Errors on health insurance cards cause concerns

Multiple errors in the ID cards of Tamil Nadu Government Employees’ New Health Insurance Scheme has put the policy holders in trouble.

The State Government had introduced the new scheme in this financial year and all employees were advised to feed their profiles online.

The ID cards had details like name, date of birth, date of joining, date of retirement, name of dependents and their relation to the cardholder and validity of the card.

However, when employees received their ID cards, some found that their name had been changed. Others had errors in the date of birth, date of joining, date of retirement and so. In some cards, the name of dependents were also wrongly printed.

Many policy holders,who received faulty cards, said that they had properly fed their profiles online. The District Coordinator of the State Health and Allied Insurance Company failed to give a satisfactory reply, they said, adding that they were unable to avail of the health services from the designated hospitals because of the wrong entries in the ID card.

When contacted over phone, the Chief Co-ordinating Officer of Star Health and Allied Insurance, Chennai, told Express that they had received several complaints regarding printing errors from the policy holders. The card holders should submit an application, along with correction sought and the card to ‘The Chief Coordinating Officer, State Health and Allied Insurance Company Ltd., Second Floor, 8, New Tank Street, Nungambakkam, Chennai- 600 034.’

IDBI Fortis opens its branch in Pune

As a part of its aggressive 100-branch plan, IDBI Fortis Life Insurance Co Ltd on Friday formally opened its branch in the city. The branch is located at Erandwane.

“With changing lifestyles, more and more people want to invest their money for long term wealth building. We hope to target this segment with our unique wealth-building products that will help their investments grow by protecting it from unforeseen circumstances,” said G V Nageswara Rao, MD & CEO, IDBI Fortis Life Insurance Co Ltd.

The company has launched operations in March this year, leading with its innovative product Wealthsurance. It has already collected premium over Rs 100 crore in five months. The company plans to have 13 branches in the State, out of the 30 branches in the western region in total, stated a release.

Wealthsurance aims to provide people with protected growth. The product is designed to ensure that the hard-earned money that is invested is not susceptible to unforeseen circumstances. WealthsuranceTM offers investment choices such as Guaranteed Return Fund, Capital Guaranteed Fund, Monthly Interest Account, Equity Funds, Debt Funds. “The powerful insurance benefits of WealthsuranceTM ensure that a customer’s wealth plan is not affected by unforeseen events that may strike them,” Rao added.

IDBI Fortis Life Insurance is a joint-venture of IDBI, India’s premier development and commercial bank, Federal Bank, a leading private sector bank and Fortis, Europe’s banking and insurance giant.

Murali Iyer, national head, Agency & Alliances, IDBI Fortis, said, “Pune is the most industrialised district in western Maharashtra and a famous IT hub in the country, all this makes the city more attractive in terms of economic development. We at IDBI Fortis see a major opportunity in Maharashtra not only to expand our business but to harness the state’s talent pool.”

Freedom 58 Retirement Plan Launched by Birla Sun Life

Birla Sun Life Insurance (BSLI), the pioneer of Unit Linked Life Insurance plans in India, amongst private life insurers, announces the launch of its latest product offering, Birla Sun Life Insurance Freedom 58 Retirement Solutions. It is a simple hassle free retirement product with flexible investment option to enable a secure future for its policyholders.

Mr.Vikram Mehmi, President & CEO, Birla Sun Life Insurance remarked, ?As we enhance our distribution network in the country it becomes increasingly important to have products that cater to all the life stages of an individual. Freedom 58 is the first plan in our retirement solutions category. The market size of Rs. 11,500cr offers BSLI a huge business opportunity. We have also introduced a new 100% debt fund option called Income Advantage Fund that focuses at providing capital preservation and regular income at high level of safety over a medium term horizon by investing in high quality debt instruments?.

Product Details:

BSLI Freedom 58 is a unit linked, non-participating pension plan, which helps you accumulate your premiums.

During the accumulation phase we offer two unparalleled investment portfolio strategies for you to choose from:

* Self-Managed Portfolio ? with this option you can direct your investments in any of the 5 fund options based on your personal judgment.

* Lifecycle Managed Portfolio ? with this option you allow us to manage and administer your investment portfolio on your behalf and according to your risk profile.

Key features of the product

* Freedom to reduce policy premiums from 2nd year onwards.

