Dear Friend,

Thank you for visiting my Blog. Not all of us were born in a rich family and we always think about retiring as a CROREPATI. Thinking is one thing, have you done anything to achieve that dream?

In order to become rich, you have to invest and do it wisely. For that you need knowledge and ideas. There are a few good books that I have published which you can buy for a nominal price which can help you with that.
With the New Year on the horizon, the price of all the books have been slashed by 50% or more.

To know more about these books, their price and check out a sneak preview, please Click Here...


Best Wishes!!

Anand

Thursday, March 17, 2011

National Pension Scheme (NPS) - All your Questions Answered!!!

In the previous chapter, we saw what the National Pension Scheme or the New Pension Scheme is and what the purpose of that scheme is. By the end of the chapter, you would have got a few or rather a lot of questions related to the scheme. If you had, don't worry about searching the internet for the answers because, this chapter is going to do it for you.

So, lets get started!!!

1. Who can invest in NPS?

Any Indian citizen between the age of 18 to 60 years can invest in NPS. However, persons having an existing NPS account and government employees who are already covered under NPS cannot again open an additional account under NPS.

2. Can an NRI open an NPS account?

Yes. An NRI can open an NPS account if the NRI has a bank account with a bank based in India. Contributions made by NRI are subject to regulatory requirements as prescribed by RBI and FEMA from time to time.

3. What if my citizenship status changes after I open a permanent retirement account under NPS?

NPS is available only to citizens of India. If the subscriber's citizenship status changes, his/ her NPS account would be closed.

4. If I have invested in any other Provident Fund, can I still invest in NPS?

Yes. Investment in NPS is independent of your contribution to any Provident Fund.

5. I have invested in pension funds of non government / private entities. Can I still invest in NPS?

Yes. Investment in NPS is independent of your subscription to any other pension fund. It is a purely voluntary scheme and the investor can make the decision to choose the NPS or any other private entity that provides pension schemes (like ICICI or HDFC)

6. Are there any online trading websites that provide NPS Subscription facilities?

Per my knowledge, ICICI Direct website provides this facility

7. What is PRAN?

PRAN stands for Permanent Retirement Account Number. Every individual who invests in the NPS will be allotted a PRAN.

8. How will I know my PRAN?

After your NPS / permanent retirement account is opened, CRA will intimate you about your PRAN by issuing a PRAN allotment letter.

You will also receive a Telephone Password (TPIN) and Internet Password (IPIN). The TPIN can be used to access your NPS account on the call centre number of CRA (1800222080). While your IPIN can be used to access your account on CRA website (www.npscra.nsdl.co.in) on a 24 x 7 basis.

9. Are there any conditions for making contributions to the NPS account?

Yes. PFRDA has specified the minimum contribution that is to be made in a financial year for each type of NPS account. Further, you are required to make your first contribution at the time of applying for registration with a Point of Presence (POP).

Additionally, the following conditions apply for each of the below accounts.

Tier I:
Minimum amount per contribution - Rs. 500 /-
Minimum contribution per year - Rs. 6,000/

Tier II:
Minimum amount at the time of account opening - Rs. 1,000/-
Minimum Amount per contribution - Rs. 250/-
Minimum Balance to be maintained at the end of the Financial Year - Rs. 2,000/-

You may decide on the frequency of your payments during the year as per your convenience. Further, you may also contribute the entire minimum contribution amount as detailed above at the time of registration itself.

10. Will the government also contribute anything to my NPS account?

No. The Government will not be making any contribution to your NPS account.
The Government of India may however, make contributions to the accounts of NPS account holders who opt for Swavalamban scheme subject to conditions stated in Swavalamban scheme. (The details of the Swavalamban scheme is out of scope for this article and we shall look into it in future)

11. What will happen if I do not make the minimum contribution during any financial year?

If you do not make your minimum contribution during any financial year, your account would go into “Defaulted” status.

