DV-Mint – Page 22

April 20, 2022

Tips for a Fire Insurance Claim

As the fire becomes an increasingly prevalent threat, insurance companies are trying to cut the corners on fire insurance claims for saving money. The increasing threat of fires makes it very essential to familiarize yourself with the claims procedure and how to file fire insurance claims. An insurance claim, if filed correctly, permits you to get reimbursed when you lose your property in a fire.

Losing your belongings and home to a fire is a devastating experience. The last thing you want is your homeowner’s insurance company delivering you a hard time regarding your claim. Listed below are some tips that you can follow when dealing with your homeowners’ insurance company regarding fire insurance claims.

Make use of Available Financial or Resources Advance

In case of a fire occurrence, you may have been forced to vacate the space and search for temporary shelter. If you do not have sufficient money in hand to buy the essentials, you can approach the insurer to extend some financial help in advance. However, the amount released as an advance payment will be fixed with the total claim later, only if the insurer has such a facility.

Estimate The Loss

It is important to calculate the loss to get reimbursed fully. Try keeping a track of the losses incurred after the loss. While doing so just make sure that

• Not to repair the damage infrastructures

• Not to dispose of the burnt items

• Keep the proof of lost or damaged items

Approach To The Insurance Provider and File A Claim

It is suggested to inform the insurance provider as soon as a fire incident occurs. You can either write them or call on their toll-free number informing them about the loss and ask them to access the loss. You may require to submit evidence of loss claim indicating the damaged or lost items. The claim request should contain the listed below items

• Type of damage or loss

• Date of loss

• Description of damaged contents

• Any related injuries

• Location of damage

• Conditions of the office or home

• Police FIR copy in case police is involved

• Other involved

Estimation of Loss of The Surveyor

A surveyor will be appointed by the insurance company to calculate the damage or loss in the spot of the damage. The claim calculation will be done according to the report made by the surveyor. Help in the investigation to get reimbursed completely. Also, keep the original reports of the related documents or investigation for the future.

It’s Not Over Until You Say No

The insurance company might be in a rush to close your case, especially if there is a mass disaster. The reason is longer your claim is open, the greater the chance for you to find something that was ignored earlier. In such a stressful time, the probability is there that may forget something essential to list down in your initial claim. That’s why it is suggested to take your time before closing your claim.

You get many benefits when you buy fire insurance. Fire insurance protects you from many unexpected risks or situations. Just choose the right insurance company and grab the policy on time.

Source: Reliancegeneral

April 17, 2022

What is Zero Depreciation Car Insurance Cover?

Depreciation in motor insurance often refers to the loss in value of an asset over time due to factors such as age, wear and tear, and obsolescence. Vehicles, in general, are depreciating assets. For example, a new car will cost more than an older one. Similarly, there is a certain depreciation associated with all the materials the car is made up of such as glass, plastic, metal etc. Each of the materials or parts have a different rate of depreciation.

In the event of an accident, if your car is damaged, you may not be able to recover the entire expense incurred on the parts replacement. The general insurance company only pays for the replaced parts after deducting the depreciation amount. The insured person has to pay for the difference between the market value of the new part and the depreciated part of the car.

It is a good idea to avail zero depreciation for car insurance. With the help of it, you get maximum reimbursement during the time of claim and get the most out of your car insurance policy.

What is Zero Depreciation Car Insurance Cover?

A car insurance with zero depreciation cover helps protect your car against all physical damages caused to the car without factoring in the element of depreciation. Although a standard motor insurance policy covers you against losses arising in case your car is damaged or stolen when you file for a claim settlement, the compensation is received after a standard deduction of depreciation.

On the other hand, a car insurance with zero depreciation cover can fetch you the entire compensation amount. A zero depreciation add-on cover can be availed for brand new vehicles and also can be opted for at the time of policy renewal.

In a zero depreciation car insurance policy, the entire claim amount is paid by the Car Insurance Company without considering the depreciation on the value of the car. Obviously, you have to pay slightly more in terms of your premium. However, this add-on feature is highly recommended to everyone considering the fact that it eliminates the possibility of any out-of-pocket expense from the owner.

Benefits Of A Zero Depreciation Car Insurance Cover

• Helps curb out-of-pocket expenses since depreciation cost is not taken into account while filing for a claim settlement

• Most of your claims regarding the insured parts are settled without taking the depreciation amount into consideration.

• It adds more value to the basic automobile insurance coverage and makes your investment almost nil

With this cover, you can be assured of a complete peace of mind. Also, with all major insurers offering this cover, you can save yourself a lot of hassle by purchasing a nil-depreciation cover by paying a little extra premium.

Zero Depreciation Cover Vs Normal Car Cover

Let’s quickly look at how a zero depreciation cover varies from a normal car insurance cover:

• Value consideration at the time of Claim Settlement: Depreciation does not affect the claim settlement and the full compensation is given to the insured in case of zero depreciation cover. On the other hand, in case of a normal car insurance cover, the claim amount is received after a standard deduction of depreciation.

