Thinking of purchasing your first car insurance policy? First, gloss over these numbers to know why you need to have one at the earliest!

In the calendar year 2018, the Indian states and Union Territories reported a total of 4,67,044 road accidents. Even though India is a signatory of the Brasilia Declaration, wherein it intends to bring down the numbers by 50% within 2022, it remains a far-fetched objective.

To account for it, however, the Indian government has amended the Motor Vehicles Act, 1988. According to this amendment, traffic fines on all traffic violations have been hiked. The revised challan rate on uninsured vehicles is Rs. 2,000.

Now that you are aware of its necessity, let us walk you through some tips which are imperative for every first-time insuree.

Tips to Follow Before Securing Your First Car Insurance Policy

When you are purchasing your first vehicle insurance policy, it is crucial that you go through the points which are discussed below. These are the following:

1. Choose Which Type of Car Insurance Policy You Want for Yourself

The first step is to learn about the different car insurance policies available in the market. There are majorly 2 types of car insurance present in India – a) Comprehensive Car Insurance & b) Third Party Car Insurance.

Know more about the difference between both the types in the table below with their specific features.

You can also opt for add-ons over and above your preferred car insurance policy. These include –

1. Zero depreciation cover.
2. Consumable cover.
3. Tyre protection cover.
4. Return to invoice cover.
5. Breakdown assistance.

2. Look for Different Car Insurance Providers and Their Service Feedbacks

After you have decided which insurance policy you want to purchase, it is time for you to choose an insurer. You can find about their service promptness and how convenient their service is through social media comments, Google reviews, etc.

3. Check Out the Buying and Claiming Process of Car Insurance Policies with Different Insurers

Seek insurers that have a hassle-free along with fast purchase and claim settlement facilities. It is best to have an insurance policy as early as possible to ensure you can take your car out for a drive and not wait for a prolonged period for your insurance policy to be activated. Also, a hassle-free and fast claim settlement process would allow you to avail financial assistance at the earliest in the event of an accident.

4. Learn about the Claim Settlement Ratio of Different Insurance Providers

A substantial ground on which you can make your decision about an insurance provider is their claim settlement ratio. It is the ratio of the number of claims they have settled, and the number of claims reported to them.

5. Find out about NCB Policies of Various Insurers

What is No Claim Bonus (NCB) ?

NCB or no claim bonus is the discount you receive on premiums for a year if you do not make any claims in its preceding year. Although it will not be applicable on your first premium, it is necessary to know the NCB rates of different insurers beforehand to make the most out of your car insurance policy.

6. Look for Premiums as Per Your Affordability

Premiums are what you need to pay every year to keep your insurance policy activated. Check the premium of third party or comprehensive or zero depreciation car insurance offered by various insurance providers and check for the discounts they are providing on those premiums. Always choose the car insurance based on your premium affordability and coverage provided by the insurer so that it does not burn a hole in your pocket.

7. Check for Policies with High IDVs

What is meant by IDV?

IDV stands for Insured Declared Value, which is the highest sum assured by an insurance company as compensation in the event of theft or complete damage due to an accident. Look for policies that offer high IDVs and options to customise such value to maximise your benefits.

In addition to these, if you want to maximise your benefits from an insurance policy, check network garages and voluntary deductibles under an insurance policy before purchasing.

There are a lot of credit products that help people manage expenses related to a housing property. Land loans, home construction loans, and home loans are different types of loans provided by financial institutions. While land loans and home loans are relatively popular amongst the masses, not many people are aware of the features of a Home Construction Loan.

Home construction loans are availed by individuals seeking financial support to construct a house on a vacant plot. Below, we are going to discuss some of the key features of a home construction loan

Quick Approval and Disbursal

If the borrower has a good credit score and is able to provide all the required documents, then the home construction loan can be approved instantly within a short span of time. Post-approval of the home construction loan, the borrower can avail the loan amount within 3-5 days.

Low-Interest Rates

The interest rates levied on home construction loans may vary from one financial institution to another. With leading financial institutions, it is possible to avail home construction loans at competitive interest rates. The interest rate usually depends on numerous factors such as the borrower’s credit history, the policy of the chosen financial institution, the prevailing market rate, etc.

Loan Amount

Construction of a house requires ample funds to meet the requirements adequately. By taking up a home construction loan, borrowers can avail a loan amount covering the total construction estimate of the house. However, this is subject to verification by chartered engineer/architect and audit by the technical officer, appointed by the lender.

Loan Tenure

The loan-term of a home construction loan can range from 1 year to as many as 30 years. The tenure of the loan depends upon the loan amount and the repayment ability of the borrower.

Flexible Eligibility Criteria and Minimal Documentation

• In most cases, lenders readily offer Home Loans for construction to salaried individuals, business owners as well as self-employed professionals. Borrowers can also check their loan eligibility online with the help of a home loan eligibility calculator.
• Minimal documentation is yet another advantage of availing a home construction loan with a leading financial institution.

