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Whenever you want to buy a term insurance policy you make a comparison of features, premium, and riders and purchase the policy. Do you ever try to negotiate term insurance premium rate? The answer is NO, Why? Because term insurance premium is fixed based on your age. However, it is possible to reduce term insurance premium if you follow the tips given below.
1. Start at Young Age
In order to reduce premium of your term insurance policy make sure to purchase insurance over at a young age. Your insurance premium depends on your age. At lower age insurance premium is low. So, purchase term insurance plan as soon as you got your first job.
2. Annual mode of payment
The second method to reduce term insurance premium is to go for an annual mode of payment. It is generally seen that people prefer monthly or quarterly premium payment when it comes to insurance. However, if you want to reduce premium of your term insurance policy you should go for an annual mode of payment.
3. Policy term
The tenure of policy also affects your premium. If you want to reduce term insurance premium you can go for a longer term of the policy. Longer policy term means lower premium rate.
4. Unwanted Riders
The next method for reducing term insurance premium is by avoiding unwanted riders. Term insurance comes with multiple riders such as accidental death rider, critical illness, premium waiver etc. Additional riders come with an additional cost so you can remove unwanted riders from your policy and reduce the premium amount.
5. Stay Healthy
You should stay healthy and live a healthy lifestyle. Your health plays a major role in deciding term insurance premium. You must be aware that you need to undergo a medical check for high-value term insurance policy. Any detection of abnormality in your health will lead to increase in insurance premium.
6. Avoid Tobacco
In continuation with above point of staying healthy, you should avoid tobacco. Whenever you buy term insurance you need to declare that you are tobacco user or not. If you are tobacco user your term insurance premium will be high.
7. Avoid Alcohol
Alcohol drinking habit will also impact adversely on your insurance premium. If you are regular alcohol drinker your term insurance premium will be high as risk is high. So, avoid alcohol.
8. Extra Work Mode
Investment is important. It may look tiresome at this moment but when you get older and see the whole life in rewind, this would make it look so satisfying for you! Take an extra step, work a lil extra to earn that extra money and then invest!
9. Type of Job
You might not be knowing that type of job also affects your insurance premium. If you are doing a job which is risky in nature your term insurance premium is likely to be high. So, it is advisable to select a non risky job.
10. Medical conditions
Your current medical condition also affects term insurance policy premium. If you are detected with a disease like diabetes, hypertension or heart attack your term insurance policy premium will be high. So, make sure to stay fit and cure these diseases.
Dilemma – Something with which we deal every day, very moment. Is this fast rather fastest moving life, there is a constant conflict with which we live! As the definition of the word Dilemma says, a situation where one has to make a choice between two things. Lay man calls it confusion, some says problem, few address it as a puzzle and here we say Dilemma. One of such dilemma is choosing between good and bad. While we are talking about this, who decides good or bad? Is there anything called as an “IDEAL”? And if does exists, who decides it? Everyone has their own ideals. Mine would be differing as that of yours. Yours would be differing than someone else! So, is idealisiam a Myth? While talking about myths, we stay in a country with lots of myths. One such in today’s era in a financial growing country is about the debts. About the Credit score now and the impacts of debts on it.
So what is a good debt or a bad debt? Rather, is there any categorization about debt as good or bad? Can a negative thing be categorized as good or bad? Like a good negative or a bad negative? It’s an illusion. A dilemma with which we all deal. Good debt or a Bad debt. A Debt is a Debt. You can’t be categorizing it as Good or bad. The whole point here what we are talking about is A Myth many people are living with. A good Debt as they say is the phenomena where one increases their income and net worth. But with what? A DEBT? Again a myth! We check here the finances and the effect of them which would hamper our score and make our future possibilities of taking any credit. There is always a solution for all the situations!
Let us first know what is called as a good debt? What does is comprises of? Few examples of good debt are Education, Real estate, Investment, or a small business ownership. But, how can you expect a building to stay tall and strong forever without a pillar? Risk is a thing which everyone wants to take, to grow taller and faster. But without a Base? Without roots? How can you completely believe in something which is nonexistent? Of the examples, mentioned above; there is no future guarantee of it being successful! You would like to say that in this case should we not take a risk and keep on working like a donkey but not as a Cheetah? The answer is No! Risk, Calculated risks, volatile risks, Nonexistent risk or Forecasted Risk, is all a stepping stone towards the progress, but it in itself is not the final peak. When taking a risk in a financial stepping stone of life, we gotta check on every possibility. No building is made in one go! We all make mistakes and that’s the proof of trying. But, what we do would definitely make an impact on our Credit score. As a debt which we face if turned otherwise, will badly impact on everything which is built till date. Your reputation, your credibility and of cousre your CIBIL score. With considering good debt, let us look at the other side of it. The repercussions. With education, it’s essential to select a perfect path. Coz it’s not just the degree that matters but also the talent and hard work. Degrees won’t definitely always get the expected returns. Real estate and Investment both are highly volatile and can make or break one’s whole future. And a business will always have high risks or making diamonds from the coal being like coal forever.