• Premium: The premiums to be paid for a zero depreciation cover are higher than those for a normal car insurance cover.

• Repairing Costs: The repairing costs of fiber, glass, rubber, and plastic parts are borne by the insurer in case of zero depreciation cover whereas, in case of a normal car insurance cover, these repairing costs have to be borne by the insured.

• Age of the car: A zero depreciation cover is meant for new cars whereas a normal car insurance cover can be taken for cars older than 3 years.

Factors to Consider before Opting for Zero Depreciation Cover

The following are a few important points to consider while opting for car insurance with zero depreciation policy:

• Consider the age of your car. The car insurance zero depreciation policy is applicable to cars under the age limit of 3 years. So in other words, only new cars are eligible for 0 depreciation car insurance.

• As compared to a regular car insurance policy, zero depreciation car insurance will be slightly more expensive in terms of premium. It is not advisable to pay high premiums for cars older than 3 years.

Although, if you own a luxury car or live in a high-risk area, you should consider opting for zero depreciation cover add-on.

A zero depreciation policy premium depends on 3 main factors:

a) Age of the car

b) Model of the car

c) Your location

• You can make only a certain number of claims under the 0 depreciation car insurance. This is to limit the customers from making claims about every small dent in their car.

Remember that in case you make a claim, with a basic car insurance policy, the insurer only reimburses the depreciated value of the car parts replaced. As per the Insurance Regulatory and Development Authority of India (IRDA), the following rate of depreciation for the car parts has been defined:

• On rubber, nylon and plastic parts, and batteries – 50% depreciation be deducted,

• On fiberglass components – 30% depreciation be deducted

• On wooden parts – depreciation be deducted as per the age of car (such as 5% in the first year, 10% in the second year, and so on)

Who Should Buy Zero Depreciation Cover?

In order to protect your brand new car from any unforeseen events, it is advisable to opt for a zero depreciation cover. Buying a zero depreciation car insurance in India can also prove to be beneficial to:

• People with new cars

• People with luxury cars

• New / Inexperienced drivers

• People living in accident-prone areas

• If you worry about small bumps and dents

• If you have a car with expensive spare parts

It is a general belief that zero depreciation car insurance policy is apt for new or inexperienced car drivers as they are more prone to get the car damaged. However, this cannot be considered as a rule of thumb because there have been numerous cases where the most experienced drivers were caught in unfortunate events due to the fault of other drivers.

Source: Reliancegeneral

April 14, 2022

5 Life Insurance Scams You Should Be Aware Of

The large sums of money involved in these life insurance policy frauds are one of the main reasons why they occur so frequently. Money is the primary motivator for any type of fraud, and life insurance fraud is one of the most widespread.

Another factor is that most consumers are unaware of how life insurance products function. They are vulnerable to fraudsters because of their ignorance.

You can be taken advantage of in a variety of ways. Here are some of the most typical life insurance scams so you can recognize when something isn’t quite right.

1. Theft of Identity

This is the most popular fraud. Identity theft occurs when a person obtains your personal information from you wrongfully and uses it for economic gain. Over the years, this type of life insurance scam has significantly increased due to the internet. As technology has advanced, more and more work is being done by just talking over the phone or the internet. This enables the fraud to commit more crimes.

Many scammers lure you via e-mails, phone calls, SMS will pose as agents and ask you for your personal information. They can contact you saying to buy a new policy or your existing policy needs some changes. The information asked from you can include the following.

a) Credit card information

b) Aadhar card number

c) Bank account number

All these are taken by the scammers as a form of information needed to apply for a life insurance policy but then are misused against you for money.

2. Fraudulent Company/Insurer

You may have heard in the news about the companies that didn’t have any existence taking advantage of people. Yes, this thing does happen. Some high-profile frauds research well and set up their own fake insurance companies.

These companies make they’re at a cost that is considerably lower than what the other legitimate companies are offering so that customers are attracted to them. Also, they can offer services such as easy sign-up, quicker response.

All they require is for you to enter your card details. As soon as they start getting customers and when the customers enter their details to get insurance the fraudsters run away with the money. Always make sure of the company before buying.

Not only the company but sometimes insurers are also frauds. They may present you papers that are real and take premiums from you as well, but they will not transfer it to the policy and instead keep it with themselves. This will lead to the company cancelling your policy even though you are paying premiums.

3. Churning

Churning is the act of replacing the policy which is already in force with a new policy by the agent, to earn more commission. This is also referred to as ‘Twisting’.

How does Churning Work?

In churning, an insurance agent will try to replace your existing policy with a new policy price of which is either same or a bit higher. He will try to do this without involving you as the policy structure is somewhat the same. This is done so that the agent can get an extra commission for the new policy he replaced with your existing one.

Churning to add to your commission is illegal and is a big fraud in India as well as many other countries. Agents must take the customer’s consent before making any alteration, modification to the policy.

4. Claims Fraud

You must have seen in many movies that how people orchestrate their or even their loved one’s death to get hold of the insurance money. While this happens in real life as well.

