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Child Education

Children education is an important financial goal for Indians
Inflation may be down but a major expense of the average Indian household is growing at a fast clip.
The cost of higher education is already high and rising at 10-12% a year. Childrens education is one of the biggest cash outflows that families must plan for. A four-year engineering course costs roughly `6 lakh right now.In six years, the cost is likely to touch `12 lakh. By 2027, it would cost `24 lakh to get an engineering degree. Lifestyle inflation, too, has affected the cost of childrens education.
The question worrying Indian parents is: will they be able to fund their childrens higher education? They can, if they plan ahead and take the right steps.

Jan 2015
Delhi -India

Role of Women in Decision Making

In what might just provide the requisite nudge to the economy , women consumers are wielding their purchasing power in sectors that go beyond food and grocery , such as automobiles, liquor, travel and financial products as well.

Almost all sectors that do not fall in the realm of household goods have traditionally and predominantly seen male consumers as decision makers. With more women entering the workforce and becoming equal wage earners in households, a large portion of their disposable income is also being directed to areas which have hitherto dealt with male buyers.

So while they continue to dominate as decision makers and purchasers in household goods and grocery , their numbers are rising among car purchasers, travellers and wine drinkers. As a result of this shift taking place in gender ratio of purchasers across sectors, the number of women taking personal loans has also risen. From April 2012 up to September 30, 2014, personal loans by HDFC Bank to women customers had more than doubled, said executives. In keeping with this trend, the bank has designed personal loans specifically for women customers who can avail of benefits and discounts on apparel, jewellery , restaurants and more.

Feb 2015
Delhi -India

Budget Proposals 2015-2016

Investment Benefits :
Additional deduction for contribution to National Pension Scheme.In order to encourage people to contribute towards National Pension Scheme, an additional deduction up-to INR 50,000 will be available on the employee’s contribution. This is in addition to the deduction available upto10% of salary within an overall limit of INR 150,000.
Investment in Life Insurance Corporation (‘LIC’ Annuity Plan / any other Pension Fund The limit of eligible deduction for investment in LIC Annuity Plan or any other Pension Fund is proposed to be increased to INR 150,000 from the existing INR 100,000

Contributions for the benefit of girl child -Contributions/ investments made by an individual in the name of girl child to notified securities/schemes will be eligible for deduction under section 80C. Interest earned on Sukanya Samriddhi account will also be exempt.

Transport allowance exemption increased:
For salaried individuals, exemption on account of transport allowance is proposed to be doubled to INR 1,600 per month from the existing limit of INR 800 per month
Relief with respect to medical treatment , etc.
Health insurance premium/Health check-up/Medical expenditure The existing deduction available for payment towards health insurance premium and preventive health checkup has been enhanced by INR 10,000 as under:
Existing limits-INR
15,000 for individual, spouse and dependent children INR 20,000 for senior citizens, including payment for parents

Proposed limits, INR 25,000 for individuals, spouse and dependent children,INR 30,000 for senior citizens, including payment for parents It is proposed that medical expenditure incurred for very senior citizens (80 years and above will be deductible up to INR 30,000 if no payment has been made towards any existing health insurance policy for such individuals. Relief for persons with disability Deduction available to a person/dependent with disability has been enhanced from INR 50,000 to INR 75,000. In case of a person/ dependent with severe disability, the limit has been increased from INR 100,000 to INR 125,000.
Medical treatment of specified diseases: Under the existing provisions, a certificate is required from a specialist doctor in a Government hospital for claiming deduction for expenditure incurred for medical treatment of specified diseases. It is now proposed that it will suffice if a prescription is obtained from a specialist doctor (not necessarily from a Government hospital for this purpose. In addition, the limit in case of very senior citizens (80 years or above is proposed to be increased to INR 80,000 from INR 60,000.

Proposals for Tax Deduction at Source
Withholding tax on salary payments :Under the existing provisions, while determining withholding tax on salary, the employer is authorized to allow certain deductions, exemptions, or set off of certain losses, etc. after obtaining necessary evidence/documentary proof from the employees. For example, house rent allowance, interest payment for claiming loss from self occupied house property, etc. However, the existing provisions do not contain any
specific guidance regarding the nature of evidence / documents to be obtained from the employees in this regard thereby resulting in lack of uniformity.To bring clarity, it is proposed to amend the provisions to provide that the employer shall obtain from the employees evidence / documentary proof in such form and manner as may be prescribed by the CBDT in due course
Withholding tax on provident fund withdrawals :Tax deduction at source on withdrawal of accumulated balance has been simplified. It is proposed that in case of premature withdrawals of INR 30,000 or more, where employers manage their own private provident fund trust, tax will be withheld @10%. If PAN is not furnished by the employee, tax will be withheld at maximum marginal rate. The amendment is proposed to be effective from June 1, 2015.
Relief from withholding tax on payments from LIC It is proposed that individuals not having taxable income and receiving payments under LIC upto INR 100,000 can claim relief of non- deduction of tax at source by submitting Form 15G / 15H

March 2015
Delhi -India

LIC Penalized for Rs 10 Lakhs

The Insurance Regulatory and Development Authority of India (IRDAI has imposed a penalty of Rs 10 lakh on Life Insurance Corporation (LIC of India.In an order, the authority said the filled in proposal forms were altered by LIC without necessary authentication from the proposers. The policies were also split and more than one policy was issued under a single proposal.
``Tampering with the proposal forms without the consent of the policyholders may affect the policyholders’ interest adversely,’’ it said.
Similarly, LIC had also violated existing norms on investments in other entities in certain cases. A fine of Rs 5 lakh each was imposed for both these violations. The corporation was also warned to follow regulations in many other areas of business, according to the circular.

