Due to the easy availability of finance from banks and Non-Banking Financial Companies [NBFCs], numerous individuals resort to external borrowing to meet their credit needs. There are various types of loans available in the market that cater to the diverse financial needs of individuals.

One such type of a loan is a personal loan. Such loans, also known as unsecured loans, may be used for numerous purposes such as medical emergency, domestic or international travel, home purchase or repair, higher education, purchase of a new vehicle, or for debt consolidation, among others. You may borrow an unsecured loan and receive the much-needed financial support during a cash crunch.

Besides the numerous benefits offered on personal loans, you may also enjoy tax benefits on the borrowed amount. However, an important aspect to note is that you may claim deductions on the repayment amount only if the loan amount is utilized for your housing requirements.

Stipulations of the Income Tax Act

According to Section 24(b) of the Income Tax Act, 1961, you may enjoy tax deduction on the loan amount used for the purchase of a residential property or for renovation towards the same. You may also claim tax benefit if you have utilized the borrowed amount to make a down payment towards the purchase of a home. Other valid expenses that may be used to claim tax deduction include repairs of your home, reconstruction, or for renovation.

A very important point to keep in mind is that you may claim tax deduction only on the interest paid on the loan, and not on the principal amount. This means that if you have borrowed a loan of Rs. 5.25 Lakh with an interest of Rs. 1 Lakh, then you may reduce your tax liability up to the interest amount, i.e. Rs. 1 Lakh.

Another point to consider is the limit of tax deduction allowed. In case, you have given the renovated house on rent, there is no limit on the amount that you may claim as a tax deduction. However, if the house is self-occupied, you may enjoy tax deduction of up to Rs. 1.5 Lakh.

You may also note that tax deduction on the interest amount cannot be claimed in case you have purchased the property at the construction stage. You may do so after the construction has been completed. Additionally, the house must be ready to be occupied within three years of borrowing the loan.

You may, therefore, utilize a personal loan for the purpose of purchase of a home, repairs, and renovation, and enjoy tax benefits of the interest component. In order to avoid any hassles, you may preserve all related documents that will help establish the end use of the loan. By doing so, you may reduce your tax liability largely.

The generic approach to wealth management is goal-based. Investors park their funds in various financial instruments to cater to their future needs. One of the best vehicles to help achieve this objective is a Unit Linked Insurance Plan [ULIP].

Before investing in such an avenue, it is important to understand ULIP meaning. This financial scheme aggregates the benefits of both investment and insurance. Therefore, you may enjoy risk cover as well as high returns. Such a policy is best-suited for meeting long-term goals and objectives. Following are four methods that will help you achieve this.

1. Opt for top-ups and suitable premium mode

In case you have any additional surplus available, say from a bonus or from the sale of property, you may utilize the top-up option. Financial advisors recommend top-ups as they help lower the overall cost associated with a ULIP policy. Top-ups generally attract a 1-2% charge, as compared to the fees on the original premium. This means that you may purchase a higher number of units at a lower cost. You may, therefore, lower the total average cost. Another benefit of a top-up on a ULIP scheme is that it contains the insurance aspect as well. This helps in increasing the level of life coverage. You may utilize this benefit as you become older and your liabilities begin to increase.

To achieve your goals of high returns, you may also consider monthly investments in a ULIP policy through Systematic Investment Plan (SIP). Regular investments help average the cost of units. Besides, this inculcates disciplined savings habit.

2. Utilize various fund options

ULIP policies allow you to select the funds you wish to invest in. On the basis of your preference, you are also allowed to select a percentage that you wish to invest in each fund. The fund options vary from insurer to insurer. For example, Bajaj Allianz Life provides seven options, which are Pure Stock Fund, Equity Index Fund II, Asset Allocation Fund, Accelerator Mid-Cap Fund II, Equity Growth Fund II, Bond Fund, and Liquid Fund.

You may make a choice between these fund options based on the market performance, your age, risk tolerance, and most importantly, your life goals. For example, if you belong to the younger age group and do not bear the financial obligations of a family, your risk tolerance may be higher. You may, therefore, allocate the premium in a high-risk instrument such as equity funds. If your life goals are long-term, you may invest in large cap funds. Such funds are generally invested in reputed blue-chip companies and face lower volatility. It is recommended to shift from high-risk investments to low-risk, such as debt funds, when you are at least three years away from your goal. This aids in lowering risk while earning good returns at the same time.