Faking or staging death to claim the insurance money is what claims fraud is all about. Many people fake their death or their family members to claim the life insurance policy death benefit. Fraudster fakes their death and disappear and return after some years.

Some famous life insurance fraud examples include one of the British ministers, John Stonehouse. The minister went missing from Miami and was later found in Australia with a different identity. He was later found guilty and was imprisoned for 7 years for fraud.

Some people even go to the extent of killing their loved ones to get the policy’s benefit. Though sounds gross, but it does happen in some cases.

These were the most common scams under life insurance. Staying aware of the working of life insurance policy and knowing what you are getting into is very important. Some steps you can take to stay safe from these scams are as follows.

a) Check that the company you buy insurance from is trusted. Do not buy from the source you have not heard about and cannot be easily found.

b) Do not reply to unsolicited e-mails. If you receive an e-mail, call asking about your information then do not provide them unless you are sure of it. Check with the company’s helpline if they require such information or not.

c) Always read the terms and conditions associated with a life insurance policy thoroughly. Keep checking on the policy regularly.

d) Check with the company immediately if the agent asks you to pay more premium without any reason.

e) Always disclose full information to the insurer. Do not indulge in any unscrupulous activity yourself too. Getting caught can lead to a heavy fine and even jail.

5. False information

This case happens not at the insurer’s end but at the insured end. This happens when wrong information is entered into the application. This is also called misrepresentation or concealment of facts. This is one of the most common frauds.

Before buying a life insurance policy, you are required to enter details, regarding your basic information. This may also involve your medical details. Hiding any important information or misrepresenting information counts as fraud in this case.

For example, not disclosing some medical condition you may have. Another example is not disclosing you are a smoker, despite being one. To cater to this fraud companies, have medical tests. If the information doesn’t match the medicals, then the policy is rescinded immediately.

If you have a problem or you sense that you have been cheated, contact the insurer. If there is no response then immediately contact IRDAI’s grievance cell.

Source: CanaraHsbclife

April 10, 2022

Things to know before taking loan against Mutual Funds

You have mostly come across borrowing loans against the land, gold, or a house. But, if you’ve put your money in a mutual fund investment, can you take a loan against it?

Let’s find out.

An overdraft against mutual funds, could it be? There are always emergencies right be it Small or big? It can happen. There can be a time in those situations that you can fall short of money in a short-term aspect. Investing in funds is known to be liquid, but not all of the funds have high liquidity. Sometimes you would not be ready to redeem your fund as it would interrupt your financial goal, and liquidating it can be out of the picture. So a loan against this find could be an opportunity to keep the find and still be supplied the finance, right?

Let me also make it clear that not all banks would accept mutual fund investment from fund houses.

Pointers to Loans Against Mutual Funds

– You Can Avail Loans to Only a Certain Limit of your Mutual Fund Holding

The amount of loan you may acquire against your mutual fund holdings is primarily determined by the sort of mutual fund scheme in which you have invested and the financial institution from which you will borrow.

– The Loan you Can Get Has an Upper Limit

Loans against mutual funds, like any other form of loan, have specific restrictions. Many banks have a maximum and minimum loan amount that you can get.

– You won’t Get these Loans From All the Banks

Many banks only lend money against a certain set of mutual fund plans that they have chosen.

– It will Cost you Less for a Loan Against Mutual Funds than Personal Loans or Credit Cards

A significant advantage of a loan against mutual funds is that the interest rate is lower than that of credit cards or personal loans. This is due to the fact that loans against mutual funds are secured, that is, they are guaranteed by collateral.

– You Will Still Continue to Earn Returns on your Pledged Mutual Funds

When you pledge your mutual fund units to secure a loan, those units remain invested in the market. This is due to the fact that when you pledge your mutual fund units with a bank, you grant the bank the right to sell the mutual fund units only if you default. However, as long as you do not default, your assets remain market-linked, and you continue to receive profits on them.

What are the Advantages of Taking a Loan Against Mutual Funds?

1. You Get a Lower Interest Rate: Loans against mutual funds often have lower interest rates than personal loans. Because it is a secured loan, the interest rate is lower than that of unsecured loans.

2. You Do Not Need to Redeem your Mutual Fund : Investors are not required to redeem the MF plan in order to get loans against it. The units are pledged as security for loans but are not sold, allowing investors to get loans while maintaining ownership. In fact, if money is tight, it is best not to sell the apartments and instead take out a loan against them.

3. Quick Money: It is useful when there is a need for rapid cash. In times of financial crisis, one can pledge fund units even online and get money into an account. Because you are already an investor, the loan application process is simplified, with minimal documentation and eligibility requirements.

4. A Source of Short Term Capital Needs: Loans against MF might be beneficial when money is needed for short-term purposes. You can raise cash from investment fund units for a short period of time and repay it gradually without jeopardizing scheme ownership.

5. Pay Interest for the Used Loan Amount: Interest is not to be paid on the full loan amount promised from the investment plan, but only on the amount actually utilized, that is, the amount credited or overdraft from the current account.

