Life insurance: Types, benefits and features

One of the primary goals of investing and building a corpus is to ensure the financial safety of the family. The logic behind this is that having a significant corpus built up means the family will not have to struggle to meet expenses after the death of a loved one. To achieve this goal, one of the tools used is life insurance.

Features of life insurance:

Life insurance insures a person against death. A certain decided sum is paid out to his dependents at the end of the policy period or if the policyholder dies.

Life insurance plans require an absolute premium to be paid to the insurance companies. You can pay the premium at regular intervals, i.e. monthly, quarterly, half-yearly or yearly. This premium is paid every year till the end of the policy term.

A life insurance policy does not need to be renewed every year. However, these policies can be surrendered during the policy term if the policyholder wishes to change insurers.

It is effortless to buy life insurance online through an aggregator or the company’s website directly. This may turn out to be cheaper than buying offline.


Types of life insurance:

There are different types of life insurance policies that people take to serve different needs:

1. Term insurance plans:
A term insurance plan is a plan where there is no benefit on maturity. This means the sum assured is paid out only in case of death of the assured. It is a pure insurance policy. There is no investment component of the premium. This reduces the incentive on such policies.

2. Endowment or money back insurance plans:
In these life insurance plans, there is a certain sum of money that the policyholder gets on maturity as well. These plans involve a small amount of investment, which gets returned to the policyholder at the end of the policy term.

3. Unit-linked insurance plans (ULIP):
A ULIP is a plan where a portion of the premium is invested in a fund that is linked to the stock market. On maturity, the fund value is paid out to the policyholder. On death, the higher of the sum assured or the fund value is paid out to the family.

4. Child education plans:
These are special ULIP plans that pay out the sum assured in case of death of the policyholder and continue making investments in the decided fund till maturity. The fund value is paid out on maturity thus helping meet the education costs for the child.

5. Life insurance plans insuring health:
Several insurers have specific plans that cover critical illnesses, cancer etc. A certain sum is paid on the diagnosis or for treatment.

6. Pension plans:
Pension plans collect a premium to build a corpus and pay the policyholder or his family a monthly pension after retirement.

Benefits of life insurance:

• It provides a safety net for the family after the death of the policyholder
• Can help with specific life goals such as retirement or child's education
• Life insurance policies get a tax benefit under Section 80C of the Income Tax Act
• Life insurance plans are used as collateral for taking loans
• Term insurance policies come with riders or add-ons which provide additional safety

How to apply for a business loan in India

A business loan is a loan that can be used for growing and expanding the business. These type of loans may be secured or unsecured. Several banks and financial institutions give out different types of business loans which are completely unsecured. These loans are like a personal loan in the sense the lender does not dictate where they should be used. Business loan in India is a popular way to fund business expansion.

Types of business loans:

• Equipment finance loans
• Line of credit
• Working capital loans
• Invoice discounting
• Short term loans
• Cash credit facility

Steps to apply for a business loan:

Step 1: Assess your fund requirement

The lender is going to require details about the fund requirement, which is why it is important to calculate this. Preparing a thorough fund estimate will help the lender assess the loan application faster which in turn will improve the business receive funds more quickly. 

Step 2: Check business loan eligibility

While each lender has different loan eligibility, it is best to do thorough research and pick a few lenders whose eligibility criteria the business meets. This will help simplify the loan application.

Step 3: Fill out the loan application

You can apply for an online business loan or visit the branch of the lender. If you’re looking for speedy approvals for business loans, apply online through the lender’s website. Several lenders have quick online approvals and fund disbursements.

Step 4: Submit documents:

Once the lender approves the loan application, you need to submit the documents. Some of the documents required for a business loan application are:

• Identity proof of the applicant (Voter ID/PAN card/ Driving License/ Passport/ Aadhar card)
• Address proof (Aadhar card/ Voter ID/ Driving license/ Passport)
• Bank statement for the previous 6 months
• Income tax returns are showing the computation of income. Some lenders insist on Balance Sheet and Profit and Loss account as well. These financial statements should be audited or certified by a chartered accountant
• Proof of establishment (Business registration documents)
• Copy of partnership deed where applicable
• Memorandum and Articles of Association where applicable

Step 5: Completion of loan formalities

Once the loan is approved and the documents submitted, the loan agreement is signed. It is essential to go over the different terms and conditions outlined in the loan agreement before signing. This will ensure there are no issues in the future.

What is a forex card?

A forex card is one of the best products available when you’re considering a tour abroad. A forex card is a full debit card cum ATM card where the card is preloaded with foreign currency. It can be used in ATMs to withdraw cash as well as swiped directly at merchants. Both these transactions will reduce the balance in the card. A forex card is a safe way for people to carry cash while travelling abroad.