The good news is that insurance providers also allow you to change the fund apportionment by utilizing the ‘fund switch’ option. Through this feature, you may move your funds between investment options, with the goal of obtaining optimum returns. You may also avail of the permanent fund switch option to make a lifelong change to the fund apportionment based on your latest fund switch.

3. Make use of ULIP features

Every individual has varied financial needs at different life stages. You may put to use various ULIP features such as different premium payment methods, partial withdrawals, or varied fund options in order to customize your saving schedule. For example, ULIP policies allow tax-free partial withdrawal upon completion of the five-year lock in period. Therefore, if you wish to obtain funds for a certain goal, say for your marriage, you may partially withdraw from your ULIP policy once the lock-in period has been complete. You, therefore, need not borrow a loan from any financial institution or liquidate your emergency fund to meet your financial requirements.

4. Plan life stage needs

ULIP policies appeal to individuals looking to fulfil their long-term needs. You may determine your goals and estimate how much amount will be needed to fulfil those goals. While doing so, it is imperative to take the inflation factor into consideration as well. Insurance providers offer the benefit of an online insurance calculator, which helps you determine your insurance requirement.

Alternatively, you may seek the help of your insurance agent, who will generate a ULIP ‘illustration benefit’ on the basis of various personal factors like age, sum assured amount, desired term of the policy, and the amount needed to fulfil your life goals. You may calculate the premium amount that you need to pay for a particular sum assured amount, so that the fund value of your policy at each life stage helps in meeting your requirement at that point of time. Financial advisors recommend taking a coverage of at least 15 to 20 times the annual premium amount so as to meet your lifetime goals.

If you are looking to fulfill your long-term goals, a ULIP plan is indeed an ideal option. Due to the varied ULIP benefits, a lot of investors are opting for this scheme. Some benefits to look out for include comprehensive protection, loyalty or booster additions, lower fund management charges, and Rupee cost averaging, besides others. Through these ULIP benefits, you may get closer to your life goals, be it saving for your marriage expenses, funding your child’s future education, making down payment for a new home, purchasing the vehicle of your dreams, taking an international trip, or even ensuring financial stability of your loved ones in your absence.

 A lot of individuals still avoid acquiring health insurance because of insufficient understanding. However, medical costs are constantly rising, which makes it difficult to meet expenses in case you are diagnosed with a serious illness.

Several myths surround health insurance that also acts as a deterrent to acquiring such coverage. Most insurance companies offer health insurance that provides several benefits. It is important that you do your research and get a clear understanding of various plans to make an appropriate decision.

Here are eight common health insurance myths that must be overcome:

1. Group insurance is adequate

Some companies provide group insurance plans to their employees. However, group health insurance plans generally do not cover a wide range of illnesses. Additionally, there may be certain caps on the maximum coverage that is available under the group insurance plan. Another factor you must remember about group health policies is that the coverage is available only as long as you are working with the organization. If you quit the job, you lose the insurance coverage leaving you vulnerable to high medical expenses in case of an illness. Therefore, it is recommended you procure health insurance coverage for self and family based on your health condition and personal needs.

2. Health insurance is not available if you smoke

This is a very common myth surrounding health plans. However, this is not true because insurance companies consider only pre-existing medical conditions while providing you with health coverage. In case your habit of smoking causes any health condition, such as respiratory issues or lung cancer, you need to declare this at the time of making an application.

3. Pre-existing conditions are not covered

Another common myth about health insurance is that if you have an existing condition, such as diabetes, hypertension, or heart disease, you do not receive coverage for the same. Insurance companies impose a waiting period [generally between two and four years] before the expenses related to such illnesses are covered under the health policy. At the end of this waiting period, you receive coverage under your health insurance policy and you may file a claim for their treatment at the end of this duration.

4. Coverage begins from the date of purchase

Do you like most individuals think that coverage under the health policy commences as soon as you purchase it? The fact is that most insurance companies offer you a period of 30 days before coverage commences. In case you are diagnosed with an illness that requires immediate treatment, these expenses will not be covered under the health policy during this 30-day period. However, if you meet with an accident and require treatment, the expenses for the same are covered under the policy even during the first 30 days from the date of purchase.

