You might be unsatisfied with your term plan due to various reasons. It is possible that various things can go wrong after you purchase a life insurance policy. However, it does not mean that you have to continue with the term plan.

Here are different steps you can take to get yourself out of the situation.

Five things to do if you are not happy with your life insurance policy

If you are in a situation where you are not happy with the policy, you should take the below-mentioned steps:

• Make the most of your free-look period

When you realize that you have purchased the wrong policy, the first thing you need to do is make the most of your free-look period for life insurance. Insurance companies offer a 15-day period. During this period, you can contact the company and inform them that you want to discontinue the policy. The premium will also be refunded to you after deducting the cost of medical test, risk premium, and stamp duty.

• Exit the term plan

Term insurance plans have a low premium. However, you are not allowed to surrender a life insurance policy. In case you exit the plan, you end up losing the corpus that you paid for in the form of premiums and will not get any death benefit. However, you can exit the plan during the free-look duration to avoid losing any money.

• Get additional life cover

If you think that the sum assured is low, you can invest in an additional life insurance cover. The plan will be over and above the sum assured and the benefits of the current plan. This means you will be able to enjoy comprehensive coverage. You can buy an additional life insurance rider that is suitable as per your coverage requirements.

• Surrender Unit-Linked Insurance Plan (ULIP) and endowment plan

If you want to know how to cancel a life insurance policy, you need to understand that companies offer a policy termination option. You can use the option any time after your policy completes three years. However, you will earn no return if you surrender the policy during the first year itself. The Insurance Regulatory and Development Authority [IRDA] states that if you surrender a policy after five years, you need not pay any costs such as fund management charge and surrender charge.

• Convert (ULIP) and endowment plan into a paid-up plan

Many insurers give you the option to continue a paid-up plan. This means you need not surrender your policy but can discontinue paying premiums and the policy will exist until maturity. The benefit will be proportionate to the premium amount that you have paid.

Your present financial situation is a very important factor when choosing a policy. You need to choose wisely and access the financial needs of your loved ones before you make a decision.

You make a wise decision by investing in an insurance policy. You invest in a plan to safeguard for the future and cover the uncertainties in life. You pay your hard-earned money to the insurance company to remain secure in the future. Hence, the thought of an insurance company going bankrupt and a life insurance policy being of no use is quite scary and it can make anyone nervous.

Is it possible for an insurance company to go bankrupt?

You need to have detailed information about life insurance to find an answer to the aforementioned question. A company has to adhere to the norms of the Insurance Regulatory and Development Authority of India [IRDAI], the regulator of the Indian insurance industry to function in the industry.

According to the IRDAI, an insurance company needs to be registered and requires approvals to start a business in India. Any company cannot simply start an insurance business. It is important to meet the capital requirement in the country. For a company to sell insurance policy in India, the capital should be INR 100 crore and the IRDA has a right to cancel the license if the insurer does not abide by the guidelines.

Once the company starts operations in the market, the ‘Solvency Margin’ will help check its financial standing. This margin is the cash reserve, which is kept by the company to pay claims in an emergency. A company has to maintain an average solvency margin of 150%. When the solvency margin is high, the company is safe. Different companies in India have different solvency margins but they cannot go below this benchmark.

The best thing about the guidelines is that they apply to both, government-run insurance companies and private insurers. This means nobody can close the business and abscond. If an insurance company intends to close the business, it needs to merge the business with another organization. In this scenario, the other organization will take control of the particular insurer’s operations, as well as its assets and liabilities.

IRDAI aims to protect the interest of the policyholders and is responsible for bringing the insurance company into operations by establishing the rules and regulations and ensuring that they are met. IRDAI has the right to cancel the license of an insurance company and this will help prevent insurance company bankruptcies.

In case a customer has a complaint against an insurer, he can approach the grievance cell of IRDAI and remain assured that a resolution will be provided. Given the regulations and strict rules, life insurance bankruptcy cannot happen.

Hence, remain rest assured that your money will be safe and stop worrying about the solvency of the company.

Like a car or your home, vacation is not a big investment. However, it still includes many of your lifetime savings. To make the vacation memorable and enjoyable, you book the best flight and accommodations. You do most of the payment in advance. So, is it not worth insuring against any unforeseen problems or life events, which can ruin your travel plan?

When you are travelling to a foreign country, you can come across any of the following: illnesses, accidents, theft of personal belongings, loss of baggage, or any other issues. The best way to minimize the risks that can hamper with your travel plans is by taking travel insurance for yourself and your family. You should opt for a travel insurance for senior citizens if you are travelling with your parents or grandparents.

Let us look at some specific scenarios that will explain the need for a travel insurance plan.

Buying travel insurance ensures that all expenses are borne by the insurer, which helps you to come out of any unexpected financial problems.