Features of a forex card:

1. A forex card can be either a single currency or a multi-currency forex card. A multi-currency forex card can load several different currencies. Some of the popular currencies that banks charge on forex cards are US dollar, Euro, British Pound, Canadian dollar, Australian dollar, Japanese Yen.
2. The currency to be loaded in the forex card is usually sold by the bank itself.
3. The forex card India works like a debit card. The user has to set a PIN for the card which is then used to authenticate both merchant transactions as well as ATM withdrawals.
4. Most banks send an email confirmation of the transaction as well as the outstanding balance.
5. The card automatically switches between different currencies. The user does not have to do anything unique.
6. The foreign currency loaded in the forex card is entirely prepaid. This protects the money against any risk of foreign exchange fluctuation.
7. A forex card can be recharged or refilled using net banking conveniently.
8. Most banks provide a backup forex card in case the primary card is stolen or lost. This feature ensures the forex cardholder is not left stranded in case of theft or loss of card.
9. Banks provide other value-added services at a discount to forex card holders.

How to buy forex card?

A forex card can be purchased over the counter in any bank branch. It can also be applied for online on the bank’s website. However, the account holder must have enough cash in his account to cover the cost of the foreign exchange to be purchased.

Apart from that, forex card India can be purchased online. There are different websites which provide forex cards and foreign exchange from different banks. It is best to check the rates of foreign exchange provided by these different aggregators and pick the one that offers the foreign exchange at the best possible prices. 

Types of forex cards:

• Single currency card
• Multi-currency card
• Hajj Umrah card
• ISIC Student card

What is an education loan?

Education at all levels has become quite a costly affair in India. Whether it is studying for a postgraduate degree or meeting the cost of expensive courses, good quality education has seen spiralling costs. While saving prudently for education is one of the ways to ensure you can afford a good quality education, another way of enrolling yourself for your dream course is to take an education loan.

What is an education loan?

An education loan is a loan that meets the cost of education. The student is the primary applicant of the student loan. The parent or the spouse of the student is the co-applicant in most cases. Most banks give out these type of education loans:

• Education loan for Indian education:
This loan is given for education from primary to post-graduate studies in any educational institution in India. The loan amount that the bank grants will vary from bank to bank. The loan amount depends on the cost of the course. Some banks may also consider the cost of accommodation, examination fees, and other course-related expenses as well. Loans up to a particular amount (usually Rs. 5 lakhs) are given without any collateral.

• Central Government Interest Subsidy Scheme:
The Central Government has given an interest subsidy on education loans to students whose parents do not have an income above Rs. 4.5 lakhs. However, the courses that get this benefit are restricted. To get a benefit under this section, you need to provide a certificate from the State Government that proves your income levels.

• Education loan for foreign education:
This loan is given out to students who are looking at studying abroad. The bank may finance either the whole course fee or part of the course fee.

An education loan is also called a student loan.  Student loans usually do not start with repayment immediately after disbursement. These loans begin repayment a few months after the completion of the course. This period is known as loan moratorium.

One of the advantages of taking an education loan is that there is a deduction available under the Income Tax Act. As per the Income Tax Act of 1961, interest on loan taken for education is allowed as a deduction. There are no restrictions on the amount of deduction that you can claim. It can only be claimed by the person paying interest for himself, spouse, or children up to 8 years.

To avail of the education loan, the student needs to be enrolled, i.e. accepted into the course. The acceptance letter is an important document that banks require. Banks also insist on collaterals for the loan. Generally, the collateral for a loan for foreign education is higher, since the loan amount is high.

A study loan is one of the best options to fund higher education, especially for education abroad.

Fixed Deposit: Top 5 reasons to open a fixed deposit now

For most people, when it comes to safe investment avenues, a fixed deposit is one of the most popular investment options. Many senior citizens and retirees open fixed deposits to ensure a regular inflow of cash from their retirement monies.

A fixed deposit is a type of deposit where the funds are locked in for a particular period. The fixed deposit interest rates vary on the basis of the period of the deposit. The bank regularly revises FD interest rates depending on economic conditions. The rate of interest on FDs is not as high as other investments, but it has certain benefits, which make it an attractive investment alternative.

Here are the top 5 reasons to open a fixed deposit now:

1. Convenience:
Opening a fixed deposit is no more a tedious procedure which requires you to visit the bank physically. Using net banking, you can open a fixed deposit of your desired duration in a matter of minutes. FDs can also be opened using mobile banking.

It is not only convenient to open a fixed deposit, but it is also equally simple to liquidate a fixed deposit. Both net banking and mobile banking allow a customer to settle a fixed deposit.

2. Tax saving:
Investment in 5-year tax saving fixed deposits gets a deduction up to Rs. 1,50,000, under Section 80C of the Income Tax Act, 1961. However, you need to pay tax on the interest earned from such a fixed deposit.

