HEALTH INSURANCE - CLAIMS SETTLEMENT

What is cashless hospitalization?

Cashless hospitalization is service provided by an insurer wherein you are not required to settle the hospitalization expenses at the time of discharge from hospital. The settlement is done directly by the insurance company. However, prior approval is required from the TPA before the patient is admitted into the hospital.

What are the types of cashless claims?
Cashless claims can be of two types:-

Planned: Where the insured is aware of the hospitalisation 2-3 days in advance.

Emergency: Where the insured or any covered family member meets with sudden accident or suffers from bout of illness that requires immediate hospitalisation.

What do I do in case of planned / emergency hospitalisation?
In case of planned hospitalisation

·         Contact the toll free help-line number.

·         Fax / submit the required documents. E.g. Doctor’s certificate, etc.

·         Obtain approval from the TPA .

·         Obtain authorisation for network / non-network hospitals.

·         Avail health treatment.

In case of emergency hospitalisation

·         Rush the patient to the hospital

·         Patient avails treatment

·         Family contacts toll free number provided by the insurer

·         Family submits required documents. E.g. Doctor’s certificate, etc

·         Family obtains approval from the TPA

·         Family obtains authorization for network / non-network hospitals

·         Hospital bills are directly settled by the TPA

What is non-cashless claim or claim reimbursement? How do I go about filing such a claim?
A non-cashless claim is when you avail treatment in hospitals that do not form part of insurer’s network. In such cases, you have to pay the hospital bills and subsequently claim reimbursement from the insurer.

The procedure to be followed in case of claim reimbursement :-

·         Call toll free number and provide hospitalization details.

·         Settle the hospital bills directly.

·         Submit the relevant bills / documents to the TPA.

What are the documents required for filing a non-cashless claim?
The following documents are required:-

·         Duly completed claim form

·         Xerox copy of the policy

·         Bills, receipts and discharge certificate/card from the hospital in originals

·         Bills from chemists supported by proper prescription

·         Receipt and pathological test reports from a pathologist

·         Medical practitioner / surgeon prescribing the test.

·         Nature of operation performed and surgeon’s bill and receipt.

The claims are serviced at both network as well as non-network hospitals.

What are the dos and don’ts for cashless and non-cashless hospitalisation?

Cashless Hospitalisation
Dos

·         Intimate your TPA before admission to network hospital.

·         Ensure that you have ID Card at the time of admission to a hospital.

·         Provide complete information in prescribed format.

·         Carry necessary medical and investigation reports.

·         Register / reserve your admission as per the selected hospital’s procedure for admission

·         Admission at network hospital is subject to availability of bed.

·         Cashless facility is always subject to your policy terms and conditions.

Don’ts
Don’t claim the following expenses:-

·         Telephone \ Fax

·         Food & Beverages for relatives

·         Toiletries etc

·         Ambulance service (unless specified in the policy)

·         Don’t conceal or misrepresent any data at the time of buying a policy.

Non-cashless Hospitalisation

Dos
Forward all the relevant reports and documents in original to TPA for claim reimbursement.

Don’ts
In case of surgeon / consultants bills, insist on a stamped, preferably numbered receipt.

How can I prevent rejection of my claim?
You can stick to the following rules to prevent rejection of your claim:-

·         Read the list of coverage and exclusions in policy wordings (which comes to you with the policy).

·         Ensure that you declare all the pre-existing diseases at the time of enrolment.

·         Do not claim for any hospitalisation and diagnostic studies / investigation charges, which do not confirm existence of an illness or injury that requires hospitalisation.

·         After filing your claim, make sure that you maintain minutes of your interaction with the insurer in black and white.

·         Understand you policy in detail. Be informed about the ‘Fine print’ , exclusions and details pertaining to depreciation and deductions.

·         Do not hesitate to ask details of deductions or rejections.

Source: www.icicilombard.com

HELP YOUR PARENTS WITH THEIR FINANCES

Changes in the investment landscape mean that your parents might need your help with their finances. Here’s how you can assist them in staying on track.

