Tax in the year 2016-17
*The health and education cess = 3% of the Income Tax in the year 2017-18 and 4% in the year 2018-19
** The health and education cess = 4% of the Income Tax in the year 2016-17

NO CHANGE in the deductions for Investments:

Investments U/S 80C: Rs 1.50 lakhs p.a.
Investments U/S 80C:
1. Life Insurance
2. Provident Fund
3. ELSS (Equity linked savings scheme)
4. Bank 5-year FD
5. School Tuition Fees
6. Home Loan Principal repayment
7. NPS

Total Deduction for NPS is Rs 2 lakhs p.a. where:
1. 60% of the corpus can be withdrawn tax-free
2. Mandatory to purchase annuity from the remaining 40% of the corpus

80D investments:
1. Rs 25,000 for self, spouse and children
2. For dependent parents it is Rs 25,000 p.a. if they are <60 years of age and Rs 50,000 p.a. if they are 60 years or more

Deduction on home loan interest= Rs 2 lakhs U/S 24B
Only Rs 2 lakhs of loss can be set-off against income of FY18
Long Term Capital Gain tax for capital gains > Rs 1 lakh p.a. for Equity and Equity Mutual Funds levied at 10% p.a. Gains before 31st Jan, 2018 is grandfathered

Impact of the changes on your Income:

P.S: For taxable income more than INR 5 lakhs, after the deductions for 80C, 80D, Home Loan, Donations, etc. there is NO change in the tax slab. This budget has given a tax “rebate” to people with annual income of INR 5 lakhs or less and has not increased the exemption slab for all. So, for people with higher income, the tax slab remains unchanged!

Some of the other major changes can be listed as:
Savings and Health:

Standard Deduction re-introduced of Rs 40,000 p.a. and replaced Rs 19,200 of allowance and Rs 18,000 of medical reimbursement now increased to Rs 50,000 p.a.
How does it impact?
Salaried people will get an additional deduction of Rs 10,000 from their income under the heads of medical bills, transport, etc.
Ceiling Limit of TDS u/s 194A has increased from INR 10,000 to INR 40,000
How does it impact?
For people who earn interest from Bank and Post Office Small Saving Deposits, TDS deduction slab has been raised from the current level of INR 10,000 to INR 40,000
2% interest relief on loan for MSME GST registered person
How does it impact?
Helps small traders and MSME registered organizations with a relief in interest for availing loans.
More fund allocated towards Government aided health schemes like Ayushman Bharat, etc.
How does it impact?
Better facilities and reach are expected and thus a higher utilization of the insurance.

Post Retirement benefit

Tax free Gratuity limit increase to 20 Lakhs from 10 Lakhs
Mega Pension Yojana, namely Pradhan Mantri Shram Yogi Mandhan, to provide assured monthly pension of INR 3000 per month, with contribution of INR 100 per month, for workers in unorganised sector after 60 years of age.

Real Estate:

TDS on Home Rent with Ceiling Limit of TDS u/s 194 has increased from INR 1,80,000 to INR 2,40,000 p.a.
Tax exempted on notional rent on a second self-occupied house
Capital tax Benefit u/s 54 has increased from investment in one residential house to two residential houses, i.e. Benefit of rollover of capital tax gains to be increased from investment in one residential house to that in two residential houses, for a taxpayer having capital gains up to 2 crore rupees can be exercised once in a lifetime.

Summary of Income Tax Benefits:

Summary of Impact on Real Estate:

Overall this budget has been quite a populist budget and has something for the middle class and for the small businesses and salaried people as well. However, the budget has dampened the expectations of the increase in Tax Slab for the overall population.

New age digital customers drive changes in new age insurance plans

December 7, 2018May 12, 2021 Rupanjali Mitra Basu

Internet has become a staple diet of new age millennials whose day doesn’t end without accessing the internet at least once. In fact, the Internet and Mobile Association of India (IAMAI) predicted the number of internet users in India to cross 500 million-mark by June 2018 in their report published in December 2017 (Source: https://economictimes.indiatimes.com/tech/internet/internet-users-in-india-expected-to-reach-500-million-by-june-iamai/articleshow/63000198.cms ). As per Google’s research, India adds about 10 million active internet users every day (Source: https://www.business-standard.com/article/current-affairs/india-is-adding-10-million-active-internet-users-per-month-google-118062700882_1.html ). Given the popularity of internet, insurance companies have redesigned their insurance plans to meet the needs of the new age digital customers. Do you know how insurance plans have changed in recent times? Here’s a lowdown –