When you want to continue your mutual funds without a hitch but the problem is you need liquid money, a loan against mutual funds interest rate, a loan against sip, or an overdraft can come in handy. This is one of the most prominent benefits of the option of availing a loan against your mutual fund.

Conclusion

When there is a failing market, it is better to take a loan instead of redeeming the units at a loss or so. You can take a loan, which can prove to be more beneficial. When you do this, you have not liquidated your fund, and when the market does better the price of your share will rise up again. In a bull market where all funds are profitable, it is preferable to sell the units rather than borrow. If you are in a bull period, redeem. Borrow during a down market. If you require money quickly, be sure you borrow sensibly.

Source: Groww

April 6, 2022

7 Insightful Loan Tips for Young Entrepreneurs in India

Running a business is no easy task. And, if you are starting a new venture with a completely new idea, the road to success becomes much more challenging. The only way to overcome the challenges and run the business successfully is to have adequate funding.

For new businesses and entrepreneurs, there are plenty of financing options available including business loans. Therefore, you need to research the financing option that will work best for you.

Here are the 7 useful business tips for young entrepreneurs looking for a business loan that will help you make an informed choice.

1. Determine the Purpose of Seeking a Business Loan

Before applying for an online business loan, you should have clarity on the purpose of seeking a business loan. Whether it should be utilized for funding growth, making a new acquisition, working capital requirements etc.

For example, if you are seeking funding to meet working capital needs, you can consider taking a business line of credit, which is approved immediately. You need to weigh the pros and cons of each business loan type, and whether it meets your objective and business needs.

2. Decide Loan Tenure and Repayment Amount

For any new business, it takes time to settle in the market and generate enough cash flows from business operations to sustain on its own.

Therefore, as an entrepreneur, you need to decide on the loan tenure and repayment amount accordingly. It is better to go for a flexible timeline, with repayment tenure stretching up to 5 years. It will give you enough space to focus on your business, rather than prioritizing repayments.

3. Compare and Pick the Right Lender

Always compare the different funding options available with different lenders and the type of business loan that suits your business requirements.

Also, check the lender’s background, review given by borrowers, time taken to approve the loan, and other necessary factors before finalizing the lender and business loan type.

4. Understand the Costs

In any loan type, the interest cost is greater than any other type of cost associated with the loan. Also, you cannot ignore it, as a small difference in business loan interest rate percentage can have a huge impact on the total cost of the loan over the repayment tenure.

While comparing the interest cost, instead of checking the annual rate of interest charged by the lender, you should focus on APR or Annual Percentage Rate.

APR reflects the actual yearly cost of the loan and is a more effective metric when it comes to comparing the cost of the loan. It includes the base interest rate plus all the costs (processing fee, service charges) to avail of the loan.

5. Gather all the Information and Keep Documents Handy

Before approving a business loan, the lender verifies the financials of the business, whether the business is profitable or not and can generate enough cash flows to meet all the expenses efficiently. Please note that most lenders do not provide business loans to applicants who do not have an existing business or one that does not match their business loan eligibility criteria. Thus, if you are planning to start your business from scratch for the first time, you can consider taking a personal loan (if you plan to keep working at your job on the side) or looking for alternative funding options. You can also ask a close family member with a good credit score and stable income to take a personal loan on your behalf.

If you do have an existing business and match the required criteria, please also note that before applying for a business loan, do detailed market research, a report on the viability of the business with financial projections for the next three to five years. This will help the lender to establish confidence in your business and approve the business loan. You should note, lenders refrain from financing risky businesses, which are untested in the market and have a low rate of success.

Keep all business loan documents handy including bank statements, cash flow statements, income statements, balance sheets, ITR for the past two years and legal documents like trade license, certificate of incorporation, GST certificate, etc.

6. Take Advantage of Tax Benefits

There are various government-backed loan schemes targeted towards promoting start-ups, MSMEs, SMEs, in India. For example, MUDRA loan, Stand-up India scheme, Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), etc.

Such loan schemes offer many benefits to business owners and entrepreneurs, for example, tax benefits under various sections of the IT Act, interest rate concessions, and flexibility in repayments.

7. Check Your Business Loan Eligibility

Apart from the business financials, lenders also pay close attention to the creditworthiness and credit behaviour of the business owner. For example, having a credit score lower than 700 can affect your business loan eligibility. Also, having multiple loan accounts is not considered a good sign by lenders, as it indicates, you have a high dependency on credit.

Always check your business loan eligibility before applying, as any hard inquiry on your credit report can negatively impact your credit score.

Conclusion

Managing finances efficiently is crucial for the success of any business, whether it is a start-up or an established business house. You should weigh the pros and cons of every financial decision before implementing it.

The tips for entrepreneurs to be successful in availing a business loan in favorable terms will help you in making the right financing choices and let your business grow in scale.

Source: fullertonindia

April 3, 2022

How To Choose A Health Insurance Plan For Your Family

An individual health insurance coverage is designed to protect only one person. The insurance coverage is limited to one person under such programmes.

