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A Guide to Take Advantage of ULIP plans

What are ULIPs?  -

 A unit-linked insurance plan (or ULIP full form) offers its policyholders the dual benefits of insurance and investment. Premiums paid by these policyholders are split between providing them with coverage and directing them towards investments. These investments are made after collecting all the policyholders’ individual investments and then collectively directing them towards varied financial securities keeping in mind said policyholders varied preferences. In this regard, ULIPs can be understood to have similar features to mutual funds. Read on to learn how to take advantage of a ULIP plan.

 How to Take Advantage of ULIPs? -

 ULIPs offer their policyholders tons of benefits that said policyholders ought to take advantage of. These include but aren’t limited to the following.

 Flexibility – A vast majority of ULIPs on offer in the country allow policyholders the flexibility and freedom to select where they’d like their funds to be invested. Furthermore, policyholders are entitled to switch from one investment option to another keeping in mind market conditions. These switches pertain to equity, debt, and balanced fund options. By providing policyholders with this freedom, policyholders may make investments in accordance with their risk appetite. Furthermore, ULIPs allow policyholders to select between the sum assured or the premium based on their individual requirements. 

 Transparency – Ordinarily all ULIPs are transparent in their operations provided the plan on offer is run by a well-known insurance company. The pricing in place along with the anticipated value, tenure, and hoped-for return rates are all made clear from the get-go with ULIPs. Policyholders are clearly informed of where their funds will be directed. Quarterly and annual account statements in addition to the present status of a policyholder’s investment portfolio are also provided.

 Option to liquidate – In the event of an emergency policyholders are entitled to withdraw money from their account. This means that this sum of money may also be seen as a contingency fund that provides financial security in the event of tough times. That being said, this withdrawal is permitted only once a holding period of 5 years following the date of the policy being activated has been fulfilled. It is important to note here that said withdrawals are tax-free.

 Tax-free advantages – Double tax benefits imply that premiums paid on ULIPs are exempt from up to INR 1.5 Lakhs as per Section 80C of the Income Tax Act of 1961. Moreover, all payouts generated post maturity of the plan are exempt under Section 10 of the same act. It is important to note that as per FY 2021-2022’s budget, ULIP maturity proceedings that have an annual premium greater than INR 2.5 Lakhs don’t have any tax-exemptions in place.

 Allow for goal-directed savings – With the aid of a ULIP, it is possible for policyholders to fulfill long-term goals which may range from buying a house to getting a new car. This is owed to the fact that ULIPs allow for a large corpus to be built in a systematic manner. Compounding only enhances the rates of return over vast stretches of time.

 Conclusion – 

 As made clear above, ULIPs provide their policyholders with ample benefits that ought to be taken advantage of. When pitted against equity-linked savings schemes i.e., ULIP vs ELSS, there exist a number of differences. Visit Finserv MARKETS in order to acquire more knowledge on the same prior to availing of a particular plan. 

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Difference Between Sum Assured and Fund Value In ULIP

Overview - 

With the aid of a unit-linked insurance plan (or ULIPs), policyholders can avail of two essential services. Policyholders are expected to pay a premium that entitles them to both, insurance coverage in addition to an investment plan. The aforementioned premium which is paid on a periodical basis is split and allocated to each of the two benefits the policy provides. While one half is allocated toward coverage for the policyholder the other half is directed towards investments made based on the choice of the policyholder. Companies that list ULIPs accumulate all the premiums paid by policyholders’ premiums and then collectively invest this capital in a varied array of securities keeping in mind the different interests of their policyholders. Once this capital has been invested, the investment in its entirety is then split into units which each then acquire a specific value. Policyholders who each contributed towards the accumulated investment are given units based on the number of funds they invested via their ULIP plan. Net asset value (or NAV) is used to refer to the value of each of the units. Any changes experienced in the values of the underlying assets are visible in the NAV.

 Sum Assured vs Fund Value – 

When looking at a unit-linked plan, it is possible to be confused between the sum assured and fund value. Owing to the fact that ULIPs serve their policyholders with investment and insurance facilities, payouts provided therefore have two different components. Sum assured for instance only becomes applicable if the policyholder dies during the course of their stipulated policy term. In contrast, the fund value is paid to a policyholder in the event that they outlive the stipulated time frame specified in their policy term or in the event that they surrender their policy. 

 Simply put, sum assured refers to the minimum amount which serves as a guaranteed death benefit that is paid to a policyholder’s beneficiary in the event that said policyholder dies. This amount is paid regardless of whether or not the fund value - which is the value of the investment made under a ULIP - amounts to a value lower than that of the sum assured.

 Take for instance the following example. XXX’s ULIP’s fund value amounts to INR 5 Lakhs whereas the sum assured amounts to INR 20 lakhs. In such a scenario, XXX’s beneficiary will be paid INR 20 lakhs in the event XXX dies within the tenure stipulated in the ULIP. However, if in the same scenario, if the fund value amounted to INR 25 Lakhs, XXX’s nominee would be entitled to a payment that corresponded to the higher value i.e., the fund value amount in this scenario.

Conclusion – 

 When looking at ULIPs, it is easy to pit them against mutual funds. However, in the case of ULIP vs mutual funds, it is important to note that only ULIPs offer life coverage whereas mutual fund investments do not. In order to explore both, ULIP and mutual fund plans, head on over to Finserv MARKETS.

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Why Should Mothers Opt for Term Life Insurance?

Introduction – 

 Term life insurance plans provide coverage available at a fixed rate of payments for a specified time frame. Read on to learn who mothers should avail of the same.

Exploring the Varied Roles Played by Mothers – 

Term life insurance is a viable insurance plan for a wide variety of mothers. Read on to have a clearer understanding of the same.

Single mothers – While all mothers ought to have life insurance, this holds particularly true for single mothers. While most couples invest in a plan bearing in mind the possibility of one staying on to take care of their children, this doesn’t hold true for single mothers. Their children view them as their sole caretakers.

