A term insurance plan is one of the most affordable life insurance policies. It does not come with any maturity benefits. The nominees of the policyholder receive the sum assured if the insured passes away before the maturity of the plan. Both the individual and joint term insurance plans provide financial security to your loved ones.

Term insurance plan for couples

Couples can opt for separate or joint term policies, depending on their needs. You must understand these aspects of a term plan to decide which option to choose:

1. Nuclear double-income families

A working couple must opt for a term insurance plan to make sure that the future of their family is financially protected. According to experts, the sum assured should be at least ten times their yearly income.

2. Cover for life

When you buy a joint term insurance plan, you secure the future of your partner. The right term plan will offer them enough cover to run the household without having to compromise on lifestyle.

3. Future requirements

The plan that you buy decides the financial security of your children in the future. You have to decide on the sum assured depending on your future needs like children’s tuition fees and renovation the house.

4. Health concerns

The term life insurance for married couples must also come with critical rider benefits that cover healthcare bills. You will need this, as you get older when the visits to the hospitals become more frequent.

Different kinds of term insurance plans for couples

When it comes to the term insurance policies for couples, there are two options:

• Separate term insurance plan
• Joint term insurance plan

Separate vs. joint term insurance plan

Explained ahead is a comparison between separate and joint term plans based on the following points:

• Terms and conditions

Buying separate policies allow couples to select the conditions according to their personal needs.

• First death

Most term plans offer the sum assured in case of the first death or when the first claim is made. Some policies offer benefits on each death.

• Single payout

For a joint term policy, in case of accidental deaths of both policyholders, the nominees receive only a single death- benefit. In the case of separate policies, they will get two separate benefits.

• Divorce

In case of a joint term plan, the policy cannot be split if the couple decides to go for a divorce. The policy lapses if any one of the policyholders decides to stop paying the premium. Having separate policies can solve this problem.

• Affordability

The joint term plan is generally more affordable when compared to two separate policies.

• Convenience

Many couples buy a joint term insurance policy because it makes the paperwork simpler. Separate policies require couples to fill two sets of documents.

Now that you understand the differences between joint term plans and separate policies, you and your partner can decide which one to opt for according to your needs and expectations.

For financial security, it is essential to have a contingency fund that can take care of your expenses for 3 to 6 months. Such a contingency fund can help tide over the short-term loss of income such as an extended leave due to illness, loss of a job, a decline in business, etc. It can also help cope with unforeseen expenses such as medical emergencies, among other things.

Many investors park their surplus money in a savings account to serve as contingency funds. A reason for this could be they do not want to lock their money in any investments. Or, they may not know other alternatives. But what if there is a better alternative where you can park your surplus money? Liquid funds can be an excellent financial instrument from an investment standpoint.

What is liquid fund?

Liquid mutual funds are types of debt funds that invest primarily in open-ended schemes which have a short-term investment horizon. They invest in money-market instruments such as commercial papers, treasury bills and certificate of deposit up to 91 days. The main objective of short term liquid funds is to provide income via creating ample liquidity and preserving your capital. Once you know how to invest in liquid funds, you can choose to invest for a few days or months depending on your financial requirement.

Liquid fund returns v/s savings account

In 2011, the Reserve Bank of India introduced changes and deregulated the interest rate on savings deposits. Before that, every bank would offer an interest rate of 4% per annum. Since the ruling, banks are now free to provide interest they deem fit. Typically, the returns now on savings account are still around 4%. If you fall in the highest tax bracket, the post-tax returns on savings account come to approximately 2.8%. Such a return may not counter inflation or help to accumulate wealth.

On the other hand, liquid funds offer returns in the range of 7% to 9% per annum. If you consider the post-tax return on the highest tax bracket, the percentage is about 5% to 6%. This is moderately higher than what a savings account offers.

Tax treatment

Interest on a savings account is taxable. However, there is also a deduction available under Section 80TTA up to Rs. 10,000 per year. If the interest income exceeds the said limit, the amount is taxable depending on your income tax bracket.

Here are some scenarios to consider:

• If you hold liquid funds for less than three years, tax on liquid funds is charged as per your income slab.
• If you hold liquid funds for more than three years, you become eligible for long-term capital gain tax at 20% with indexation benefit.
• If you opt for the dividend option, the dividend income is free, subject to a dividend distribution tax of 29.12%.

Conclusion

Thus, you could benefit more from investing in liquid funds if you have surplus cash. Not only would you earn better returns but also save on tax. 

The stock markets provide a good avenue for growing your wealth. This is especially true in a developing economy like India. But to transact in the equity markets, you will first need to open a demat account.

‘Demat’ is the short form for ‘dematerialised’. Such an account holds your securities digitally – in dematerialised form. Thus, it allows you to buy and sell securities online with ease. If you are wondering how to open demat account, the process is simple. All you need to do is check if you meet the eligibility criteria and gather the documents required for demat account opening.

Eligibility criteria for demat account

Two factors determine whether and how you can apply for a demat account. Here’s what you need to know

1. Age – First things first, your age does not matter. Certainly, those above 18 years can open a demat account at any time. But even minors are free to apply for demat accounts.In case of minors, a parent or legal guardian can open the account and be in charge of it until the minor turns 18. Upon attaining majority, the account holder will have to submit some Know Your Customer [KYC] documents and open a fresh account.

2. Documentation – To apply for a demat account, a valid PAN card is essential. In addition, you will need to furnish documents that prove your identity and address. Take a closer look at the documents required for demat account opening:

• Proof of identity – PAN card, voter’s identity card, passport, driver’s license, among others.
• Proof of address – PAN card, voter’s identity card, passport, driver’s license, ration card, utility bill, bank statement, among others.