In case of a default:

You will have to pay a default penalty of Rs. 100 per year of default and further CRA will mark your NPS account as dormant on the last date of that financial year.
To reactivate your account, you will have to pay the aggregate of the outstanding amount of the minimum contribution due for each year that your account is dormant and the applicable penalty amount per year. For instance, if your account has become dormant due to non payment of minimum contribution and you have already contributed say Rs. 3000/- during the year to your NPS account. Now, to reactivate your account, you will have to contribute the outstanding minimum contribution ie Rs. 6,000/- less Rs. 3000/- = Rs. 3000/- plus penalty of Rs. 100/-

A dormant account shall be closed when the value falls to zero.

The fee structure may change as may be decided by the PFRDA/ NPS Trust from time to time.

12. Is there any maximum age limit for making further contribution to NPS Tier I Account?

Yes. You can make contribution in your NPS accounts only till you have not completed the age of 60 years. After attaining 60 years of age, you will not be permitted to make further contributions to the NPS accounts.

13. Can I transfer my savings amount from NPS Tier II account to NPS Tier I account or vice versa?

No. You cannot transfer savings from one NPS account to the other.

14. How do I pay the charges or fees applicable to my NPS transactions?

The charges applicable on your NPS transactions and service tax amount payable thereon shall be deducted from your contribution amount and the balance amount will be invested in your NPS account.

Note: Details of the fees payable for investments can be found in the NPS offer document. This fees are subject to change from time to time by the PFRDA and will be intimated to the investors.

15. How do I select the Pension Fund Manager for my NPS savings?

You can select your Pension Fund Manager at the time of applying for the NPS Scheme. The list of available fund managers is available in my previous article and you can refer to it by clicking here


16. Can I select more than one PFM to manage my savings?

No. You can select only one PFM.

17. What is meant by Investment Choice?

Investment Choice refers to the feature by which the subscriber specifies the manner in which his contribution is to be invested. The contributions made by you towards the NPS account shall be invested by the Pension Fund Manager based on the asset class allocation given by you, and the value of the pension corpus shall be totally based on the NAV of the schemes. You can choose, equities or government securities etc. Details of the different investment choices can be seen in the NPS offer document (And in the next question… Did you think I will let you search for it )

18. What are the various investment choices available in NPS?

The following two investment choices are available in NPS:

(I) Active Choice - Individual Funds (Asset class E, Asset class C and Asset class G) and
(II) Auto Choice - Lifecycle fund

In Active choice, you have the option to actively decide as to how your NPS Pension wealth is to be invested in the following three asset classes:

Asset Class E - investments in equity market instruments
Asset Class C - investments in fixed income instruments other than Government securities
Asset Class G - Investments in Government securities

You will be able to choose from the below-mentioned basket of investment choices:

Equity (Asset Class "E") with a maximum asset allocation of 50% and remaining 50% which can be allocated from Asset Class C and/or Asset Class G

Fixed Income Instruments other than Government Securities (Asset Class "C") with maximum asset allocation of 100% (if allocated singly)

Investment in Government Securities (Asset Class "G") with maximum asset allocation of 100% (if allocated singly)

The overall asset class allocation under the 'Active Choice' option should be equal to 100%

In the Auto Choice option, your funds will be invested across various asset classes in a lifecycle fund as per a pre defined portfolio wherein the Pension Fund Manager shall invest your contribution based on the asset allocation table formulated by PFRDA (based on your age group).

19. Can I select both investment choices when investing in NPS?

No. You have to select either Active Choice or Auto Choice as your option when making investments under NPS. You cannot choose both…

20. Can I change my investment choice?

Yes, you can change your Investment Option [Active or Auto]. After all, it’s your money and you can choose how it is invested.

However, these changes can be made only during the period as specified by CRA / PFRDA. PFRDA will announce the period (from and to dates) during which you can make the said changes.

21. What rate of return will my contributions earn?

There is no guaranteed or suggested rate of returns. The returns earned by your investment would depend on the type of assets you chose to invest and the market performance.