BABAR ZAIDI – ET Wealth – 23/01/2012

    Imagine driving into a new city only to discover that your road map is outdated. The road signs confuse you and passersby either have incomplete information or deliberately mislead you. Many senior citizens don’t have to imagine. This is the harsh reality of their financial situation. The financial landscape has changed completely, with traditional fixed income schemes now offering market-linked returns. Other investment options are too complex or too costly. To make matters worse, unscrupulous agents are forever trying to palm off high-commission investments to gullible retirees.
    If your parents too find themselves at this financial crossroad, you need to step in. There was a time when they looked after you, helping, guiding and supporting as you went through life. You might find that the roles will have to be reversed. In the winter of their lives, your parents could need your help. Even if they are financially independent, senior citizens require assistance to navigate the maze of new opportunities, to adapt to the fast-changing investment environment and, most importantly, to safeguard themselves against the perils that lurk in the new financial ecosystem.
    Stepping in to assist an ageing parent on financial matters is not as easy as it may seem. Money is a sensitive subject and you need to be gentle and encouraging. Remember that you are an assistant; never give the impression that you are in charge (see box).
Start by making an inventory
The first thing to do as your parents’ wealth manager is to make an inventory of their income and investments. List all the sources of income, including their pension, dividends and interest on fixed deposits. Then prepare a portfolio of investments, including bank deposits, funds, stocks and insurance policies. It is generally observed that older people are methodical in documenting their financial details. If you are lucky, your parent would already have such a list with relevant details, such as the amount invested, date of maturity and interest payment.
    This listing is important because it gives you a 360 degree view of your parents’ financial situation. It also tells you whether you need to reallocate some of the resources to optimise the returns of the portfolio. Most senior citizens, including Pune-based Ashok Chawla (see picture), are obsessed with guarantees and will invest only in options that promise a fixed return, however low it might be. It took his son Satyam several weeks to convince his father to invest a small portion of the portfolio in equity funds to beat inflation and replace bank fixed deposits with the more flexible and tax-efficient debt funds and FMPs.
    Of course, the allocation would depend on a lot of factors, including your parents’ age, their health condition and life expectancy and, ultimately, their overall asset base. At 60, a retiree with normal health will need to plan in a way that his corpus lasts him at least 20 years. Given his investment horizon, he can allocate up to 10-15% of the corpus to stocks. If he has enough wealth, he can raise this amount to 40-50% of the portfolio. But for someone who hasn’t got too much to invest, stocks cannot be an option and he must have a 100% debt portfolio.
Banking on assistance
Managing bank-related work is one of the biggest headaches for a 60-plus customer. It becomes worse if the senior citizen is not very mobile and needs assistance when he ventures out of the house. For such people and those who are handling their finances, online banking is a godsend. With a few clicks of the mouse, they can do within 5-10 minutes what could otherwise take 1-2 hours. What’s more, it can be done from anywhere and at any time. Also, the spread of ATMs means that your parents can access their bank accounts even after regular hours.
    Unfortunately, many senior citizens are not very trusting of the online channel and plastic contraptions. They still prefer the traditional bank branch route and you might have to squeeze in a visit to the bank into your monthly schedule. If your parents also think like this, you will need all your persuasive skills to get them to embrace technology. A small demo with your own account could be helpful in introducing them to Net banking. Let them conduct a few transactions online on your account to get the hang of it.
    In fact, it would be a good idea to tell them how Netbanking can help you check your bank balance and account statements without any hitch. Once they see technology at work and understand the safety measures that are in place, they may be more amenable to banking online, which in turn could make your job of handling their finances far easier.
    It could also become simpler if your parents make you a joint accountholder. Then, you will be able to operate their bank account without any hitch. This is especially advisable when the parent is too old or frail to sign cheques or other documents.
    This assumes greater importance if your parents have a bank locker. Many banks declare a locker inoperative if it isn’t used at least once in six months. Forget it for a year and the bank can even cancel the allotment. When 74-year-old Kusum Gupta got a letter from her bank, informing her of this new rule in 2010, she immediately made her favourite grandson Akshay, 20, a joint accountholder. “He can drive down to the bank any time and operate the locker. I will not be under any compulsion to visit the branch every six months,” she says.
    A note of advice here: don’t hold it against your parents if they decline the suggestion to make you a joint holder. It’s an age at which their financial independence means a lot to them (see box).
Best ways to invest
Unlike investors at other stages of their lives, most senior citizens don’t have too many complicated goals. “There aren’t too many imponderables. At that age, you only have two basic goals—generating a monthly income for yourself and leaving a legacy for your heirs,” says Kamal Rampuria, senior vice-president of Delhi-based AUM Capital. This also means that unless your parents have an enormous amount of wealth to invest, you don’t need an expert’s help in developing a plan for them.
    The Senior Citizens’ Saving Scheme (SCSS) is a good option if your parents need regular income. Each of them can invest up to 15 lakh in this governmentsponsored ultra safe scheme. What’s more, they even get tax deduction under Section 80C for their investment in this scheme. From this year, the interest rate has been linked to thegovernment bond yield in the secondary market. The interest is paid out every quarter and is fully taxable.
    Fixed deposits are even better, with many banks offering seniors more than 10% interest. These high interest rates could go down in the future, but there’s no point in locking up all of your parents’ money in long-term deposits. It’s best to invest in fixed deposits of different maturities. Instead of making one lump-sum investment in a 5- or 10-year fixed deposit, spread it over 5-6 different tenures. When the shortterm deposit matures, the proceeds are reinvested in a longterm deposit. By building such a ladder of deposits, you can ensure
    that your parents have some deposits maturing every few months without missing out on the high rates on long-term deposits.
    There are also corporate fixed deposits, but experts sound a warning note. “Corporate fixed deposits offer higher rates than bank FDs, but go for the ones with a high credit rating,” says Satkam Divya, business head, Rupeetalk.com.
    Steer clear of NSCs as well, even though the interest rates have been hiked to 8.2% (5 years) and 8.7% (10 years). Even if the objective is to save tax under Section 80C, five-year FDs are a far better option. The best offer is from the Oriental Bank of Commerce, which is giving senior citizens 10.25% on taxsaving FDs. It should be your parents’ preferred tax-saving option this year.
    If your parents need monthly income from their fixed deposits, you will have to structure the investments in a way that they don’t lose out on the interest. The rates for deposits that give a monthly income are usually 50-100 basis points lower than those offering quarterly or annual payments. Kolkatabased bank manager Amitava Bhattacharya (see picture) has divided his father’s fixed deposits in such a way that even though the interest is paid out every quarter, there is some income coming his way every month. “This ensures that my father does not lose out on the interest,” says Bhattacharya.
Time to go beyond FDs
While fixed deposits offer assured returns, it’s a good idea to look beyond banks for debt investments. Debt funds, especially fixed maturity plans, can give higher returns than fixed deposits. What’s more, these investments are more liquid and tax-efficient than fixed deposits. The interest earned on bank deposits, SCSS and NSCs is fully taxable. But when you withdraw from a debt fund, only the capital gain earned per unit is taxable.
    So, if you invest when the NAV is 15 and withdraw when it rises 10% to 16.50, only 1.50 of your withdrawal will be taxed. The balance 15 is the principal investment and is, therefore, not taxed. After one year of investment, the profits are treated as long-term capital gains and are taxed at a lower rate of 10%. However, this advantage will vanish after the new Direct Taxes Code comes into effect and there is no distinction in the tax rate for long- and short-term gains.
    The best thing about funds is the flexibility they offer. An investor can customise the withdrawals to suit his needs. Your parents’ bank deposits will give a fixed income, year after year. A 10 lakh investment earning 10% a month will give them roughly 8,333 per month. But inflation could render this income insufficient over the years. In a mutual fund, they can choose the income they want every month. Say, they start withdrawing 8,333 a month in the first year, but increase it to 9,000 a month in the second year (8% inflation), and to 9,700 in the third year. This way, they can also develop a draw-down plan to suit their age and life expectancy.
How to tackle inflation
If inflation is the worst enemy of the retiree, stocks and gold are their biggest weapons against this stealth bomber. While it is easy to get the older generation to invest in the yellow metal, not many are willing to put their money in stocks. Like most people her age, Bangalore-based retired lecturer Kaveri Biswas, 75, also prefers investments that offer assured returns. “It was difficult to convince her to invest in equity funds, so I have opted for a mix of balanced funds and gold investments,” says her son Dipankar (see picture).
    If you too face this problem, get your parents to invest in monthly income plans (MIPs). These funds invest a small portion (15-20%) of their corpus in equities and are, therefore, able to generate better returns than 100% debt investments. In the past three years, the average MIP has given annualised returns of over 9%, while bank deposit rates hovered at around 7-8%.
Unlock the value of house
Are your parents asset-rich but income-poor? Many senior citizens have a big chunk of their net worth locked up in the real estate they occupy. Here again, a change in the mindset can lead to a comfortable retired life if they reverse mortgage their house. Under this arrangement, a bank starts paying the owner an EMI for his house. A house valued at 70-80 lakh can generate a monthly income of about 18,000-20,000. After the owner’s death, his heirs can repay the loan and get back full ownership. If they don’t, the property is sold and they get the proceeds after subtracting the amount disbursed to the owner till his death and the interest that accrued to the money.

