DV-Mint – Page 24

February 6, 2022

How would taking a home loan help you save taxes?

For someone servicing a home loan it might be one of the best tax-saving tools in their kitty, especially if they have exhausted all other tax saving avenues. Besides the tax saving, your home loan also helps you create an appreciating asset at the lowest interest rate. While many are aware about low interest rate and tax saving prospects of the home loan, very few are aware about what should be the optimum loan amount and tenure that gives them the best of both worlds at the lowest cost and fastest repayment. There are many limitations of this tax saving avenue, and it delivers the best saving only when you use it smartly. Here is a look at how to optimise your tax saving using your home loan.

Why annual interest outgo of your home loan is most critical

You can save income tax on the home loan principal repayment amount up to Rs 1.5 lakh each year under section 80C of the Income-tax Act, 1961. However, this is a crowded avenue which has many other alternatives such as deductions available on EPF and PPF contributions, investments in ELSS, ULIPs, tax benefits on payment of school fee, life insurance premiums, and many more, due to which there is hardly any scope left for one to claim deduction on the home loan principal amount.

On the other hand, the tax saving that is offered on home loan interest payment under section 24b does not have any replacement and you can use this tax saving only when you are paying interest on a home loan. So, the annual interest outgo becomes a deciding factor as to how much tax you can save through your home loan. If you fall in the 30% income tax bracket you can save Rs 60,000 each year if your annual interest outgo is Rs 2 lakh or above. The lesser interest outgo you have, the lesser would be your tax saving.

“The deduction to claim interest paid is available for up to Rs 2 lakh within the overall limit of Section 24b in a financial year. In case of Let out property, there is no limit on the maximum interest that can be claimed. However, the loss that will be adjusted against other income heads such as salary etc. cannot exceed Rs 2 lakh in a financial year. The remaining loss under the head ‘Income from house property’ can be carried forward for 8 successive years to be adjusted against the income from house property only,” says Rishi Mehra, CEO Wishfin.com, an online financial market place.

Loan amount and tenure that delivers biggest tax saving

If you were to just look at tax saving, you need to go for a higher loan amount and the longest tenure to give you the maximum possible tax saving. For instance, if you take a Rs 30 lakh home loan for 15 years at 7% per annum interest rate, the total tax that you can save in 15 years is Rs 5.54 lakh, if you fall in 30% income tax bracket. On the other hand, if you have a home loan of Rs 50 lakh with a tenure of 30 years, the tax saving amounts to Rs 13.93 lakh in a similar situation.

However, the longer tenure will also mean that your total interest outgo is much higher. Instead of paying a total interest of Rs 18.53 lakh on a Rs 30 lakh home loan, you would end up paying a total interest of Rs 52.59 lakh on a Rs 50 lakh loan. As a result, your interest liability rises much more than the increase in the tax saving. The best way to strike a balance and find an optimum amount is by comparing the net interest rate after considering the tax saving benefits. Net interest rate is the effective rate of your home loan with which you would pay the same amount of interest that you would get by deducting the tax saving from the original interest charged by the lender. At the current prevailing rate of interest a home loan which is close to Rs 30 lakh with 15 years tenure can give one of the lowest net interest rates.

Why this is so?

Excess interest payment in higher loan amount

It is a myth that if you take home loan of a higher amount you would save more tax. The interest portion in a home loan monthly installment comes down each month as principal repayment increases correspondingly. So, the annual interest payment remains higher in the initial years while it comes down sharply in the second half of the tenure towards the end. However, the maximum tax saving that you can do on account of interest payment under section 24b is limited to Rs 2 lakh.

So, any amount of interest that you pay over and above Rs 2 lakh annually does not help you in saving taxes. During the first half of repayment if there are many years in which you are paying interest above Rs 2 lakh in a year, then it remains unproductive and will not help in saving taxes.

High loan amount with longer tenure comes with the dual disadvantage of higher interest outgo without any tax saving and longer period of debt outstanding. To optimise the best mix of lower interest outgo and higher income tax saving you can use partial prepayments to bring down your loan outstanding to a level where the annual interest is close to the Rs 2 lakh annual limit. This is the optimum level which will help you capture the best interest saving and keep your interest outgo at a level where it enjoys income tax deduction on the entire amount.

Not many want long tenure just for tax saving

Only a few are comfortable with a debt outstanding for longer periods just for the sake of saving taxes. Borrowers often looks for ways as how to use their home loan in a way that it offers a combination of best tax saving and timely payment of debt.

In this scenario keeping the tenure short will help you keep the interest cost lower and pay off your loan quickly. However, once your annual interest outgo comes significantly below Rs 2 lakh you will have unused tax savings. In such a situation, if you have the requirement to upgrade your house to a bigger one or plan to go for a second house then you can utilise the tax saving avenue offered on home loans again. This will ensure that you always keep the debt at lower levels and utilise the tax saving for longer periods at an optimum level.

Boost your tax saving with a joint home loan

If both spouses are paying a high amount of income tax, then they can take a higher home loan and enjoy the principal and interest deduction on the home loan separately. As a result, the couple can get a total deduction of Rs 3 lakh under section 80C (Rs 1.5 lakh plus Rs 1.5 lakh) on the principal repayment and Rs 4 lakh (Rs 2 lakh plus Rs 2 lakh) towards interest payment under section 24b. This means a bigger home loan of Rs 60 lakh with shorter tenure of 15 years could give them the optimum mix of greater tax saving and faster repayment of the loan. “All the applicants should also be co-owners of the property in order to claim this deduction,” says Mehra.

