The life insurance company, HDFC Life has launched ProGrowth Flexi - a Unit Linked Insurance Plan (ULIP) with minimum monthly premium of Rs 2500!
What HDFC has to say about its new product?
"A highly affordable product, HDFC SL ProGrowth Flexi comes with 30-day Free Look-in, flexible premium payment options, five investment funds, and the flexibility to change premium paying term."
To quote:
Amitabh Chaudhry, MD and CEO, HDFC Life –
“The product offers several flexibilities to customers that can be chosen based on their needs and appetite. Apart from the normal life cover, HDFC SL ProGrowth Flexi also provides extra life cover with accidental death benefits option.”
Premium payment:
• Yearly,
• Half-yearly and
• Monthly.
Investment funds:
1. Short Term Fund,
2. Income Fund,
3. Balance Fund,
4. Blue Chip Fund, and
5. Opportunities Fund.
Friday, January 7, 2011
Thursday, January 6, 2011
How to avoid Insurance traps?
A new year means new resolutions. Regularly exercising and eating healthy is important for good health. But remember financial wisdom is equally important to keep your money intact and growing. It is also time for drawing up plans for tax investments as well as regular savings so here are some tips to get you started.
• Don’t invest in Ulips for only 5 years
It can be difficult to lock in money for long so if you expect you might need money in 1-3years from now, Ulips is not meant for you. You should look at this investment product only if you leave your money untouched for be-yond five years. A good time horizon would be around 5- 30 years.
To better understand this let us take an instance. If you invest Rs 1,00,000 in a Ulip for 30 years, the first year return will be negative at around 80,000. This is because the investment amount itself shrinks to Rs 75,000 after accounting for charges such as mortality, policy, allocation and fund management.
However, the investor breaks even after the fourth year and doubles the investment in 30 years. Even if the investor locks in for 15 years, he earns Rs 20.5 lakh if he has invested Rs 15 lakh. Ulips are designed in a way that they attract maximum front loading in the first 3-4 years of the policy. So, stay long to reap maximum benefits.
• Try not to take home loan insurance
Everyone would love a home of their own. It has become easier to own one with help of a home loan. But one should always remember that until you pay off the loan it doesn’t become your house in the true sense. The aspiration to own a house comes with a heavy price tag and a huge liability. Hence, you have to cover the liability so that your family doesn’t have to shoulder the burden of EMIs if something happens to you during the tenure of the loan.
Although the home loan insurance policy works similar to a term life insurance policy, term cover is the cheapest option. The risk cover/ sum assured will be equally to the outstanding loan amount at any point of time. But home loan insurance works on a reducing balance principle. As the outstanding loan amount reduces, the size of the cover also decreases.
The biggest advantage of a term plan is that the sum assured remains constant in a term plan over a period of time whereas in a home cover, it is a declining cover.
• Don’t invest in Ulips for only 5 years
It can be difficult to lock in money for long so if you expect you might need money in 1-3years from now, Ulips is not meant for you. You should look at this investment product only if you leave your money untouched for be-yond five years. A good time horizon would be around 5- 30 years.
To better understand this let us take an instance. If you invest Rs 1,00,000 in a Ulip for 30 years, the first year return will be negative at around 80,000. This is because the investment amount itself shrinks to Rs 75,000 after accounting for charges such as mortality, policy, allocation and fund management.
However, the investor breaks even after the fourth year and doubles the investment in 30 years. Even if the investor locks in for 15 years, he earns Rs 20.5 lakh if he has invested Rs 15 lakh. Ulips are designed in a way that they attract maximum front loading in the first 3-4 years of the policy. So, stay long to reap maximum benefits.
• Try not to take home loan insurance
Everyone would love a home of their own. It has become easier to own one with help of a home loan. But one should always remember that until you pay off the loan it doesn’t become your house in the true sense. The aspiration to own a house comes with a heavy price tag and a huge liability. Hence, you have to cover the liability so that your family doesn’t have to shoulder the burden of EMIs if something happens to you during the tenure of the loan.