If you are insured, you can get a buffer against baggage loss and the insurer will cover for the loss.

The above are the most common issues encountered by travellers and underline the importance of travel insurance coverage while planning a holiday.

Disadvantages of Not Taking Travel Insurance

Spiralling Medical Costs

Travelling in western countries without travel insurance is the riskiest thing to do as the medical expenses and hospitalization costs are very high. The graph of the medical cost increases rapidly with each passing day in the hospital. If you are not covered with a travel insurance policy, you will have to pay for these hefty expenses from your own pocket. When you have travel insurance with emergency medical benefits, it can help you by paying the losses incurred due to medical emergencies that occur during your trip.

Medical transportation with emergency benefits can pay for medically necessary transportation to the nearest appropriate medical facility, also the cost of getting you home following a covered injury or illness.

Loss of property and baggage

One common issue, which you can face while travelling, is thefts and baggage losses. In such an event, you lose your belongings and pay additionally to buy new ones. Thus, travel insurance indemnifies you against such losses. You can buy travel insurance online without much hassle.

Damaged Destination

No one can control or predict the activities of nature. If in case hurricane excessive rains close the airport for days keeping you from reaching the resort you are heading to, you could lose the cost of an airfare and accommodations. Therefore, buying a travel insurance plan while you book your trip will help you to get reimbursed for the costs.

Flight Delay

Nothing will ruin the beginning or the end of your vacation more effectively rather than flight problems. If your flight is delayed for more than 12 hours than the originally scheduled departure time then you are provided with the compensation. Travel insurance covers the cost of the hotel stay if you are forced to buy an accommodation in a city you had not planned to visit because of the delay of the flight.

Going abroad without considering buying an international travel insurance policy is not a wise decision at all. Do not compromise while paying the premium amount which is insignificant compared to the risky situations you might encounter during your travel.

Thus, by checking the reviews or individual travel insurance or family travel plans you can find out the best one for you according to your needs, budget, and make your trip protected.

You may have heard that SEBI implemented a new methodology of categorizing mutual funds [MFs].  However, there are still some pockets of confusion even after the new norms have come into place and ushered in an era of uniformity. A large deal of confusion still prevails between a balanced fund and a balanced advantage fund. It is important for investors to know how to clearly demarcate between these funds and understand the risk aspects surrounding them.

Differences between balanced funds and balanced advantage funds

After SEBI-mandated re-categorization took place, there have been changes in both fund categories and also some changes within the categories. Here are the main differences between balanced and balanced advantage funds:

Balanced Funds – A balanced fund, also called hybrid fund, invests in both equities and debt. Under SEBI’s new norms, aggressive/equity-oriented hybrid funds invest 65~80% of their portfolio in equities. As per tax laws, funds that maintain 65% or above in equity investments are classed as equity funds and are eligible for Capital Gains tax benefits. However, there are also hybrid funds that invest a greater portion of their portfolio in debt [less than 65%]. These debt-oriented hybrid funds are treated as debt funds as per tax laws and don’t enjoy the capital gains tax advantages available for investments in equity funds.

Both kinds of balanced funds – equity-oriented and debt-oriented hybrid funds maintain their asset allocation irrespective of where the stock markets move. For instance, if equity markets move downwards thereby providing investment opportunities, a balanced fund will not change its asset allocation to take advantage of this opportunity and will retain its asset allocation at a near-static level.

Balanced Advantage Funds – A Balanced Advantage Fund [BAF] also known as a dynamic asset allocation fund invests in both equity and debt and the allocation between the two is managed dynamically. The term ‘dynamically’ allows mutual fund houses to have flexibility in maintaining levels of debt and equity within these funds.

Balanced Advantage Funds and their advantage

BAFs are known to adjust their equity exposure to prevailing market valuations i.e. whether valuations are cheap or expensive. So, when stock market valuations are high, BAFs will lower their equity exposure and when they are low, they will increase equity exposure. These schemes work best for investors who have a good grasp over asset allocation strategies. Investors, who understand the wealth generation capability of equity investment may also benefit from investing in BAFs. Here is why you should consider BAFs

• Good in volatile conditions – Equity markets are going through increased periods of volatility in the present scenario. Since BAFs have the flexibility of changing equity exposure to take advantage of market conditions, they can offer more protection against volatility.
• Good for capital growth – In undervalued markets or where fundamentally strong companies’ stocks have been browbeaten, BAFs can increase exposure to equities to as high as 80% and have the ability to generate considerable growth.
• Eliminate need to time markets – There is no need to time the markets if you invest in a BAF. These funds have the expertise to take advantage of market movements.

Given the broad macroeconomic factors and the resultant volatility in the markets, Balanced Advantage Funds [BAFs] have advantages that investors should definitely consider.