* Freedom to change investment portfolio strategy at any time.

* Freedom to change premium allocation at any time.

* Freedom to change risk profile at any time.

* Freedom to meet your ever changing needs through unlimited top-up premiums and fund switches.

* Freedom to meet any cash emergencies after three policy years through free of charge partial withdrawals or full surrender.

* Flexibility to vest anytime after an accumulation phase of min. 5 years.

Respond Acquires Wiseradvisor, Strengthens Financial Planning Market Presence

Respond (www.respond.com), the leading online lead referral service that connects purchase-ready buyers with local sellers in real time, today announced that it has acquired WiserAdvisor.

WiserAdvisor, established in 2003, is the pioneer in offering an unbiased, objective and sophisticated matching service for potential investors searching for financial advisors who best fit their unique needs.

Acquiring WiserAdvisor will strengthen Respond’s presence in the financial space, which has been Respond’s fastest-growing sector. The acquisition enables Respond to provide its high-quality and real time investor leads to qualified financial advisors. This complements Respond’s current relationships with most existing firms in the financial planning leads market such as Paladin Registry, a registry of five star financial advisors who are acknowledged fiduciaries.

“This business consolidation helps Respond’s ability to serve financial planners and positions Respond and Paladin Registry as the leading providers of financial planning leads in this marketplace,” said Jack Waymire, Founder and CEO of Paladin Registry and author of Who’s Watching Your Money.

“Financial planning presents tremendous opportunity for lead generation service providers, such as Respond, and this acquisition further strengthens our presence in this space,” stated Atul Jain, Chairman and CEO of TEOCO, the parent company of Respond. “This acquisition and Respond’s track record of providing verified and qualified referrals enable us to provide significant value to our clients,” exclaimed Jitin Ahuja, Director of Respond.com.

“Respond combines superior technology with deep knowledge of the lead generation industry to offer a world-class service,” said Thomas Murcko, founder and CEO of WebFinance Inc. “This acquisition will accelerate their progress toward becoming the clear leader in online lead generation.”

Since 1998, Respond has been helping consumers find qualified service providers in over 300 categories such as wedding photographers, home contractors, accountants and numerous other professions. Today, Respond has narrowed its strategic focus to several, select industries – including financial services – to ensure they provide quality, verified leads to service providers and establish a strong reputation and market presence in their chosen markets.

ABOUT RESPOND

Respond is the leading online lead referral service that connects purchase-ready buyers with local sellers. Since 1999, over three million consumers have used Respond to find everything from banquet facilities to business loans. Today, Respond covers over a hundred types of services and delivers quality leads to entrepreneurial small businesses. Respond has been a line of business of TEOCO Corporation since 2002.

TEOCO is widely recognized for its commitment to Principled Entrepreneurship with a particular emphasis on alignment of its core values with employees, clients and the community. See more at www.teoco.com.

ABOUT WEBFINANCE

Founded in 1996, WebFinance Inc. is a financial Internet company which designs, builds, and nurtures business opportunities where technology and finance intersect. WebFinance Inc. is the parent company of a thriving family of financial websites whose goal is to help empower individuals to make better financial decisions. Our properties include InvestorGuide.com, InvestorWords.com, and BusinessDictionary.com.

Financial Planning: Start early and be rich

High salaries, fast lifestyle and latest gadgets are normal characteristics of the life of Indian youth in recent times. High economic growth rates have thrown up tremendous set of opportunities to earn and show talent. As a result the youth is working harder, smarter, earning a lot and spending it leisurely. Indeed a great situation to be in.

So, how does financial planning come into picture? How many of the young workforce out there has heard about the magic of compounding? Chances are great that most of them will be unaware of this vital component of a secure financial future.

Investing right and investing young is the mantra of accumulating wealth over a period of time. Even a small sum of Rs.500 invested early in proper investment vehicles will result in a big fortune over time.

It is ironical but true that it is not very uncommon to find young professionals having good salaries, with little or no financial security & ridden with all sorts of debts. Lack of knowledge regarding importance of investing early and various types of investment opportunities available takes it toll on the immediate as well as long term financial future.