JOURNEY OF AN IMAGINARY INVESTOR

What’s the worst that can happen? A lot of my friends and readers ask me this question. What if I’m not disciplined? What if I buy a house beyond my means? Or invest money based on what my trusted family & friends tell me (even if I don’t have a clue)? What’s the worst that can happen?

Well, rather than sitting here and crunching numbers and showing you my results with incomprehensible tables and then trying to convince you, let me tell you a story. Remember Arush? Akshay Kumar’s ‘panauti’ character from Housefull? Let’s play God with Arush’s life. No more strokes of good luck for him, unlike the movie, no good / rich friends or acquaintances. No exotic locations or countries either. Instead, let’s put him into our shoes, – our average, Indian, everyday-joe, shoes. And let his panauti streak run it’s course. Let’s see what happens when life becomes brutal and how he pays for his ignorance and bad luck.

Year 2011

Arush is a happy-go-lucky 28 year old. Perfect education, close knit family and a great job, with a salary that’s better than 95% of other people in our country take home. Newly married to Sandy! Great job! DINKy income! Life’s great! The sky’s the limit! . He has just taken a home loan for a spanking new 3 BHK in a cushy, lifestyle complex! A house is obviously needed! He needs to keep up with his cousin Ajay’s lifestyle too! Ajay has a duplex, dammit! And to think, his old friend and classmate Manish, suggested he rent a smaller house… Damn you Chauhan! What do you know?

“Renting is so beneath me! And it’s not the done thing either! Such a cheap idea! What would people think? Forget people, what would Sandy think? Forget Sandy, what would her Anna think?! I’d be laughing-stock, I tell you, laughing-stock! Nothing wrong with a big house. Nothing has gone wrong yet! Nothing can go wrong! Everybody does it!”