Some of the major differences between a home loan and a home construction loan mentioned below

• The loan amount in case of a home construction loan is disbursed in phases. The lender keeps a check on the progress of the project and disburses the loan amount accordingly. However, in case of a standard home loan, the whole amount is disbursed at once.
• Most financial institutions do not levy a prepayment penalty in case of a home construction loan. Whereas, if borrowers prepay their standard home loan, they might have to bear the pre-payment charges levied by the lenders.

Now that you are well aware of all the key features of a home construction loan, you can consider availing it to build your own house. Do not forget to read the terms and conditions of the loan agreement carefully before signing it.

Everyone has faced financial setbacks at some point in their life, it’s like an uninvited guest. These setbacks always turn up unannounced at the wrong time and derail your plans. Many of us might not have an emergency fund ready and need to fall back on other unpleasant options, like taking a loan from a relative or a friend.

So how do you arrange for money at these times of crisis? One such recommended option is getting a loan against property.

This loan is a secured loan which means, the bank never hesitates in offering a good loan amount against the property being used as collateral. There are several benefits of loan against property [LAP]. Let’s take a look at all the benefits it has to offer.

Secured Loan

The chances of getting a loan against property approved is high as it is a secured loan, where the risk-factor of recovering money in case of a default, is difficult for the banks or financial institutions providing funds.

Serves Variety of Needs

There are not many restrictions as to how to utilize the funds when it comes to loan against property. However, most people borrow against property in situations of huge funding requirements for education, medical costs, purchasing a new house, travel plans, etc. But before applying for LAP, check with your loan against property eligibility for quick loan approval.

Flexible Loan Tenure

The duration is longer in this case, which makes a loan against property a favorable option, with the tenure extending to around 20 years.

Loan Based on EMI or Overdraft Facility

You can pay the loan either through equated monthly installments or overdraft facilities, whichever is suitable. It is the estimation of the property along with your account history, which confirms the overdraft limit. LAP tenure is longer than other loans. Thus, you may have to pay smaller EMIs if you choose a longer tenure.

With the help of a loan against the property EMI calculator, you can calculate your monthly installments for the repayment of your loan. Using an online loan against a property calculator is a simpler way to derive EMIs for the same.

Borrowing against Different Property Types

You can take a LAP on commercial and residential property. You need to own the property in order to get the loan sanctioned. This loan can be taken on a piece of land you own and even in few cases properties that are under construction.

Pre-Closure

Just like the option to pre-close other types of loans, you can also prepay the loan against property to clear off the liability sooner than the term decided.

Top Up

When you take a property loan, you also have the option of top-up funding. The latter can be taken only on existing loan against property. Some banks provide the facility of taking a top-up on a home loan.

A loan against property is one of the best ways to raise money especially when the property market is optimistic. Like any other loan, repayment defaults also negatively impact the borrower’s credit/CIBIL score, which will be charged on loan repayment.

It is therefore wise enough to thoroughly assess one’s repaying capabilities and understand all associated conditions before opting for a loan against property.

Equity Linked Savings Scheme or ELSS funds are preferred investment options among most investors. It combines wealth creation and tax saving, which makes it a remarkable value addition for a balanced portfolio.

Many mutual fund experts suggest an ELSS fund as an ideal choice for a new investor looking to invest in mutual funds. Besides, ELSS can offer the flexibility to investing via a lump sum or Systematic Investment Plans. However, some investors have a few regarding these tax-saving instruments.

The article busts the four commonly-held myths surrounding ELSS tax saving funds.

Misconceptions about ELSS funds

Ideal only as a tax saver

Investors get drawn to ELSS because of their tax-saving nature. However, there is more to tax-saving investments than enjoying an ELSS tax exemption up to Rs.1.5 lakh. Similar to other equity fund mutual schemes, ELSS funds can also be used to achieve long-term financial objectives. As these funds invest their corpus in equity, most of them follow a multi-cap strategy. Thus, over the long-run, they can generate returns as high as multi-cap funds.

Redeem funds immediately after the lock-in period

ELSS funds have the shortest lock-in period of three years compared to other Section 80C investment instruments. Given this option, most investors sell the fund units on completion of the lock-in period. But it can be wise to hold on to the ELSS investment for an extended period. If the fund is performing well, you can continue reinvesting for better yields.

Invest in the same ELSS

Some investors believe that to get a tax rebate under Section 80C they must continue investing in the same ELSS fund. However, this is not true. To claim a tax deduction, you can invest in any ELSS fund. You can change or even invest in multiple schemes to make a tax claim. It is not mandatory to stay invested in the same scheme year on year.

Recycle or use up ELSS funds on maturity

Some investment experts suggest reinvesting in the same ELSS mutual fund investments after the lock-in period ends. They assume this strategy can help save tax without making additional investments. However, this strategy can fail as some investors may stop investing on receiving a lump sum amount on completing the lock-in period. The lump-sum amount may get spent on purchases, thus defeating the purpose of achieving the financial goal or wealth creation.