Term insurance plans

Term plans are the most popular and most relevant life insurance plans which provide unmatched financial security. Here’s how new age term plans have evolved –

– Companies are offering higher sum assured levels to customers. In fact, in many plans, there is no maximum limit on the sum assured. You can choose any coverage level as per your coverage requirements

– Since life expectancy has increased, term plans are allowing the maximum coverage age to be up to 80 or 85 years

– Online term plans have reduced premiums considerably and are available instantly

– There are inbuilt riders in term plans which have enhanced the benefits payable

– New whole life term plans have been launched covering individuals for up to 100 years of age

Health insurance

Health plans are a must to meet the rising healthcare expenses. In recent times health plans have also undergone major changes some of which include the following –

– There are disease-specific health plans in the market covering specific ailments like dengue, cancer, heart-related ailments, etc.

– Critical illness plans have expanded their scope of coverage by covering more illnesses

– The coverage features in health plans have become innovative and more comprehensive. For instance, there is sum insured restoration feature found commonly in modern health plans which reinstates the sum insured if it is exhausted.

– Health plans are being sold online which makes the plan an instant buy

Unit Linked Insurance plans

ULIPs have also undergone some changes in recent times which include the following –

– The premium allocation charges have reduced considerably. In fact, in some popular online plans, the allocation charge has been reduced to nil. Moreover, policy administration charges, fund management charges and other relevant charges have also been reduced.

– ULIPs provide tax-free returns even after the Union Budget of 2018 imposed Long Term Capital Gains (LTCG) tax on equity earnings exceeding INR 1 lakhs. The returns from ULIPs do not attract LTCG tax. Moreover, any switching done under the plan is also tax-free.

Car insurance

Though car insurance plans are mandatory for car-owners, insurance companies are offering new and improved features to make their plans more attractive. Here is what’s new –

– Technology enabled telematics helps in live tracking of the car to help insurers understand the driving pattern of the car-owner. Good driving records earn premium discounts

– Comprehensive car insurance policies are being offered with inbuilt add-ons the most popular one of which is roadside assistance.

– Even claims are being expedited through photos and videos being uploaded to the insurance company’s systems through Smartphones.

The insurance industry is dynamic and would evolve with the evolution of technology. Though insurance plans have already undergone many changes, more is yet to come. Given the ease with which internet is becoming available to people in all parts of the country, who is to say what new developments would become apparent in insurance plans in the coming years!

Read more about life insurance in your 30s

7 Best health insurance policies for Indian women

December 5, 2018February 25, 2022 Rupanjali Mitra Basu

Women have become empowered in recent times as they balance both home and work effortlessly. They have become career-driven and do not shy away from achieving their dreams. However, when it comes to their health, women often ignore it and when a severe illness or disease strikes, they become indisposed to take care of their family and work commitments. Women are prone to specific illnesses and diseases and so it is imperative that they have health insurance for women which provide coverage for their gender-specific health issues.

As a woman, you have certain financial and medical requirements at every stage of your life that may not be covered under a general health insurance plan. That’s why it’s important that you opt for health insurance for women that cater especially to your particular needs.

Why women need a dedicated health insurance policy?

Here are some reasons why health insurance for women is a must for their specific coverage needs –

Certain illnesses, like breast cancer, cancer of the reproductive system, etc. are specific only to women. When these illnesses strike, the expenses on treatments are considerable. In the absence of a health insurance plan women might face a financial crunch in meeting the treatment costs and so health insurance for women covering these specific illnesses is important.
Women are privileged to bear children and yet the maternity costs are considerable. Moreover, if there is any complication at the time of childbirth, additional medical expenses might incur. To cover these maternity expenses, dedicated maternity oriented women’s health insurance plans is a must.
Women can claim a tax benefit on the premiums that they pay towards their health insurance policy. Section 80D of the Income Tax Act, 1961, allows them to avail a deduction of up to INR 25,000 on the premium paid for a women’s health insurance policy. This helps women reduce their taxable income and consequently, their tax liability

Benefits of women’s health insurance plans and policies in 2020

Now that you know that women need dedicated women’s health insurance plans, here are some of the benefits which can be availed from such plans –

Women can enjoy optimal coverage against the illnesses or diseases that they face.
Women can avail quality healthcare facilities without compromising on the quality of care when they have dedicated women’s health insurance plans covering their specific medical expenses
Women can get coverage against such illnesses which are specific to them when they buy women’s health insurance plans. A generic policy might not offer such coverage
Women can claim additional tax benefit and plan their taxes with a women’s health insurance policy

7 best health insurance policies for Indian women

Here’s a sneak peek into some Indian policies providing health insurance for women that are designed specifically for women:

Besides a free-look period, cashless claims, and deduction in tax returns, the above-mentioned women-specific health insurance policies also offer many other advantages.