The interest on fixed deposits attracts TDS, however, banks will not deduct TDS unless it crosses Rs. 10,000. This provides relief to small investors.

3. Insurance up to Rs. 1 lakh:
Fixed deposits are generally safe investments. However, each fixed deposit is usually insured up to Rs. 1 lakh by the DICGC (Deposit Insurance Credit Guarantee Corporation of India). To take the maximum benefit of this provision, you can split up your deposits to ensure they get covered by this protection.

4. Flexible investments:
Fixed deposits are flexible investments in the sense the minimum amount to invest is Rs. 500 but there is no cap on the maximum amount. This makes it possible for a person to open small fixed deposits with their savings.

5. Senior citizen concessions:
Senior citizens get special concessions when they open fixed deposits. Generally, senior citizens get higher FD rates as compared to other depositors. Also, under Section 80TTB of the Income Tax Act, savings and fixed deposit interest up to Rs. 50,000 is deductible from the total income of the senior citizen. This gives them higher income.

What are the benefits of current account?

A current account is a type of bank account with unique facilities. These types of accounts are preferred by businesses, companies, public enterprises, educational institutions because they have a higher volume of low-value transactions.

Almost all commercial banks offer a current account, i.e. both scheduled and non-scheduled commercial banks. One of the main features of a current account is that it does not earn any interest on its balance.

Benefits of a current account:

1. Liquidity:
One of the best features of a current account is that it provides complete and unrestricted liquidity to the customer. Unlike a savings account, there are no restrictions on daily withdrawals or deposits of cash. Unlimited free deposits are allowed up to a particular limit. There are no limits on withdrawals of funds. This provides a lot of liquidity for businesses to manage their operations.

2. Easy account opening:
Opening a current account is very simple, especially since several lenders have the current account opening formalities entirely online. You have to fill up a form, and the customer representatives from the bank will contact you for further formalities to open a current account.

3. Overdraft facility:
One of the benefits of getting a current account is that the business can get an overdraft facility where funds are borrowed at a cheaper rate of interest as compared to a regular loan. These funds can be repaid by depositing cash into the account. An overdraft is the easiest way of infusing funds into the business.

4. Net and Mobile Banking:
Most banks extend mobile and internet banking to current account holders. A current online account makes it easy to check balances, make transfers, and have a check on the account.

5. Multi-city banking:
A current account provides a business with multi-city operations. It is possible to deposit funds from all over the country which is very useful for businesses spread geographically.

6. Other value-added services to business owners:
With the competition among banks, business owners can get a whole range of different value added services such as:

• Higher free withdrawal and deposit limits
• Cheque collection facilities
• Monthly account statements
• Relationship managers
• Discounts on other services

These value-added services help a business to save costs and expand.

7. Bank guarantees:
Having a current account with a healthy balance can help a business get a bank guarantee which is useful for companies looking to get into foreign trade.

What is a Demat account?

Investing in the stock market is one of the best ways of growing your capital. The stock market is an essential tool to increase your money in the long term. It is also possible to make a sizeable earning by trading in the stock market. However, to invest or trade in the stock market, you need a Demat account.

What is a Demat account?

A Demat account is an electronic repository of financial instruments. Instead of holding physical copies of shares, bonds, debentures, mutual fund units etc. a demat account holds it all in electronic form. A demat account shows the number of units, the date of purchase, and the price at which the unit was purchased. It also shows the current value of the investment. Thus, a demat account can tell you the financial position of your investments at one glance.

Demat accounts also contain information about bonus issues or rights issues of shares. They also show partly paid and fully paid-up shares and debentures. Some demat accounts also give information about dividend paid or interest paid. 

Features of a demat account:

• A Demat account holds the securities of an investor. When the investor purchases or sells any securities, they are credited or debited to his demat account
• Since all the securities are held in electronic form, it lowers the risk of theft and loss that was associated with physical securities.
• Selling securities through the Demat account can be done for odd lots or a different number of shares since order matching is completely electronic on the stock exchange.
• Demat accounts facilitate easy share transfers.
• Pledging shares for any purpose through the demat account is convenient. Some lenders offer loans against stocks and mutual funds by using this facility. 
• It becomes easy to invest in debt instruments since they are automatically credited to the demat account.

It is important to remember that a Demat account itself is not enough to invest in the stock market. It is necessary to open a trading account, to carry out the purchase and sale of shares and other securities. A lot of brokers or depository participants will open a demat account and trading account for you. However, it is entirely possible to open a trading account separately from the demat account.

The best demat account in India for an investor is one that provides an accurate and thorough statement accessible to the investor and trader at all points of time. Having demat accounts that are completely accessible online will ensure a stricter control and faster decision making for the investor.