The PFM will invest your savings in a scheme of your choice. Remember that your investment allocation is one of the most important factors affecting the growth of your pension wealth. The rate of return earned by your contribution depends on the return provided by the asset classes you choose to invest in viz equity instruments, fixed income instruments , government securities.

The returns earned by the PFM on the scheme selected by you will be credited to your account.

22. Can I register for NPS without indicating any investment option?

No. You will not be able to register for NPS, unless you have indicated your Investment choice.

23. What is meant by Life Cycle fund in the Auto Choice option?

NPS offers an easy investment option, called "Auto Choice", to assist those customers who do not have the required knowledge to manage their NPS investments.

Under this Option, the investments will be made in a life cycle fund whereby the allocation across various assets will be defined as per your age and will be readjusted as you grow older. When you are younger a higher portion of your funds will be invested in equities and as you grow older, the exposure to equities will be reduced and the exposure to debt instruments will be increased.


24. Can I change the Pension Fund Manager for my pension savings?

Yes, you can change your Pension Fund Manager.

However, as for question 20, this change can be done only in specific timeframe and not all the time.

25. Can I have a different Pension Fund Manager and Investment Option for my Tier I and Tier II account?

Yes. You may select different PFMs and Investment Options for your NPS Tier I and Tier II accounts.

26. Who are the Annuity Service Provider for NPS accounts?

PFRDA is in process of appointing the Annuity Service Provider(s) for the NPS accounts. Upon appointment of the same, you will be able to select any Annuity Service Provider for your account as per your choice at the time of withdrawal of contribution from your NPS Tier I account or on attaining 60 years of age.

As of now, they are not yet appointed/finalized.

27. Where can I view my unit holdings held in the NPS account?

You can view your unit holdings by logging on to the CRA Website. https://cra-nsdl.com/CRA/ using the IPIN provided by CRA.

28. Will I receive a transaction statement on allotment of units in my NPS account?

Yes. An annual statement containing details of your unit holdings will be issued by CRA to your registered address within 3 months of the end of every financial year.

29. Are there any conditions / formalities to be completed for withdrawing money from my NPS Tier I account?

Yes. Following are the conditions stipulated by PFRDA for withdrawing funds from the NPS Tier I account:

On attaining age of 60 years and upto 70 years of age

On exit, you would be required to compulsorily invest atleast 40 % of your accumulated savings (pension wealth) to purchase a life annuity from any IRDA - regulated life insurance company.

You may choose to purchase an annuity for an amount greater than 40%. The remaining 60 % of your pension wealth can either be withdrawn in lump sum on attaining the age of 60 or in a phased manner, between age 60 and 70, at the option of the subscriber.

In case you opt for phased withdrawal, please note:
1. Minimum 10% of the pension wealth should be withdrawn every year
2. Any amount lying to the credit at the age 70 should be compulsorily withdrawn in lumpsum

Death due to any cause In such an unfortunate event, option will be available to the nominee to receive 100% of the NPS pension wealth in lump sum. However, if the nominee wishes to continue with the NPS, he/she will have to subscribe to NPS individually after following due formalities.

Update - As of 12th June 2013:

As per some latest developments 60% of your corpus can be withdrawn in One Lumpsum. You need not do the phased withdrawal as explained above. I am retaining this old answer as well just to show how the NPS policies change over time to benefit us...

30. What will happen to my savings if I decide to retire before age 60?

To withdraw from your Tier I account at anytime before 60 years of age, you would be required to invest atleast 80% of your pension wealth to purchase a life annuity from any IRDA - regulated life insurance company. You may withdraw the remaining 20% of your pension wealth as a lumpsum.

31. Can I appoint nominees for the NPS Tier I Account?

Yes. You can appoint upto 3 nominees for your NPS Tier I account.