Working mothers – One of the primary reasons life insurance must be availed of is the fact that it serves as a form of income replacement. In the event of death of a policyholder, term life insurance provides death benefits to the beneficiary (/ies) of a said policyholder who might otherwise be reliant on said policyholder’s income as a means of survival. Children rely on their mothers for an unending list of reasons ranging from food and shelter to love and support.

Stay-at-home mothers – Although these mothers may not be employed and earn an income, they are still engaged in ample amounts of work within their homes. This includes taking up random chores across the house in addition to looking after their children and managing varied responsibilities. In the event that they are no longer around, their partner will have to take on their work in addition to their own work.

Why Invest in Term Life Insurance? – 

 Mothers ought to avail of term insurance as it provides them with a wide range of benefits, the more prominent of which have been examined below.

 Financial stability over a long period of time – With the aid of term life insurance, mothers can better prepare for their future expenditures. Term life insurance plans allow for long-term financial goals to be met and allow policyholders to acquire a level of financial independence. 

Allow for savings for the future – In the event that your spouse retires, it is still important to have multiple sources of income coming in. With the aid of a term life insurance plan, it is possible to avail of a form of income once retired.

Provide coverage for critical illnesses – Certain term-life insurance plans provide coverage for critical illness planning which can spare policyholders from having to pay high medical bills.

 Financial protection for children and those left behind – Term life insurance plans provide children with the funds needed to succeed in the future. These funds can be of major help with bills ranging from education and buying a house to wedding expenses and personal investments. 

Conclusion – 

The Pradhan Mantri Jeevan Jyoti Bima Yojna and Pradhan Mantri Suraksha Bima Yojna or PMJJBY and PMSBY respectively are two term life insurance schemes made available by the government that has each been designed to offer basic healthcare facilities. In order to learn more about them and other forms of term life insurance, visit Finserv MARKETS today. 

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How to get back your entire term insurance premium

Before you decide to sign up with an insurer, make sure to read all the policy details. The return of premium features varies between insurers and some insurers are known to put a twist on the return policy. If you are looking for a transparent way to attain life insurance, make sure to visit Finserv MARKETS. The website will give you a comprehensive analysis of different term plans from the top insurance providers in the country. These include PMJJBY and PMSBY, both of which are government insurance schemes that offer great returns.

Unlike a badly fitting pair of shoes or mismatched jacket, an insurance policy isn’t something that you can just return for your money back. Breaking this convention, a Term Insurance with Return of Premium (TROP) Plan promises to refund the money paid by the policy holder in the event he/she does not pass away during the policy term. This policy plan is a great alternative for people who despise having to pay a premium without the possibility of ever seeing a return.

What is with Return of Premium Plan

ROP is a term insurance, with death benefits, that returns the premium paid if the policyholder survives the policy term. With regular term insurance, insurers are paid only when the insured individual passes away. However, with ROP, the insured individual gets paid all the premiums in return at the end of the policy term. 

Let’s take a look at an example to understand this better:

Abhishek takes a ROP with Rs. 1 Crore cover for 30 years. Abhishek pays a yearly premium of Rs 5,000. If Abhishek passes away during the 30 year term, his family will be paid the sum assured of Rs. 1 Crore. Now the catch is, if Abhishek were to survive the 30 years term, the insurance provider will have to return the premium paid i.e. Rs 1.5 Lakhs (Rs 5,000 x 30).

Premium Amounts

Everything has a price. Policyholders can expect to pay a lot more for the money-back feature. The term insurance with return premium could triple the cost when compared to a conventional term insurance.

Looking at the same example, had the insured individual taken a convention term plan with return of premium plan, he would have had to pay only Rs. 1,400 as opposed to Rs. 5,000. Therefore the premium amount is another factor when deciding on a ROP plan.

 Advantages and Disadvantages of Return of Premium Policy

Getting a return for the premiums paid can seem appealing for many, and especially for those who dislike not seeing a return on the premiums paid. However, ROPs have their share of disadvantages; let’s compare some of the advantages and disadvantages of ROP.

Advantages

Disadvantages

Unlike conventional term insurance plans, if you outlive a ROP plan you are guaranteed complete return of your premiums.

ROP policies are generally a lot more expensive than conventional term plans. In some cases, they are three times more expensive, which begs the questions, should you perhaps consider a high return investment.

The ROP are non-taxable as they are not considered an income. Rather, the ROP is accounted for as a return of payments.

ROP plans do not entail interest payments. Only the money invested is returned.

 Payments have to be made during the entire tenure of the policy. Sometimes covering over 30 years.

Note: If you decide on prematurely ending your ROP plan, you will not be entitled to any return payments. In this case, you will lose the entire policy including any payments that you were otherwise entitled to.

Final Thoughts

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Difference between pure term insurance and return of premium policy

Insurance has been a commonly purchased scheme by many individuals. However, it is essential to know and understand the nuances of the type of insurance that you purchase. When it comes to term insurance, many are of the assumption that there is only one type of term insurance. However, term insurance is of two types - term insurance with ROP (return of premium) and pure term insurance. Let us have a look at what each of them means and the feature of them both. Understanding the features and benefits of each of them will help you decide which insurance to avail of according to your unique needs.  

What is Pure Term Insurance?

Pure term insurance is the usual term insurance that will provide coverage for the family upon the death of the insured person. Usually, the tenure of pure term insurance can range between 10 years and 50 years. This type of term insurance can offer high covers, with the insured person having to pay low premiums. However, there are no maturity benefits when it comes to pure term insurance. There are several benefits to pure term insurance as follows:

Death Benefit Upon the death of the insured individual, the insurance can be modified into a single or a joint pure term insurance plan depending on the choice of the family. 

Tax Benefits

According to Section 80C and Section 10(10D), you will be eligible for tax benefits on the premium amount paid for the pure term insurance. 

Low Premiums

One of the most popular benefits of pure term insurance is the low premium amount that has to be paid.