For example, how many of credit card holders know that the interest rate charged on the cash withdrawal or outstanding balances using it carries an interest rate of around 40%! Credit card is visualized as easy money and cash withdrawals, paying only the minimum due is rampant practice among credit card holders and this is one of the major reasons of falling into debt and worsening credit ratings.

How does financial planning help in such a situation? First, it helps you understand the pros cons of various financial investment products like term insurance, ulips, fixed deposits, mutual funds, stocks, real estate etc. and helps you choose one according to your risk profile. Secondly, it helps you enumerate your financial goals- both short term and long term and plan your investments in such a way that you are able to fulfill your financial goals. It also helps you understand the cost of borrowing via various financial instruments and their impact on your financial future.

Starting early on the right financial track can be the difference between a successful and rewarding financial future or a debt ridden and insecure life full of financial difficulties.

Pairing up to meet financial goals

I am 32 years old and my wife is 31. Both of us are employed in a software company in Bangalore. Our monthly take-home pay is Rs 1,10,000. We have twin daughters, who are a year old.

Currently, our monthly expenses towards house keeping are Rs 30,000 and our home loan repayment is Rs 30,000.

We are investing in few SIPs to the tune of Rs 25,000 and payments towards life insurance policies are Rs 8,000 a month.

We expect our salaries to increase by 8 per cent every year and we are planning to work till the age of 60.

Our assets, liability, investments and savings are as follows:

Our equity portfolio is worth Rs 12 lakh and we expect to earn a 12 per cent compounded return annually.

We have invested in mutual funds to the tune of Rs 6 lakh and we expect a similar return. Provident fund net balance amounts to Rs 6 lakh totally.

We are currently contributing Rs 8,500 towards PF (including company’s contribution).

We have two insurance policies maturing in 2025 and 2026 and the total maturity value will be Rs 24 lakh.

At the time of availing home loan, both of us took term insurance for Rs 15 lakh each. Our employer took a term insurance for Rs 15 lakh each when we joined the company. We purchased an apartment two years ago and the loan is likely to run till 2020.

The current loan outstanding is Rs 23 lakh. For emergencies we have flexi-deposit to the tune of Rs 5 lakh. We are covered for Rs 3 lakh each under group health insurance.

Our Primary investment objectives are as follows:

Meet the graduation and post graduation expenses of both our children. This may cost Rs 12 lakh for each child in today’s value.

We may need Rs 1 crore each for our daughters’ wedding in 2032

We are planning to retire at 60 and settle down in Chennai. At today’s value, we may require Rs 5 lakh an annum including medical, travel and living expenses.

As both of our parents are healthy, we expect to live till 85. After achieving the above, we would like to pursue our secondary goals as given below:

To buy an apartment worth Rs 80 lakh by 2011 after selling our present house and using the proceeds to clear the existing loan, use the remaining for down payment and take a fresh loan

To leave an estate for our children if possible. — Name withheld on request

Solution

It is good to earmark investments for specific goals. You have not mentioned the end use of the investments made so far. Hence, we have resorted to some assumptions in our working.

Education: Your daughters’ education expenses of Rs 24 lakh (Rs 12 lakh each) inflated at 6 per cent would amount to Rs 61 lakh.

We assume that the insurance amount of Rs 24 lakh (maturing in 2025 and 2026) mentioned by you is the maturity value and not just the sum assured.

This can be utilised for the education. To meet the shortfall of Rs 37 lakh, you will have to save a sum of Rs 7,800 totally (a part of the existing SIPs can be ear-marked for the same) for the next 192 months.

This should earn an interest of 10 per cent an annum to reach the goal.

Marriage in year 2032: If you wish to have Rs 1 crore for each of your daughter’s marriage, then it is better to earmark the current savings in equities and mutual funds for the same.

Assuming your current savings of Rs 12 lakh in equities grows at 12 per cent compounded annually over the next twenty four years, the corpus would add to Rs 1.82 crore.

If your investment in mutual funds too provides similar returns, the current value of Rs 6 lakh can grow to Rs 91 lakh. After utilising Rs 2 crore for the marriage, the remaining sum of Rs 73 lakh can be shifted to your retirement kitty.

Retirement in year 2037: You have stated that you need Rs 5 lakh a year for your retirement kitty.

At the time of your retirement at 60, a corpus of Rs 5.37 crore that earns an inflation-adjusted return of 2 per cent will meet your needs for the next 25 years.