Harish mama’s sold him a few money back policies. OK, a lot! Arush doesn’t quite want to invest. He doesn’t understand the fundas. But, his pappa made sure Arush bought them & helped his mama out in his bad times. Akhir apne hi apno ke kaam aate hain!, and come on man, everyone has invested in money back plans. They are “safe”. They provide the “best returns” (Agent mama’s words obviously). Pappa’s bought it, Pappa’s pappa bought it, Kaka bought it, heck even Nana has it part of his portfolio! All of them, obviously cannot be wrong! And Mama obviously won’t charge commissions on it, will he? It’s a gift for Arush, he’s family after all!

Is his Insurance Cover enough ?

Arush feels his jaw drop, when Manish tells him, his insurance cover should be worth 1.5 croresbecause his family expenses are 40k/month. (It can be reduced to 30,000/month if he really tries, but who cares? The salary is going to increase yearly, & he is the top performer of the team). It hurts sometimes, that he hasn’t built a good corpus yet, but thats fine! Anyways he is going to “invest systematically” next year onwards. It’s his New Year resolution! (This incidentally was last years resolution too). Listening to Manish for once, Arush goes enquiring about the term life insurance plans. Guess what he finds… He has to pay only Rs. 20,000/year as premium for Rs.1.5 crores!,

“Wow! & Double Wow! My family will not have a single worry! So much security! . But wait! What if, God blesses me with a long life and doesn’t kill me before the tenure ends? What happens to all my hard-earned money, I paid as premiums at the end of tenure? I don’t get the money at the end if I don’t die? Ridiculous! What’s the use of the product then? Total waste! . Better save 100% of my money then! Best ROI” . Suddenly his probability of dying has come down , I am not sure HOW ! . Arush doesn’t want to lose 6 lacs in these 30 years. But he doesn’t realize that 6 lacs won’t amount to anything at all by 2040! . “Health Insurance? What’s that? My company already provides cover to me and my family! 2 lacs for everyone! Combined! . OK, I know its not much, but I am so healthy, I go to gym and I drive safely, almost no chances of accident”

What about other people’s driving skills? Arush will feel smug & smart as long as nothing untoward happens. All it takes, is one minor illness, one small accident… to turn the whole thing upside–down! What if the expenses run to 6 or 8 lacs? (It very easily could!) Every one of Arush’s ‘plans’ for his family & himself will be really messed up! . And guess what? To top these hijinks, he goes out and buys the “Best Mutual funds” How does he know? He did a lot of ‘research!’ . Research consisted to looking at bright shiny ads on billboards & on TV & in the paper, googling it, and checking out it’s performance over 6 months. (56%!) Arush is so happy! He’s already making vacation plans!

But wait? What about actual, boneheaded mistakes? He recently bought Reliance shares a couple of days back at Rs. 2000… & now it’s at Rs. 1959. “Oh man! I feel so bad! I’m such a loser! Darn, all this tension has made me skip lunch! Think I should sell them tomorrow itself!” . Arush doesn’t need the money tomorrow. He knows that equity gives good returns in the long run. Yet, he will still sell his shares tomorrow, because he doesn’t want to be a loser! . “Ugh! Still feel so bad! How could I have bought something like this? I’ve been a winner all my life! In studies, job interviews, work… I have always won! I cannot make mistakes! . So this is how Arush is! Confused, yet unable to listen to good advice, unable to ask for help, a little too lazy when it comes to his own future, too impulsive, always wanting to be instantly gratified, a little too proud! . Let’s leave Arush now, & play catch up with him at some time in the future…

Year 2014

Booya! The markets are zooming… The Sensex has crossed 40000+!!! . “I always knew this ‘Sensex’ company would rock! Just look at it! See its performance! Wow! I’m so good! . I’d like to see the look on Manish’s face now! Calling my decisions, ‘unplanned!’, ‘with no understanding!’, ‘random!’ & what not! There! I showed you Chauhan! Investments have tripled! . Just one more week now, and I will sell everything, and cash out!” . Oops! Something bad has happened! Markets are crashing!

15% down in a day! .“It’s just ‘profit booking’”, Arush justifies to himself. “India is bound to shine in the long run!” . 1% up next day! ,“See! I told you!” , 10% down again next day! , “Chinese real estate markets are the reason! Our markets are de-coupled! It’s FII!” (that’s Arush talking through his hat, trying to show off!) . He tries to justify to himself and others around, that things will soo be better! But, his investments are now down 50%! Arush wakes up and scrambles wildly. Arush is in a blue funk!

Denial Mode

“I cant sell right now, dammit, but I want my money back!” (Your money?) “It was 10 lacs some months back and today its just 5.1 lacs! Manish says even now, my investments are have given more than 25% return on a CAGR basis… But, I wont take it! I am a ‘winner’! I won’t take less than what it has touched previously!” . Markets tank another 5% after that.