High Coverage

Many might believe that a low premium would only fetch insurance with low coverage. However, that is not true when it comes to pure term insurance. The coverage provided is rather high.

What is the Return of Premium Policy?

With a return of premium policy, the insured person gets death benefit along with survival benefit, in contrast to pure term insurance that only offers a death benefit. Typically the validity of return of premium policy is between 10 and 30 years.  The survival benefit that comes along will include all of the total premiums that have been paid, including the bonus that has been incurred. The insured person is also eligible for tax benefits on the premium paid according to Section 80C, 80D, and 10(10D). 

Endowment Plan vs Term Plan

An endowment policy is unlike term insurance and offers both covers during a crisis as well as provides an option for the invested money to grow. While a term plan is entirely just insurance, an endowment plan is insurance as well as an investment. In addition, an endowment plan has maturity benefits while a term plan does not.  Moreover, a term plan has only the death benefit whereas an endowment plan has both death and maturity benefits. 

In a Nutshell

With the benefits and features of each type of plan listed out, it can be easier for you to decide on which insurance to purchase. Moreover, if you are looking to purchase term insurance, Finserv MARKETS is the place to go as it facilitates insurance from plenty of insurance providers. It also offers benefits like low processing fees and minimal documentation. 

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Best SUV Cars In India

Best SUV Cars In India

SUVs have become a popular car type in the industry today. Almost 1 out of every 3 cars that rolls out of the showroom is an SUV. There are a number of reasons why SUVs have become such a popular vehicle among the masses. Modern SUVs come with a long list of features that rival their sedan counterparts. When you couple this with a strong road presence and a go-anywhere attitude, the SUV is truly a sound option. If you are looking for the best SUV under 15 Lakhs, read on while we help you figure out what suits you best. 

We present to you a comprehensive list of the best SUVs under Rs. 20 lakhs and Rs. 10 Lakhs.

Kia Seltos 

The Seltos is Kia’s first model in India commissioned with the uphill task of establishing the Korean auto giant in the Indian market. It unsurprisingly did not disappoint. The car had all the right ingredients for the job. Attractively designed, keenly priced and available with a wide range of engine and gearbox options. You can opt for the 1.5-litre petrol, 1.4-litre turbo-petrol and 1.5-litre diesel engines. The individual engines are available with manual and automatic gearbox options. All versions of the Seltos are BS6 compliant with the manufacturer keeping a check on the latest norms. 

 Mahindra Thar

The Mahindra Thar is the true off-roader. The all-terrain monster can negotiate the beaten track like no other. The car is surprisingly capable as an everyday vehicle with creature comforts like AC, climate control, and telescopic steering. The all new Thar is an embodiment of the original Jeep with its boxy looks and well shaped front and rear bumpers.  The Thar is available with diesel and petrol engine options and there are three roof options as well.

 MG Hector

The Hector is Chinese-owned British carmaker Morris Garages’ initiation to the Indian market. At first glance, it sure has some interesting ingredients to offer. An eye catching design, massive proportions and new-age tech make it a well-rounded package that should definitely be on the radar of prospective mid-size SUV owners. The car’s engine choices include a petrol-manual, a petrol-automatic and a diesel-manual. There is also the option of mild-hybrid technology on the petrol-manual powertrain. A major talking point is the industry first 5 year/unlimited km warranty that the car offers.

Hyundai Creta

The Hyundai Creta has been without doubt one of the most successful vehicles that has come from the  Hyundai stables. The car got an all new 2020 facelift with a host of cosmetic and mechanical upgrades.  One of the prominent features of the new Creta is a bold front grille with an updated set of tail lamps. The interior remains disguised, but it is likely to have the same layout as the current model. When it comes to the engine options, the new car gets a 115PS 1.5-litre diesel and 140PS 1.4-litre turbo-petrol engine with a 6-speed manual, automatic and a 7-speed DCT gearbox options.

Mahindra Scorpio 

The Scorpio SUV is undoubtedly Mahindra’s biggest hit. Its tough build makes it well-suited to rough usage and to many, the upright shape gives it the right image too. The Mahindra Scorpio is available in 7-, 8- and 9-seat configurations and there are lots of versions to choose from. Automatic transmission isn’t on offer but you can choose from 2.5-litre and 2.2-litre diesel engines; the latter is available in two states of tune, and four-wheel drive is also an option.

 Toyota Innova Crysta

The Innova Crysta is a popular MUV (Multi Utility Vehicle) from the Japanese automobile manufacturer Toyota. The car was first launched in May 2008 and has since seen a number of upgrades including the 2016 Crysta. The car gets cosmetic and mechanical upgrades and is bigger, better looking and more luxurious than ever before. It also boasts a BS6 compliant 2.4-litre, four-cylinder diesel engine and a 2.7-litre petrol engine. 

 Mahindra XUV 500

The XUV 500 is a 7 seater SUV from the Indian automobile manufacturer Mahindra. The car was first introduced in 2011 and has seen multiple upgrades including a facelift in 2017. The XUV 500 new model gets more power, new features and a long-overdue automatic transmission. The XUV500 is available in petrol-auto, diesel-manual and diesel-auto forms while the diesels can also be had with all-wheel drive. Powering the diesel is a 2.2 liter mHawk engine that delivers 140bhp of power and 320Nm of torque; while the petrol motor is a 2.2-litre mHawk engine that delivers 140bhp of power and 320Nm of torque.

 Jeep Compass

The Jeep Compass Is an all-round SUV that’s perfectly made for India. Tough, capable and built to last, the Compass feels like a proper Jeep. The standard Compass is available in petrol-manual, petrol-auto, diesel-manual and diesel-auto forms, the latter two of which can be had with all-wheel drive as well. The whole range was given a facelift in early 2021, which remained mechanically unchanged but brought significant improvements to the interior. The new model Compass has taken things to proper luxury car levels in terms of quality, appointments and equipment.