5. One day admission is mandatory for receiving health insurance benefits

Several people think that they will receive the health insurance benefits only if they are admitted to a hospital for at least one day. This may be accurate for most diseases. However, insurance companies do consider certain treatments and surgeries that do not require hospitalization and are known as day care procedures. Therefore, the insurer will cover the expenses incurred towards such procedures as long as an experienced and qualified medical practitioner certifies the validity of your claim.

6. Online purchase is not safe

Traditionally, you needed the assistance of an insurance agent if you wanted to buy a health policy. However, today you may opt for an online health insurance policy, which is more convenient and quicker. You may directly apply to the insurance companies’ websites to purchase a health policy. Insurers also provide better deals and lower premiums if you choose to buy an online policy. This is because the insurance companies are able to eliminate costs such as commission and agent fees when you purchase the policy directly through their online platforms. These cost savings are passed on to you through a lower premium cost, which makes buying health insurance more affordable.

7. Lowest premium is the best plan

You may think that the possibility of filing a claim under your health insurance policy is lower. Therefore, you may choose to opt for a plan with a lower premium to save money. However, a cheaper health policy may have multiple restrictions and limited coverage. Therefore, you may be in for a rude shock to find that the desired coverage is not available when you require the same.

8. All medical expenses are reimbursed

This is a very common myth associated with health insurance. Expenses are reimbursed only if the terms and conditions are met. Moreover, there may be certain sub-limits even when coverage is available. Therefore, it is very important that you read the policy document carefully to clearly understand the inclusions and exclusions to avoid any confusion in the future.

It is important that you do not fall prey to the myths surrounding health insurance. You may seek the advice from a qualified insurance advisor to understand more about such policies. Alternatively, you may research online and read through blogs, forums, and other resources to gain an understanding about health insurance.

For most people who are planning to buy a house, getting a home loan sanctioned is the biggest part of the deal. So, how can you improve your chances of your home loan application getting approved? In this article, we’ve put together a few useful tips for you.

Show Ability to Repay

When applying for a loan, you have to show that you are able to repay a home loan. This is one of the key requirements that lenders look at, before sanctioning a home loan. They would check your current expenses and all your other financial commitments. So, if you have too many repayments to be made, the lender will want to know about how you are planning to repay your debts.

Check Your Credit Rating

You should always make an effort to keep a check on your credit report. It’s important to access your report and see if you have any negative history or defaults. By checking out your credit report well in advance, you will get an idea of what your report contains before the lender accesses it.

During this time, if you find any information or markings that are not right, you can contact the company who had reported it to get it corrected. Having negative repayment history is not going to be good for you when you apply for a home loan. Remember, a good credit score can really help you seal the deal.

Have a Savings History

Showing the lender that you are good at saving money and are able to manage your expenses well are always a good sign when you apply for a loan. Having savings will also help you with your loan repayments and can also be useful in order to make your contribution when purchasing a home.

Don’t Apply with Too Many Lenders

It is very important for you to compare different lenders and see what they offer. However, never submit applications to too many lenders at once, since this would appear on your credit report. Hence, only submit an application after you have done all the necessary research and have decided to go with a particular lender.

Try to Have Stable Employment

Employment stability is a big plus point for you when applying for a home loan. Lenders look at how long you have been working for a particular company as this shows that you have a stable employment and would be able to repay your home loan. Changing jobs too often will not look good. Most lenders usually prefer a borrower to be with the current employer for at least six months – this does not include probation.

If you have changed your job recently, then the lender will check to see what you did prior to your current job. Hence, being in the same job for a period of two years can be satisfying to the lender and will help you meet the employment requirement.

Cut Down On Unnecessary Financial Commitments

Before applying for a home loan, make sure you cut down on all the unnecessary financial commitments since this could impact your application. When you apply for debts, there are inquiries done on your credit report. Too many credit enquirers will not reflect positively on your credit profile. Also, credit limits on all cards would be included in your repayments as well and this would mean that you wouldn’t have surplus cash available to meet on your new loan.

Disclose All Information

This is very important when applying for a loan. Be upfront about all your issues and never try to hide anything with regards to your finances. Disclose all the necessary information to the lender when you apply for a home loan because if during the process the lenders find things that are not disclosed beforehand, your loan maybe declined due to non-disclosure.

Always keep these points in mind whenever you apply for a home loans, as this will enable your chances of getting your home loan being sanctioned easily and quickly.