Let’s take a look at few of the key benefits of these plans which provide best health insurance for women:

HDFC Life Smart Woman Plan

Coverage of pregnancy complications or the birth of a child with a specified congenital disorder, malignant female-specific cancers, and death of a spouse.
Uninterrupted savings with waiver & funding of premiums and periodic cash benefits for the next 3 Partial withdrawals also allowed meeting contingencies.
Sum assured of up to 40 times the annualized premium.
Enhanced allocation rate from the 11th year onwards.

Tata-AIG’s Wellsurance Woman Policy

11critical illnesses covered, with a higher benefit for cancer.
Coverage of expenses for hospitalization, ICU/ICCU, convalescence, cosmetic reconstruction surgery (for accidental injuries only), and emergency ambulance.
Access to free health helpline, articles for health & wellness information, personalized health tracker, discounts at health-related services (over 200 gyms, skincare & weight management centres, diagnostics centres), etc.

Bajaj Allianz Women Specific Critical Illness Insurance Plan

8 women-specific critical illnesses covered.
Congenital disability benefits up to age 40 for up to 2 deliveries.
Children education bonus and loss of employment cover.

Star Wedding Gift Insurance Policy

No pre-acceptance medical screening.
Maternity cover and new-born baby cover for up to 2 deliveries. Also pays certain pre-natal expenses, such as a test for detecting congenital abnormality in the foetus.
Coverage of expenses for inpatient care, pre & post hospitalization, emergency ambulance, specified day-care procedures, pre-existing illnesses (with waiting periods), and non-allopathic treatment.

Religare Joy Maternity Health Insurance Policy

Maternity cover and new-born baby cover.
Coverage of expenses for pre & post hospitalization, emergency ambulance, daycare treatment, inpatient care, and specified pre-existing/named illnesses (with waiting periods).
No Claim Bonus (with an add-on).

New India Asha Kiran Policy

11 critical illnesses covered.
Hospitalization expenses for the family can be covered.
Coverage of expenses for specified day care treatments, pre & post hospitalization, critical care, organ transplantation (organ cost not included), non-allopathic treatment, and emergency ambulance expenses.
Personal accident cover applicable to proposer and spouse.
Discount on premium for including a daughter in the policy.

Reliance HealthGain Policy

5% discount for single women or girl children.
The health of immediate & extended family members can be covered.
Coverage of expenses for inpatient care, domiciliary hospitalization, pre & post hospitalization, organ donor, accidental injuries, critical illness, specific ailments, pre-existing diseases (with waiting periods), and emergency ambulance.
Discounts and deals on a range of health & lifestyle products and services.
Access to health experts and other online services including medical appointment booking, personalized diet plan, and health risk assessment.
Accidental death cover for no-claim renewal.
Cumulative Bonus for claim-free years.
Restoration of the sum insured and free extension of policy possible.

Note: The coverage and other benefits of these health insurance plans are subject to terms and conditions as specified in their respective policy documents.

Choose health insurance for women that are suited to your specific needs and provides you with the best benefits. It’s recommended that you don’t delay getting health insurance. This is because, when you’re in your 40s, most women-specific policies require you to get a medical screening before they can be approved. If you’re not found in the best of health, you might end up having to shell out more for your policy premium.

Find out more information on health insurance for women. Call our HEALTH EXPERT at 1800-266-0101 or visit the Turtlemint website to get quotes for different women-specific health insurance plans.