 Tata Safari

The lord of the SUVs, the Tata Safari is back in an all new avatar. Tata has brought the Safari name back, a seven-seat cousin of the Harrier. Unlike previous Safaris, which used ladder-frame chassis and traditional, rear-biased 4x4, the new one borrows the Harrier’s (actually Land Rover) D8 platform and is front-wheel-drive only. It's powered by a 170hp FCA-sourced 2.0-litre diesel engine, which can be had with either a six-speed manual or six-speed torque-converter automatic gearbox.

Tata Harrier

The Harrier is a premium SUV from the Indian automobile manufacturer Tata. The car was first introduced in 2019 and has seen one upgrade including a facelift in 2020. The new Harrier gets more power, new features and a long-overdue automatic transmission. One of the defining features of the Harrier is the Land Rover platform that the SUV has been built on. This makes the Harrier a force to reckon with. This platform is powered by the 2.0-litre turbo-diesel. The engine also happens to power the Jeep Compass, which is a 170hp power-house of a motor. 

 Final Thoughts

Rugged looks, big tyres and a go-getter attitude make the modern SUVs in India a sophisticated piece of engineering. If you are looking for an SUV under 20 Lakhs, make sure to go through our list carefully before coming to a decision on which SUV to buy. Understanding key specifications like engine type, seating capacity and price are key factors in getting the right SUV.  

Remember to Buy Insurance

Once you have found your dream SUV below Rs. 15 Lakhs, make sure to give your car the much needed protection of a good car insurance. In the event of an accident or natural calamity, your car will be protected for any eventuality.

A great place to get your SUV insured is Finserv MARKETS. Here you will find some of the best insurance plans that offer own-damage protection and third party protection. The comprehensive car insurance policy not only covers damages that occurred to your car during an accident but also covers the repairs and costs incurred to third-party property.

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Calculate your Term Insurance Premium online to enjoy Term Insurance benefits

You can easily apply online to buy a term plan and even compare different policies using the term insurance calculator available online on Finserv MARKETS. Not only this, the renewal and claim process is also completely online and can be done in a few simple steps. So get a life cover today at affordable rates and give your family the promise of a better future! 

More and more Indians are realizing the importance of investing in a life insurance policy. This is evident in the figures of the premium collected by insurance providers according to a report by the India Brand Equity Foundation. The total life insurance premium collection more than doubled from Rs. 2.56 trillion in FY 2012 to Rs. 5.78 trillion in FY 2019. 

Term insurance is one such category of life insurance that is the most affordable option to ensure financial stability for your family in the future.  It should be a part of your financial planning if you still haven’t purchased one. However, if you are confused about which plan is the best for you, help is at hand.

Term insurance calculator

The plethora of insurance plans available in the market can be mind-boggling and can deter you from zeroing upon the right policy. However, using a term insurance calculator can ease the process by letting you know the exact premium that is to be paid to the insurance company. It also allows you to effectively compare premiums of different term insurance plans according to the features that you need and choose a policy that is pocket-friendly while not compromising on the benefits that are offered. Factors such as your age and lifestyle, the sum assured chosen,  duration, and premium payment frequency of your term insurance  policy influence your net premium payable.

Using a term insurance calculator

Even if you are a beginner to term insurance, you will find the term insurance calculator available on Finserv MARKETS a useful and helpful tool that can let you know the premium of your ideal policy. All you need to do is enter your personal details such as your current age, gender, annual income, educational qualification, lifestyle habits, etc. 

Now enter the sum assured and the duration for which you require a term plan. The term insurance calculator analyses the data entered by you by computing your liabilities, risk quotient and recommends plans that suit your requirements. You can go through the features of the plans and select one that is in tune with the needs of your family.

Remember that the earlier you purchase term insurance, the lesser would be the premium that you end up paying. Factors such as old age, smoking, drinking, unstable income, add-on covers, policy term, sum assured and others can lead to a resultant higher premium when you enter your details in the term insurance calculator. 

Hence, opt for term insurance at affordable premiums as soon as you start earning and enjoy uninterrupted life cover with the assurance of financial independence for your dependents in your absence.

Conclusion

Term insurance plans available on Finserv MARKETS offer comprehensive coverage and can be personalized to suit the needs of you and your family. A high claim settlement ratio assures you of a swift claim process so that your loved ones do not have to wait to receive financial benefits once you are gone.

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ULIP VS MF: Better Last minute saving investment options

No one likes to pay taxes. All of us want to save as much money as possible while paying taxes, within legal limits of course. However, choosing the right investment instrument to save taxes is a headache for most of us. Except for a few, no one knows where to begin when it comes to tax-saving investment. You have to assess your risk appetite, the risk involved in various instruments, expectations of return on investment, your long-term financial goals, among other things. Most of us ignore tax-saving instruments throughout the year, if you are looking for some last-minute advice, look no further.

ULIPs

One of the most popular tax-saving investment options is Unit-Linked Insurance Plans (ULIPs). These are investment cum insurance plans. Part of your investment in a ULIP goes towards paying a premium for a life cover while the rest is invested in equity, debt, or combined funds. Most insurance companies have multiple ULIP options with different investment compositions so you can choose a plan that is suitable for you. Keep in mind that ULIPs have a lock-in period of five years.

Premium paid for a ULIP is tax-deductible till Rs. 1.5 lakh under Section 80C. Death benefits and maturity is also exempt from tax under Section 10D. However, you should note that in Budget 2021, some of the tax benefits of ULIPs have been taken away and now you are liable to pay capital gains tax on ULIP benefits if the annual premium exceeds Rs. 2.5 lakh. The government has also imposed a securities transaction tax in case you redeem or surrender a ULIP. Additionally, withdrawals before maturity will also attract securities transaction tax.

Mutual funds

Tax benefits can be claimed only if you invest in an equity-linked saving scheme. Otherwise, mutual funds investments do not provide any tax benefits. Mutual funds are purely investment products and do not include insurance as a component. Investments in an equity-linked scheme have a lock-in period of three years. These investments are tax-deductible up to Rs. 1.5 lakh under Section 80C. The returns made from an equity-linked scheme attract capital gains tax if they are over Rs. 1 lakh. These funds are only invested in equities, so your returns are determined by the market.