Non-Resident Indians [NRI’s] enjoy many of the similar financial benefits enjoyed by regular Indian investors. They can purchase property, set up their businesses in India, invest in the stock market, buy tax-saving products such as ULIP, apply for tax-benefits etc. However, the steps and formalities they have to follow differ vastly from regular Indian investors.

Some NRIs have retirement plans that involve moving to India and living here for the rest of their lives. However, they must complete some formalities to transfer their overseas income in an Indian bank. When NRIs visit India to perform banking and transactions, they must open an NRE or NRO savings or current account. There is a separate protocol and a set of documents that an NRI needs to produce for opening these accounts.  They can exchange their foreign currency to Indian INR for usage.

NRIs also need to fulfill additional formalities for making investments such as trading stocks, buying life insurance, purchasing real estate etc. The Government of India offers some exceptions for taxes on payment of insurance. Section 80D of the Indian Income Act, 1961 states that any payment made towards insurance and medical expenses is eligible for deduction. This benefit is also available for NRI’s.

ULIPs are hybrid insurance policies as they provide dual benefits of insurance and investment under one plan. Premiums paid are divided into two parts. One goes toward providing you and your loved ones with life insurance cover, and the other goes towards multiple ULIP fund options selected by you under your plan. In ULIPs, the amount that goes towards life cover and fund options depends on the policyholder. The ULIP investment plans provide additional benefits to all the policyholders such as the switching benefit to yield better returns.

ULIP tax-benefits for NRI investors

1. Under Section 80C of the Income Tax Act 1961, premiums paid towards keep a ULIP policy alive are deductible from your taxable income [up to INR 1,50,000]
2. You don’t attract taxes on the ULIP returns accumulated during the policy term.
3. Under Section 10(10D) of the Income Tax Act 1961, the maturity benefits received by the policyholder is exempt from taxation, provided that the annual premium is ten times the promised Sum Assured.

Given below are some of additional tax benefits that are applicable to NRI investors:

1. According to Section 80D, the Government of India made certain exceptions for taxes on payments for health insurance. According to Section 80D of the Indian Income Tax Act, 1961, any payment that is made towards health insurance is said to be eligible for deduction. NRIs as well can enjoy the benefit of this Act.
2. You can choose to receive your maturity benefit in installments [monthly, yearly, half-yearly] or one-time. The TDS is applicable in case your pay exceeds INR 10,000. However, you can claim these later when you file your returns.
3. There are some NRIs who pay tax for both the countries, which might reduce their overall income. The taxes of NRIs are, however, comparatively higher than that of a permanent citizen of India. If you don’t wish to pay double taxes, there is an option where you can apply for a Double Taxation Avoidance Agreement. India has signed DTAA with more than 80 countries. So before you apply, it is important to check if there is a DTAA available with India in the country you reside.

ULIPs allows you to switch between different portfolios as per your risk appetite.  In addition, it uses your money to boost your wealth. ULIP covers the two most important aspects of wealth management, i.e. savings and investment. The best ULIP plan in India will provide you with an option where you can invest in equity markets and protect your family with a financial cover that will help you get your life goals done.

After the introduction of the new categorization of mutual funds [MFs] by the Securities and Exchange Board of India [SEBI], Multicap Funds are defined as equity funds that can invest across market capitalization. These funds should invest at least 65% in equity and equity related instruments. The portfolio of such funds can comprise of large-cap, mid-cap as well as small-cap stocks. Multicap funds have been gaining in popularity of late due to their performance.

Multicap funds for investors

When you think of investing in an equity fund, you should consider multi-cap funds. Here are some reasons why multicap funds are recommended to investors:

1. No need to understand valuations: Some investors find it difficult to grasp valuations of various capitalizations like mid, small or large and it is problematic for them to decide on which will do better in the future. Investing in multicap funds eliminates the need to choose the right capitalization.
2. Professional expertise: In a multicap fund, a dedicated fund manager can shift holdings from one capitalization to another depending on market outlook. As an example, if valuations of mid and small cap companies turn expensive, the fund manager can shift the holdings to large caps, and vice versa.
3. Fewer constraints: Multicap fund managers have greater freedom in managing the fund’s portfolio. For example, in a pure large cap fund, it is a requirement that 80% of the portfolio be allocated to top 100 stocks by market capitalization; mid-cap funds need to have 65% of the corpus in stocks listed between 101-250 in terms of market capitalization. In a multicap fund, a fund manager is free to pursue the best pickings and create a mixed portfolio without any market cap bias.

Risks attached to multicap funds

All investments carry some risks and so do multicap funds. Since mid-cap and small cap funds carry more risk than large cap funds, the risks of mid cap and small cap funds are in part inherited by multicap funds. However, in a good economic environment, the fund manager can invest in small and mid-cap segments while shifting to large caps during periods of downturn.