“Oops! I should had taken that 4.9 lac loss earlier, now its 5.1 lacs down the hole! Anyway, what’s the use of selling now? Whatever could have happened, has already happened! Let it run its course. I know it will come back to it’s earlier level! And anyway, I am a long-term investor! Manish also says I should invest for the long term! (feels so nice somewhere in my heart, when I said that)”

A few months down the road… Arush suddenly needs the money for some reason in the next month or two. He decides to surrender get his endowment/moneyback plan money back now, since the matter’s urgent! . Finding the agent, is like tracking a lost animal in the forest… in the dark! He finds Agent Akhiri Pasta after nearly a week of persistent hunting and calling…

Arush : Hi Pasta, remember me, Arush here, where are you man?

Pasta : (Obviously, I remember you, you dolt! You were my 1000th policy buyer which helped me win the bahamas trip)

Of course Saar! How can I forget you saar?

Arush : Hey Pasta, I need a favour yaar, I have a financial crunch right now, so I’m wondering If I can surrender my policy and get my money back .

Pasta : Oh, why not saar? We are always there to help you saar! You can take your money back… Come to my office in a week and lets surrender your policies (the initial years of high commissions have already passed, so I’ve already made my money! Hehe!)

Arush : Wow! You guys rock! Uh, how much will I get back?

Pasta : 60,000 saar!

Arush : No no no, hehehe! I am not taking about the interest part yaar. What is the total amount I get?

Pasta : (Sigh… Yes you idiot!) Its 60,000 only saar, Total amount saar!You are aware of surrender value before maturity, right saar?

Arush : Hey man! But, but, I paid 1.5 lacs in premium in last 5 yrs, what are you talking about ?

Pasta : Saar, didn’t you sign on those documents where we clearly mentioned that surrender charges will be blah blah blah… Have a look at your Documents saar. We are not doing anything against our rules. It is as per our policy saar, which we believe that you have cleared read and then took the policy ! .

Arush : Hmm, let me go look at those documents! (while wondering which part of the world are those documents in now)

Let’s just hope Arush copes with this panauti and catch him 10 years down the road

Year 2024

Arush’s life is going on as usual, chal raha hai, lots of expenses now! Children have grown up, career which was “awesome” around joining and then “great” after few years have turned “ok ok” right now. After about 4 yrs into his ‘awesome job’, he finally realized that he was at a wrong place and couldn’t truly excel, but then it was too late. Can’t take any risk now, can’t rock the boat! Who will pay the Home EMI, the Car EMI , the jeans EMI and the EMI for the vacation they took last year? So… chal raha hai, chalne do! He drags year after year in the same job, which is now drab and uninteresting.

His home loan interest has gone to its highest level (which he never thought about, while taking the loan) and hence EMI’s have crossed their budget (the one he had originally planned.) While all these issues are haunting him, with all that tension, another serious incident happens!

An auto hits him while coming home. He’s critical! Arush is rushed to Hospital, there’s a month of rona dhona, 9 lakhs of expenses, (come on guys, we are in 2024 now, not 2011). The company pays 2 lacs (doesn’t seem like a lot now, does it?), and Sandy organizes 7 lacs from his own wealth by breaking a Fixed deposit and selling some mutual funds.

But hey, look at the brighter side too! He saved 1.5 Lacs in Health Insurance premiums all these years… Did he not?

Year 2034

Life is really cruel to Arush, He never returns to home one day, He dies in another accident, a victim of a mishap! . His insurance policies come to rescue. The company settles the claim of 10 lacs very fast. His Family is in a deep problem though, Sandy cannot work, 1 Child is in 7th class and other one is ready to go to college! There are 20 lacs fixed bank deposits, but wait, the home loan still runs for 10 more years! All the money in Fixed deposit goes towards paying off that debt. There are other investments, worth 30 lacs. Lets use that money now! The family life-style has sky-rocketed like anything in the last decade, & monthly expenses are around 80k per month. How will they manage?

I personally see just one solution. Lets them eat once a day and stop the kids education, if they want to survive with that leftover money!. 30 lacs in the Bank generating a monthly income of 25k per month (Only if interest rates offered on FD’s are 8% in year 2034 ! , which is very rare !) , all they just have to lower their standard of living, such an easy thing to do! . But hey, look at the brighter side too! Arush did a very good thing, He saved so much in his premiums by not taking Term Insurance! Smart Husband, I wish every women gets a husband like this and every child should get a Father like Arush. Its called being mean, who will suffer now, Arush ? NO !

Year 2044 (alternative scenario)

Imagine if Arush didn’t die! That panauti didn’t happen and he just grew old like the rest. Its Retirement time, the time to reap benefits of one’s investments throughout life! Arush hasn’t actually accumulated a lot of wealth for his retirement! He didn’t take it seriously all his life.

Overall investments in mutual funds were never left to rest so that they could compound well, major investments in Insurance Policies and Fixed Income instruments never actually gave better return than inflation! . Even though his wealth has grown to close to 1 crore, it’s actually peanuts now, in 2045! His expenses are Rs. 2 lacs/month! How did he forget about Purchasing Power? Even though this 1 crore looks big enough all those years ago, this will not give him more than 80k per month. Even if he lower’s his standard of living , he can’t live comfortably! He is retired now. Too late worry about these things! Everybody wants to enjoy their life after their working years!

