Home Insurance: Why getting one will make more sense

When it comes owning any financial product, a home will always be one of the most prized and high-value assets for all individuals. Not only does it offer an emotional satisfaction, but it also comprises of nearly 60 to 70% of an individual’s wealth investment. Consequently, it comes as no surprise that, a home is the second most reliable investment asset.

With over 200 million plus homes in the country, India has become the second largest country in terms of home inventory. With the economy expected to grow at a healthy pace shortly and a reduction in borrowing costs due to the demonetization move, the home purchase will continue to witness an increase in the coming years.

While owning a home will always be a dream if not a priority for individuals, when it comes to home insurance, it does not feature at all on the priority list. The reasons may vary, but in today’s time, it will benefit you if you invest in a home insurance policies.

Here are some of the benefits you can enjoy through this type of insurance:

Vulnerability to natural disasters: It may come as a surprise that India is a vulnerable country to plenty of natural disasters. Research has indicated that more than 58.6% of the landmass is prone to earthquakes of moderate to high intensity. At least 12% of the land in India is prone to floods and river erosions. Even 5,700 km of the 7,516 km long coastline of India is prone to cyclones and tsunamis. Additionally, the hilly areas are also facing risks of landslides and avalanches. However, the awareness of home insurance is relatively slow. It is estimated that only a small fraction of Indian homes have some form of home insurance. This insurance will cover damages caused by these natural disasters. In the event this disaster affects your home, you do not have to bear the entire cost of reconstruction of the house.

Provides the ideal coverage for homes within your home too: Having a majority of your wealth such as your home or any of your household articles insured can put you at a risk of significant losses. This, in turn, can result in emotional setbacks. Home insurance plans will not only protect your immovable wealth from such perils and natural calamities, but it will also protect your home items. In other words, it will also offer the ideal protection against items such as jewelry, clothing, electronics and much more. The ideal home insurance policies will provide you with the ideal protection for both your and your home items.

Various options available: Just as your financial needs and habits will differ from person to person, there are plenty of home insurance plans available in the financial market. You can easily opt for one that will suit your needs while offering you the ideal protection for the right price.

All you need to know about inactive and dormant savings account

It is not uncommon for several individuals to hold several saving accounts under one single name. With the introduction and convenience of online saving account opening, you can now own this account in a few seconds.

However, while is it easy to open several accounts, on the contrary keeping a tab on several bank accounts isn’t. Not only does it increase your confusion, but it will also lead to mismanagement and loss of funds. If you don’t keep track of your saving account, it can cost you funds. Here is all you need to know about inactive or dormant savings account:

When do bank accounts become inactive/dormant?

If you don’t make a transaction through your saving account for more than 12 months, the bank will classify your account as an inactive account. Furthermore, if that particular account does not witness any transaction for another 12 months, it would be further reclassified as a dormant account. The transaction mentioned in this case will consider the transaction made by you through debit cards, net banking or third party transactions. Bank – initiated transactions such as your interest charged and earned on the balance or any penalties or service charged debited are not considered. However, the credit of interest earned from fixed deposits is considered as customer induced transaction and helps keep the account active.

What are the restrictions on active and dormant accounts?

The restrictions on inactive/dormant accounts can vary from bank to bank. Some banks will impose a restriction on net banking facilities, phone banking, and ATM transactions. It can also extend cheque transactions.

Why do banks re – classify accounts to inactive and dormant accounts?

The main reason why a bank will reclassify your savings account is to reduce the risk of fraud in your account. By reclassifying your account, the awareness about your account is raised. A lookout will be kept for potential risks involved, wherein which due diligence will be carried out before any fresh transaction is made through them.

What does the bank do before reclassifying your saving account?

A bank will be required to notify you, at least three months before the reclassification of your account. They will also be required to inform you about the procedure for the re – activation of your account. If you choose to reply to the bank and provide the relevant reasons for the non – operation of your account, your account will still be considered as an operative account for the next year. However, if you don’t make a transaction through your account during this extended period, it will be classified as a dormant/inoperative account until the extended period. You will continue to receive interest on your balance even after your account gets reclassified as a dormant or inactive account.

How to reactive the saving account?

Reactivating your account is very simple, and does not require the same effort as the online saving account opening. You only need to make a deposit or withdrawal transaction to reactive your inactive account. To reactivate your dormant account, you will need to submit a written request at your home branch.

Are you aware of the different factors of the NRO account?

As per the Foreign Exchange Management Act, any individual is a resident of the India, if he or she stays within the country for more than 183 days, preceding the financial year. If the individual does not satisfy this condition, then he or she is considered a non – resident Indian, commonly known as NRI.

While this definition may determine the status of NRI, it also determines the financial requirements and functioning of the individual. As an NRI, and the individual can enjoy the benefits of earning in foreign currency and investing in banking products that offer the best benefits of currency conversion. One such main benefit and requirement is the NRI account.

In this case, an NRI can either opt for NRE or an NRO account. Amongst the two options, the Non-Resident Ordinary (NRO) will provide to be a beneficial investment. As an NRI, whose also earning in Indian income, this is the best option to invest your earnings.