If you marry and have children, your current insurance will no longer cover them. In this instance, you will need to get a family health insurance plan to cover your dependents. Individual health insurance policies are often best suited for teenagers who do not have any dependent family members. However, as you become older and have additional obligations, you may realize that such a plan is insufficient. This is where family insurance policies come into play.

A family health insurance policy covers the entire family on an individual amount insured or floater basis, with the same sum insured shared by all family members. Family is the most essential thing in everyone’s life, and individuals will go to any length to defend it. Aside from meeting their material requirements, it is critical to protect them from medical problems with the help of a decent health insurance policy. Coverfox provides a variety of health policies to keep your family protected in the case of an emergency. Our rapid disbursement and a large network of cashless hospitals ensure that you receive the best care whenever you require it.

What Will Be the Cost of Rs 10 lakh Health Insurance Policy for a Family of 4?

If you are unable to afford a large health insurance policy for all of your family members, Family Floater policies are an option. A Family floater plan allows any member of the family to use the sum insured (coverage) after paying a single premium amount. The premium is usually calculated based on the age of the oldest family member. Such programmes are ideal for young families, particularly millennials with young children.

Hospitalization costs have skyrocketed since the pandemic, so acquiring comprehensive health insurance is critical to protecting the family. If the children are young, a health insurance plan of ten lakh rupees may suffice. The premium may vary depending on the insurer’s terms and circumstances. You may use a premium calculator to calculate your premium online and find out your policy premium in minutes.

How to Use a Family Health Insurance Premium Calculator?

Getting a health insurance policy online is becoming more popular since it is convenient, and calculating the premium payable is also quite simple with the health insurance premium calculator. Follow the steps outlined below to receive the premium amount in a matter of minutes!

• Go to the insurance provider’s website and select the Health option.

• Fill in the essential information such as name, age, gender, city, pin code, insured members, mobile number, and e-mail address.

• Select an Individual or Family Floater plan.

• Select the ‘Get Quote’ option.

• You will be transported to the sum insured page, where you may view several plans and their features like coverage, add-ons, and premiums.

• When you select the appropriate plan, you will be given a preliminary premium figure that must be paid to obtain insurance coverage.

Factors Affecting the Family Health Insurance Premium

The health insurance premium is the amount you must pay to the insurer regularly to continue receiving medical treatment and to keep the policy valid. The cost of the premium varies from policy to policy, however, some elements are considered while calculating the premium, such as:

1. Age of the Applicant

The premium rises with age. This is since as we age, we become more susceptible to illnesses such as heart disease, kidney disorders, and so on, and the likelihood of filing claims due to a health issue increases.

2. Sum Insured

The premium will be lower if you have no prior medical history. However, if you have any pre-existing conditions, your premium will be greater because you may require ongoing medical attention.

3. Medical History

When calculating the premium, a person’s medical history is taken into account. If you or a member of your family has a pre-existing ailment, you will have to pay a higher premium.

4. Policy Tenure

The premium is also affected by the length of the policy. A one-year health insurance coverage will cost more than one with a longer-term.

5. Type of Policy

A critical illness health insurance coverage will have a higher premium than a typical policy. Similarly, the premium for an individual policy will differ from the premium for a family floater.

6. No Claim Bonus

NCB is a discount on your insurance premium that you will receive at the time of renewal if you do not make any claims throughout the tenure.

7. Riders

Riders are purchased on payment of additional health insurance premiums. The more riders you include in your policy, the higher will be the premium.

Family health insurance policies are perfect for people who want to ensure their complete family without having to purchase individual plans for each member. If you are a family of four and want to get a health policy with Rs 10 lakh coverage, you must utilize a family health insurance premium calculator to figure out how much it would cost. Just keep in mind that before purchasing a policy, you should compare several family health insurance policies online.

Source: Coverfox

April 1, 2022

Dos And Don’ts Before You Apply For A Personal Loan

Taking a personal loan has become one of the simplest ways to tackle cash crunches. The loan is offered at minimal eligibility criteria and can be used for several purposes making it the ideal choice for loan seekers. Be it providing financial support during an emergency or funding a purchase of an electronic item, or renovating your home, a personal loan can be availed for any of these purposes.

Another great advantage with a personal loan is that the loan is approved and disbursed in minutes. One can also apply for a personal loan online from the comfort of their home and get the loan disbursed within a few hours.
However, while applying for a personal loan, one must be aware of several factors, ignoring which can have a great impact on their finances and can also lead to future problems. For example, in the urgency of getting funds, many people ignore the interest rate factor. This impacts borrower’s future finances and can also lead to trouble if they are unable to pay the EMIs.
So, here are some of the dos and don’ts for getting approved for a personal loan.