If you can provide these documents, you are eligible to open a demat account.

How to open demat account

Start by approaching a depository participant [DP] that is registered with a depository. Two such depositories operate in India currently: Central Depository Services (India) Ltd [CSDL] and National Securities Depository Ltd [NSDL].

Now, fill in the account opening form and provide the necessary documents. Following an in-person verification, the DP will provide you with a demat account number and an identification number. A DP like Kotak Securities ensures a hassle-free experience and processes demat account applications in just a few days.

What is ULIP?

Unit linked insurance plans [ULIP] are a combination of insurance and investment. The policyholder can pay the premium either monthly, quarterly or annually. While a small portion of the premium is for the life coverage, the remaining money gets invested in multiple fund options available under your plan. The lock-in period of a ULIP Policy ranges from 3~5 years [depending on when you purchased your ULIP]. An investor must opt for a longer policy term since it allows growth of the corpus.

ULIP insurance allows you to allocate your money in equity and debt funds based on your risk appetite. An aggressive investor must select equity-oriented fund option, whereas a debt option can be opted by a conservative one. ULIP offers an investor the flexibility of free switches between funds. You can switch your portfolio between debt and equity based on your risk and knowledge of the market’s performance. Under Section 80C of the Income Tax Act, 1961, you can enjoy tax benefits on the premiums as well as the maturity benefits. While the premium is deductible up to Rs. 1, 50,000, the maturity pay-outs are tax-free.

There are two different types of ULIPs

1. Type- 1 ULIP

In case the policyholder dies, whoever is the nominee, will receive either the fund value or the sum assured, whichever is higher. When a policyholder opts for Type 1, he might obtain high returns. Moreover, the timely payment of premium ensures the reduction of risks.

For example, ‘A’ holds a Type-I ULIP that gives her a sum assured of Rs 5 lakh for an annual premium of Rs 50,000.

In case of death in the initial years of the policy, when the fund value is less than the sum assured, the insurer will pay the agreed sum [which here is Rs 5 Lakh] to A’s nominee. However, if the fund’s value goes higher than the sum assured, the death benefit amount will be the accumulated fund value. Type 1 ULIP has lower premium amount as compare to other ULIP types.

2. Type- 2 ULIP

In case the policyholder dies, whoever is the nominee, gets Fund Value + Sum Assured. In this structure, the liability of the insurer remains constant at Sum Assured until maturity.

For example – The nominee of “A” gets the sum assured and the amount accumulated in the fund as on the date of death by the insurer. Under the type II policy, the insurance company charges an extra cost for the additional risk.

Which one should a user buy?

Since ULIPs offer dual benefits, you can be assured of adequate life coverage to cover all your emergencies. However, selection between these two types has its own pros and cons. The right thing to do before investing in the best ULIP for yourself is considering your needs and opting for one of the two types.

If want to purchase a ULIP to fulfill a life insurance requirement in your portfolio, consider investing in a Type-II ULIP. However, if you’re looking towards ULIP as an investment vehicle, go with a Type-I ULIP. The charges are lower, and you only get the fund value on maturity, which decreases the life insurance company’s liability. However, ensure that your Sum Assured is ten times your annual premium amount, in order to claim tax benefits under Section 80C and 10[10D] of the Income Tax Act, 1961.

A commercial vehicle loan is available to any individual or organization, which is planning to buy a commercial vehicle. These loans are often costlier compared to personal vehicles; hence, you will need a loan that can help you finance the purchase.

Before you apply for the loan, here are a few things that you need to know about.

Eligibility

The commercial vehicle is a necessity for many businesses, especially for the delivery and transportation-related companies. The loans can be applied for by a

• Self-employed person
• First-time commercial vehicle buyer
• Transportation business person who owns a fleet
• Business firms
• Public and private limited companies
• Educational institutes
• Healthcare business
• Trusts and societies
• Transporters

The application process

Applying for commercial vehicle loans is quite simple, just like any other loan offered by a financial organization. Either you can visit their branch to ask for an application form or you can visit their online portal to find the same.

You need to fill the form with your personal and professional information. You also have to provide them with your address and contact information. Once done, you need to submit the required documents so they can verify your information. For the online procedure, you can upload the scanned copies of the documents too. If your loan application is accepted then your lender will ask you to complete the verification procedures and other formalities.

Required documents

To get the commercial vehicle finance, you must submit the following documents with your loan application –

• Address proof like Voter ID, Ration Card, or Passport
• Documents that prove you have experience in the related area of business
• Records of past loans, if any
• Bank statement for the  past six months
• Proof of previous two years’ income tax returns
• Audited balance sheet document
• Account statement of your business’ profit and loss
• Information regarding all the vehicles you own
• A copy of the vehicle registration certificate

Loan tenure and amount

The amount of loan you can get for the commercial vehicle depends on your requirements. Sometimes, your past relationship with the lender can determine the amount too. Most lenders provide up to 100% of the price of the vehicle you are buying. The loan repayment tenure can be anything from six months to five years.

Interest rate

The interest rate can vary depending on the lender. The rate of interest for these loans can be 10-15% or more. It also depends on your credit score, business turnover, the number of vehicles you already own, your relationship with the lenders, and other factors. You can use a commercial vehicle loan EMI calculator to get an idea.

By using the commercial vehicle loan calculator, you can get an idea about the monthly installment amount that you have to pay. However, you also need to keep in mind that you will be charged a processing fee. It is charged when you are applying for the loan, and it is not refundable. The amount depends on the value of the loan.