Who are multicap funds good for?

Multicap funds are good for long-term investors who have an investment horizon of above 10 years. These funds can help in wealth building, planning for retirement and achieving long-term financial goals like purchase of a house or education funding. This type of equity fund uses a dynamic investment strategy to accumulate gains over different market cycles. Here is a snapshot of their performance

A Systematic Investment Plan [SIP] in a multicap fund can help you build a comfortable corpus through consistent investments over the long term. Investors who do not want to get into the nitty-gritty of stock selection or sifting through market capitalization may find these funds ideal.

Delhi, a city of fascinating history, charm, and chaos, blends the rich Indian culture and modernity at once. Though for some reason, people love to hate this city, it doesn’t change the fact that it is one of the best places to buy a house in.

Are you planning to invest in a residential property? Read on to know why the heart of India makes for one of the lucrative options.

1. Value appreciating venture

Over the past few years, there has been a downfall in the real estate business. However, according to multiple surveys, this sector is going to have an economy of $1 trillion by 2030. The value of residential properties in all likelihood will be increased in Delhi. Therefore, buying a house here makes sense for it is a value appreciating investment. If you are looking for funding, a home loan can be the right approach for you.

2. Favourable government schemes

To assist Delhiites financially, the Delhi Development Authority offers a plethora of beneficial schemes. For example, the Mukhyamantri Awas Yojana caters to the people from the lower-income group and middle-income group, on the provision of valid documents. Moreover, the Ministry of Housing and Urban Affairs offers the House Building Advance [HBA] scheme to government employees based on certain criteria. If you do not qualify for both, you can opt for a housing loan and fund your dream house in Delhi.

3. Ease-of-Connectivity

Being the heart of India, Delhi is well-connected to every other part of the country and also globally. Moreover, the development of intercity communication via metro routes, buses, and autos are mention-worthy. All you need to do is to find the right location in Delhi to enjoy such benefits.

4. Quality education

Home to multiple educational institutes of great repute, Delhi is the ultimate educational hub. You have a strong reason to buy a home here if you want to see your kids graduating from the best educational institutions.

5. Multiple Job Opportunities

Despite the slowdown in the economy, the capital never fails to disappoint its people. Delhi, including the NCR, over a period, has created a plethora of job opportunities for people from every walk of life. Be it creative or technical, the place offers jobs to have a steady life. Hence, buying a home for the foreseeable future is a smart choice.

Opting for a home loan

A home loan offers several benefits, an important one being the tax benefit. With such a loan, you can get a tax deduction under Section 24 of the Income Tax Act and thus, reduce your taxable income.

A Housing loan offered by financial institutions like Tata Capital Loan seems to be a feasible option. With an easy application and post-verification of documents, the money will be disbursed to you within a reasonable period of time. Moreover, with flexible EMI schedules, you can repay the money at your own convenience.

An amortization table is a chart that lists the periodic loan payments and is inclusive of the principal amount as well as the interest amount, which forms the basis of each monthly installment till the end of the loan term. Amortization tables are standard for installment loans, which have the payoff dates known at the time of the sanction of the loan. Both borrowers and lenders use them for assessing home loan repayments.

Amortization table reveals the true cost of buying a home with regular home loan repayment installments over a period of time. The earlier home loan installments mostly go in repaying the interest on the loan. As a result, the percentage that covers the loan’s interest decreases with every installment. By the end of the tenor, most of the payment is directed to cover the principal. Borrowers can avail discounted interest rates if they choose to reduce the amortization period of their home loan. However, as doing so considerably increases the monthly payment amount, only individuals who can maintain a higher level of monthly payment should consider it.

A home loan amortization table can be obtained by using a home loan EMI calculator. The key components of the table are:

1. An installment number, which is a unique serial number with the payment details mentioned in the corresponding rows.
2. The due date for each loan payment.
3. The opening principal, which indicates the standing principal amount at the beginning of the month on which the interest is subject to be charged.
4. The installment amount, which is the EMI repayment amount that changes with the fluctuations in interest rate over several years.
5. The principal component of the installment, which is the component of the EMI that goes into paying the principal amount of the home loan.
6. The interest component of the installment, which is the component of the EMI that goes into paying the interest on the opening principal of the home loan. The interest component is more initially; however, it keeps decreasing over time.
7. The closing principle amount, which indicates the principal amount remaining post the payment of the monthly EMI. The opening principle of the following month is the same as the closing principle of the last month.
8. The interest rate per annum, which is also known as the home loan interest rate that varies based on the lender.

The home loan authorization table is important to take into account when applying for a home loan. It presents a clear picture of the home loan payment schedule and as well as assists in understanding the home loan repayment process. With a better idea of the final cost of buying a particular home, it becomes easier to make an informed decision.