Do’s

Do compare for the interest rate
Different lenders have different interest rate offerings for the customers and if you come across one, it is important to compare it with different lenders. Doing this will help you get the best offer at affordable pricing.
Figure out the loan amount that you require
It is important to know the exact figure of the amount you require before you apply for a personal loan. Borrow only as much as you truly need, even if you qualify for a higher sanction. This way, you don’t pay interest on a higher sum than you didn’t require.
Do compare for offerings with additional features and benefit
Before you apply for a personal loan, do your own research by comparing various loan offerings. Start by comparing the loan amount, tenure, and interest rate. Then finalize one based on the best offering and availability of additional features/offers. These can help you to reduce the cost of borrowing, or even help you get the money you need on flexible terms.
Do check eligibility criteria of the lenders
Many people do not find it important but it is important to check for the eligibility criteria of the lenders. Doing this helps you know the lender who fits best for you as per your eligibility. So, when you apply with such lenders your chances to get approved for the loan also increases.

Don’ts

Don’t accept the first loan offer you get
You might have several loan offers in your message box or mail inbox. But, this doesn’t mean that you accept the first offer you see/get. Doing this is never advisable and even after you are given an offer, it is important to check for several other offers with different backs and then go with the one which suits your requirement and pocket.
Remember to shop around before committing to a loan.
Don’t take out the maximum loan possible
Your lender might suggest you go for a full loan amount for which you are eligible. But, we don’t recommend taking out a big loan just because you are eligible for it. Personal loans are loans with high interest rates and hence one needs to be careful before going for a particular loan amount. However, it is important to analyse your repayment capacity before you apply for a personal loan. Apply as per your requirement and repayment capability. The payment that seems manageable upon approval may be a mistake down the line if you unexpectedly lose your job or in a case where you need to spend some huge amount.
Do not make several loan applications at once
People who have an urgent need for cash sometimes apply for loans with multiple lenders at the same time. Each loan application results in a credit score check, which reduces the score marginally. These checks could hurt your CIBIL score, lowering your loan eligibility and credibility both.
A personal loan is a financial tool that could help to deal with several financial crises. However, keeping the above-mentioned pointers in mind when applying for a loan will save you from future problems.