Frequently Asked Questions

How do I find the best health insurance for women?
To find the best health insurance for women, you should always compare and buy a plan online. When comparing, look at the sum insured offered, the coverage benefits, premium discounts, add-ons and the premium rate. Choose a plan which offers the most comprehensive scope of coverage at the most reasonable rate of premium and that plan would qualify as the best health insurance for women.
I am a single woman with kids. Can I buy a family floater health plan?
Yes, you can buy a family floater health plan for yourself and your kids. When choosing the best health insurance for a single female, ensure that you choose an optimal sum insured so that you and your family are covered. The premium should also be affordable so that the policy can be renewed lifelong without any financial strain. The coverage benefits of the plan should be suitable for your needs. Try and compare plans offering best health insurance for single female and then buy a suitable policy with the best benefits.
What is the maximum tax benefit which I can avail if I buy health insurance for women?
The tax benefit is up to INR 25, 000 which would increase to INR 50, 000 if you are aged 60 years and above. Moreover, if you buy a policy for your senior citizen parents, you can claim an additional deduction of up to INR 25, 000 for their policy which would also increase to INR 50, 000 if your parents are senior citizens. So, you can claim a maximum tax benefit of up to INR 1 lakh by investing in women’s health insurance plans.
How can I get cashless claims under my policy of health insurance for women?
To get cashless claims under your women’s health insurance plan, get admitted in a hospital which is tied-up with the insurance company. Cashless claims are available only at networked hospitals and you can find the list of networked hospitals on the insurance company’s website.
Can I increase the sum insured when I renew the plan?
Yes, you can increase the sum insured when you renew the policy. However, the pre-existing waiting period would apply again to the increased sum insured.

Switching to a new car insurance policy? Here’s a complete guide

October 2, 2018May 11, 2021 Rupanjali Mitra Basu

Sticking to one insurer year on year for car insurance is rare. With so many insurance policies available in the market, you can always find a better deal in another car insurance policy. Or, you might be dissatisfied with your current insurance company and might want to switch to another insurer. Whatever be the reason of your change, there is a process which is to be followed when you switch to a new policy. Do you know what the protocol is?

Here is a complete guide to switch the car insurance policy if you don’t –

The process involved

If you don’t know how to switch your car insurance policy or insurer, here are the steps which you should follow –

At the time of renewing your policy, go online and find the available car insurance plans
Compare the available plans and choose the one which has good coverage features at competitive premium rates
Once the policy is shortlisted, pay the premium online

If you are renewing before the due date, the existing policy would continue till midnight of the due date. After midnight, the new policy for which you have paid the premium would become effective. If your existing policy has expired, an inspection would be required before switching and renewal are allowed. The new insurance company should be informed about the expired status of your existing policy. The company would, then, arrange for an inspection of the car. Once the inspection is done and its report submitted, the policy would be renewed with the new insurance company.

Things to look out for in the new policy

Switching is good only when you get a better plan than your existing one. To ensure this, you should be careful when comparing car insurance plans. You should compare car insurance plans on the following parameters –

IDV offered

The Insured Declared Value (IDV) is the effective value of your car. A higher value is, therefore, advised. When switching, ensure that the policy offers you a better IDV than your existing one. If your IDV is higher, you would get a higher claim settlement in case of theft or total loss of your car.

Read more about Should you increase IDV of your car.

Premium rate

Though you must have checked the premium rate when you compared, ensure that the premium is in tandem with the car insurance coverage. Don’t be tempted by a low premium if the coverage features and IDV of the new policy are low. Ensure that you get a comprehensive scope of coverage at the lowest possible premium rate.

Add-ons available

Comprehensive car insurance policies provide various add-ons to enhance the scope of coverage. When switching to a new policy, make sure that the add-ons which you require are provided by the new plan. If not, you would be compromising on the coverage which is always a mistake.

Claim settlement ratio of the company

The claim settlement ratio of an insurance company denotes the company’s claim settlement history. If the ratio is high it means that the company has settled most of the claims which were presented up on it. Thus, you should check the claim settlement ratio of the new insurer. Make sure it is higher than your existing insurer.

Available discounts

You get attractive discounts in your car insurance policy. The rate of available discounts varies across companies. So, when switching your policy, ensure that your new company’s discount rates are higher than your old ones.

List of garages

Insurance companies have tied-up garages where you can avail cashless repairs of your cars. The higher the number of tied-up garages the company has the better are your chances of locating a preferred garage for cashless claims. So, look for a company which has the highest number of preferred garages.

Keep these points in mind when you compare different plans.

There are a lot of car insurance plans available in the market today. Each one offers something better than the other. So, find the most suitable plan and switch your car insurance policy. The process is quite simple, isn’t it?

Want a loan in your life insurance policy? Keep these things in mind

August 13, 2018May 10, 2021 Rupanjali Mitra Basu

Life insurance policies are multi-faceted. They not only cover you against premature death, savings-oriented plans create wealth too. In fact, there are other benefit features in your life insurance plan too which give you liquidity. Unit linked plans provide you the facility of partial withdrawals so that you can access your money whenever you want. Traditional plans, on the other hand, provide you policy loans. These loans give you funds when you need them the most. Though loans are a good way to way to have access to your funds, there are some things which should be remembered before you take a loan. Do you know what these things are?