You are required to specify the percentage of your saving that you wish to allocate to each nominee. The share percentage across all nominees should collectively sum up to 100%.

32. I have not made any nomination at the time of registration. Can I nominate subsequently?

If you have not made the nomination to your NPS account at the time of registration, you can do the same after the allotment of PRAN.

33. Are there any charges for making a nomination?

If you are making the nomination at the time of registering for PRAN, no charges will be levied to you.

However, a subsequent request for nomination updation would be considered as a service request and you will be charged an amount of Rs. 20/- plus applicable service tax for each request.

34. What is the transmission process to be followed by a nominee in case of death of the NPS account holder?

Incase of the death of the NPS account holder, the nominee(s) may opt to receive 100% of the NPS pension wealth of the deceased NPS account holder in lump sum or may continue with NPS .

In case the nominee (s) opt to withdraw the pension wealth, the nominee (s) are required to submit the withdrawal request to CRA directly with the supporting documents specified in the withdrawal request form.

However, if the nominee wishes to continue with the NPS, he/she will have to subscribe to NPS individually after following due account opening formalities.

35. What is the transmission process in case of death of NPS account holder who has not selected a nominee?

It is advisable that the NPS subscribers indicate their nominee. CRA is in the process of defining the procedure for transmission in case of NPS account holders who have not selected a nominee.

36. Can I raise my queries or complaints directly with CRA?

Yes. The NPS also has a multi layered Grievance Redressal Mechanism which is easily accessible, simple, quick, fair, responsive & effective. You can register your grievance / compliant by calling at the CRA call centre or by registering the grievance on www.npscra.nsdl.co.in.

You will have to authenticate yourself through the use of T-PIN (in case of call centre) /I-PIN (while registering on the site) allotted to you.

On successful registration of your grievance, a token number will be allotted to you for all future references.

37. How can I track the status of resolution of my grievance that I have registered with CRA?

You can check the resolution status of your grievance by logging in to the CRA website www.npscra.nsdl.co.in

If you have raised your grievance through CRA, you may contact the CRA Call Center and enquire about the resolution of your grievance by mentioning the token number. You can also raise reminder through any one of the modes mentioned above by specifying the original token number issued.

38. What can I do if I do not get a response from the CRA?

If you do not receive any response with in 30 days or are not satisfied with the resolution provided by CRA, you can apply to the Grievance Redressal Cell (GRC) of PFRDA

Grievance received by the GRC, directly from the subscribers only shall be entertained. GRC shall not entertain any complaints written on behalf of the subscribers by advocates, agents or third parties unless formally authorized by the subscriber.

Complete address of the GRC of PFRDA is:

Grievance Redressal Cell
Pension Fund Regulatory and Development Authority
1st Floor, ICADR Building, Plot No. 6, Vasant Kunj,
Institutional Area, Phase - II, New Delhi - 110070,
Tel: 011-26897948-49, FAX: 011-26892417,
Email: grcpfrda@gmail.com


Hope this article was able to answer most of your queries related to the NPS. If you have any further queries, don't hesitate to leave a comment and I will see what I can do 

Happy Retirement!!!

Wednesday, March 16, 2011

The National Pension System (NPS) – De-Mystified

The National Pension System is a retirement planning option that has been made available to the citizens of India in the year 2009. Not many people know what it is and how it can be used for retirement planning. The purpose of this article is to elaborate on that scheme and help people understand and use the National Pension System in their retirement plan.

So, lets get started!!!

What is the National Pension System ?

The New Pension System or The NPS as we will be referring to it in this article, is a new voluntary contributory pension scheme introduced by the Central Government through Pension Fund Regulatory and Development Authority (PFRDA) to promote old age income security.
The aim of the NPS is to provide a sumptuous retirement corpus for the working class of India (Something like Social Security in USA) when they retire. Though it is not a compulsory contribution option like Social Security, this scheme is purely voluntary. The scheme is available to all citizens of India who are not Government Employees.