But for poor Arush, there are few choices! None of them, good! He can be dependent on his children, or he could lower his standard of living or cut off a big part of his desires after retirement or worst case, convince himself that he is interested in some part-time job which he can do comfortably. God forbid, if there’s an unforseen medical problem which he didn’t account for, at this stage in life!

Conclusion

With this article, I have tried to show you how things can go wrong at each point in life and what your financial life can look like if you mess up with your money. It’s the time to take care of your finances and plan for it well! . Yes! Situations are exaggerated in this article. It was just to show you the worst that could happen! . Beware! Be Prepared! Be Wise!

Author – Manish Chauhan – www. Jagoinvestor.com

WHAT A FLY CAN TEACH YOU ABOUT FINANCIAL PLANNING

Why some idiots don’t Plan out things in life? – Hey we are not saying this but it’s a message from a“one minute fly” to all of us. The fly is here to ask you one question what do you want to achieve in the one precious, unrepeatable life that you have? Really go deeper and figure out what do you REALLY REALLY RALLY want in your life. What kind of house you would like to live? What kind of places you would like to visit? What kind of people you would like to meet?

What kind of charity you would like to do? What kind of retirement you would like to have? What kind of wild things you would like to do in your life? What kind of legacy you would like to leave?  We all have one financial life and we should make the most out of it. We tell this to all our coaching clients at the end our financial life will either will be a “warning” or an “example”. It is up to us how we create our financial life like an example.

One of the Financial coaching Principle is “Start living a good financial life rather than trying to live a good financial life”. Personal finance is not about what you are going to do in next month or next year it is all about what you are doing right now. 

We would like you to watch a video and learn some life changing lessons from it; you can learn the importance of planning from a One Minute Fly.

http://www.youtube.com/watch?v=YoaOf5u8-FU&feature=fvst

The video “One Minute Fly” Teaches us the true meaning of life.  It teaches us some very important life lessons on how we should live our life.  One of our clients after watching the video said “We are same as this Fly in the video”, he is so true we are just the same.   We are here on this earth for a limited period of time and we have to do our best.  We have many things to wrap up in the one life we have.

It is therefore important to figure out important goals of your life and start planning for them.  Let me tell you something. This life goes by so fast you cannot believe it. One day you are 25 looking forward to all that life has to offer it, and the next day you are 52. You suddenly get on the other side of those dreams, looking back and wondering where in God’s name all the time went.

You are lucky if you have more time ahead of you than behind you. If not now than when will you start planning. This is the right moment in which you can start creating your financial life. So step fully into your financial life and start making the most out of it. This is not an article, this is life,  so dust casualness and laziness from your financial life. We want to leave you with a beautiful poem from the movie zindagi na milegi Dobara

If you have eagerness in your heart, it means you are alive,
If your eyes are filled with dreams, it means you are alive
Learn to be free like the wind, Learn to flow freely like the river,
Embrace every moment with open arms,
See a new horizon every time with your eyes,
If you carry surprise in your eyes, it means you are alive,
If you have eagerness in your heart, it means you are alive…

Once you are through with the video take a blank piece of paper and make a list of 100 things that you want to do before you leave this world.  It would be great if you can share some of your dreams and goals with us in the comments section. In this moment you can declare your goals with courage, play for your goals with courage and live your goals with courage. If on your own you are not confident take some professional help, spend some money on yourself and get a financial plan or get a financial coach and start taking actions and make the most of the one financial life you have.  And don’t forget to comment what did the FLY TEACH YOU.