Let’s find out –

- When is the loan available?
  You cannot avail a loan whenever you want to. Only if your life insurance plan acquires a surrender value can you avail the loan. Your plan acquires a surrender value only after you pay premiums for a specified number of years. Usually, premiums for the first two or three years are required before the plan acquires a surrender value. In case of policies where the premium paying term is 10 years and less, the first two years’ premiums are required. If the premium paying term is more than 10 years, the first three years’ premiums are required. So, check the policy to find out when you can avail the loan.

- Maximum quantum of loan
  There is a limit up to which you can avail a loan. The limit is defined as a percentage of your policy’s surrender value which is available when you apply for the loan. Different plans have a different maximum limit of loan. Usually, you get up to 60% to 90% of the surrender value as loan. You should check the maximum quantum available and whether the quantum matches your requirement or not.

- Interest applicable on loan
  Loan is a credit which you take from the insurance company. As such, you have to pay an interest rate on the loan. Interest is calculated on an annual basis on the amount of loan which you avail. The rate is determined by the insurance company based on the market rates. Sometimes, you might find the rate to be 2% more than the existing bank rate. So, always keep the applicable interest rate in mind before you apply for the loan to ensure that the repayment would be affordable.

- Loan in case of paid-up policies
  Paid-up policies are those in which you have stopped paying the premiums. If the minimum premiums have been paid, the policy continues on a reduced sum assured without you having to pay future premiums. In case of paid-up policies, the surrender value is limited as premiums are discontinued. When you apply for a loan, you get a very limited amount. Moreover, if you do not repay the loan and the outstanding liability exceeds the surrender value, the policy is foreclosed. So, try and avoid taking a loan in a paid-up policy. You might lose your coverage

Foreclosure
As mentioned earlier, foreclosure applies when you take a loan in a paid-up policy and the loan with interest exceeds the surrender value. The surrender value is the maximum value which is payable to you in between the term of the plan. If the outstanding liability exceeds this value, the company is forced to foreclose the policy. Foreclosure is an early termination of your policy. The company informs you before foreclosing the policy and requests you to pay the loan to avoid foreclosure. If you do not repay the loan or respond to the company’s notice of foreclosure, the policy is foreclosed. Any remaining surrender value (after deducting the outstanding loan) is refunded to you on foreclosure.

Here are some tips of buying life insurance

So, be careful when you take a loan. Take note of these points before you take a loan so that you don’t face any surprises later on.

Find out the types of life insurance plans available in the market

Read more about Common terms in life insurance

How much car insurance do you really need?

April 24, 2018May 12, 2021 Rupanjali Mitra Basu

It is only human to want more, isn’t it? The more the merrier. However, when it comes to car insurance policies, does having a higher insurance cover really make sense? How much car insurance do you really need?

While the choice of the coverage level in a life and health insurance policy is in your hands, in case of car insurance policies, the coverage level depends on the car’s IDV. Do you know what IDV is?

What is IDV?

IDV stands for Insured Declared Value. It is calculated as the current market value of your car after deducting the age-based depreciation. IDV calculation also excludes the costs incurred in registering and insuring your vehicle. The rate of depreciation applicable in IDV calculation is as follows –

If the vehicle is older than 5 years, the IDV is calculated by mutual agreement between the insurance company and the policyholder.

The IDV represents the sum insured of your car insurance policy. It is payable if the car is damaged completely or if it is lost or stolen.

Now that you know the concept of IDV, let’s understand how much car insurance do you require?

For new cars

If you buy a new car or your car is up to 3 years old, choosing the highest possible IDV is a better choice. A high IDV would maintain the value of your car and ensure a higher settlement of claim in case of total loss or theft of the car. Different insurance companies might offer a different IDV for the same car. As such, you should compare different car insurance policies on their IDV, coverage features and premium rates and then try to buy a plan which offers the highest IDV.

For older cars

Cars which are 4 or more years old do not require very high IDVs. Such cars’ life spans are nearing their end. Many individuals, usually, use their cars for 4 or 5 years on an average and then replace them. That is why, a car insurance policy for an older car, which is on the verge of being replaced, can make do with a lower IDV. In fact, low IDVs are better for older cars as they help in saving premiums.

Don’t forget about the available add-ons

A comprehensive car insurance policy also offers you optional add-on coverage features. These features enhance the coverage of the plan but cost extra. Are they required?