Under the NPS, individuals can open a personal retirement account with the government through the PFRDA and can set aside and save a pension corpus during their work life to meet financial needs post retirement. There are various investment options available for the investors who wish to subscribe to the National Pension System. The amount invested in the scheme earns returns depending on the investment options selected by the investor.

At the time of withdrawal (When the investor retires) the subscribers have to invest a portion of their accumulated pension money under the Scheme to purchase a life annuity from an IRDA regulated life insurance company and the balance may be withdrawn in full. The amount the investor can withdraw and the timeframe after which it can be withdrawn are subject to certain conditions.

Dont worry just yet, we will cover that too ...

Who are the people involved in the National Pension System?

There are many people or rather the correct technical term would be intermediaries involved in the NPS. They are:
1. The Pension Fund Regulatory and Development Authority (PFRDA) of India
2. The Central Record Keeping Agency (CRA)
3. Pension Fund Managers
4. Annuity Service Providers
5. Trust & Trustee Bank
6. Point of Presence

Let’s look into these one by one.

Pension Fund Regulatory and Development Authority (PFRDA)

PFRDA is the regulator for the NPS. PFRDA is responsible for registration of various intermediaries in the system such as Central Record Keeping Agency (CRA), Pension Funds, Custodians, NPS Trustee Bank, etc. The PFRDA also monitors the performance of the various intermediaries and ensure that all stakeholders comply with the guidelines/regulations issued by PFRDA from time to time.

The most important responsibility of the PFRDA is to ensure that the interest of the Citizens who invest in the scheme are protected which essentially means they are there to look after our best interest.

Central Record-keeping Agency (CRA)

The record-keeping, administration and customer service functions for all subscribers of the New Pension System will be centralized and performed by the CRA. The CRA will, on the basis of instructions received from subscribers, transmit such instructions to the appointed Pension Funds on a regular basis. The CRA will also provide periodic, consolidated PRAN statements to each subscriber.

The National Securities Depository Limited (NSDL) has been appointed as the CRA for the NPS.

Pension Fund Managers (PFMs)

The money deposited by investors is invested into a pension fund which is managed by designated fund managers. There are a few leading professional firms that have been appointed to act as the Pension Fund Managers. They invest the subscriber’s money into various schemes like equities or bonds etc for further investment.

The Pension Funds are required to invest strictly in accordance with the guidelines issued by the government and PFRDA. The NAV of each and every scheme in the Pension Funds would be communicated to the CRA and the investors regularly.

NPS allows you to choose from any one of the following six entities as PF to manage your pension fund:
1. ICICI Prudential Pension Funds Management Company Limited
2. IDFC Pension Fund Management Company Limited
3. Kotak Mahindra Pension Fund Limited
4. Reliance Capital Pension Fund Limited
5. SBI Pension Funds Private Limited
6. UTI Retirement Solution Limited
7. Annuity Service Provider (ASP)

Annuity Service Providers:

The Annuity Service Providers are responsible for delivering a regular monthly pension to the investor after they attain their retirement age of 60 yrs. The PFRDA is in process of appointing the Annuity Service Provider(s) for the NPS accounts. Upon appointment of the same, you will be able to select any Annuity Service Provider for your account as per your choice at the time of withdrawal of contribution from your NPS account or on attaining 60 years of age.

Trust & Trustee Bank (TB)

The Trust established under the NPS, is responsible for taking care of the funds under the NPS and is the registered owner of all NPS assets. The trust holds an account with as the NPS Trustee Bank, i.e Bank of India. NPS Trustee Bank facilitates fund transfers across various entities of NPS system which include, PFM, Annuity Service Providers, subscriber, etc. The NPS Trust is being administered by the Board of Trustees, as decided by the PFRDA.

Point of Presence (PoP)

PoP is the first point of interaction between the voluntary subscriber and the NPS architecture. The PoP is responsible for performing functions relating to registration of subscribers, undertaking Know Your Customer (KYC) verification, receiving contributions and instructions from subscribers and transmission of the same to designated NPS intermediaries.