Although the home loan insurance policy works similar to a term life insurance policy, term cover is the cheapest option. The risk cover/ sum assured will be equally to the outstanding loan amount at any point of time. But home loan insurance works on a reducing balance principle. As the outstanding loan amount reduces, the size of the cover also decreases.
The biggest advantage of a term plan is that the sum assured remains constant in a term plan over a period of time whereas in a home cover, it is a declining cover.
Wednesday, January 5, 2011
Bharti AXA to twice its health insurance business in 2011
Bharti AXA General Insurance Company Ltd, a 74.26 joint venture between Bharti Enterprises and AXA Group, has set the target of doubling its health insurance business in the calendar year 2011. The company has also policy to open 15 new branches in Western region of the country in the current calendar year.
Presently, 17(%) per cent of Bharti AXA General Insurance business comes from the health insurance segment. The company has a total of 58 branches across the country, including 14 branches in Western region, which includes Maharashtra, Goa and Madhya Pradesh and Gujarat.
“We are planning to double our business in health insurance segment from the current 17(%) per cent to 34(%) per cent in the current calendar year 2011,” Sanjay Radhakrishnan, vice-president, Western India, Bharti AXA General Insurance, who was here in Nashik, told Business Standard.
“We are also planning to open 15 new branches in Western region in the current calendar year 2011. Of which, 8 branches will be opened in Maharashtra, while rest of the 7 branches in Gujarat,” he said.
The company has achieved the new premium business of Rs 450 crore and has sold out 5.40 lakh policies by November end in the calendar year of 2010. Western region’s share throughout the same period was 35(%) per cent of total new premium business of the company, with sale of 1.15 lakh policies.
Presently, 17(%) per cent of Bharti AXA General Insurance business comes from the health insurance segment. The company has a total of 58 branches across the country, including 14 branches in Western region, which includes Maharashtra, Goa and Madhya Pradesh and Gujarat.
“We are planning to double our business in health insurance segment from the current 17(%) per cent to 34(%) per cent in the current calendar year 2011,” Sanjay Radhakrishnan, vice-president, Western India, Bharti AXA General Insurance, who was here in Nashik, told Business Standard.
“We are also planning to open 15 new branches in Western region in the current calendar year 2011. Of which, 8 branches will be opened in Maharashtra, while rest of the 7 branches in Gujarat,” he said.
The company has achieved the new premium business of Rs 450 crore and has sold out 5.40 lakh policies by November end in the calendar year of 2010. Western region’s share throughout the same period was 35(%) per cent of total new premium business of the company, with sale of 1.15 lakh policies.
Tuesday, January 4, 2011
Benefits of joint life policy
Insurance options for a couple need not be restricted to taking separate covers. A joint life insurance policy covers both the partners through a single endowment. It also help you save on premium but remember that the maturity benefits are lower than individual policies.
Example:
Abhi Aul (35) and his wife (30) recently took Rs 30 lakh loan for their house, the bank insisted they buy an insurance term plan. By doing this, the bank would get the sum assured in case any of them passes away. For the surviving spouse, it ensures paying off debts without liquidating other investments or assets.
Particulars Joint life Individual
Endowment*
Husband’s age (yrs) 35 35
Wife’s age (yrs) 30 30
Policy tenure (yrs) 25 25
Risk cover (Rs/lakh) 60 60 (30+30)
Maturity benefit (Rs/lakh) 30 +
bonus 60 + bonus
Annual Premium (Rs) 148,957 2,31,857
(1,18,402+1,13,455)
*Individual Rs 30 lakh policies for a 25-year tenure
Since the couple is employed, they planned to share the total equated monthly installment (EMI). Taking separate term plans of Rs 30 lakh each was an option but they opted for a joint life insurance policy.