This article is written by Nandish Desai - source www.jagoinvestor.com

COMBINE BONDS WITH FDs FOR BEST RETURNS

Combine Bonds with FDs for Best Returns

Build a ladder with short- & long-tenure papers for optimum returns, liquidity

PRASHANT MAHESH  - The Economics Times - 17 Jan 2012

    Investors are betting big on tax-free bonds of longer tenures. The recent bond issues of National Highways Authority of India (NHAI) and Power Finance Corporation (PFC) were oversubscribed by almost three times, say merchant bankers. A similar issue from Indian Railway Finance Corporation (IRFC) is expected later this month. 
With interest rates expected to fall soon, financial advisors are asking their clients to add longtenure bonds and long-term fixed deposits to their debt portfolio. “A rate cut is round the corner. These long-tenure bonds could give you the added benefit of capital appreciation. Similarly, you can also lock into higher rates in fixed deposits and also enjoy the benefit of compounding. Build a ladder around bonds and fixed deposits to optimise your returns”, says Vishal Dhawan, founder, Plan Ahead Wealth Advisors. 
Bonds or non-convertible debentures give you the twin advantage of coupon, or interest, rate plus capital appreciation. This is because since they are listed and traded on the stock exchange, the price of a bond could move up or down depending on the interest rate. In a scenario when interest rates fall, bond prices go up and you will benefit from capital appreciation. 
For example, Tata Capital - N2 bonds with a coupon of 11.25% (face value . 1,000) and a quarterly interest payment, issued in March 2009, still trade at a premium of 3.4% at . 1,034. 
So if the current 10-year Benchmark G-Sec has a yield of 8.25% and due to falling interest rate the yield comes down to 7.75%, then the price of a bond you hold is bound to rise. The capital appreciation would depend on the duration of the bond. Prices of longtenure bonds rise more than short tenure bonds. On the other hand, if interest rates were to rise to 9%, then the price of the bond you hold is bound to fall. 
A bank fixed deposit earns you only interest. However, you stand to benefit from the effect of compounding rate of interest in a fixed deposit. So the interest income you earn every year by default is reinvested at the same rate. “Bonds have the benefit of capital appreciation while fixed deposits give you the advantage of compounding”, says Anup Bhaiya, MD and CEO, Money Honey Financial Services. For example, suppose you invest . 10,000 in NHAI bond at 8.2% for 10 years where interest is paid out annually, and . 10,000 in an SBI FD at 9.25% for 10 years, where you get the benefit of compounding. In the case of NHAI, you will receive . 820 as interest every year, while in SBI FD it will be . 925. In the case of NHAI, you will have to reinvest it at the prevailing interest rates at that time. So you are not sure what you will end up with at the end of 10 years. However, in the case of SBI, the interest income of . 925 will get reinvested at 9.25%, and at the end of 10 years you are sure to get . 24,954. This eliminates reinvestment risk and gives you the benefit of compounding. 
DRAWING A STRATEGY As you can see, the strategy is based on the theory that interest rates are going to fall soon. How realistic is the theory? 
“There is a case for a rate cut. However, the central bank may watch for some more time before taking any decision”, says Mahendra Kumar Jajoo, chief investment officer (fixed income), Pramerica Mutual Fund. Most analysts expect the central bank to start cutting rates from the first quarter of the next financial year. Even the RBI statements indicate the same: “The guidance given in the second quarter review was that, based on the projected inflation trajectory, further rate hikes might not be warranted. In view of the moderating growth momentum and higher downside risks to growth, this guidance is being reiterated. From this point on, monetary policy actions are likely to reverse the cycle, responding to the risks to growth”. 
The central bank has resorted to 13 rate hikes since early 2010, with an objective to rein in rising inflation. Food inflation was close to the 20% mark a year ago while the Whole Price Index (WPI) inflation crossed the 10% mark. While WPI inflation fell from 9.75% in October 2011 to 9.1% in November 2011, food inflation touched a 4-year low of -2.32%. However, growth is slowing down. India’s GDP grew by 6.9% in the period July–September 2011, the slowest pace of expansion in the last nine quarters. It is this slowing growth which may make the central bank cut rates going forward. 
GREAT PROMISES “For any drop in interest rates by 100 basis points, or 1%, very broadly you can see a capital appreciation of 5% on a 5-year bond, 7% on a 10-year bond and 10% on a 15-year bond”, says Deepak Panjwani, head- debt markets, GEPL Capital. The higher the duration of the bond, the greater the capital appreciation. Since bonds like NHAI and SBI come from the government, they track benchmark 10-year Gsec rates. The 10-year yield now stands at 8.25%. Suppose this were to drop by 100 basis points over the next one year, then it is possible that the NHAI 10-year bonds with a face value of . 10,000 could gain . 700 per bond and trade at . 10,700 and the 15-year bonds will trade at . 11,000. Thus for a 15-year bond, an investor could make a capital gain of . 1,000, or 10%. 
In addition, he earns an interest of 8.3%. So his total return could be as high as 18.3%. 
Since it is very difficult to predict interest rates, experts are recommending the technique of laddering — a strategy to build debt portfolio with different maturities — to their clients. “Invest up to 75% of your corpus in a mixture of NCDs and fixed deposits. These products could have a maturity period between 3 and 15 years,” says Vishal Dhawan. If you are aggressive you could have a higher exposure to longtenure bonds. So your ladder could have NHAI/PFC bonds with a maturity of 15 years, SBI bonds with a maturity of 9 years and some fixed deposits with lesser and varying maturities. “The advantage of such a ladder is that it frees up capital at various points of time, offering liquidity,” says Anup Bhaiya. 
Lastly, financial advisors ask investors to buy these bonds with an objective of holding till their maturity, and not merely for capital gains. Bond markets are not well developed, with very little activity. So, exiting could be a problem. There are very few products with a maturity of 10 to 15 years, hence the market prices may not reflect the true price. For example, SBI - N6 bonds, with a 15-year maturity and a coupon rate of 9.45%, witness thin volumes with less than 100 bonds traded on most days. Also, some of these bonds have a call option. If the interest rates drop significantly, the issuer has the option to buy the bond back and return your money. 

INDIAN TRAVEL INSURANCE OVERVIEW

Indian Travel Insurance Overview

Travelling is one of the more pleasurable experiences for one and all. In the travel insurance context, travel to exotic destinations can be divided as domestic and overseas travel. Travelling within India is called as domestic travel and once you are out of India its overseas travel. Travel insurance is very essential when you travel, be it domestic or International travel. 