How to invest in NPS?

The PoP is the entity through which an investor can invest into the National Pension Scheme. The Investor who wishes to subscribe to the NPS can contact the PoP and become an investor in the Pension Scheme.

Types of NPS Accounts

The NPS currently has two types of Accounts available for the subscribers. They are:
1. Tier 1 Account – This is a non-withdrawable account wherein you will not be able to take out your investments until you reach your retirement age of 60 years. If you want to withdraw the money from your Tier 1 account before you reach 60 years, you would be required to invest atleast 80% of the money in your account to purchase a life annuity from an Annuity Provider (Life Insurance Companies). You can only withdraw the remaining 20% of your balance.
2. Tier II Account – To open a Tier 2 account, you need to have an active tier 1 account. You can withdraw your savings from this account whenever you want.


Benefits of Investing in NPS

There are a lot of benefits of investing in the NPS. They are:
1. You can choose the amount you want to set aside and save every year
2. All you have to do is to open an account with any one of the POP and get an Account
3. You can choose your own investment option and Pension fund and see your money grow
4. You can operate your account from anywhere in the country , even if you change your city, job or pension fund manager
5. NPS is regulated by PFRDA, with transparent investment norms and regular monitoring and performance review of fund managers by NPS trust

I know that, by now you will have numerous questions about the NPS. So, in the next article we are going to cover them all.

Happy Retirement!!!

Saturday, March 12, 2011

Cashless Hospitalization in Health Insurance

In the previous chapter on Health Insurance, I had used the term Cashless Hospitalization. Some of you may have understood what it meant or even used it but there are a few who may not know what it is. Well, the purpose of this article is to understand what Cashless Hospitalization is and how it is useful.

So, lets get started!!!

What is Cashless Hospitalization?

Cashless Hospitalization is a facility using which a person who holds a health insurance policy can get admitted in a hospital and get himself treated without having to pay for all the medical expenses. There are a few things that the insurance does not cover, which the person would have to pay for, but otherwise the insurance company will pay for the rest of the expenses.
Convenient, Right???

How Cashless Hospitalization works?

Let us take an example situation and try to figure out how it works. Let’s say our Uncle Sam has suffered a Heart Attack and needs a Surgery to be done within the next 2 or 3 days. Luckily Uncle Sam has a medical insurance policy and his son is planning to use the cashless hospitalization facility to treat his father. This is how it will happen
Step 1: Uncle Sam’s son contacts the Hospital Reception, explains the situation and inquires about the cashless hospitalization facility.

Step 2: The Receptionist gives him a form to fill-up to request Cashless Hospitalization

Step 3: Uncle Sam’s son fills up the form, signs it and hands it over to the Receptionist

Step 4: The Hospital sends out the details to the Insurance company

Step 5: Officers at the Insurance company validate the documents and the details of the insurance policy. They check if Uncle Sam has enough coverage to pay for the hospitalization. Once they validate they send out a response to the Hospital.

A point to note here is that, the company would send out details of the amount they would pay for the treatment, and the kind of expenses they wouldn’t pay. For Ex: They can say that, Uncle Sams policy covers upto Rs. 2 lacs of treatment and we will not pay for Air Conditioned rooms and food expenses. The rest of the treatment upto Rs. 2 lacs is covered.

Step 6: The Hospital receives the communication from the insurer and shares the news with Uncle Sam’s son.

Step 7: They ask him to sign an agreement that, whatever expenses are not covered would be paid by him before Uncle Sam is discharged

Step 8: After he signs the agreement, the hospital will begin Uncle Sam’s treatment

Step 9: Uncle Sams treatment is over and he is getting discharged today. His son is going to pay the balance amount due to the hospital and take his healthy dad home...

What are the Documents you need for Getting Cashless Hospitalization?