Extra deduction on buying an affordable house

If you have bought the house under the affordable housing category then an additional deduction of Rs 1.5 lakh is available under section 80 EEA. “The timeline to avail this additional deduction has been extended to 31st March 2022. So, all home loan related deductions put together can help you help you get a maximum deduction of Rs 5 lakh (Rs 2 lakh u/s 24, Rs 1.5 lakh u/s 80C and Rs 1.5 lakh u./s 80EEA) if it meets the specified conditions,” says Mehra.

Source: Economic Times

February 3, 2022

Complete Guide to Health Insurance in India

Health insurance is a safety net that takes care of your financial wellbeing in case of a medical emergency. A health insurance policy covers medical expenses you might incur due to accidents, illness or injury.

Technically, it is a contract between you and your health insurance company. It means the insurer will bear some or all medical expenses you incur against a certain fee (premium) you will pay. There are generally two ways through which the insurer pays for your medical expenses:

Take a cashless treatment where you don’t have to pay. The insurance company pays the hospital directly.
You can pay your medical expenses first and then later ask for reimbursement from the insurance company.

Why You Need Health Insurance

Buying a health insurance policy is not something that most people willingly do, until it is too late. While the awareness and intent to buy health insurance has increased, it is still not seen as a priority. There is still a big lag between the intent and actual buying.

A medical emergency can come knocking anytime. If you are young, chances of falling ill are low but not zero and accidents can also happen. The medical expenses associated with such situations could make a big hole in your pocket. A good health insurance plan can protect you from this financial blow to your savings and provide you the much-needed cushion to bear the costs towards doctor’s visits, tests, medicines and other procedures.

Healthcare expenses are increasing at a rate higher than medical inflation; health insurance helps you to get the required treatment without cutting any corners for the lack of funds.

And to top it all, the premiums paid are tax deductible upto specified limits!

When To Buy a Policy: Now or Later?

The sooner, the better. Let’s take a look at buying a health policy at different life stages:

In the 20s

The best age to buy a policy. You are likely to be in good health with limited financial responsibilities and pressures. Investing in a health insurance plan at a younger age certainly has its own advantages like better sum insurance for a lower premium amount, no medical tests required and so on.

In the 30s

This is the settling down phase. You will most likely be married, planning to start a family, invest in a home, etc. Add to it, lifestyle diseases that are increasingly affecting the younger population. Buying a policy at this stage will need you to factor in all these aspects. Be prepared for a higher premium and higher chances of a claim.

40s until 60

A stage where your financial responsibility is likely to be at its peak. You will need a higher sum insured resulting in higher premiums. If you have fallen prey to diabetes, hypertension, etc. then expect longer waiting periods. You will also need to consider add-on benefits to ensure the additional protection needed is taken care of. Also, be prepared for a medical screening prior to getting the policy. Usually, for anyone above 50, medical screening is a prerequisite.

Senior citizens

You will need a high sum insured that comes at a hefty premium. A life stage where you anticipate long term treatment for critical illnesses and hospitalisation, etc. Opt for senior citizen health policies. Research, compare and choose the best one. Typically at this stage, policies come with a co-pay condition which mean that you have to bear part of the medical cost.

Types of Health Insurance Policies Available

There are basically two types of health insurance plans you can choose from — individual plan and family floater plan. Both policies can be described in a few words: a family floater as “one plan to cover them all” and Individual cover as “different strokes for different folks”. Your choice will depend entirely on factors such as your age, your kids’ ages, medical history, and budget.

It is important for you to thoroughly understand both types and make a smart decision that works best for you and your family.

Individual cover

An individual health insurance policy is issued in the name of a single person. This means the sum insured is dedicated to the insured in its entirety. For example, if you are the policyholder and find yourself in need of hospitalisation, the insurer will cover your expenses up to the sum insured. Any leftover amount will remain available for use during the rest of the policy period.

Family floater cover

This plan covers the entire family under one umbrella policy. As opposed to individual health insurance, floaters require all the insured members to share the sum insured.

For example, if you purchase a plan for yourself, your spouse and child, for a sum insured sum of INR 4 lakh, all three of you will be covered by the insurer within that sum, regardless of who is hospitalised. The age of only the most senior family member is considered when the premium is calculated. If you’re a young parent with small children, this could work in your favour. You’ll be able to get cover for your loved ones for a very affordable price.

Remember:

If you’re looking to insure your elderly parents, instead of buying a family floater, choose separate plans for yourself and your parents as it will prove more affordable. Under the family floater option, the premium usually gets pegged to the oldest person in the family and therefore with your parents in the same plan, the premium for all of you will likely be higher.
Also, if you have a family member who is unwell and likely to claim for a significant chunk of your sum insured, an individual policy might be the smarter option.

Points to Consider While Choosing Your Health Insurance Policy

Here are some important parameters for you to consider while choosing your health insurance plan. Remember to invest in a health insurance plan that is comprehensive and best suited for you and your family.