ULIP vs mutual fund

Whether you should invest in ULIP vs mutual fund as a tax-saving scheme is completely dependent on your financial situation. You also have to consider the amount of risk you are willing to take. If you are looking for insurance cover with investment options, ULIP is surely a better choice. Whereas if you think the market will provide higher returns over the long term, an equity-linked fund could be the right choice for you. You should also consider your income bracket to make a more informed choice. Normally it is hard for all of us to begin investing. If you are confused about it and would like to find an easy guide, you should head directly to Finserv MARKETS. They have a variety of ULIP and mutual fund options that could help you save your hard-earned money from taxes.

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ULIP VS MF: Which works better for you?

Saving for your future is confusing. You can never be sure of what instruments to invest in, particularly, if you have never invested before. Even if you are not an active investor, you must have heard about ULIPs and mutual funds. These two are popular investment options for a variety of reasons. They help you build your wealth over the long term. It could be puzzling to choose between them, you can use this short guide to decide which one is a better option for you.

Unit-Linked Insurance Plans (ULIPs)

A ULIP is a combination plan wherein some of your investment goes towards paying a premium for life insurance and the rest is invested in the secondary markets. These investments could be in equity, debt, or combined funds and are generally managed professionally. ULIPs are essentially insurance plans with the added benefit of helping you build long-term wealth.

Premiums paid for ULIPs up to Rs. 1.5 lakh are tax-deductible. One major drawback of ULIPs is that they have a lock-in period of five years. Some plans also have high administrative charges. Most insurance companies offer you a choice among many plans with different investment schemes. Switching funds is also permitted in most ULIPs.

Mutual funds

Mutual funds are purely investment products. Money invested in a mutual fund is invested in the secondary markets and managed by a professional team. Money invested in mutual funds does not have any tax benefits unless the fund is an Equity-Linked Saving Scheme. Mutual funds have their expense ratio capped at 2.5 percent, meaning no more than 2.5 percent of your investment would be used as administrative fees and other charges.

Unlike ULIPs, mutual funds do not have a lock-in period, you can enter or exit the market at any time. The gains made from mutual funds attract capital gains tax. There are certain tax benefits you can claim if the gains are made from an equity-linked scheme. You should keep in mind that switching between mutual funds could have tax implications.

ULIP vs mutual funds

Whether to choose ULIPs or mutual funds is completely dependent on your long-term financial goals and personal preference. If you are looking for life insurance that can also give you returns over time, ULIP should be your choice of investment. Whereas if you think the market is likely to provide high returns over the long term, you should prefer a mutual fund. You should also consider the tax implications of both before putting your money in. It is also beneficial to look up the history of the funds you are planning to opt for.

The bottom line.

Choosing between ULIP vs mutual fund is a difficult choice. However, it could be made easier if you know where to look for the right information. The easiest way to go about is to head directly to Finserv MARKETS where you can easily browse multiple ULIPs and mutual funds that suit your needs. You can also ask them to call you and take help from an experienced advisor in deciding your plan. So, what are you waiting for?

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ULIP: New Tax Rules 2021

What is ULIP?

ULIPs are a popular investment option in India. Especially, since they provide life insurance as well as the opportunity to build wealth over the long term. ULIP full form is Unit-Linked Insurance Plan. In these kinds of plans, part of your investments goes towards paying a premium on life insurance while the rest is invested in the secondary markets. The investments under ULIPs could be in equity, debt, or a combination of funds. Most insurance companies allow you to choose from various options so you can decide where you want to invest your money.

Tax benefits of ULIPs

Part of the popularity of ULIPs is due to their tax benefits. However, the 2021 budget has made significant changes to how much taxes can be saved via ULIPs. Before now, the premium paid for a ULIP up to Rs. 1.5 lakh in a year was exempted from tax under Section 80C of the Income Tax Act. The law also allows death benefits to be exempted from tax. Additionally, before the 2021 budget, the maturity benefits of ULIPs were also tax-free under Section 10D. This was applicable only when the annual premium was under 10 percent of the sum assured under the policy.

New tax rules for ULIPs

Budget 2021 has not changed the status of tax exemption on ULIP premiums under Section 80C. You can still claim a deduction of up to Rs. 1.5 lakh under it. However, the maturity benefits arising out of a ULIP would be taxed as capital gains; bringing them closer to investment in mutual funds. However, if you had a ULIP before February 1, 2021, you will not be subjected to the new rules. Also, the new rules would apply to you only if the annual premium exceeds Rs. 2.5 lakh.

If your yearly premium for a ULIP is less than Rs. 2.5 lakh, you can continue to enjoy tax-free maturity on your policy. The rule relating to death benefits remains the same, the beneficiary would not be subjected to taxation after receiving death benefits under a unit-linked policy. The latest budget has also imposed a Securities Transaction Tax when you redeem or surrender a ULIP after February 1, 2021. It will also be applicable in case of partial withdrawal from the ULIP fund or when the policy matures.

Should you invest in ULIPs?

You may be wondering if it is still a good idea to invest in ULIP after the changes in the tax rules. Given the dual benefit of insurance and wealth generation, a ULIP is still an attractive option for saving and investment. It also ensures that your family will not face financial hardships in case of untimely demise. It would be a wise decision to make sure that your annual premium is less than 2.5 lakhs so you can remain out of the purview of capital gains tax as postulated in Budget 2021.

ULIP is an important instrument to hold in your portfolio. If you are planning to purchase a ULIP and don’t know where to begin, you could start by approaching Finserv MARKETS. They have multiple ULIP options to suit your needs and offer one of the lowest premiums.