To accumulate this money, the surplus of Rs 73 lakh (arising from your equity and mutual fund portfolio)can be invested effectively.

If this investment provides a compounded return of 10 per cent for five years, it will grow to Rs 1.12 crore.

Your current balance of Rs 6 lakh in PF growing at 8.5 per cent every year would total to Rs 64 lakh at the end of 29 years (year 2037).

Your current savings of Rs 8,500 a month, growing at a similar rate would fetch Rs 1.29 crore on your retirement. But still you may face a shortfall of Rs 2.32 crore.

To achieve the full target, you ought to save Rs 11,300 every month for the next 348 months and invest to earn a return of 10 per cent (you can earmark a part of your SIP for the same).

Secondary goals

Given your current income, your secondary goals does appear to be little challenging, especially given that your loan outstanding is more than Rs 7 lakh.

If you live up to the age of 85, you can leave the current house as estate.

But beyond this age, the value of the estate can go down (assuming you opt for reverse mortgage) as the estate may become your primary source of income.

Conclusion:

All your expenses are taken at today’s value.

In fact your surplus might reduce once our children start their schooling. Further, while in today’s value, your annual expenses is Rs 3,60,000, your post-retirement expectation is high and can be moderated.

However, if your children are going to be employed post their education, any supplementary income from them may offer comfort.

A moderation in spending plans for the marriage may also help. Once your home loan is closed in another 12 years, you can step up savings.

To protect your goals, it is mandatory to take term insurance to the tune of Rs 3.4 crore (Rs 1.7 crore each) after adjusting your existing term insurance.

The total premium required for you and your wife will be Rs 1,10,000.

Is tax-planning on your ‘to do’ list?

Here’s a thought – when it comes to investing in the normal course, investors are willing to spend time, evaluate various options and meticulously plan the entire process. But when it comes to tax-planning, handling it in a rushed manner towards the end of the financial year is an acceptable proposition. While investing can be a sporadic activity, tax-planning is an annual exercise and hence can have far greater implications on one’s finances. Finally, when investments are made in designated avenues for the purpose of tax-planning, they deliver dual benefits i.e. reduce the tax liability and generate optimum returns.

Despite the obvious benefits that tax-planning offers, the apathy displayed by some investors towards it is rather surprising. Perhaps these investors continue to look at tax-planning as just another annual obligation that must be fulfilled. As a result, they haven’t fully understood the benefits that the tax-planning exercise can deliver.

Investors would do well to appreciate that tax-planning forms an integral part of their financial planning. Hence, an adequate amount of time and effort must be devoted towards the exercise.

Speaking of time, it’s important that investors commence the tax-planning activity well in advance; waiting for the last moment is certainly passé. This will give them the opportunity to thoroughly evaluate various options. And with the half-way mark of the financial year approaching, we believe it is high time investors got started.

Another popular reason for investors shying away from the tax-planning exercise is that it is perceived as being too complicated. Nothing could be farther from the truth. With good advice (read the services of a competent investment advisor) and time on hand, tax-planning is not half as difficult as it is made out to be.

For example, while tax-planning can assume many forms (i.e. Section 80D, Section 24(b)), Section 80C is the key section for the purpose of claiming tax sops because of the breadth of options it offers. Investments (like Public Provident Fund (PPF), National Savings Certificate (NSC), tax-saving fixed deposits and tax-saving mutual funds, among others) and contributions (like life insurance premium and repayment of principal on a home loan, among others) of upto Rs 100,000 per annum are eligible for deduction from gross total income. All investors need to do is follow some simple steps and the tax-planning exercise can be easily sorted out.

To begin with, investors must find out how much (based on their incomes) they need to contribute towards the Section 80C kitty. Tax-advisors and chartered accountants can aid investors on this front.

Once the investment amount is known, the next step is to get a check on the ongoing investments and contributions that are eligible for tax benefits. For instance, if one has availed of a home loan, he needs to find out (from the housing finance company), what his annual contribution towards the principal repayment will be. This is important since the EMI (equated monthly installment) consists of both the principal and the interest components. The interest component is eligible for tax benefits under a different section.