Conclusion

If you are a new investor faced with a dilemma of choosing ELSS v/s mutual funds, you can consider investing in ELSS. You get the opportunity of delving into equities, thus helping you move to high-risk high-return equity schemes based on your investment profile. Plus, you can also enjoy the ELSS tax benefit under Section 80C up to Rs.1.5 lakh.

Numerous factors play a role in determining the final price of your life insurance premium. But did you know that family history could be one of them? Yes, many insurers also take the history of your family health into consideration.

Let’s understand the factors that affect your term insurance premiums and why you shouldn’t hide your family history.

Why is Family’s Medical History Important?

When you buy insurance, the company is insuring your life without knowing much about you. This is a huge risk if you look at it from the insurer’s point of view. For such a reason, insurance companies want to know the kind of risk they are taking up. If there is a serious condition in your family, they could reject providing you with coverage altogether. But if the medical problem doesn’t pose a huge risk, then the company settles with a higher premium.

Some Factors that Affect Life Insurance Rates

1.   Genetics and Heredity

Some disorders or medical conditions are hereditary. They run through your family, making it very likely that you would get it as well. Such conditions are in the genes so there is a chance of you getting affected.

2.   Typical Lifespan

Your family history could consist of an average lifespan. This could be a shorter or a longer lifespan but the insurer would consider it when deciding the premium.

Some Illnesses That Are Checked by Your Insurer

• Diabetes
• Cancer
• Heart diseases
• Kidney-related issues
• Lung diseases

Every insurer will not treat the above-given illness the same way. Some might think strokes, diabetes, etc. play an important role in deciding the premium of your life insurance. But for some, genetic disorders could be the deal-breaker. It varies from insurer to insurer.

How to Get the Best Life Insurance?

There are several insurers that will give you a quote for the premium. Hence, it is recommended to check with every insurance company to be sure you get the best. After you have all the rates, it is a good time to sort through the companies based on the claim settlement ratio, solvency ratio, authority in the market, and finally the premium price. You shouldn’t compromise on the insurer just to pay a little less.

Do Not Hide Your Family History

If you think that hiding your family history can help you get affordable premiums then it is wrong. Eventually, if you were to get diagnosed with something which your insurer doesn’t know, then your claim could get rejected. To ensure that your claim doesn’t get rejected, it is better to share your family’s medical history and also your health record.

Reference

Mutual funds are professionally-managed investment vehicles that are increasingly becoming the preferred choice of investment for many investors. The primary reason for its appeal is the relatively higher returns it offers as opposed to traditional forms of investing. Plus, it provides high liquidity as you can withdraw whenever needed. However, experts recommend staying invested for the long-term for enhanced benefits.

This article looks at how to invest in mutual funds via Systematic Investment Plans (SIPs) to build wealth.

Understanding the power of compounding

Compounding plays a pivotal role in mutual fund investments to help grow your money. It does so by generating earnings on your previous earnings along with the base capital. This results in substantial growth of your funds provided you have a long-term investment horizon of 5 years or more.

Let us see how compounding works in mutual funds.

Suppose, you invest Rs.1 lakh as an initial investment for 15 years. Assuming a rate of 10% per annum as compound interest, your funds by the end of 15 years would amount to Rs.4,17,725. This is how compounding earns interest on interest and results in higher wealth accumulation.

Investment through SIP

Most experts advise investing in mutual funds via regular SIP investments as it builds the habit of saving consistently.

SIP in mutual funds has many benefits, including rupee cost averaging. Since you invest regular sums at different levels of the market cycle, you can average the purchase cost of units in the long term. This is because when the markets are low, you can purchase more units and vice versa. The profits you make via SIP investments can be reinvested in the mutual fund scheme and compounded upon thereby translating to a larger corpus.

Let us look at how power of compounding can make a difference in your earnings.

Say, you invest Rs.1 lakh annually for 5 years. At the rate of 10% compound interest, your money would grow to Rs.6,71,561 at the end of the term. The total interest earned would be Rs.1,71,561.

However, if there were no compound interest, a flat interest rate of 10% per annum for 5 years would leave you with an interest of Rs.50,000 (5 lakh x 10%). The difference in interest would be Rs.1,21,561 (1,71,561 – 50,000), i.e. almost 3.43 times more than the interest you earned.

Conclusion

As a new investor, if you are wondering how to invest in SIP, here are some easy steps:

• Start by understanding your risk tolerance level and the objective of your investment.
• Decide for how long you wish to stay invested.
• Choose a mutual fund scheme that meets your investment profile and set up a SIP with an auto-debit facility.

Remember, compounding works best when you stay invested for a while, preferably over 5 years. So, if you anticipate you may require funds in the short-term, consider investing in liquid funds and short-term debt funds.