April 2015
Delhi -India

Risks in opening lockers

Customers who apply for lockers are made to invest in costly insurance policies and big-ticket fixed deposits
If your bank is also pushing you to invest in insurance policies and fixed depos its, you can take up the matter with the banks griev ance cell. If they fail to resolve the complaint, you can approach the Banking Ombudsman. You can not go to the Ombudsman without first moving the banks grievance mechanism. If the Banking Ombuds man fails to resolve your concerns, you can also write to the RBI deputy governor, who is the appellate authority.

Finally, if you do not receive any satisfactory response, you can knock on the doors of a consumer court.

May 2015
Delhi -India

Bank Insurance Business

Banks will now be able to provide customers a choice of insurance companies whose products can be bought through the bank with the central bank permitting banks to get into insurance broking.However, RBI has put on banks, the onus of ensuring the suitability of insurance product sold to their customers.

The insurance industry meanwhile is almost equally divided between companies that have equity participation from banks and those that do not. Companies that do not have a bank partner have been lobbying with the regulator and the government for an open architecture system where one bank can sell products of multiple companies

June 2015

Ordinance paves way for PSU insurers to go public

State-owned general insurance companies can now get listed on the stock exchanges with the recent promulgation of the ordinance on the insurance bill.

Besides hiking FDI, the insurance bill has a clause which amends Section 10 of the General Insurance Business Nationalisation Act of 1972, allowing the government shareholding in General Insurance Corporation, New India Assurance, National Insurance, Oriental Insur ance and United India Insurance to fall up to 51%.

Industry experts say that listing will bring in benefits far beyond enabling fund raising for the government and insurance companies. The chase for top line growth among the four public sector companies by giving up on profitability is expected to come down. It would enable companies to reward employees with performance incentives through stock options

July 2015

Four states account for 62% of health cover premium

The insurance regulator has expressed concern over the skewed penetration of health insurance in India with four states accounting for 62% of premium. The regulator is also worried about the sustainability of the business given the high ratio of claims to premium.

“While four states of Maharashtra, Tamil Nadu, Karnataka and Delhi UT contributed 62% of total health insurance premium, the rest 32 statesUTs contributed only 38% of total premium. In fact, the health insurance premium from 8 sister states of north-eastern India is only Rs 118 crore (0.6% for 2013-14,“ the Insurance Regulatory and Development Authority said in its annual report for 2013-14.

One of the reasons for the skew in premium is that 46% of health insurance premium comes from group policies sold to corporates.As a result, the coverage is highest in states with high level of industrialization.Individual policies account for only 42% of total premium while the remaining 12% comes from the govern ment schemes such as Rashtriya Swasth Bima Yojana.

The insurance regulator said that although premium from health insurance has grown from Rs 15,453 crore in 2012-13 to Rs 17,495 crore in 2013-14, the incurred claims ratio (ratio of outstanding and paid claims to premium received was highest for health insurance at 100.7% and motor at 79.5%, respectively. While in motor insurance there has been an improvement in the net incurred claims ratio, in the case of health insurance the ratio has progressively deteriorated from 94% in 2011-12 and 2012-13.

Aug 2015

A new term plan will cost less than old one

Competition, Online Distribution, Higher Life Expectancy Lead To Steep Fall In Premium.At a time when inflation is impacting every aspect of life, the cost of term life insurance has dropped dramatically in recent years. For a few thousand rupees, individuals can buy a Rs 1 crore policy thanks to competition, online distribution and improvement in life expectancy. The drop in prices has been so sharp that an individual who has brought a policy a few years earlier can now get a cheaper cover despite falling into a higher age bracket. Experts now say that policyholders have an opportunity to save money by buying into a new cheap cover and discarding the old one.

Unlike health insurance, the instalments for term insurance (policies which pay out only if the insured dies are ‘level’ premiums. What this means is that although the risk of death rises with age, the premium is computed by calculating the risk for every year and levelling it across the tenure of the policy.

So the same individual will pay a higher annual premium if the term of the policy is higher.

Sep 2015

Art Insurance

Art Insurance - The concept of insuring valuables such as jewellery , paintings etc is now getting popular in India thanks to increased awareness, that the risk of a huge financial loss can be mitigated effectively by insuring such items .Besides paintings and antiques, there are instances of a high-networth customer insuring 350 pairs of shoes.

Dec 2015