Currently, only Life Insurance Corporation (LIC) sells such a policy. Few banks offer cover under a group policy that their insurance partners underwrite exclusively for the lender. But the premium is to be paid in lump sum and provides cover only to the extent of the outstanding loan.
Note:
• In case the spouse is a housewife, her insurance cover will depend on her financial standing.
• Premiums can be paid by either of the partners.
BENEFITS
• A joint life plan waives off the future premiums and the survivor gets the sum assured immediately on the death of the partner.
• The plan also has an accident and total disability benefit as a built-in feature.
• If the surviving partner is alive through the policy term, he or she will also get the bonus accrued along with the sum assured.
• In case, both pass away, the nominee would get both the lump sum and bonus.
In Aul's case, death of either of them will mean the surviving spouse will get a risk cover of Rs 30 lakh. The bonus amount will continue to accrue in the policy.
COSTS
Joint life plans work out cheaper if you compare the premium paid for them as compared to individual endowment plans. The Aul's will pay Rs 1,48,957 as annual premium. Had they opted for individual endowment plans of Rs 30 lakh each, they would have paid a combined annual premium of Rs 2,31,857. However, if the policy matures, the surviving partner (or both), will get only Rs 30 lakh and the accrued bonus in a joint life plan. In an endowment plan, it would be Rs 60 lakh plus bonus.
CORPUS FOR FUTURE
If both partners survive till maturity, the amount can be used to buy an immediate annuity plan. This is how Aul’s have planned to add to their retirement corpus.
Even surviving partners could use the same strategy. While there is no burden of paying the premiums, the risk cover shall continue.
Points to bear in mind:
• Before taking a joint life policy, ensure that your relations with your spouse are stable, with no indications of a possible separation. Considering it defeats the very purpose of this policy.
• The taxation in this plan is similar to other life insurance products. The proposer of the plan gets a deduction in his taxable income under Section 80C and any claims or maturity arising out of the plan comes tax free u/s 10 10(D).
Example:
Abhi Aul (35) and his wife (30) recently took Rs 30 lakh loan for their house, the bank insisted they buy an insurance term plan. By doing this, the bank would get the sum assured in case any of them passes away. For the surviving spouse, it ensures paying off debts without liquidating other investments or assets.
Particulars Joint life Individual
Endowment*
Husband’s age (yrs) 35 35
Wife’s age (yrs) 30 30
Policy tenure (yrs) 25 25
Risk cover (Rs/lakh) 60 60 (30+30)
Maturity benefit (Rs/lakh) 30 +
bonus 60 + bonus
Annual Premium (Rs) 148,957 2,31,857
(1,18,402+1,13,455)
*Individual Rs 30 lakh policies for a 25-year tenure
Since the couple is employed, they planned to share the total equated monthly installment (EMI). Taking separate term plans of Rs 30 lakh each was an option but they opted for a joint life insurance policy.
Currently, only Life Insurance Corporation (LIC) sells such a policy. Few banks offer cover under a group policy that their insurance partners underwrite exclusively for the lender. But the premium is to be paid in lump sum and provides cover only to the extent of the outstanding loan.
Note:
• In case the spouse is a housewife, her insurance cover will depend on her financial standing.
• Premiums can be paid by either of the partners.
BENEFITS
• A joint life plan waives off the future premiums and the survivor gets the sum assured immediately on the death of the partner.
• The plan also has an accident and total disability benefit as a built-in feature.
• If the surviving partner is alive through the policy term, he or she will also get the bonus accrued along with the sum assured.
• In case, both pass away, the nominee would get both the lump sum and bonus.
In Aul's case, death of either of them will mean the surviving spouse will get a risk cover of Rs 30 lakh. The bonus amount will continue to accrue in the policy.