Comprehensiveness of Cover
Choose the amount of coverage or ‘Sum Insured’ keeping in mind the cost of medical treatments today, the inflation rate and your current requirements. Re-evaluate the cover needed every year while renewing.
Premium
The premium you pay depends on multiple factors such as the amount of cover opted for (sum insured), your age, your medical history, the type of plan you have picked, etc. While evaluating options, look for an insurance provider who offers you most of the features and benefits you are looking for at the best possible rate. While premium is important to consider, it should not be the primary decision-making factor.
Know what’s included and what’s not
While choosing a policy, remember to check what all is included in the policy, and what are the conditions under which a claim cannot be made. Having clarity saves the hassle and pain of claim rejections later.
Room rent sub-limits

The room rent limit specifies the maximum room rent coverage allowed under your health policy. Different health insurance companies have their own rules for room rent and capping, which will be clearly mentioned in the policy document. Before buying a health insurance policy, make sure that you understand how the room rent limit works and make an informed choice. Consider this factor depending upon the type of room and kind of hospital you may want to go to.
Network of hospitals

Check for the list of hospitals available under the policy that provide cashless facility. Try choosing a policy that has a wide network of hospitals. In case you travel frequently, please also check global hospital networks.
Co-pay

This clause allows you to reduce your premium while buying a health policy by offering to pay a fixed percentage of the total claims made during the policy year. In case you opt for co-pay, you can select the percentage you wish to commit, right at the beginning.
Waiting period

This is the time period during which claims will not be accepted. Different policies have different waiting periods. For claims related to pre-existing illness, the waiting period is longer. Look for the policy that has the least possible waiting period.
Critical Illness

Incidence of critical illnesses like heart attacks, strokes, cancer, etc. is on the rise. Treatment cost of these life-threatening illnesses is also very high. It is advisable that you choose a health plan that can take care of these expenses if they occur. It comes at an additional cost, so please evaluate your needs, and buy it if you can afford it.
No Claim Bonus (NCB)

This is the reward you get from your insurance provider for not making any claims during a policy year. The bonus can either be given as a discount on your insurance premium for the following year, or it could be a higher sum insured for the same premium. Make your choice wisely!
Day care procedures

Certain medical procedures like cataract are completed within a day and do not require hospitalisation. It is therefore important to know if such treatments are covered in your plan.
Alternative treatments

AYUSH (ayurveda, yoga, unani, siddha and homoeopathy) treatments are gaining importance and becoming preferred modes of treatment for a lot of people. Most health plans these days provide coverage for such alternative treatments. If you prefer AYUSH over allopathic medicine, ensure your policy covers the same.
Reputation of the insurance company

Consider factors like claim settlement ratio, solvency ratio, customer service, product portfolio, etc.

What Your Policy Will Not Cover: Exclusions
Here are some common exclusions for health policies. But before making your choice, check and understand the exclusions since they differ from policy to policy.

• Cosmetic procedures
• Dental procedures
• Some pre-existing conditions
• Congenital diseases
• Non-prescription drugs
• Injuries incurred from war, terrorism and suicide

How To Buy Your Policy

In today’s digital age, the simplest way is to go online and purchase your policy:

Get detailed information about different health policies that are available according to your requirement. Research and compare policies at your convenient place and time
A 100% do-it-yourself (DIY) process. Even if you need an agent, you can avail services in a few clicks online itself
It can be super-fast to buy the policy online, if you are looking for a basic health insurance cover – in this time starved era, time is money right.
No paper required or physical signatures.

Bottom Line

You may have heard that health is wealth but given the unpredictability of life, beyond good habits and lifestyle, you also need some wealth or money to ensure good health. And health insurance can make it a lot easier to access that money when you need it most.

Source: Forbes

January 30, 2022

Will health insurance policies cover the Omicron variant?

The instances of Covid-19 and its new variant Omicron have been increasing at an alarming rate across the country. Face masks, hand sanitisers, social distancing apart, getting a health insurance policy has become more crucial now.

A comprehensive health insurance policy covers hospitalisation expenses incurred for all illnesses and injuries, including Covid-19 and its variants. This policy is renewable for a lifetime, and hence, will take care of your healthcare needs both in the short and long term. There, however, might be some restrictions that come with comprehensive health insurance, such as – waiting period for pre-existing and other conditions, sub-limit or eligibility cap on rent limit, etc. You must be aware of these conditions before making the purchase.

Insurance regulator Irdai says health insurance policies that cover COVID treatment costs will also cover expenses for treating infections due to Omicron.

“All health insurance policies issued by all general and health insurance companies that cover treatment costs of COVID-19 also cover the costs of treatment towards Omicron variant of COVID-19 as per terms and conditions of policy contract,” the Insurance Regulatory and Development Authority of India (IRDAI) said in a release.

The regulator has issued the directive to general and health insurers in view of the growing number of cases of the Omicron variant.

The regulator has also asked insurance companies to put in place an effective coordination mechanism with all their network providers and hospitals to make available seamless cashless facilities to all policyholders in case of hospitalization and render speedy services to all policyholders.

In April 2020 also, Irdai had clarified that all the indemnity based health insurance products that cover the treatment costs of hospitalisation offered by all general and health insurance companies cover the costs of hospitalisation treatment on account of COVID-19.

Health insurance options that cover Omicron

Introduced in March 2020 by IRDAI, Corona Kavach and Corona Rakshak are short-term health plans designed specifically for Covid-19. Both these policies will cover treatment costs of COVID-19 and all its variants including Omicron.