Then the premium payments on existing life insurance policies must be taken into account. For salaried individuals, contributions to EPF (Employees’ Provident Fund) should be factored in; the employer will be best equipped to provide information about this. Finally, investment avenues like PPF wherein annual contributions are mandatory should also be considered. Once the investor gets a fix on the above, he will be unambiguously aware of the additional sum to be invested/contributed towards Section 80C.

Principles of financial planning like asset allocation and investing in line with one’s risk profile should kick in at this stage. For instance, risk-averse investors should ensure that a greater portion of their tax-planning portfolio is held in assured return schemes like PPF, NSC and tax-saving bonds. Conversely, risk-taking investors can have a portfolio skewed in favour of market-linked avenues like tax-saving mutual funds (also known as equity-linked saving schemes – ELSS) and unit linked insurance plans (ULIPs).

The tax-planning exercise can also throw up some ancillary benefits. For instance, it offers the opportunity to take a hard look at one’s portfolio. This might throw up some interesting observations – say the lack of or an inadequate insurance cover, or a portfolio skewed in favour of assured return schemes in a risk-taking investor’s portfolio.

As mentioned earlier, the tax-planning exercise is not half as difficult or dreary as it is made out to be. All one needs to do is be methodical, seek advice and the rest will fall into place. Finally, that it can significantly contribute to one’s finances, should be reason enough to get started at the earliest.

Financial planning for young and restless

The Indian youth never had it so good. On the consumption side, the choice of goods and services available is unprecedented. And as far as income is concerned, given the blooming economy and its ever-improving prospects, opportunities have never been better. So, the youth is earning a lot and spending a lot.

It’s definitely a happy situation to be in.

As a college student, you should be focussing on your financial future as well as your studies. No, not the financial future consisting of next week’s pizza fund, but your long-term personal financial future. Make sure you start your life after studies on the right financial foot by treating your financial future seriously while you’re still in college.

Young investors have an edge over others on account of their age. In other words, a young investor has more time on hand as compared with a middle-aged investor or one who is nearing retirement.

Young investors can take higher risk as compared with middle-aged investors or nearing retirement investor. This in turn affords young investors greater flexibility while making investment decisions.

If we take an example, considering most young people spend Rs 500 every month, then calculate how much money they are losing. It can be illustrated with the help of compounding method.

The percentage of younger generation in India is higher compared with the older generation. Over the past couple of years Indian economy has seen unprecedented boom, leaving surplus money in the hands of people.

The young can use financial planning route to meet their future goals. They have their whole life ahead of them and ample time to plan for every goal including retirement. The problem with the masses is that they do not plan their finances. Some who have decent salary packages and enough surplus available also invest without doing proper asset allocation in various asset classes such as equity, debt, real estate, gold etc.

There are various investment avenues available to young investors and the various facets of each avenue such as small saving schemes, equity, mutual funds, ELSS, unit linked insurance plan etc.

Today’s youth should ensure that he is associated with the right investment advisor at all times. He could well be the individual who plugs the gap between youth achieving or not achieving his financial goals and objectives.

Financial markets have become very complex and there are varieties of products available to choose from. The choice of product will depend upon:

The age of the client
The time horizon of investments
The risk appetite of investor
Need of the investor

As a thumb rule, a person shall invest 100 minus his/her age percentage of his/her portfolio equity and the remaining in debt, after providing for sufficient amount in the form of liquid assets/cash for emergency provision. A person shall also plan for the purchase of a house.

If a young person has a high-risk appetite and the time horizon of investments is also long, he should invest more money in equity and equity-related instruments and fewer amounts in debt. When a person starts working, his income level is also low and there is very less surplus available for investments after meeting his monthly expenses. Every young person would like to become rich faster.

Small savings per month, if done in a disciplined and systematic manner, will lead to a higher amount of wealth accumulation over a longer period of time.

If a young person (23) starts saving Rs 2,000 per month till his age is 60, he will be able to accumulate Rs 3,96,06,204, if rate of return on investments is 15% pa. In this case I have not taken into consideration the increase in salary and thus increase in amount of investments.

The young investors first have to do their asset allocation. After deciding about asset allocation, the choice of products will start.

The writer is a certified financial planner and full member of FPSB India and working as academic and regional head (western region), International College of Financial Planning, Mumbai.

FPSB India relies on its members’ prudence, competence, and ethical standards to have submitted this write-up in good faith in their personal respective capacities.