You must have heard stories about people who hastily chose a home loan which eventually become a financial burden. A home loan is a long-term commitment, which has a significant influence on your finances. Thus, as a home loan buyer, you should be a lot careful throughout the process.

Here are the factors you must consider in order to choose the home loan that suits you the best.

Selection of the interest rates

The interest rates on home loans are influenced by several factors namely, loan amount, credit score, tenure, etc. you must consider home loan interest rates before applying for a loan as they directly affect EMIs and total payable interest. There are two types of interest rates available,

• Fixed interest rates – They remain the same throughout the tenure.
• Floating interest rates – They change according to the market fluctuations.

In India, banks follow the Marginal Cost of funds based Lending Rates [MCLR] regime to decide interest rates. This system is designed to give the benefit of changing interest rates to the borrowers.

Tenure of the Loan

There is a straightforward relation between tenure and EMIs, the more the years you chose to repay your home loan, the lower will be EMIs; however, the higher will be total payable interest.

For example, Mr. Shardul has borrowed Rs. 30,00,000 as a home loan with an interest rate of 9%, then, the EMI will be different for different tenures. Take a look

As you can see, as the tenure increases, the EMIs decrease, thereby increasing the total payable interest. The best choice will be selecting the tenure in such a way that paying EMIs will not be a financial burden for you. Selecting a longer tenure is perfectly fine when EMIs won’t be stressing your monthly budget.

Loan processing time

It is the period between approval of home loan application and disbursal of loans amount. Every lending institution has different guidelines to decide the loan processing time. So, you have to choose the lender based on your urgency for a home loan.

Home Loan Processing Fees

It is a fee that lenders charge you to work on your case as well as process your files. Generally, processing fees are fixed that is most lenders charge 0.50% to 1.50% of the total home loan amount. The home loan processing fees are non-refundable, and they do not confirm the sanctioning of the home loan application. So, you should opt for a bank that charge lesser processing fees in comparison with others.

Repayment Conditions

Every lender has their terms and conditions about home loan repayment. It is essential to understand them before taking a home loan. Having a comprehensive knowledge about late payment charges, CERSAI charges or loan transfer charges, etc. is crucial before taking a loan.

Prepayment or Part Payment options

Prepayment and part payment, both are the facilities given by lenders to their customers. As per these facilities, you can pay a lump sum amount over and above the EMIs against your loan. These facilities help you to reduce the payable interest by repaying the loan ahead of time. Many lenders do not charge you for these facilities; however, some lenders could charge pre-payment penalties to their customers who wish to pay off their loan before time. So, you need to confirm about these before finalizing your lender.

Affordable Housing

The Indian Government has introduced subsidized home loans under Pradhan Mantri Awas Yojana [PMAY] to provide financial aid to the low and middle-income households. This scheme was incorporated to encourage all Indians to buy their home.

Considering all the above factors and make a calculated decision based on them. This would make it easier for you to choose the home loan that suits you the best.

What is a ULIP plan?

If you are planning to begin your financial journey, ULIP is the best option for you. A ULIP, i.e. Unit Linked Insurance Plan, will offer insurance as well as investment options in the same plan itself. Its purpose is to offer the benefit of life cover with the option to grow wealth in the long term. The list of ULIP benefits are profound. Some of the common features most ULIP plans have are free funds switching, allocate premium according to your risk appetite, flexible surrender options, availability to select from multiple rider add-ons, top-up facilities to increase your investment anytime, etc.

ULIPs are helpful for investors looking to fulfill some of their long-term goals such as building their dream home, travelling the world, saving for their kid’s education and retiring early. However, in order to fulfill these long-term life goals, you need to have a long-term investment plan in place.

Given below are the characteristics that makes ULIP plans an important investment tool for the long-term.