Given below are some of the features of the NRO accounts and how it can benefit you:

• This account has a restricted reparability. An amount of only 1 million USD can be repatriated per financial year for any bonafide purposes.
• Unlike the NRE account, the interest that is earned in this account is fully taxable.
• TDS also known as tax deducted at the source is also applicable to the interest that is earned here. This is also subjected to DTAA also known as the Double Taxation Avoidance Agreement with other countries.
• This account can be maintained in Indian rupees
• It can also be held jointly with another Non-Resident or Resident Indian as well.

Given below are some of the FAQ’s asked and answered about the account:

Can I repatriate the funds from my NRO accounts?
The interest that is earned in your NRO account, especially if you have opted for a savings account is repatriable. However, the payment of taxes will be made before the repatriation happens. Additionally, you can repatriate only up to a maximum of 1 million USD per financial year.

What are the funds or assets that can be repatriated from this account?

The following funds or assets can be repatriated from the savings account:

• Proceeds from the sale of immovable property, shares and securities
• Assets acquired by inheritance or any legacy
• A fixed deposit with a bank, firm of company
• Provident fund balance or superannuation benefits.
• Amount of claim or maturity proceeds of an insurance policy
• Any assets held in India in accordance with the provisions of the Act, Rules or Regulations made by the government.

Will be required to pay tax on the interest income earned?

As per the current regulations, a tax that is deducted at the source on the interest earned on your account will have to be paid.

Bank account and marriage: How to ensure a balanced financial life

Amongst the several challenges newlywed couples will face, is not only living together but also money management. This will be a delicate task, something very few couples will master with ease and cooperation. After all, there will be a considerable difference between spending styles, financial independence and how and where the funds should be spent.

Amongst the several dimensions of spousal financial management, decisions about the bank account will be the most important. Choosing the right choice amongst the several types of the bank to account for yourself and your partner will go a long way to build a financial future.

Given below are certain steps for newlyweds who want to start a firm financial future and also build the right banking approach and account this year:

Consider respective banking styles and roles: As like any other issue in a relation, communication is the key to financial management. You will need to consider your respective availability, interest, and aptitude in handling your bank account. In most cases, such a decision will be shaped by your spending independence you each want and the level of trust you share between the both of you’ll. Compare your banking habits regarding physical bank accounts or whether you would prefer an online bank account. You need to understand that each relationship will be unique and therefore, every couple will most likely end up with a different financial organization.

Should you opt for a joint or separate accounts?

Another one of the key decisions you and your spouse would need to decide the right types of bank account. This would mean deciding between owning individual accounts or a joint bank account. In most cases, a joint account will be most beneficial for several reasons. For one, consolidating your deposits and withdrawals in one place will simply the financial management. Additionally, it can also be used to invest in a large balance, thus reducing fees and maximizing interest and account features. It can also be used to know how much funds is withdrawn from the online bank account, especially if it is concerned with joint spending. However, owning individual accounts will help in individual expenditures, especially if one individual does not approve of personal purchases of the other.

Customize automatic transfers to your account

Certain banks allow you to establish recurring automated transfers from and to your accounts. Such transfers will help you pay off your bills, replenish your funds and build your savings. All this can be done without any conscious effort on your part. In the case of individual bank accounts, you will need to assign various deposits and payments to your appropriate accounts. This would require you to split everything proportionally or establish a combination of the two accounts. In either case, automatic transfers can lighten your administrative burden, thus giving your sufficient time and resources to focus on other tasks.

Personal Banking: What is it and how can it help you?

Banking services are classified into different services, namely the personal and private banking. With personal banking, it refers to the wealth of services that are available to individuals from different financial institutions. To those who have some experience with any of the banking services such as savings and checking accounts and lending options such as loans, mortgages and lines of credits, you are facing a personal service of the banking institutions.

With the advancements in the digital and internet technology, plenty of new features has been added to this form of banking. For one, you will have the ability to view and interact with accounts online and make deposits and payments via phone or online services. You can even access any ATM’s from around the world and at any time. These banking services are also progressing furthermore to include other new banking services such as financial advising, retirement, planning and automatic bill payment at the most modern institution. 

Given below are some of the features of the personal banking services you can look out for:

Customer Management: Banking personnel from the personal service are well equipped and trained to ensure that you make only the best investment and financing decisions. They ensure that a good communication bridge is built and maintained with their clients, in order to understand their needs and preferences. In the end, they ensure that their clients only receive that which is best suited to their financial personality. If you need to make any investment, you can always ask for a personalised investment proposal, which will offer you the best options based on the current market trends and performance.

Quality: Quality is said to be not a coincidence, but a result of effort and efficiency. Today’s financial needs by each individual are not unique but also sophisticated and demanding. Not only are the products and services provided by banking institutes designed in such a manner to suit the needs of customers, but also ensure that the best of quality is presented to them. Flexibility yet fluidity is the much-needed requirements of the financial market, which banks aim to capture and provide in their offerings.