Corona Rakshak is a fixed cash benefit policy that will pay up to INR 2.5 Lakhs if you’re infected with Covid-19 or any of its variants and are hospitalized for 72 hours or more. Corona Kavach, on the other hand, will reimburse the actual expenses incurred if you undergo hospitalization for Covid-19 or its variants for more than 24 hours.

These plans are not a substitute for comprehensive health insurance. They are just short-term health insurance plans that cover Covid-19 and its variants. It is important that you and your family have a comprehensive health insurance policy that will cover hospitalization expenses of all kinds of ailments, infections, and injuries – and not just Covid-19. And it is important that you get it NOW.

January 27, 2022

5 ways to protect yourself from market correction

Markets are like Cardiograms. Just like ups and downs on the cardiogram are necessary, markets are not meant to be linear. Not everyone has been able to make the best of the market cycles. However, smart investors not only leverage on the bull market they also smartly benefit from the bear market. It’s not always about making a good investment; it’s about making a smart investment during the market correction. Let us familiarize you with 5 key behaviors of smart investors.

Greed in the time of panic

“Be fearful when others are greedy. Be greedy when others are fearful.”

For a smart investor, corrections are times to be greedy, because this is the time when smart investors find many opportunities to invest rather than selling off their winnings in selling spree. Smart investors leverage on the greed of buying stocks at reasonable price. While others choose to sell, smart investors invest more in the time of market panic. Buying in the times of correction is one of the identical features of smart investors.

Opportunities to analyze more quality stocks

“Good things are found in the depth.”

Smart investors are opportunistic. They seek opportunities for quality companies as market corrections bring down the average cost price for the quality stocks. This means there is a higher opportunity to multiply the number of stocks at a fair value at such times of correction. They rather find opportunities in critical situations than to surrender their winnings in equity. Quality companies have higher growth potential and smart investors execute their expertise to spot one. Quality companies tend to have limited downside during the corrections and they help keeping portfolio strong. Smart investors dive deeper even in the volatile markets to find such quality catch.

Knowledge first

“An investment in knowledge always pays the best.”
Smart investors make their decisions with a supported knowledge base. They trust only the facts and ignore the market rumors. Such investors merely run on luck, they believe in knowledge and research as it is the base of investment in equity. Smart investors avoid churning portfolio often because their portfolios often consist of quality stocks that have limited downside in such times. This helps them avoid cost for churning their portfolio. Markets have never been stable but only the smart investors learn how to make the best of it. Knowing the market trends is smart investor’s characteristic but they don’t necessarily follow.

Buy right: Sit tight

“Big money is not in the buying or selling, but in the waiting.”

Smart investors invest in equity for a long term as they believe in wealth creation by investing in quality stocks that possess a growth potential over the long period of time. Keeping ears to ground and holding the stocks till the full growth cycle of the company, smart investors benefit from the period spend in growth of the company. Being hasty in selling quality stocks is never a choice of smart investors. They believe in fundamentals to achieve financial goals over the long term therefore market corrections do not lead them into panic. During market correction, they prefer to sit tight on their holdings.

Evaluating performance of portfolio

“Look back to see forward.”

Smart investors plan for longer term before they invest. Market crash enables smart investors to evaluate their plans. They evaluate the performance of their stocks as how much has the stock risen up since the investment with respect to the fall experienced in the correction. They calculate possible value of their portfolio in the bear market with the caliber of stocks in the portfolio for the period to stay invested. They urge to invest more in quality companies for higher opportunities and higher expected returns. They don’t change their plans, they just refresh the existing plans. Above all smart investors do not simply risk money to test their luck, they invest money to systematically create wealth over a long period of time.

Source: MotilalOswal

January 23, 2022

How can you save more taxes in 2022 ? Here are 6 investment schemes to save more money

The best time to start your tax saving investments is at the beginning of a calendar year or a financial year. While tax planning is important, getting aware of all tax saving schemes and choosing the right one is crucial.

Tax saving schemes ensure you don’t pay more taxes and make money in the long run by investing in savings-oriented schemes. Here are some of the best tax saving options with a deduction of up to ₹1.5 lakh in your income tax for the year.

Here are a few options of tax saving schemes:

ELSS Mutual Fund

Equity-linked saving scheme (ELSS) is a type of mutual fund scheme that primarily invests in equity funds. ELSS offers tax benefits to investors. The investments in the scheme are eligible for tax deduction under section 80C of the Income Tax Act, 1961 up to a maximum of ₹1.5 lakh.

One can invest through both lump sum and systematic investment plans (SIP) to avail the tax deduction. This way, ELSS offers both investment and tax saving benefits.

Here are the five top performing ELSS funds in the industry:

Funds	% return in last 3 years
Quant Tax Plan	37.52%
BOI AXA Tax Advantage	30.92%
Mirae Asset Tax Saver	26.53%
Canara Robeco Equity Tax Saver	26.19%
IDFC Tax Advantage (ELSS)	24.54%

National Savings Certificate (NSC)

NSC is a fixed income tax-saving investment plan that you can open with any post office branch. The scheme is an initiative of the government of India and hence is relatively safer. The investment in NSC qualifies for deduction under section 80C of the income tax act of up to ₹1.50 lakh.

These certificates earn an annual fixed interest of around 6.8% per annum (revised every quarter by the government), thus guaranteeing a regular income for the investor. The scheme has two types of certificates — 5-year and 10-year.