Calamities and pandemics across the globe are also common these days. Travellers, despite of their age have to be careful about their health particularly when they are outside their familiar surroundings. They need proper medical insurance coverage as falling ill or getting injured is not predictable. There are several travel insurance plans to suit your requirements; it can be purchased to safeguard you and your family respectively. Shop around online to learn more about the distinctions between different travel insurance plans before buying. 

Travelling overseas has become common nowadays with people travelling abroad either to visit their close ones or simply for recreation or through business. The United States and Canada are two nations in North America that are frequented by Indians. While it is exciting to visit America, visiting an American hospital as a patient is not as exciting. The health care costs are exorbitant, and even though, insurance is not mandatory to travel to these countries, it is highly recommended. 

To travel to Europe, travel insurance is mandatory as the consulates of all Schengen states insist on travel insurance before issuing the Schengen visa (common visa for 24 European countries). While travelling within Asia, Indian travellers tend to ignore purchasing travel insurance viewing it as an unnecessary expense. However most insurance providers offer very affordable insurance policies for vacation travel within Asia, and it is prudent to purchase travel insurance even while travelling to popular Asian destinations like Thailand, Dubai, Sri Lanka, Malaysia, Singapore etc...

Travel Insurance- Types of products

Single Trip Travel Insurance

This plan is for single trips. If you are an occasional traveller, Travel insurance is very essential and single trip Insurance comes handy. Single trip insurance can be purchased from a few days up to 360 days. Most companies offer the single trip up to 180 days. However there are a couple of plans which can be purchased directly for 360 days.

Multi Trip Travel Insurance

Multi trip travel insurance allows the insured to travel multiple times during the coverage period. There are different travel insurance products specially designed to meet the requirements of those who travel multiple times in a year. This plan is quite popular with business people. There is usually a limit of 30, 45 or 60 days as being the maximum number of days outside India in a single trip under the Multi trip plans.

Asia Travel Insurance

It is common among Indians to travel frequently within Asia. Indians visit Asian countries like Malaysia, Hong Kong, Indonesia, Maldives, Singapore, Nepal, Sri Lanka etc for several reasons. While travelling within Asia you require travel insurance but most of the people tend to ignore this fact. There are several insurance companies to offer you Asia travel insurance. You can choose affordable Asia travel plan of your choice and stay secure. 

Europe Travel Insurance

Europe Travel Insurance is specifically designed for the convenience of the Schengen Visa. Europe Travel Insurance common visa allows you to travel to schengen countries. However Schengen visa countries have mandated health insurance coverage for visitors. Schengen Visa insurance requirements are specified by the consulates.

Domestic Travel insurance plans

Domestic insurance policies cover travellers within India. These plans can be purchased either for a single trip, or for the entire year. Your domestic Travel insurance becomes ineffective once you are out of home country.

Senior Citizen Travel Insurance Plans

This special travel insurance plan is designed to suit the requirements of travellers above the age of seventy. As you grow old the chances of health risks will be higher compared to your younger days. It is important that you have travel insurance when you travel outside India as the cost of healthcare is very high and you do not want to be forced to visit an foreign hospital without insurance.

Travel Insurance coverage

Travel Insurance policy covers the insured against various eventualities while travelling abroad. It covers the insured against personal accident, medical expenses and repatriation, loss of checked baggage, passport loss etc.

The most common risks that are covered by travel insurance are:

• Medical expenses and emergency evacuation/repatriation
• Accidental death or dismemberment
• Injury or disablement benefit
• Trip Cancellation
• Delayed departure
• Delayed baggage
• Personal liability and rental car damage excess

Travel Insurance Companies and E India Insurance

There are several competent private players in travel insurance sector like TATA AIG, Bajaj Allianz, ICICI Lombard, Reliance, Oriental, Cholamandalam, Future Generali, Apollo DKV etc. All these insurance companies have online travel insurance policy issuance facility through E India Insurance. At E India Insurance you can access different travel insurance quotes before buying. Different travel insurance plans are displayed in an unbiased manner to the convenience of the clients. There is no extra charge for the purchase service provided by E India Insurance. Compare travel insurance policies by different insurance companies and make a productive purchase. Buying travel insurance in E India Insurance is Quick, Convenient and Eco friendly.

Policy cancellation in Travel Insurance

Travel insurance can be cancelled conveniently online. If the insured prefers to get his/her travel insurance policy cancelled before the policy start date then he/she should intimate the E India Insurance by sending an email. The insured should furnish policy number or schedule number in the email. If the cancellation request is after the start date of the policy then Photo copy or Scan copy of all the pages (including empty pages) of the passport should be sent to E India Insurance as a proof that he/she has not travelled overseas. In both the cases there will be a 250/- cancellation charges.

Claims Settlement in Travel Insurance

The efficiency of an insurance company is best determined considering the history of claims settlement. Cashless settlement in travel insurance for out-patients can be availed by walking in to the hospitals directly. If the insured is an inpatient, then he/she is expected to inform the service provider by calling the toll free number specified on the policy document. Signed claim form, policy copy and other documents as specified by the insurer is required to apply for a claim.

Source : www.eindiainsurance.com