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Tax Planning: Eleventh-hour miracle to save your income tax

Overview

Taxpayers are scrambling to reduce their tax burden as much as possible as the end of the fiscal year approaches. Investment in specific instruments such as LIC policies, which offer income tax exemptions under Section 88, entitles a person to a rebate of a prescribed percentage (depending on gross total income) of the sum invested, is the most common tax-saving device. Those with a gross total income of more than Rs 5 lakh, however, are not eligible for Section 88 benefits. In addition, taxpayers often exhaust the incentives provided by section 88.

There are some rare gems that could save the day at the eleventh hour. Here are a few of the unusual income tax exemptions:

Rent

This deduction will help you minimise your tax burden if you are self-employed or do not earn the HRA income as part of your salary and live in a rented home. The amount of rent charged will be deducted from gross total income under section 80GG of the Income Tax Act, but it will be limited to the lower of the following:

5,000 rupees a month

Before this exclusion, 25% of net profits is deducted.

Rent is less than 10% of income in fact.

However, if the person, spouse, or minor children own a residential home, he or she will not be able to assert this deduction.

Put your money to a good cause

The deduction under section 80G of the Income Tax Act not only helps you, but it also puts your money to good use. It helps you to exclude contributions to designated relief funds and charitable organisations from your taxable income. Only contributions to the informed relief funds and foundations, however, are tax deductible. The method of payment to these charities is another relevant clause in the section. If you donate more than Rs 2,000 in cash, you won't be able to claim the deduction.

A deduction of 100 percent can be claimed through a number of notified charities and relief funds. The Central Government's National Defense Fund, as well as the Prime Minister's National Relief Fund, are two examples. Certain notified funds, such as the Jawaharlal Nehru Memorial Fund and the Rajiv Gandhi Foundation, enable donors to demand 50% of their donations.

Scientific Research and Rural Development

Donations to an accredited research organisation or a university with the purpose of conducting scientific research, or to a for scientific research or rural development, may be deducted. Only if the total sum exceeds Rs 2,000 is paid using a method other than cash will the deduction be permitted.

Political Parties

Any contribution to political parties or electoral trusts made by a person may be claimed as a deduction under section 80GGC of the act. However, the deduction is only valid if the contribution is made in a non-cash manner. Electoral Trust is a non-profit organisation that collects people's voluntary donations and distributes them to political parties. It ensures that contributions to political parties are transparent.

Sukanya Samriddhi Yojna 

If you have a girl child under the age of ten, you can demand an additional deduction under this government programme. Prime Minister Narendra Modi's 'Beti Bachao Beti Padhao' campaign saw the introduction of the Sukanya Samriddhi Yojna (SSY). A girl child's parents or legal guardians can open an account for her at any time before she reaches the age of ten.

Wrapping Up

Calculating income taxes may be overwhelming, so you might want to delegate the task to your chartered accountants. However, it is important that you are aware of your financial situation so that you can make informed choices that will help your money grow. After deducting all income tax exemptions that relate to your income amount, you can measure your taxable income.

You can use Finserv MARKETS' online Income Tax Calculator to help you keep track of all. Don't put off paying your taxes because it would cause you problems later. Follow these suggestions or consult with a chartered accountant to learn how to legally minimise your taxable income.

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Government extends the validity of driving licence, vehicle documents till June

You can opt for a tailor made comprehensive car insurance plan available on Finserv MARKETS that comes with round-the-clock repair and assistance of your vehicle and protection against imminent dangers such as personal accidents and others. Get additional protection with add-on covers and pay a premium that fits your budget to avail car insurance with swift claim settlement and cashless claims facility at more than 4000 garages pan India.

Driving with an expired licence can attract an e-challan of Rs. 1000 on Indian roads. If your driving licence is nearing its expiry date, you have to apply for renewal within 30days from the date of its expiration. However, in the light of the inability of people to do so due to the impending lockdown and the rising pandemic situation, the government has issued advisories since March 2020 announcing validity extensions of driving licence and other vehicles applicable to the Motor Vehicles Act, 1989. 

Validity extensions since March 2020

To provide relief to vehicle owners and avoid overcrowding at RTOs, the government first extended the validity of driving licence and other related documents till March 30, 2020. As the pandemic spiraled out of control in the upcoming months, extensions were issued till June9, August 9 and December 27 in 2020. 

In December last year, it was decided that the extension date of driving licences be changed to February 1, 2021. This was later revised to the end of the financial year 2020-21, that is until March 31, 2021. However, in the wake of a country being in the grip of the second wave of infections, the Ministry of Road Transport and highways issued a recent advisory statement further prolonging the validity of your driving licence as well as allied documents till June 30, 2021. 

What this means for you

So, if your driving licence had expired on February 1 last year or on March 31 this year, you no longer have to pay an e-challan for driving on the road without a valid driving licence. This also applies to fitness certificates, vehicle registration certificates, and other documents whose renewal was hampered in the last year due to the restrictions imposed by the lockdown. 

Enforcement authorities have also been directed to not issue a fine or e-challan for failure to renew vehicle documents and instead treat them as valid till the extension date specified by the Transport department. 

The government has indicated that this might be the last in the series of extensions announced so far for driving licence validity. The move is expected to reduce harassment or inspection by traffic policemen and avoid e-challan issuance for lack of valid driving documents in your possession while on the road. All states have been issued directions to follow the instructions in both letter and spirit to ensure smooth movement on the roads.

Conclusion

You can apply for the renewal of your driving licence online after June 30. However, if your car insurance has lapsed due to a delay in renewing the policy, it makes sense to purchase a new one. With no validity extensions in view later, driving without valid insurance for your vehicle could attract a fine or e-challan. 

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Tests for driving are likely to get stricter in India. All you need to know

Having a driving licence is a mandatory requirement to drive a two-wheeler or a four-wheeler on Indian roads according to the Motor Vehicles Amendment Act 2019. If you are found driving without one, it might attract a traffic challan from enforcement authorities and even imprisonment in some cases. 

However, if you have recently purchased a new car or are planning to buy one, you will need to subsequently apply for a permanent driving licence. Brace yourself, because the road ahead just got a bit tougher. A new rule announced by the Minister for Road Transport, Highways, and MSME in the parliament is all set to make the upcoming driving licence tests more stringent.