Source: financebuddha

March 30, 2022

What Makes ULIP A Flexible Investment Option

It’s better to bend than to break, this proverb correctly be used to define flexibility. Flexibility refers to adjusting to the changes and the challenges that life throws at you.
Being flexible helps you to tackle and adapt to the changing environment quickly. This ensures that you are ready all the time and can quickly cover lost ground. Flexibility in ULIPs makes them one of the most versatile investments possible.
Flexibility is a vital trait to possess, be it life or investment.
What is Meant by Flexibility in Investment?
You are not the only one that should possess the trait of flexibility. Your investment must also be flexible. The more flexible an investment is, the more it will benefit you.
The world is becoming more and more dynamic, and to cope with such an environment you need an investment that is not rigid and can allow you to customize.
An investment must cover the following things to be called ‘flexible’
1. Freedom to Switch Between Assets
An investment should give you an opportunity to switch between the assets you invest in. At the start of an investment, you are given options to choose from many asset classes, these can be equity, fixed instruments, real estate, etc.
It is natural that in a long-term investment, you would not want to stay invested in one fund throughout. As you move on with your goals, you might need to shift your funds as well. A flexible investment will help you do so.
2. Invest Anytime
A flexible investment gives you the option to invest as you like and not only a single time. Different people have different professions and have different payment capabilities.
For example, if you are a salaried individual, you would prefer to pay regularly. On the other hand, if you have a seasonal business, you would like to pay upfront for the whole policy.
A flexible investment considers these and gives you options to invest at your convenience.
3. Withdraw Money when Needed
Withdrawal facilities go a long way in determining the flexibility of an investment, especially when the investment is for the long term. A flexible investment allows premature withdrawal.
The ability to withdraw from your funds is necessary to meet emergencies as they do not come with notice and can occur anytime. To cater to such obstacles, you can need funds.
Withdrawing money from your fund will make sure that you do not have to borrow or take a loan from the bank.
4. Term of Investment
The term of an investment describes the period for which you will be invested in a particular instrument or option. A flexible investment allows you to choose the term you want, instead of having a fixed tenure.
A different individual can possess different goals. Every goal requires a different time. Thus, investment tenure should be flexible so that you can align your term with the wealth goal you want to achieve.
Investment Flexibility in Unit Linked Insurance Plans
Unit Linked Insurance Plans or simply ULIPs are one of the most flexible investment plans in India. This is one investment that you can use for almost all important financial goals in your life. Whether you want to invest safely to build a specific corpus in five years or want to have a great retirement in 30, ULIP can do it all.
The flexibility concept in Unit Linked Insurance Plans looks something like the following:
a) Choose the Asset Class
b) Fund allocation
c) In terms of choosing the premium payment term
d) The benefits to be received
e) Systematic Withdrawal
1. In Terms of Choosing the Funds
Most of the investments invest in one or two assets in which you have no freedom to choose. ULIP plans, on the other hand, offer you multiple asset classes that you can invest in. Some of the options offered include:
– Equity
– Debt
– Balanced Funds
– Liquid Funds
You have the full freedom to choose where to invest in.
2. Fund Allocation
In ULIPs it is not necessary that you have to select one fund to invest in. You are given the flexibility to invest in more than one fund at a time. Yes, ULIP allows you to allocate your money to different funds.
You can choose to allocate different proportions of your premium to different funds. For example, 50% to equity, 50% to debt.
3. In Terms of Choosing the Premium Payment Term
The premium payment term or the PPT is the duration for which you are required to pay your premiums. ULIPs provide you with multiple ways in which you can pay your premium.
You can choose one of the following ways
– Regular Payment
– Monthly
– Quarterly
– Yearly
– Limited Payment
– Single premium Payment
4. Benefits to be Received
There are two major benefits that are present in the ULIP plan. These are
– Maturity Benefit
– Death Benefit
The majority of the investments present in the market provide these benefits in a lump sum, especially the death benefit.
But with ULIP, you can receive your benefits in lump sum as well as in instalments.
5. Systematic Withdrawal
You can partially withdraw your funds before your policy matures in ULIP. However, you can make use of partial withdrawal only when the lock-in period of the policy is completed and you have attained the age of 18.
Flexibility of Invest 4G
Invest 4G, a ULIP offered by the trusted name of Canara HSBC Oriental Bank of Commerce Life Insurance offers all these flexibilities to you and much more.
Invest 4G | Buy ULIP Online
Here we look at other benefits it offers:
1. Transparency
ULIP is the most transparent investment option currently in the market. It shows you how your premium is allocated, in which assets it is allotted and in what proportion.
It also shows you the full list of charges that are deducted along with the amount as well.
2. Bonus Additions
In Invest 4G, you are rewarded for staying invested in the policy in the form of bonus additions.
It offers the following bonuses
a. Loyalty Additions
b. Wealth Boosters
These additions occur after 5 years of commencement of the policy. A % of your fund value is added to your existing fund as a bonus.
3. Tax Benefits
ULIP offers you tax benefits as well. Invest 4G faces no additional tax on switching of the funds. Thus, you incur zero tax liability for switching from equity to debt or debt to equity. Other investments do incur taxes on the same.
Other tax benefits are present in ULIP too, these are
a. You can avail of a deduction of up to Rs 1.5 lakh towards the premium that you pay for your policy.
b. It is also eligible for exemption u/s 10(10)D
4. Wealth Creation
ULIP is perfect for investors which have a long-term horizon in mind. With ULIP, you can create a huge corpus for yourselves in the long run.
Invest 4G provides you with 4 portfolio management strategies that help you minimize the risk and maximize the returns of ULIPs.
You have the flexibility to choose any of the 4 strategies.
a. Systematic Transfer Option (STO)
b. Return Protector Option (RPO)
c. Auto Funds Rebalancing (AFR)
d. Switch Option (SSO)
These strategies work in a pre-defined manner and help in the creation of wealth. These make sure the policy works in the way you want, without too much involvement.
5. Goal Protection Feature
This is another defining feature of the Invest 4G ULIP. If you opt for this feature then-
a. Your policy will continue to run even after your death
b. The remaining premium will be waived off and are taken care of by the company
c. At the end of the policy, your family will receive the maturity benefit
This feature ensures that the ultimate goal gets fulfilled and the family does not have to worry about the premiums.
Flexibility in ULIP plans can make your money work harder if invested right. All you need is to find a way to keep your money invested for another few years. Another aspect of ULIP flexibility you should aim to use is portfolio management strategies. These strategies are extremely helpful in managing your investment risk when you invest in equity funds.
So, why not take advantage of these features to grow your money higher.
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised to exercise their caution and not to rely on the contents of the article as conclusive in nature. Readers should research further or consult an expert in this regard.

Source: CanaraHsbcLife

March 26, 2022

Chasing Returns vs. Wealth Creation

Creating Wealth from your investments is all about return maximization, right? Wrong! It may surprise you to know that your pernicious little habit of always trying to maximize portfolio returns may in fact be what is impeding your ability to generate long-term wealth. Here’s are four reasons why.
You’ll end up Churning & Burning
The most direct and visible side-effect of perennial return-chasing is excessive churn. You’ll forever be moving in and out of investments; chasing the next hot tip or trying to invest in the “next big thing”. Resultantly, you’ll never stay in an asset class long enough for its cycle to really play out to your advantage. Remember, financial markets seldom dance in tandem with economic cycles. By constantly re-jigging your portfolio with the flavour of the month or trying to trade the news, you’ll probably miss out on the best investment periods altogether. Over time, you’ll be left wondering why you worked so hard to earn lower than fixed-deposit returns!
Your Behaviour Gap will be as wide as the Grand Canyon
It’s a well know fact that return chasing encourages short-term thinking, which in turn triggers a host of biases that create a wide behavioural gap in your long-term returns. Ironically, the very act of chasing returns is what ends up reducing your long-term portfolio growth the most. Every time your investments slip into the red, the loss aversion bias gets you all riled up. When markets turn volatile, the action bias comes to the fore and forces you to “do something” with your portfolio. You keep starting and stopping your SIP’s instead of letting them flow passively. You’re forever trying to time the markets. As a result, you neither benefit from compounding nor rupee cost averaging, negating all chances of creating wealth from your investments.
You’ll usually end up catching the Bull by its Tail
It goes without saying that return-chasers are not forward looking. In fact, they invest for the future with their eyes fixed on the rear-view mirror – as dangerous an investment habit as any. As a result of this tendency, return chasers tend to be overtly enamoured by short term past returns, and end up investing into assets that have already gone up in price. When GILT funds rallied spectacularly in 2008, return chasers jump right in; only to earn a negative 10% return in the next year. When small and midcaps rallied in 2017, they lined up to invest in 2018 just before the spectacular fall. Gold just crossed Rs. 50,000? Bring it on, baby! Wealth Creation actually entails taking the exact opposite stance – that is, going against the grain and investing in an asset that is nearing the end of a bad cycle (ergo, often reflecting poor short to medium-term returns) basis their future outlook.
You’ll probably be flying blind
In his inimitably comical style, the record-breaking Baseball star Yogi Berra once said: “If you don’t know where you are going, you might end up someplace else”. This rings especially true for return chasers, as they seldom invest with a solid Financial Plan in place. Without the tether of future Financial Goals to keep them in check, return chasers usually take investment decisions in an indisciplined and ad hoc manner, without a cool and rational mind. They tend to be mercurial and erratic, and their investments may not even be aligned correctly to their time horizons. As a result, they rarely create wealth from their investments – and often wind up an embittered lot, having had poor initial experiences with volatile growth assets that actually afford them a shot at generating long term growth.

