personal finance Archives – Page 2 of 10

Buying Term Plans – A comparison of plans and key questions

April 6, 2017 by Vipin Khandelwal

You buy life insurance when you need to ensure that your family continues to live a financial worry-free life, in case you were to leave your bodily abode earlier than expected.

Term plans allow you to buy a life cover through a Sum Assured for a very low premium. A pure insurance plan without any savings component as otherwise offered in an endowment, money back of ULIP.

I have ensured that my insurance (including, life, health, etc.) remains in good shape. I bought my first life insurance cover in 2007 through an agent. Subsequently I switched to online term plans.

What is an online term plan?

Online term plan is a term plan that is offered directly to the users by the insurer through its website. It does not involve any third party sales channel or distributor and thus helps the company save on expenses too. Due to this, these term plans are offered at comparatively cheaper premium rates compared to those sold by insurance agents.

Recently, I decided to buy an additional term plan to increase my sum assured. So, I set out searching one for me.

I use this opportunity to present to you a comparison of different term plans.

Incurred Claims Ratio – How useful is it in evaluating an insurance plan?

April 4, 2017 by Vipin Khandelwal

Incurred Claims Ratio - Health Insurance

I recently received a comment on my health insurance post. Here it is.

Hi,

I read up on your comparison of health insurance policies. There are 2 statistics for the Royal Sundaram Lifeline Policy:

a. CLAIMS PENDING FOR OVER 6 MONTHS (% OF CLAIMS PENDING AS OF 31 DEC 2014) which is 21%
b. Incurred Claim Ratio of the Insurer being 52.89%

1. Can you please comment on the above and how key these parameter are.
2. Also, would you continue to have a positive outlook for this policy when the ICR is this low.
3. Can we, as individuals, be confident that our claims would be successful on time?

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Now, there is confusion galore with all the terms used by the insurance industry. The latest one is the Incurred Claims Ratio. I believe it has been confused with the Claims Settlement Ratio.

Let’s understand the difference between the two.

Always trust your banker and other advice

April 1, 2017 by Vipin Khandelwal

The new financial year starts today. It is a day to make new beginnings.

Today, I would like to share with you all that I learnt about investing in all these years. It worked for me, I hope it works for you too.

Here’s myMaster List.

Remember, if an investment is not offering you a guaranteed return, then just ignore it. Risk is for losers. I need certainty.

Aadhar, PAN, Passport – The case of multiple identities and your investments

March 26, 2017 by Vipin Khandelwal

AADHAR, PAN, PASSPORT - MULTIPLE IDENTITIES

2 years ago, I wanted to use the Aadhar based OTP method of e-verification. But it wouldn’t work. The system failed to match the records.

The reason is my PAN. My PAN was created in 2002 or 03. At that time, I had a middle name – “KUMAR”.

You see, my father is a old Bollywood movies fan.

Systems are programmed to behave like systems. For my PAN and my Aadhar, I was two different people, courtesy my middle name.

So, they didn’t link and did not allow me to e-verify.

What do I do?

Annuity – When is it a good investment choice?

March 22, 2017 by Vipin Khandelwal

What is an annuity?

An annuity is a solution for post-retirement income. How it works is simple. You invest a fixed initial amount and in return you get a lifetime of assured income.

When you buy an annuity, you get

an assured income
lifelong income (pension)
no risk income
no hassle income
no bother about investment options, advisors, rebalancing, etc.

Take an example.

You are 60 and you need an assured Rs. 50,000 per month to meet your post retirement expenses. If you want an assured income of Rs. 6 lakhs a year, then you simply buy an annuity for approx. Rs. 75 lakhs, as a one-time payment. (Estimates based on an immediate annuity plan of a private insurer)

You don’t have to bother at all. No money management hassles, no investment selection, no dealing with bankers or advisors and collecting cheques from various investments.

The annuity provider will transfer the amount to you every month/year as per the frequency you choose.

An annuity ensures that you earn an income for the rest of your life.

But is it all that good? Not really.

Dhan ki baat #3 – The milling stone

March 17, 2017March 16, 2017 by Vipin Khandelwal

US Fed has hiked interest rates
Modi has won UP elections with a thumping majority
RBI is cautionary in tone with respect to inflation and rate cuts

With all these events, how do you see the markets unfold till 2019? How and where should I invest if I have a lump sum for the next 2 years?

FYI, I am regular investor and have investments in Direct equity and MF (large, mid, balanced).

This is a question from an investor.

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Dear Investor