COSTS
Joint life plans work out cheaper if you compare the premium paid for them as compared to individual endowment plans. The Aul's will pay Rs 1,48,957 as annual premium. Had they opted for individual endowment plans of Rs 30 lakh each, they would have paid a combined annual premium of Rs 2,31,857. However, if the policy matures, the surviving partner (or both), will get only Rs 30 lakh and the accrued bonus in a joint life plan. In an endowment plan, it would be Rs 60 lakh plus bonus.
CORPUS FOR FUTURE
If both partners survive till maturity, the amount can be used to buy an immediate annuity plan. This is how Aul’s have planned to add to their retirement corpus.
Even surviving partners could use the same strategy. While there is no burden of paying the premiums, the risk cover shall continue.
Points to bear in mind:
• Before taking a joint life policy, ensure that your relations with your spouse are stable, with no indications of a possible separation. Considering it defeats the very purpose of this policy.
• The taxation in this plan is similar to other life insurance products. The proposer of the plan gets a deduction in his taxable income under Section 80C and any claims or maturity arising out of the plan comes tax free u/s 10 10(D).
Sunday, January 2, 2011
What is not covered under your Insurance Policy?
The best way to avoid any surprises at the time of medical emergency is by being prepared. Fore warned is fore armed! All you need to do is carefully go through the insurance policy document when it arrives and not when your claim is rejected. Being aware of what your policy does not cover is as important as knowing what it does. Increasingly, insurers are also imposing limits on room rent and operation theatre charges, even if the total claim is within the extent of coverage. Therefore, it is critical to understand at least three clauses (pre-existing illness being the third) in your health insurance policy.
Exclusions: Is any illness, condition or expense that is spelt out in the policy as being specifically out of the scope of coverage. For instance, most policies do not entertain claims during the first 30 days from policy inception, barring the ones that are accident-related.
• Preventive care, vitamins and tonics and the cost of pacemakers and wheel-chairs are usually not reimbursed.
• Same is applicable to expenses relating to maternity, dental treatment, outpatient department (OPD) and diagnostic tests (that are not linked to hospitalization). However, some policies do cover some of these expenses.
• Amongst ailments, cataract and piles are not covered in the first year. However, if the insured has to undergo medical tests in connection with an upcoming surgery, the same will be covered and so will be the medicines administered during the period. These could be claimed separately as pre-hospitalization expenses.
• A majority of health policies cover expenses up to 30 days prior to hospitalization and 60 days after discharge.
Sub-limits: All charges including room rent are reduced in proportion to the room rent cap. This is primarily because the charge structures levied by hospitals varies as per the type of room chosen by you. This apart, the claim that is finally disbursed to you could be in great variance to what you have estimated, due to another clause: reasonability. If the insurer is of the opinion that you have paid say `1 lakh for a treatment that generally costs `80,000, only the latter amount will be sanctioned.
Exclusions: Is any illness, condition or expense that is spelt out in the policy as being specifically out of the scope of coverage. For instance, most policies do not entertain claims during the first 30 days from policy inception, barring the ones that are accident-related.
• Preventive care, vitamins and tonics and the cost of pacemakers and wheel-chairs are usually not reimbursed.
• Same is applicable to expenses relating to maternity, dental treatment, outpatient department (OPD) and diagnostic tests (that are not linked to hospitalization). However, some policies do cover some of these expenses.
• Amongst ailments, cataract and piles are not covered in the first year. However, if the insured has to undergo medical tests in connection with an upcoming surgery, the same will be covered and so will be the medicines administered during the period. These could be claimed separately as pre-hospitalization expenses.
• A majority of health policies cover expenses up to 30 days prior to hospitalization and 60 days after discharge.
Sub-limits: All charges including room rent are reduced in proportion to the room rent cap. This is primarily because the charge structures levied by hospitals varies as per the type of room chosen by you. This apart, the claim that is finally disbursed to you could be in great variance to what you have estimated, due to another clause: reasonability. If the insurer is of the opinion that you have paid say `1 lakh for a treatment that generally costs `80,000, only the latter amount will be sanctioned.
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