National Pension Scheme (NPS)

NPS is a pension cum investment scheme launched by the government of India to provide old age security to citizens of India. The scheme offers tax saving options to both government and private employees. Any citizen between the age of 18-60 can invest in it. The amount invested by the depositor is invested in several schemes including the equity markets. Again the basic amount of deduction offered by the fund is up to ₹1.5 lakh on the same amount of investment. However, NPS allows one to get an additional ₹50,000 deduction under section 80CCD (1B), taking the overall tax deduction amount to ₹2 lakh.

Unit Linked Insurance Plan (ULIP)

ULIP is offered by insurance companies that, unlike a pure insurance policy, gives investors both insurance and investment under a single integrated plan.

A portion of the premium paid by the policyholder is utilised to provide insurance coverage to the policyholder and the remaining portion is invested in equity and debt instruments. ULIP also provides tax deduction up to ₹1.5 lakh.

Here are the top 5 best performing ULIP plans in the industry:

ULIP plans by insurance companies	% returns in last 3 years
PNB MetLife – Met Pension Plus	27.40%
AEGON Life iMaximize Plan – Opportunity Fund	23.40%
Bharti AXA Life – Future Secure Pension – Growth Opportunities Pension Plus	23.30%
Future Pension Advantage Plan – Future Pension Active	21.80%
Kotak Platinum Edge – Frontline Equity Fund	21.40%

Public Provident Fund (PPF)

PPF is one of the safest investment options to start with that can help you secure your retirement and save tax as well. The PPF has a minimum tenure of 15 years with as little as ₹500 to open an account.

You can open a PPF account through a post office or in any nationalised bank.

Income tax exemptions are applicable on the principal amount invested in a PPF account. The interest rate for PPF is set and paid by the government for every quarter which is currently at 7.1%, more than the savings rate in banks. Taxpayers can claim a maximum deduction up to ₹1.5 lakh.

Home loan

If you have taken a home loan to buy a new house, you are also allowed to claim a deduction of up to ₹1.5 lakh under section 80C of the income tax. The deduction can be claimed on the principal amount repaid in the particular financial year. Check your home loan interest certificate for EMI payment details.

However, note that even if you put more money i.e ₹1.5 lakh each in any of the above tax saving options like ULIP, ELSS MF, your maximum deduction from taxable income will still be a total of ₹1.5 lakh only.

However, investing in NPS can get you an additional ₹50,000 deduction, taking the overall tax deduction amount to ₹2 lakh.

Source: Business Insider

January 7, 2022

Protect Yourself From The New Strain of Covid-19 Variant-Omicron!

Amidst the spread of COVID-19 across the country, people are facing a lot of issues related to health & other life-related issues. The Indian Government is leaving no stones unturned & taking all precautionary measures to curb the spread of the virus and its variants including the Omicron.

Experts are still learning about this variant & its deadly effects. It has around 50 mutations, which potentially makes the variant more transmissible & deadly. There are almost 50 mutations & 32 are in spike proteins. The virus uses them to enter the human cells. 10 are mutations of exceptionally high relevance.

This deadly virus is surely a “Variant of Concern”, placing the new strain into the most troubling category of Covid variants, along with Delta, and its less strong rivals Alpha, Beta, and Gamma.

The WHO had expressed its concern & said that it is not yet explicit whether infection with Omicron causes more serious disease compared to other variants, including Delta. The known mutations that may withhold immune escape potential and possibly transmissibility advantage. The likelihood of potential further expansion of Omicron at the global level is soaring.

The likelihood of potential further expansion of Omicron at the global level is soaring. The total global risk associated with the new VoC (a variant of concern) Omicron is estimated as very high.

Omicron Variant Safety Precautions

The oncoming of the new deadly Covid-19 variant shows once again that the pandemic is far from over — and Covid-norms to be followed strictly for breaking the chain of transmission:

Following are the preventive measures that you must take in order to protect yourself and your loved ones from the Omicron variant:

Mask yourselves while venturing out of your house
Be in good ventilation in all shared spaces
Maintain social distancing practices when in public places
Wash your hands regularly with soap and water for around 20 seconds and carry a sanitiser with you
As per Govt guidelines, get your shot of Covid vaccine at the earliest

In these Covid times with growing medical needs and rising inflation, we must secure ourselves with a medical health plan. A simple outpatient procedure can make your wallet considerably lighter.

An insurance policy will help you get the best medical care and you don’t have to worry about expenses. A good insurance plan ensures you don’t have to dig into your savings in the time of a medical emergency.

It also helps cut down the cost of medical expenses in cases such as day-care procedures & routine check-ups. At the cost of a small premium every year, you can protect yourself and your family from huge financial losses in the time of a medical emergency.

Health insurance comes with a plethora of benefits that are not just limited to offering financial cover during medical emergencies but also offers you peace of mind.

Even though you are in good health at the moment, health insurance covers more than only illnesses and diseases. Accidents can happen at any time, regardless of one’s age or level of physical ability.

In such a situation, having health insurance could be beneficial. Coverfox.com has tied up with multiple insurers to provide the best health plans including Covid-19 health plans. If you wish to get comprehensive protection we would recommend going for comprehensive health insurance else there are COVID 19 specific policies such as Corona Kavach and Corona Rakshak you can opt for.

Corona Kavach Policy (Corona Health Insurance)

This plan grants you a cover against hospitalization due to Covid-19. Although, one needs to get hospitalized for a minimum of 24 hours/full day. This Corona Kavach Policy covers your covid-19 hospitalization cost, bills related to AYUSH treatment that go up to Rs. 5 Lakh & expenses related to home treatment as well.