Estimate the retirement corpus

You must consider your current expenses, life expectancy, future medical expenses, number of dependents and the expected rate of inflation to determine your required retirement corpus. There are many online calculators, which are useful to generate estimates of your retirement corpus. A retirement premium calculator is a helpful tool to calculate how much you need to save and invest in the present so you can enjoy your life in the future. Post-retirement life should be the most relaxing phase in your life.

Estimate the tenure

Early retirement planning is vital because it helps you to accumulate a substantial corpus. Therefore, it is beneficial to start investing early. Also, invest in market-linked products, which have higher returns in the long-run.

Choose the right plan

It is very important to choose a plan, which is designed to help you meet your goals in life. As Unit Linked Insurance Plans [ULIPs] is a long-term product and it helps you invest in different fund options such as equity, debt or the combination of both, it is one of the preferred choices. If you have high-risk appetite, you can invest in equities because it has the potential to give higher returns. The lock-in period in a ULIP insurance helps in encouraging disciplined savings habit.

Plan for regular income

It is not enough to have a fairly good retirement corpus. You still must use the corpus judiciously for it to last longer. Hence, it is important to have a source of regular income post-retirement. Just a part of your corpus or even your entire corpus can be used to buy an annuity plan that will guarantee you a regular income post retirement.

Take care of health expenses

When you grow older, the expenses of healthcare will increase. Considering in these expenses is necessary while you decide on the amount that is required for retirement.

Periodic review

Your lifestyle, as well as aspirations, continue to evolve when you move from one life stage to another. Therefore, it is important to review the savings and investments allocated for the retirement fund regularly. Even if you feel that your retirement corpus is falling short of the target, you must either increase the investments or change the asset allocation for meeting the target.

Early retirement is about building a large corpus as well as fulfilling your life goals in the long-run. It is essential to choose the right investment plan, which will help build a corpus at the accumulation phase and continue to earn returns during the redemption phase.

A major advantage of buying a term policy is the death benefit offered to the nominee upon the policyholder’s death. No monetary benefits are granted at the time of maturity if the policyholder survives the tenure of the term insurance. As a result, people have a lot of apprehension about buying a term insurance plan.

Below discussed are 5 common questions that people have when thinking about buying an online term plan.

Q1. Why Do We Need Term Insurance Plan?

Just like any life insurance policy, a term insurance plan offers life insurance coverage. However, the main USP of a term insurance plan is the death benefit offered. A term policy is only valid for a pre-decided “term”. The provisions under this policy are made in such a way that if the policyholder dies during the decided term, his/her nominee gets a lump sum amount in the form of a sum assured.

The main reason why people opt for a term insurance plan is because these policies charge much less premium as compared to traditional insurance policies. People with limited finances to spare for their insurance plans or who are the sole breadwinners of their family can create a safety net for their family members under this insurance scheme.

Q2. How Does One Decide On The Tenure Of The Term Insurance Plan?

The tenure of your term insurance plan is decided based on at what age you buy your policy. Similarly, other factors such as your health, gender, lifestyle and annual income also play a key role in deciding on your insurance tenure. Thus, if you buy a term insurance plan in your 20s or 30s, and assuming you are in a good space, both physically and financially, you can enjoy a long tenure of 50-60 years on your term insurance plan. The more delay you make on buying a term insurance, shorter would be the tenure on your term insurance.

Q3. What Are The Types Of Deaths Covered And Not Covered Under A Term Insurance Plan?

Any death that is a result of natural causes, accidents or due to any critical illness, is covered under a term insurance plan. However, there are certain exceptions under this cover. For example, death due to suicide, because of any sexually transmitted disease, or self-inflicted injuries is not covered under a term insurance plan.

Similarly, accidental deaths while being under the influence of any intoxicant like alcohol or drugs or death caused due to any natural calamity like earthquake, floods, or tsunami cannot be claimed to get a sum assured under a term insurance plan.

Q4. What Riders Are Offered Under A Term Insurance Plan?