What you need to know

Some of the updated measures to be followed at all regional transport offices when you apply for a driving licence will be as follows:

Higher passing percentage: You need to score a minimum of 69% or above in the objective test that aims to assess your knowledge of traffic regulations when you apply for the learner’s licence. Earlier those who secured 60% or above in this test qualified to apply for a permanent driver’s licence. The increase in passing percentage makes the preliminary computerized test for obtaining a learning licence tougher.

Skillful driving: If the vehicle for which you are applying for a licence, has a reverse gear, you will be asked to reverse it back into a restricted space either to the left or right when you appear for the driving test to obtain your permanent driving licence. This is to test your sense of control and accuracy while driving so that you can avoid being served a traffic challan for not parking your vehicle properly on the road or any other violations.

Computerized monitoring: You will be provided a link to the demo driving skill test when you book an appointment for a permanent license at the nearest RTO. This will help you to be better prepared for the upcoming test. LED screens will be installed in all automated driving test tracks to view test demonstrations. Apart from this, you can also witness the driving licence test live at the test tracks before your turn for the same.

All these guidelines have been brought forth in line with the rules and regulations laid out in the Motor Vehicles Act, 1989. Alongside, several driving licence services such as vehicle registration, renewal, etc have been made available online for the convenience of applicants. 

Once you obtain your driving licence, you should also buy an insurance policy at the earliest, if you do not want to pay a fine or traffic challan for driving without one. Driving without vehicle insurance attracts a traffic challan of Rs. 2000 or imprisonment of up to 3 months and is considered a violation of traffic rules. 

This is why you should choose car insurance available on Finserv MARKETS that offers comprehensive coverage against personal accident, repair, and maintenance of your vehicle as well as natural and man-made disasters. It also comes with a cashless claim facility at more than 4000 garages across India and quick settlement of claims raised for your convenience. So, apply online for a car insurance plan that fits your needs today and stay on the right side of the law! 

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Not paid e-challan? You may not be able to sell your car

For instance, car insurance available on Finserv MARKETS protects you against impending disasters such as earthquakes, floods, etc as well as theft, riots as well to name a few. Apart from this, repair and maintenance of your car at more than 4000 garages across India 24X& means that you can be assured of emergency assistance wherever you go.  

Delhi saw a 59.7% increase in 2020 as compared to 2019 in the number of e-challans issued to traffic violators through cameras installed at various locations in the city. This has been possible due to Intelligence Traffic Management Systems (ITMS) deployed by the government to allow for efficient monitoring of traffic, stringent law enforcement, and punishment for violating traffic rules. Along with the facility of online application and renewal of driving licence, the introduction of traffic e-challan has streamlined the collection of fines levied to errant drivers. 

Pending e-challan fines in Maharashtra

The one-state one e-challan system was introduced in Maharashtra in mid-2018. Since then 3 crore vehicles have been issued e-challans across the state. However, only 34% of the fines imposed have been recovered. The Maharashtra Traffic Police are staring at a huge backload of accumulated pending fines. In a bid to recover a whopping 830 crores of unpaid fine, the traffic police have resorted to stern action against those who have a history of a pending e-challan Regional Transport offices have been directed to not issue transfer certificates to vehicle owners who have an unpaid e-challan to their credit. 

This means that if you are a resident of the state and were issued an e-challan for speedy driving, invalid parking, or not carrying a driving licence and you forgot to pay it on time, you will not be able to transfer the ownership of your vehicle if you decide to put it for sale in the future. If you fall in this category, you might receive a call or a text message from the traffic police or even be caught through nakabandi. Repeat offenders and those with a high amount of pending fines will be the topmost on the priority list of e-challan recovery.

Making e-challan payment online 

Ideally, you are required to make payment for the traffic e-challan issued to you within 60 days by visiting https://echallan.parivahan.gov.in/index/accused-challan. Simply enter your driving licence number, e-challan number, and vehicle number and check your status. Make payment using your preferred digital mode and once the transaction is completed an SMS verification is sent to your registered mobile number.

In case you have misplaced your e-challan or deleted the SMS sent by the RTO you can enquire about your traffic challan status online by visiting https://echallan.parivahan.gov.in/. Click on the challan status tab and enter your driving licence and other details on the following page. If you have been issued an e-challan in the past a list will be displayed with the fine to be paid alongside. Make payment using net banking, debit, or credit card at your convenience.

Conclusion

So, become a responsible citizen and pay your e-challan on time or else you could face legal action or even cancellation of your driving licence. Just as the traffic police issues fines to ensure drivers adhere to road safety norms, you can also protect yourself when driving by purchasing insurance for your car or bike.

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10 Key Investments that will help you make optimum use of Section 80C Deductions to save Income Tax

Introduction

Whether you are a salaried person, a businessman, or a consultant; chances are that you do not want to pay taxes. However, as they say, taxes are the price we pay for living in a civilized society. The good news is that you can save some of your taxes by using the income tax exemptions provided under Section 80C of the Income Tax Act, 1961. There are many ways to save your tax liability by using income tax exemptions, here are 10 ways to do that;

1.       Premium paid for life insurance policies

Amount paid as premium for insurance of yourself, your spouse, or your children can be deducted from your taxable income. You can include premiums for multiple insurance policies.

2.       Investment in unit-linked plans

Unit-linked insurance plans are plans that include a life cover and are also investments. Apart from tax-savings, these plans can also help you grow your money over the long term.

3.       Equity-linked saving schemes

Investments into equity-linked saving schemes with a minimum lock-in period of three years are deductible under Section 80C with an absolute cap of 1.5 lakh rupees.

4.       Provident fund investment

Investment into Employees’ Provident Fund or Personal Provident Fund is eligible for tax exemptions. Even the interest paid on the money in these funds is exempted. However, exemption under Employees’ Provident Fund is applicable when an employee has worked for 5 years.