Special products and services: As previously mentioned, the financial needs and requirements of an individual will differ from person to person. Banks follow an objective to ensure that their customers make the most of their funds and the consecutive financial decisions. These very same banks are also coming up with different products and services that offer the best outcome, in terms of investment and financing.

Personal treatment: The key to an efficient and long-lasting relationship with clients is flexibility, transparency and sincere management. Most banking institutes aim to follow a basic mainstay where personalised management services and empathic communication is a focus.

Converting to NRI: 5 money matters you must consider before travelling abroad

When you leave India to settle abroad, there are plenty of factors you need to take into consideration, especially when it comes to your financial requirements. One factor you need to consider is that your current funds are secure, and accessible, especially when you travel abroad. While the country you may be travelling to will have their own laws regarding their banking, you will need to adapt to their new environment without losing control over your own finances.

Keeping this in mind, here are a few steps you can take:

Update your bank account: If you have any bank accounts in India, it is only meant for resident Indian. Therefore, when you travel abroad, your residency status will change. This, in turn, will affect your ability to hold a resident bank account. You will need to change your resident accounts into any of the NRI accounts namely the NRO or the NRE account. Each of these accounts has different properties and functionalities. For example, the NRO account allows you to hold income accrued from India and will pay interest on your investment. On the other hand, the NRE account can be used to repatriate funds without any limitations. Additionally, rupee currency can be invested in this account.

Manage your investments: You will need to take stock of all your investments before moving out of India. Before you do so, you will need to make a decision about the investments you want to hold and which you wish to liquidate. For example, if you have a demat account, you will be required to relinquish your hold on the account. You can even open a portfolio investment scheme where you can transfer all your holding before you get your NRI status. If you cannot make these decisions on time, you can appoint someone and give them a power of attorney to act on your behalf and execute your transactions.
  
Update your KYC status: It is crucial that you update the KYC status for every financial product your hold. This can include bank accounts, insurance policies and mutual funds. Once you leave the country and settle abroad, your address and residency status will change, and therefore, you will need to update your KYC.

Evaluate and update your insurance cover: Before you change your status to an NRI, you will need to ensure that all is covered in your health insurance policy, especially outside the country borders. While health insurance companies allow treatment within the country, it would also include medical treatment abroad. However, you will need to evaluate your cover size and increase it before you change your residency status.

Debt management: As far as possible, try and close all existing debts before you shift to another country. If you have any outstanding loan balances after shifting, you can try for timely repayments from your NRO or NRE account. You can appoint a POA to manage your debt, as it will help you immensely after you leave the country.

Are you eligible for an education loan?

The education loan has a big market, considering that several students are interested in pursuing a higher education both, within the country and abroad. Several banks offer a study loan to the meritorious and deserving students who require finance to continue their studies.

Not only has such an education loan helped boost careers, it also helps individuals afford the payment, something which they wouldn’t be able to do on a normal basis. However, before even accessing this loan, you would first need to be eligible for it.

Most banks set down certain criteria for applicants who would want to purse this form of financial assistance. They consider a certain set of factors before reviewing the application. It includes:

• Student’s academic background and qualifications. It would also include the track record of the marks, credits and achievements.
• The course that is being sought. These courses must be accredited and worthy of studying. Additionally, it should also possess a good chance of placement and job prospects, which allows the applicant an opportunity to repay the loan.
• The institution where the course will be pursued. Whether it is a school, college or even a university, it should possess a good reputation along with the right accreditation.
• The collateral offered during the loan application. The bank will consider the value of the collateral, whether or not the applicant can afford it.
• Whether the applicant has potential co – borrowers or guarantors of the education loan. Furthermore, lenders will also check the job profile and credibility of these co – borrowers.  

Apart from these factors, certain set of courses are also eligible for education loans. Lenders will offer the loan to students to study in almost anything, so long as the course and the institute are accredited by the concerned authorities or possess a good reputation. Courses that are eligible for this financial assistance include:

• Undergraduate degrees/diplomas and special courses
• Postgraduate degrees/diplomas and special courses
• PHD’s and doctoral programmes
• Specialised courses, training and diplomas.

Alternatively, certain banks will sponsor a study loan for special courses, especially if there is a prospect of a job, or an enhancement in the current employment. Some of the courses include:
• Agri diploma
• Certificate courses from ITI
• Computer certification courses
• Courses run by State Skill Missions, State Skill Corporations, or National Skill Development Corporation
• Data entry operator course
• Degree or diploma courses for aeronautics, pilot training, shipping held by recognized regulatory bodies. This course is normally associated for the purpose of employment in India or abroad.
• Engineering diploma
• Nursing or teacher training certification courses and B.Ed
• Veterinary diploma
• Vocational courses run by government organization or certain departments.

Apart from the courses, certain institutes are also taken into consideration when it comes to their eligibility. Lenders will look at the institute’s reputation. Additionally, they may also have a pre – approved list of universities and even a blacklisted one. Some of the universities that are preferred for the studies in India and abroad include:

• Educational institutes that have been recognized by the UGC, Govt., AICTE, AIBMS, IMCR, etc.
• Polytechnic institutions that have been approved
• Reputed foreign educational institutions
• CPA in USA, CIMA-London, etc.