The following are the documents you need for getting or rather using Cashless Hospitalization facility. They are:

1. Identity Proof – like Drivers License, Passport (This is used to validate that the person asking for the feature is indeed the person who is covered by the insurance policy)
2. Insurance Proof – Usually an Insurance Card or a Policy Document (This is used to validate that the person has a valid insurance policy and is currently active as on the current date)
3. Proof of Sickness – Usually a letter or certificate from a Doctor who is treating the patient
4. Proof of Treatment – Usually a letter or certificate from the Hospital that the patient is being treated in their premises

An important point to note here is that, almost all insurance companies and policies have the cashless hospitalization facility. It is better if you confirm with the insurance agent about the availability of this feature before you sign-up for the policy.

Because, better safe than sorry!!!

Do You Have Health Insurance?

Well, this is a million dollar question. Yes and I mean it. According to a recent survey less than 5% of Indians are insured for their health expenditure. Thats actually the good part. The bad part is that 95% of them are either not insured or don’t know what it is.

The purpose of this article is to help people understand what it is and how to use it.

So, lets get started!!!

What is Health Insurance?

Health Insurance is just like any other form of insurance. Let’s take Automobile Insurance for comparison. Everyone who owns a car or a bike knows what it is. Lets say you swerve on the road to avoid a suddenly crossing dog on road and end up bumping the roadside lamp-post. This good deed of yours (trying to avoid running over that poor dog) would cost you thousands of rupees to repair your car. But, fortunately you have car insurance, and the insurance company covers nearly 90% of the expenses and you end up paying a few hundred rupees to get your car fixed “as good as new”

Yes, this is exactly what Health Insurance does. But, instead of your car or bike, its your body that is insured. Whenever you have any health ailment or any disease that requires medical treatment, the insurance company would happily pay for upto 90% of your expenses (Provided you are insured for that much) and you will be “as good as new” after the treatment...

Do we Need Health Insurance?

Yes. 100% Yes. Anyone who asks do we need health insurance needs to read the below paragraph...

Lets say, one fine morning, you wake up and realize that you are having a pain in your chest and it might be a heart attack. You are the only earning member of the family and your wife is a house wife and your kids are in school. You don’t have lakhs of money in your bank to pay for your heart treatment. What would your family do without you? Without the treatment they will be left to fend for themselves without a job and for the treatment you need a few lakhs of rupees which you don’t have either.

You need the treatment because, its a matter of life and death and your family needs you because they depend on you.

What do we do here?

“Health Insurance” is the answer my friend. If you had insured yourself, all this confusion could have been averted. You’d have got your treatment at a good hospital without having to shell out this lakhs of rupees and your family is relieved and happy that you are safe.

An Irony!!!

This is something I have been wondering for quite some time... many of us have bikes and cars and we all have insured them. Cars and bikes are just machines. You can always replace a damaged car or bike with a new one. Something that has just monetary value is insured and the human life and health, something that is invaluable and priceless isn’t treated with as much importance like a car of a bike.
People need to realize that life is precious and we need to ensure that we take good care of ourselves.

How to get Health Insured?

There are many insurance providers who provide health insurance policies. You can contact them and get the insurance. Some of the major insurance providers in the public and private sector are:

Public Sector Players:
1. National Insurance
2. United India Insurance
3. Oriental Insurance Company
4. New India Assurance

Private Sector Players:
1. TATA AIG
2. Chola MS
3. Iffco Tokio
4. Royal Sundaram
5. ICICI Lombard
6. Reliance General
7. HDFC Ergo

What kind of Protection do we need?

We need two important things here:
1. Personal Protection – The case where the policy holder (you and me) is covered for all ailments that involve hospitalization and treatment for the same. The amount that the insurance company would pay would depend on the premium we are willing to pay. This amount can be chosen by the insurer (Again you and me)
2. Family Floater Protection – The case where the family members of the policy holder (Wife, kids, dependant parents) are covered for all medical treatments. Again this would depend on the amount of premium we are willing to pay.
Note: All the above insurance companies i have mentioned in the previous paragraph provide both these protections. I personally suggest you include family floater protection to ensure that all members of your family have health insurance.