Yes, they are. Some of the add-ons are quite useful at the time of claim and should be added to your car insurance policy depending upon their suitability. Here are some of the important add-ons which you should consider in your car insurance plan –

Zero depreciation cover – under this cover the effect of depreciation on your car insurance claims is nullified. The insurance company pays the full value of claim for repairs of the depreciated parts of your car.
NCB protect – you earn a no claim bonus (NCB) in your car insurance policy when you don’t make a claim. This gives you a premium discount in subsequent policy years. However, a single claim wipes out the NCB discount. NCB protect add-on protects the accumulated NCB even when you make a claim
Roadside assistance – this add-on provides you 24*7 assistance in case your car breaks down in the middle of the road and you cannot reach the nearest garage for repairs
Engine protect – this add-on is beneficial if you are living in a flood prone area. The add-on covers the damage suffered by the car’s engine due to waterlogging
Return to invoice – under this add-on, the invoice value of the car is paid in case of total loss or theft.

You should choose the available add-ons based on their suitability. Don’t choose add-ons unnecessarily. Newer cars require zero depreciation, return to invoice and NCB protect add-on. If you live in an area where monsoons cause water-logging, engine protect add-on should be your obvious choice. Roadside assistance is helpful if you go on frequent road-trips.

So, when buying your car insurance policy, choose the correct IDV based on your car’s age. Also add the required add-ons for a more comprehensive coverage. This way, your car would be insured for the correct value.

Check out our video below to know the comprehensive motor insurance in detail

Most common #7 exclusions in a car insurance policy that you must keep in mind

February 27, 2018May 13, 2021 Rupanjali Mitra Basu

When you buy a car insurance policy, which is mandatory by the way, you believe that you are covered against all odds. Since you have paid a hefty premium you get the notion that your insurance policy would cover you for all the possible contingencies which might strike. Right?

Wrong!

You should read the fine print of your car insurance policy. While it is true that your car insurance policy provides a comprehensive cover, there are some specific instances which are not covered. Surprised? Don’t be. There are limitations on your insurance coverage which are called exclusions and you should pay attention to them to prevent future surprises. To make your work easier, here are 7 common exclusions which you would find in all car insurance policies –

#1 Driving under the influence of alcohol and/or drugs

How many times have you been warned not to drink and drive? Even if you escape the notice of the police, you cannot escape the rejection of your claim in case of any consequential accidents. Accidents faced when driving under the influence of alcohol and/or drugs are excluded from coverage. Since you are committing a legal offence, don’t expect your insurance policy to pay for your crimes.

#2 Driving without a valid driving license

A driving license is mandatory to drive a vehicle, right? Though all of you know the rule, it is ignored by many. The consequence – if you face any accident and claim for it, you would be denied coverage. The insurance company first checks the driving license when a claim is made. If you are unable to produce a valid driving license bid goodbye to claim settlement.

#3 Accidents outside the geographical boundaries of India

Your car insurance policy, however comprehensive it might be, covers you only on Indian roads. If you are driving outside the Indian subcontinent and face an accident, any claims made would not be valid. You would have to foot the expenses yourself.

#4 Consequential losses

Though the damages suffered by your car are covered under a comprehensive car insurance policy, any consequential losses are excluded. Consequential losses are losses which result from your actions or the actions of any third party. They are not due to any natural or man-made disasters which are covered in the policy. For instance, if your car gets stuck in a water-logged area and you try to crank it up to start, you might cause a hydrostatic loss to the engine. This loss damages your engine which needs to be repaired or replaced. Since the loss was not due to flooding but due to your action to start the car, it is called consequential loss and excluded from coverage.

Read more about How to drive safe in monsoons

#5 Normal wear and tear and depreciation

The normal wear and tear of your car and its parts are expected losses which accrue due to usage. These losses are not covered by your policy. That is why, when you make a claim, the insurer deducts the relevant depreciation from the repair costs and then pays the remainder.

#6 Violation of guidelines as to the usage of the vehicle

The car manufacturer lays down guidelines for the usage of the car. If you do not follow these guidelines and as a result of which you suffer damages you would not get the settlement of your claim.

#7 Claim on a lapsed policy

A car insurance policy is a one-year contract which needs annual renewals. If you do not renew the policy within the due date, the policy lapses. When the policy lapses your coverage ceases. Any claim which is made subsequent to such a lapse is, obviously, not honoured.

So, these are the most common exclusions which you can find in a car insurance policy. Beware of this list and keep them in mind so that when your insurer rejects your claim on any of these grounds you wouldn’t be shocked or cry foul.