5.       Stamp duty paid to purchase a house

If you have purchased a house during the financial year, you can claim a deduction of stamp duty and other necessary charges from your taxable income.

6.       Payment of principal on home loan

The principal amount paid to your financier against a home loan can be deducted from your taxable income. The limit for this exemption is up to 1.5 lakh rupees.

7.       Investment in National Saving Certificate

This scheme is an investment scheme that can be availed at any post office. This is a relatively secure investment with low interest and tax benefits.

8.       Tax-deductible fixed deposits

Certain fixed deposit accounts provide tax benefits, you should always check the same with your bank before opening a fixed deposit account.

9.       Small saving schemes

There are many small saving schemes initiated by the Central and State governments. They could be savings for senior citizens, saving for a girl child, etc. You should check your eligibility for such schemes before deciding to invest in them for tax-saving purposes.

10.   Tuition fees paid to a school, college, or university

Tuition fees paid for a maximum of two children is deductible from your taxable income. You can not deduct fees paid for yourself or your spouse. This deduction is applicable up to 1.5 lakh rupees.

Conclusion

While there are many income tax exemptions under Section 80C, you should note that most of these deductions have a limit up to which you can save taxes. It is generally a good idea to use an income tax calculator to determine your tax liability. An income tax calculator allows you to enter your income, savings, and investments in a financial year and determines your tax liability. You should use an income tax calculator from a reputed website, you do not want to miscalculate your taxes and be held liable for tax evasion.

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Insurers seek clarity on home insurance policy

 Introduction

In January 2021, the Insurance Regulatory and Development Authority of India mandated that insurance firms compulsorily offer three standard products for fire and related risks from April 2021. The new guidelines have confused companies offering home insurance. The regulator changes certain aspects of policies offered under the Standard Fire and Special Perils category. The IRDAI also stated that it will stop publishing reference rates for home insurance policies along with policies covering buildings and structures against fire and natural calamities. This means that insurance companies will be able to set home insurance premiums as per their assessment of risk and hazards.

What will happen to your home insurance policy?

Insurance companies will now have to come up with three standard insurance policies for home insurance and insurance of buildings and structures for small and medium enterprises. Traditional products sold under these categories will have to be discontinued and new policies would be initiated from April 1. However, if you have home insurance, you need not worry. Old insurance policies will continue as per the agreement between you and your insurance companies. Your premiums will also remain the same as before.

What kind of home insurance I can buy?

The insurance companies in India usually offer three kinds of home insurance;

1.       Regular householder’s policy covering basic protection

2.       Comprehensive risk policy protecting against fire, natural calamities, and household content. This kind of policy could also offer protection against other risks such as terrorism.

3.       Packaged policies, which combine two or more products from different policies and are sold as a packaged deal to the policyholder.

There is confusion regarding which products will be discontinued and made standardized as per the new guidelines from IRDAI. You need not worry about your home insurance policy. The insurance companies will seek clarity from the regulator on the new guidelines and offer home insurance products accordingly.

Should you buy home insurance?

Once you have bought your dream home, it is important to protect it against unknown risks and damages. If you do not get one, you may have to face a financial crisis in case something untoward happens to your house. Home insurance is easily available in the market. If you do not know which insurance plan is right for you, you can use a home insurance calculator to find a suitable policy. A home insurance calculator will also calculate the premium for your preferred policy based on the value of your house. If you are not comfortable with buying home insurance online, you can always approach your preferred insurance company and they will help you find the right policy.

Conclusion

Home insurance is necessary to protect against unforeseeable risks to your house. The risk of burglary, fire, structural damage, etc. is ever increasing. Along with that, the risk of damage from riots or terrorism has also increased. For your peace of mind and to ensure that your loved ones always have a place to call home, you should buy home insurance if you have not already done so.

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After a few years, a term plan may be changed to an endowment plan?

Introduction

Generally, most insurance policies do not allow conversion from one type of policy into another. However, some life insurance policies come with a convertible option, allowing you to change the type of policy after a few years. Insurance companies will charge an extra premium if you want to have the option to convert the policy at a later stage. When you convert from one kind of policy to another, your premium is revised to the applicant rate in the new policy.

Why convert?

When you start savings and investments at a young age, you may not have a lot of funds to spend on an insurance cover. In that case, you get the cheapest insurance with basic coverage only. As your career advances and income rises, you may want additional coverage in your insurance policy. At that stage, it is good to have the option to convert your policy. Insurance policies are long-term, often 10-20 years. Your financial situation could be completely different after a few years of entering into the policy. It is good to have an option to convert then. Between an insurance plan, you may even start a family, further accentuating the need for additional financial security.

Term insurance vs life insurance

When buying a life insurance policy for the first time, most youngsters take term insurance policies for insuring life. These policies have a fixed term for which the policy remains in effect. If the policyholder dies during the term, their nominee gets a pre-determined assured sum. Most policies also allow the choice to the nominee to opt for a monthly income instead of a lump sum. Apart from death, these policies could cover critical illness or disability for an extra premium. Term insurance plans are the cheapest and most-preferred life insurance plans.

The other form of life insurance is to get a traditional life insurance policy. In these policies, the life of the policyholder remains insured as long as regular premium payments are made. Such policies are indefinite and do not have a pre-determined term. Term insurance can be converted into regular life insurance if the same is possible as per your insurance contract.

Endowment plan vs term plan

An endowment policy is life insurance and a saving policy. Endowment policies usually have a term during which the life of the policyholder is insured. After the term is over, endowment plans provide you a lump sum or a monthly income based on your preference. Endowment plans generally have a much higher premium compared to a term plan. Under endowment plans, nominees usually do not get any benefits if the policyholder survives the term of the policy.

Conclusion

When buying a life insurance policy, you have multiple options, and they can be confusing at first. You need to assess your needs and then make an informed choice. If you think your needs will change in the future and you may want to change your policy, discuss it with your insurance provider beforehand. The extra premium paid for a conversion plan is often worth it so you can change your plans according to your future needs.