The expenses of items that are consumable are also covered in this policy. These items include PPE kits, oxygen cylinders, ventilators, masks, gloves, etc. The advantages of the policy under the terms and conditions of the Corona Kavach policy remain the same regardless of the insurance provider.

ELIGIBILITY	SPECIFICATIONS
Age of Entry	18-65 years
Types of Coverage	Family Floater or Individual
Sum Insured Amount	Rs 50k – 5lakhs
Discount % on Premium	5% for doctors & health workers

Corona Rakshak Policy (Coronavirus Health Insurance)

If you are found covid positive & if it’s diagnosed in the policy term period, you receive a lump sum amount on your hospitalization. However, the hospitalization needs to be for a minimum of 72 hours/3 Days. The timeline of this policy is minimum 3.5 months & maximum 9.5 months.

ELIGIBILITY	SPECIFICATIONS
Age of Entry	18-65 years
Types of Coverage	Individual
Sum Insured Amount	Rs 50k – 2.5lakhs
Discount % on Premium	5% for doctors & health workers

Key Takeaways- During these unprecedented times, you must focus on protecting your as well as your family’s interest & health. This is why it is recommended to own a reliable health insurance plan with COVID-19 cover to avoid any uncertainties. You can select either COVID-19 specific health insurance plans or regular health insurance plans to get the required cover. All you need to do is connect with the customer care executives at Coverfox.com and share your budget and other requirements. The representatives will help you buy the most suitable policy within a few minutes.

Source: coverfox.com

January 3, 2022

9 income tax saving tips that also help financial fitness

Here is a look at 9 ways one can save income tax and improve one’s overall financial fitness.

1. Investment in tax-saving instruments

To encourage saving by citizens, the government has provided certain tax deductions on the amounts invested in specified instruments under section 80C of the Income-tax Act, 1961. Some of the popular specified investment instruments for tax planning are:

Employees’ Provident Fund (EPF)
Public Provident Fund (PPF)
Fixed deposits (tenure of 5 years or more)
Life insurance policies

Investing in these instruments wisely can serve the dual purpose of meeting financial goals and tax savings (up to an investment limit of Rs 1.5 lakh per financial year) concurrently. However, tax savings will be available only if an individual opts for the old tax regime. If one opts for the new tax regime, which offers concessional tax rates, one will have to forgo many of the tax deductions and exemptions available under the old tax regime like the section 80C benefit. For those who have opted.

2. Selection of appropriate components in the salary structure offered by the employer

In the case of a salaried individual, one can evaluate the salary structure offered by the employer and opt for those salary components which help maximise tax benefits.

For example, one can opt for House Rent Allowance (HRA) in case they are paying rent, telephone/ internet expense reimbursements, education allowance, food coupons, etc. Accordingly, one can claim appropriate deductions/exemptions.

3. Increase in retirement fund contribution

Salaried individuals can look at making an additional contribution towards the ‘Voluntary Provident Fund’ in addition to EPF if the investment limit of Rs 1.5 lakh is not exhausted.

This additional contribution will also be deductible from taxable income subject to conditions. Further, the employer’s contribution to NPS (subject to 10% of salary) will provide an additional deduction to the employee.

However, do keep in mind that the employee’s contribution to EPF and VPF should not exceed Rs 2.5 lakh in a financial year, or else income tax will be payable on the interest accretion on the excess provident fund contributions.

4. Tax benefits on a home loan

If a housing loan is availed from a financial institution such as a bank or NBFC or housing finance company to acquire/ construct a house property, then the interest and principal paid on the loan taken can be claimed. claimed only if the old tax regime is opted for. Do keep in mind that the deduction on the principal repayment amount is subject to the overall Rs 1.5 lakh limit under Section 80C.

5. Protecting oneself with health insurance

Income tax provisions provide for deductions against premiums paid towards health insurance for self, spouse, dependent children, and dependent parents.

Hence, one can buy health insurance for oneself and family members to help manage medical expenses in case of health emergencies and at the same time, avail tax benefits for the premium paid towards these policies (Rs 25,000 for self, spouse, and dependent children; Rs 50,0000 for senior .. for senior citizen parents, as applicable).

Similarly, if senior citizens are not covered under any health insurance policy, then also they can claim a deduction of up to Rs 50,000 for medical expenses made during the year.

6. Claiming an appropriate deduction for medical expenses, tuition fees, etc.

It is important to note that in certain instances even if one doesn’t make any additional investment, tax benefits can be availed in connection with certain expenditures incurred like Rs 5,000 for preventive health check-ups.

However, the deduction for expenditure on health check-up is subject to the overall limit under section 80D which includes the health insurance premiums mentioned above. Also, Also, parents can claim a tax deduction of up to Rs 1.5 lakh under section 80C (under the overall limit of Rs 1.5 lakh) for the tuition fee paid for their children’s education.

7. Filing of tax returns within the specified timelines

The importance of filing income tax returns and other statutory forms (as applicable in one’s case) within the specified timelines cannot be emphasised enough. by the tax authorities. Further, filed income tax returns (ITR) are also required to be submitted for various purposes like applying for immigration documents, housing loans, carrying forward losses, certain high-value transactions, etc. Hence, it is important to file one’s ITR within the set timelines to avoid interest/ penal implications.