Some insurance providers offer certain riders under their plan that offer additional term insurance benefits. Example of some common riders include

• Critical illness rider
• Accidental death and dismemberment rider
• Partial/Total disability rider
• Accelerated sum assured rider

Q5. What If A Policyholder Survives the Tenure of The Term Insurance Plan?

As is with any insurance plan, upon the end of the tenure on your term insurance, the policy will terminate. However, unlike traditional insurance policies, a policyholder does not get to enjoy any monetary benefits upon the insurance’s maturity. In fact, the basic idea behind a term insurance plan is that it provides a death benefit to the nominee if the policyholder dies during the insurance tenure.

However, there are some insurance providers that grant survival bonuses. These bonuses could be either in the form of monetary gains or waivers on premium amount upon the renewal of a term insurance policy.

Long term two wheeler insurance policy helps you to avoid the hassle of going through the renewal process time and time again. A long term policy provides coverage against damages caused to your two wheeler due to any unforeseen events. It is a known fact that two wheelers are more vulnerable to road accidents than other vehicles. To ensure protection from accidents, it is vital to buy a comprehensive two wheeler insurance policy.

Two wheeler insurance which protects an individual and their vehicle and provides security against a wide range of natural and man-made calamities. Apart from this, the vehicle is also protected against damages incurred due to unforeseen situations like theft, personal accident, third party liability and many more.

Benefits of a Long Term Bike Insurance Policy

No Need for Yearly Policy Renewal

An insurance policy for two or three years does not require you remembering the expiry date of the policy and renewing the same every year. It is convenient as you can ride your vehicle without any worries for a period of three years.

Lower Insurance Premium

In a long term insurance policy, per year insurance premium is lower than that of an annual insurance policy. Due to inflation, premium rates tend to rise every year. You can remain immune from the effects of inflation, by purchasing long term bike insurance policy because you pay the premium for three years in advance. You may also avail various benefits opting for a multi-year insurance policy.

Reduced Risk of Policy Lapse

Policy renewals through offline channels can sometimes get complicated. The policyholder has to state a new IDV [Insured Declared Value] of the vehicle after getting the vehicle inspected. A multiyear policy reduces the risk of policy lapse for 2-3 years, and you can be protected at a lower premium for a longer period and do not require two wheeler insurance renewal.

Avail No Claim Bonus

While renewing your two wheeler insurance policy, online or offline, don’t forget to avail the No Claim Bonus [NCB] if you have not made any claims on your policy in the preceding year. It is a benefit given to you from the insurer for adopting safe riding practices. It will be applicable for the subsequent years in case you are buying a multi-year insurance policy.

Avoid Penalties and Fines

In India, riding a two wheeler without a valid insurance policy is a punishable offence. Apart from the legal implications of a bike insurance policy, an insurance plan can also be of great support in times of emergencies that are unpredictable in nature. In the absence of an active insurance policy, you will not be able to file the claims on your policy. A long term two wheeler insurance policy removes the risk of policy lapse for a longer duration. It will also save you from paying unnecessary fines and penalties.

Trouble free Policy Cancellation

A long term motor insurance policy does not bind a policyholder to continue with the same policy till its validity ends. They may choose to withdraw from the same whenever they wish to and they would receive a refund of the unutilized premium. However, it is important to buy a new insurance policy before withdrawing from your existing policy. Also, make sure that even when you buy a new insurance policy you can retain your NCB.

Drawbacks of a Multi Year Insurance Policy

Long term insurance policy can save you from the rise in premium rates because of inflation. However, in case there is a deflation in the premium rates, you will not be able to take any advantage of the same. You might face certain financial loss if you sell off your two wheeler during the tenure of the policy.

Insured Declared Value is the current market value of your vehicle, which is calculated after deducting the depreciation amount. It is the maximum sum assured by an insurer on theft or total loss of two wheeler in the event of an accident. The insurer uses the “Insured Declared Value” [IDV] to calculate the premium of your bike. It is a vital component of a two wheeler insurance policy as it determines the amount of compensation.