Things to Check before Insuring Ourselves

If you have decided that you are going to get yourself and your family health insured, its a great decision and i would like to personally appreciate you for that decision. But, there are a few things we need to check & verify before we sign the insurance papers. They are:
1. Read the whole insurance policy document. Make sure you understand what is covered and what is not.
2. NEVER EVER ASSUME ANYTHING
3. Make sure that the policy covers you and your family
4. Make sure that treatment for accidents is covered in the policy
5. Make sure you read the fineprints (The *s #s and other small prints on the bottom part of the document)
6. Make sure that the coverage includes critical illness cover (Ex: heart attack)
7. Make sure you disclose all existing health conditions of yourself and your family members. Many policies do not cover existing illnesses and not disclosing them can result in no coverage.
8. Find out everything about the claim process (You will need this because; sometimes we won’t have time to do paperwork for cashless hospitalization and hence opt to pay for the treatment. In such cases, we can get the money reimbursed through the claim process)
9. Find out about the claim settlement history of the insurance provider. An insurance company that has a history of rejecting insurance payments is probably not your best option.

To Wrap up, i would like to finish with the words that, health insurance is extremely important and it is always a good idea to have health insurance for us and our family members.

Happy Insuring Yourself!!!

Tuesday, March 1, 2011

Budget 2011 & Income Tax Policies

Yesterday, the finance minister of India revealed the Union Budget for the financial year 2011-2012 and there sure was a lot of buzz around it.

This article is not about what the finance minister did or did not do with respect to the Indian economics. However, what this article is about is – the impact of the budget on the income tax policies for individuals or rather salaried people.

Good News & Bad News

Well, the good news is that the standard deduction on income tax calculation has been increased to Rs. 1.8 lakhs for everyone. Though it is not a significant increase, something is better than nothing.

The bad news is that, no other component in the income tax calculation was touched. Experts were expecting the finance minister to change the limits under Section 80C and other sections that affect the final income tax liability of an individual in the union budget 2011. But unfortunately, the finance minister did not alter it.

Changes to Income Tax Policies & Slabs:

The following are the changes applicable as per the budget revealed by the finance minister of india yesterday:
• Standard Deduction increased to Rs. 1.8 lakhs for all individuals
• A new category of Tax Payers “Senior Citizens 80 yrs of age and above” has been introduced
• People over 80 yrs of age don’t have to pay tax for upto Rs. 5 lakhs and above that, the standard slabs of 20% and 30% are applicable like all individuals


Apart from this, there were no other major updates reg. the income tax policies.

Below are the revised tax slabs effective this financial year 2011-12:

For General Citizens (Men)

Amount % Tax Payable
Upto Rs. 1,80,000 Nil (0%)
Rs. 1,80,001 to Rs. 5,00,000 10%
Rs. 5,00,001 to Rs. 8,00,000 20%
Rs. 8,00,001 and above 30%

For Women

Amount % Tax Payable
Upto Rs. 1,90,000 Nil (0%)
Rs. 1,90,001 to Rs. 5,00,000 10%
Rs. 5,00,001 to Rs. 8,00,000 20%
Rs. 8,00,001 and above 30%

For Senior Citizens - 60 to 80 yrs of Age

Amount % Tax Payable
Upto Rs. 2,50,000 Nil (0%)
Rs. 2,50,001 to Rs. 5,00,000 10%
Rs. 5,00,001 to Rs. 8,00,000 20%
Rs. 8,00,001 and above 30%

For Very Senior Citizens - Above 80 yrs of Age

Amount % Tax Payable
Upto Rs. 5,00,000 Nil (0%)
Rs. 5,00,001 to Rs. 8,00,000 20%
Rs. 8,00,001 and above 30%
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