8. New concessional tax regime

A new simplified optional personal income tax regime has been introduced by the government from FY 2020-21 onwards.

Subject to certain conditions, an individual or HUF will have the option to pay taxes at reduced slab rates which are applicable without certain exemptions and deductions. In view of the same, one can compare tax payable under the existing and new tax regime and opt for the regime which is more beneficial from a tax perspective.

9. Documentation requirements

While no documents are required to be uploaded while e-filing ITR, one should maintain an adequate record of documents for investments made like PF account statements, passbooks, copies of insurance policies, pension plans, bank statements, etc. for a hassle-free interaction with the relevant authorities.

Source:economictimes.indiatimes.com

December 31, 2021

How to plan your finances for the New Year 2022

As we inch closer to the new year, forming resolutions becomes imperative in order to set goals for the forthcoming year. Setting a budget, getting finances in check and carefully analysing your savings and investments comprise a key part of the financial aspect of resolutions. However, there are multiple other factors that are kept in mind while making that decision. There are multiple methods and practices along with financial tools that one can use to plan finances carefully and ensure a level of financial wellness.

The Guide to Financial Planning this New Year

December is the time everyone starts setting resolutions for themselves and before the new year arrives, here are a few easy-to-implement ways in which you can plan your finances for the coming year:

Budgeting: The Foundation of Financial Planning

Almost all financial planning depends majorly on having a budget and following it diligently. It is important to analyse past income sources, expenditure, investments and savings to get a clear picture of your financial standing and then plan accordingly how you want to spend, save and invest your future income.

A fixed budget puts a healthy constraint on your expenditure as well as gives you a number that you should ideally aim to save. Adopting the 50-20-30 rule, as mentioned in the famous book All Your Worth: Ultimate Lifetime Money Plan” by Elizabeth Warren, could be a great way to start as it allows you to have a better, more crisp idea of how to spend your money while also saving a particular amount.

Monthly Savings: Your ‘Rainy Day’ Saviour

When setting up a budget, it is imperative that you set an amount aside as savings or “rainy day fund”. A financial resolution that you should strive to include in your list of resolutions is to either save an amount of money every month or have a bigger goal and amount for the end of the month.

A few ways you can save more are by sorting priorities, differentiating between essentials and non-essentials, setting up fixed or recurring deposits with a bank, etc.

Building an Investment Portfolio: Your Retirement Companion

Investments assure present and future financial safety. They enable you to increase your wealth while also generating inflation-beating returns.

After you have a fixed plan for savings, the next important step is to figure out how and where to invest. Investing instills financial discipline by establishing a habit of getting away a specific amount each month or year for your investments.

Expenditure Control

In today’s day and age, when everything is available at your finger steps, people don’t realize how vastly their spending capacity has increased. The use of mobile apps and mobile-based payments have made it easier for consumers to get things done quickly, and that has changed the way a transaction is perceived now in comparison to earlier. Preferring food delivery overcooking, multiple streaming platform subscriptions, etc are now opted more by the millennial generation.

This in turn has given rise to a lot of expenditure that is non-necessary and can be avoided very easily. Expenditure control can help increase savings and allow more assets to be invested, as the more you save, the more you can invest.

Insurance: Your Safety Net

Insurance is essentially a financial safety net that you can rely on in times of distress. It is an extremely important and valuable financial tool. Purchasing insurance is critical because it ensures that you are financially secure in the event of a life crisis, which is why insurance is such a vital aspect of financial planning.

It not only allows financial security but also reduces stress at a later stage in life, especially when things would go south. A prime example of this was the pandemic when an unprecedented crisis struck the world, and it got extremely difficult to manage finances with the increasing costs of medical expenses and aftercare. The peace of mind that insurance provided to people in such a time is also what makes it a widely appreciated policy.

Summing Up

These are the most common ways in which you can plan your finances for the upcoming year. Since these methods are evergreen, they are sure to work perennially and also across the years.

Having said that, it’s important to take these methods seriously, as most people are aware of them but tend to overlook them.

Another critical point to keep in mind is to set realistic goals and aspirations to not overburden yourself and keep things going smoothly.

These are a few ways you can ensure your financial wellness, but it is essential to keep in mind that it is a step-by-step process that you need to take one day at a time.

Source: financialexpress.com

December 27, 2021

Why It Is Important To Have A Fire Insurance For Your Business Property?

Being a business owner, you have to take care of a lot of things like overseeing operations, finding innovative ways to grow your business, reviewing financial data, and a lot more. When you are busy planning about all these important aspects, you may not be able to identify every possible risk which threatens the future of your company.

Among all, fire accidents are quite common in the workplace. It may cause huge damage to your business property. Cooking was the most common reason followed by carelessness and electrical malfunctions for such a fire outbreak. It’s important for all small business owners to take precautions and minimize the fire risk involved.

Find out fire risks at the workplace

A business owner’s policy includes general liability insurance coverage with certain property coverage. He should identify specific fire risks. After evaluating the possible outbreak, you must opt for the right fire insurance among all the policies available.

Importance of fire insurance and how it works

When you have fire insurance on a BOP, coverage will be provided regarding:

New property
Lost business income
Physical loss or damage to the personal property of the business
Betterments, office fixtures, and improvisations

Those who buy fire insurance against their business property will stay protected from the losses incurred during the damage. If the damage occurs, you file a standard fire insurance claim. And the insurance company verifies standard claims prior to issuing compensation.