To protect your two wheeler completely, you can opt for a comprehensive two wheeler insurance policy. Because it provides complete financial protection against own damages and also third party loss or damages caused due to the insured vehicle. In case if your two wheeler gets stolen, a comprehensive policy also covers bike theft. Whereas, Third party liability only insurance is mandatory in India as per the law. This policy also covers damages or loss caused by the insured bike to the third party or property. However, it does not cover for any loss, damages incurred or theft of the insured bike. The insurer uses “Insured Declared Value” [IDV] for calculation of the premium, whereas the third party premium is calculated as per the vehicle category and is not related to the IDV of the vehicle.

Inflation rates escalate the premiums. If you do not make any claim throughout the year then you will be eligible for no claim bonus benefits. No claim bonus can come in the form of deduction in premium rates or additional coverage. It is important to know that about the IDV value of your vehicle.

The IDV calculation for a two wheeler is based on the manufacturer’s listed selling price for the two wheeler proposed for insurance either at the start of the insurance policy or during policy renewal as the case may be, and then adjusted for depreciation. You can easily calculate the rate of your premium with the two wheeler insurance premium calculator online.

Every vehicle depreciates with time. The age of the car also contributes to its depreciation value along with the wear and tear.

The rate of depreciation considered to be effective across the motor insurance industry is as explained in the table below:

Age of the car % depreciation [for calculation of IDV]

When the cost of retrieval/repair exceeds 75% of its IDV, then that particular vehicle is tagged as a constructive total loss.

When the IDV is calculated [at first purchase or during two wheeler insurance renewal], the current selling price of the model and brand is considered rather than the price at the time of purchase. So during your two wheeler insurance renewal, make sure to check whether the premium you are paying for your two wheeler insurance is justifiable as per the IDV of the vehicle.

A common dilemma that investors face when considering investing is whether to invest directly in equity or equity mutual funds. Most new investors are unaware of what is equity fund. They are types of mutual funds that invest principally in stocks. Generally, investing in equity funds can be rewarding for investors with the professional acumen to decipher market movements and technicalities of how stock markets work.

If you want to know the best option for you, this article lists the top factors you can consider to make an informed decision.

Time to track equities

Many investors think investing is as simple as acting on tips from market experts and buying or selling stocks based on their recommendations. In reality, it takes years of research, knowledge and technical skills to understand how to pick the right stocks. If you can take the time to research, monitor market trends and conduct analysis, investing in equities can be an ideal opportunity.

Amount of surplus

To grow your money, diversify your investments and allocate across various assets to spread risks. You could invest a larger investment capital in spreading your risk across ten to twelve stocks. Mutual funds allow you to invest in a diversified portfolio with small amounts of money.

Few stocks v/s bigger schemes

Are you considering focusing on individual stocks or do you plan to invest in larger market schemes? If you are only looking at buying a few shares, investing in equities could work out. However, if you want to participate in the market as a whole, equity mutual fund investment can be an apt choice.

Investing for long-term goals

Usually, most investors invest in mutual funds to achieve a financial goal in the long run. Even direct equity investments are not made in isolation and have some goals attached to them. Mutual funds perform better when the goal is to build a corpus in the long term as they are based on sound risk management.

For example, if you buy a few stocks directly in the real estate sector and it under-performs, you stand the risk of not meeting your goal. But, with a mutual fund portfolio, your portfolio is well-balanced with investments in multiple sectors.

Systematic Investment Plans [SIPs]

When you invest directly in equities, you are required to invest in each stock every time. In the case of mutual funds, you can simply activate automated SIPs to invest regularly every week, month or quarter.

Conclusion

So, if you are willing to devote time to monitor the market and acquire stock market skills, you can consider investing in equities directly. On the other hand, an excellent alternative would be to invest in mutual funds online and let a professional fund manager handle your portfolio.