Source: Finedge

March 19, 2022

Why you should diversify your portfolio

Diversification is a time-tested technique to reduce risk in investments. One would have heard the phrase “Don’t put all of your eggs in one basket.” In the financial world, that maxim is the quintessence of diversification. In simpler terms, diversification is the act of spreading the investments across a range of asset baskets to reduce investment risks.
Diversification not only reduces the overall risks but also tries to maximize returns over long time. This is because all assets behave differently over differently tenures. By having elements of different investment classes in the portfolio — be it Equity, Fixed Income, Real Estate, Gold, or other Commodities, a diversified portfolio tends to earn above-average long-term returns.
The need to diversify a portfolio is accentuated by a variety of reasons – and not limited to the economic environment and the macro or micro business factors. Portfolio diversification is a methodical process. Thus, a mindless diversification serves no purpose. The net effect of diversification should result in steady performance and smoother returns – never moving up or down too quickly – the reduced volatility putting investors at ease.
Main asset classes
The main asset classes in diversification include Equity, Fixed Income, Real estate and Alternative Investments.
A smart approach for individual investors is to diversify using Mutual funds. Mutual funds are high quality investment options which are highly transparent and cost-efficient alternatives. Given the wide availability of options in Mutual fund space one can entirely build one’s portfolio only by using MF’s.
Different assets such as bonds and stocks, generally tend to have a negative correlation. Hence, a combination of asset classes is ideal for diversification benefits. A diversified portfolio across both the areas is better as unpleasant movements in one is likely to be offset by results in another.
While investments in Fixed Income could tend to reduce a portfolio’s overall returns, it could also lessen the overall risk profile and volatility. One can also venture into having some exposures into Gold as it provides a good hedge against USD depreciation.
Different sectors
Secondly, it is vital to diversify the portfolio into different sectors. This will minimize the exposure to a single economic shock and improve their flexibility to rebalance the portfolio. Diversification by industry and size is also useful for an investor looking to limit their exposure to a certain industry. It could be cyclical (financial services, real estate), defensive (healthcare, utilities) or sensitive (energy, industrials).
You will never yield the benefits of diversification by stuffing the portfolio with concentrated exposures in companies from one industry or market. Investments in different markets across the globe reduces the risks of unpredictable natural disasters or an adverse change in the political environment in a particular market severely impacting the portfolio.
It is important to note that the more uncorrelated the investments, the better it is. That way, they weather the market differently. The companies within an industry have similar risks, so a portfolio needs a broad swath of industries. To reduce company-specific risk, portfolios should vary by industry, size, and geography.
Diversification may help an investor manage risk and reduce the volatility of an asset’s price movements. Remember though, that no matter how diversified your portfolio is, the risk can never be eliminated completely. In an uncertain environment, volatile market and shortened economic cycles, it is essential to have your portfolio invested across different asset classes. Most importantly, it is recommended to take professional help in creating a portfolio. The investment professional can guide on how to systematically diversify the portfolio and look at long-term returns and mitigating the risks – both in the short-term and the long-term. The professional help can guide you to determine what level of risk is acceptable to you, and tailor your portfolio to meet that tolerance.
Ultimately, what matters is whether you want liquidity, or if you are willing to wait it out in the long term. This will affect how your investments should be structured. Also, the risk tolerance, the investment goals and financial means of every investor is different. That plays a huge role in dictating the investments mix. Lastly, evidence-based strategies using logic and knowledge rather than emotion usually do well.
As mentioned earlier, diversification does not work the same way with every asset class across every industry in every market. Still, it is an important tool to improve risk-adjusted returns over the long haul.

Source: Financial express

Author: DV-Mint

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