However, if you don’t know how to follow steps in the process properly, approach the agent as soon as possible.

Types of fire insurance

Usually, it’s hard to find different types of coverage specially designed for fire outbreaks at the commercial place but some provision is of great help. To cite an instance, if you know that overloaded outlets may result in fire accidents that may cause damage to the company’s computers or network servers. To deal with all this, you can avail benefits of fire policies providing electronic data loss coverage. This is an upgrade option for BOP which provides the coverage for interruption of computer operations, lost data, and e-commerce operations.

As we all know that fire from any source can destroy computer hardware so the upgrade is highly beneficial for business owners.

Advantages of fire insurance

When you have a BOP, it assures peace of mind, provides protection against physical property, and safeguard the future of your company. In case an electrical fire has caused damage to your computers and stock and you are finding it tough to continue business operations, BOP can provide coverage for temporary business interruption.

Remember, your physical property is covered and the business can easily recover in financial terms with the help of the best suitable fire insurance policy. When you fail to insure the possible business risks, there will be limited scope to reopen and start it all over again.

Conclusion

All in all, it’s important for every business to ensure coverage against fire outbreaks due to any reason mentioned in the policy. Choose the right fire insurance policy after important considerations.

Source:reliancegeneral.co.in

December 24, 2021

Be Your Own Santa This Christmas With These Financial Gifts

Christmas is upon us, and it is that time of the year when we eagerly look forward to giving and receiving secret Santa gifts. However, what if this Christmas is a little different from the rest, and instead of expecting gifts, you present yourself some. And, what if they are financial ones that can help you going forward?

Read on to know the multiple financial Christmas gift ideas to help you secure your future and augment your riches. Let’s get started.

Mutual Fund Investment

Mutual funds need no introduction. They are one of the most potent financial tools to help you accumulate a corpus for different life goals – short and long term. Thanks to rising financial literacy and innovative campaigns such as Mutual Funds Sahi Hain, they have become quite popular among investors.

This Christmas, you can contemplate investing in mutual funds to achieve your goals.

If you are investing in mutual funds for the first time, you need to be KYC-compliant, post which you can invest in your chosen fund. You can invest through a systematic investment plan (SIP) or lump sum. In the former, a certain amount of money is deducted and invested in your chosen fund on a specific date. On the other hand, in the latter, you invest a chunk of money at one go.

Long-term Stock Investment

Long-term stock investment can help you gain inflation-beating returns. Investment in fundamentally strong stocks can help you nullify the effects inflation has on your wealth. Note that stocks are volatile in the short term. Only if you remain committed to them for the long haul can you make real gains.

When markets crashed in March 2020, many investors panicked and took the exit route. However, those who remained committed to their investments enjoyed meaty gains. So, if you are investing in stocks, adopt a long-term strategy and stay committed to your investment, come what may.

Building Emergency Fund

An emergency fund is an absolute must, and Covid-19 has further accentuated its importance. While earlier it was advisable to have an emergency fund equivalent to six months’ expenses, given the recent experience, it’s recommended to have a fund close to a year’s expense. You can build it by investing in instruments such as liquid funds that invest in debt instruments maturing in 91 days.

For that matter, you can also contemplate investing in a bank fixed deposit to build an emergency corpus. Make sure the corpus is easily accessible. Don’t chase returns, and capital safety should be your prime concern.

Buying Health Insurance

Health insurance prevents out-of-pocket expenses during a medical emergency and prevents drying up of savings. This Christmas, you can gift yourself a health insurance policy to ensure funds are not a paucity in receiving the best possible treatment. You can either buy an individual plan or a floater policy that will cover all the members of your family.

Compare different plans and choose the one that best fits your needs. Also, while filling up the proposal form, provide accurate information as any wrong information could result in claim denial. If you live in a metro, it’s wise to have a policy with a sum insured of a minimum of Rs. 5 lakhs. On the other hand, if you already have a health plan, review it to ensure that the sum insured is adequate.

Conclusion

Buying yourself these Christmas gifts can hold you in good stead in the years to come. They will help you accomplish your goals and ensure a smooth ride amid turbulence. Merry Christmas!

Greed in the time of panic

Opportunities to analyze more quality stocks

Knowledge first

Buy right: Sit tight

Evaluating performance of portfolio

Corona Kavach Policy (Corona Health Insurance)

Corona Rakshak Policy (Coronavirus Health Insurance)

1. Investment in tax-saving instruments

2. Selection of appropriate components in the salary structure offered by the employer

3. Increase in retirement fund contribution

4. Tax benefits on a home loan

5. Protecting oneself with health insurance

6. Claiming an appropriate deduction for medical expenses, tuition fees, etc.

7. Filing of tax returns within the specified timelines

8. New concessional tax regime

9. Documentation requirements

The Guide to Financial Planning this New Year

Budgeting: The Foundation of Financial Planning

Monthly Savings: Your ‘Rainy Day’ Saviour

Building an Investment Portfolio: Your Retirement Companion

Expenditure Control

Insurance: Your Safety Net

Summing Up

Find out fire risks at the workplace

Importance of fire insurance and how it works

Types of fire insurance

Advantages of fire insurance

Conclusion

Mutual Fund Investment

Long-term Stock Investment

Building Emergency Fund

Buying Health Insurance

Conclusion

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