So, to sum it up, here we say that it’s not about not being in a dilemma. Not dealing with Risks. Not taking credits. Not thinking about better shining future. But it’s all about making that right move in the perfect direction of taking risk, cracking that dilemma, utilizing best of the credit, making into the most shining star! But again A debt called a “good debt” is a Myth as a debt will always take the freedom at some level. Investing in good debt will not come with certified best returns!
Experts say debt usually has a major impact on emotions. Mounting debt can bring stress and unhappiness. However, the good news is if you deal with it systematically, you can get out of the trap sooner than you expected. If you are one of those who has been struggling to pay loans or have too many credit card payments left to make, financial planners tell you how to deal with it.
Most expensive loan first
If you have multiple loans and don’t have the money to service all at once, start with the most expensive one. “Pay the loan which has the highest interest rate first. For example, credit card followed by personal and education loans,” said Deepali Sen, a certified financial planner and founder of Srujan Financial Advisers LLP.
Are you wondering why credit card? “Among all loans, revolving credit on credit card is the most dangerous one. Credit card companies will give you the option to pay minimum amount instead of the full amount due. Once you get into the habit of using credit cards by paying the minimum amount, your free credit period is over. For all purchases from next month, you will be paying interest at the rate of 36-48% a year, depending on credit cards, from the date of purchase. Your existing outstanding will also attract interest at these rates. If you continue to use the card, it will be tough to get out of the trap,” said Melvin Joseph, founder, FinVin Financial Planners.
If you get any kind of surplus, use it to close a loan as fast as you can. “Keep increasing the equated monthly instalment every year by at least 8-10%. Prepay in chunks from your annual incentive. Take on as lower tenure as feasible. For a 20-year tenure loan, for the initial 3-5 years, only 18-20% of the EMI goes towards principal payment. Shorter the tenure, higher the EMI, higher will be the percentage of principal payment. The earlier the loan is over, the faster you can retire, take a sabbatical or become an entrepreneur if that’s on your wishlist,” said Sen. However, that doesn’t mean you should not invest. “Use at least 50% from annual increment to increase the EMI. The remaining 50% can be used for building on investments for impending goals,” said Sen.
People take personal loan for emergencies as they don’t have investments for short-term needs. “Everybody should create an emergency fund of their expenses for six months. This can be used in case of any emergency such as hospitalisation. If you don’t have the fund, you will be forced to resort to a high-cost loan, which can derail personal finance. Prevention is better than cure. In case of a financial emergency, adjusting your lifestyle is very important. If you are into heavy debt, there is nothing wrong in cutting short on some basic luxuries. Otherwise, your basic needs will be affected in the near future,” said Joseph.
As part of the quarterly revision in interest rates of small savings schemes, the interest rates for these schemes saw a sharp hike for the October to December quarter. For example, the interest rates for the public provident fund (PPF), 5-year post office deposit scheme, National Savings Certificate (NSC), Sukanya Samriddhi Account Scheme and Senior Citizen Savings Scheme have been hiked sharply by 40 basis points. Expecting a higher influx into small savings schemes after the latest interest rate hike, the government had last month announced a sharp reduction in the gross marketing borrowing estimate for 2018-19. Apart from attractive interest rates and a secure investment option for small investors, these schemes also provide income tax benefits.
Some of the post office schemes that offer income tax benefits:
Public Provident Fund (PPF)
After the latest revision, the interest rate on the PPF, one of the most popular small savings schemes, has been hiked to 8% for this quarter, up from 7.6% earlier. In terms of income tax benefits, the PPF, which has a maturity period of 15 years, enjoys EEE, or exempt, exempt and exempt, status. This means your contributions up to Rs 1.5 lakh a year qualify for tax deduction under Section 80C of the Income Tax Act; then the interest earned is not taxable, and the amount at maturity, too, is exempt from tax.
“Public Provident Fund (PPF) holder will now enjoy interest rate at the rate of 8% whereas it was 7.6% in the last two quarters. Increased rate will benefit small investors and it would push investments, especially in the PPF, as it enjoys EEE status in income tax,” says Naveen Wadhwa, DGM of Taxmann.com.
Even partial withdrawals from the PPF do not attract taxes.
The minimum amount that must be deposited in a PPF account in a financial year is Rs 500 and the maximum allowed is Rs 1.5 lakh. An individual can hold a PPF account in his name and even open one in the name of a minor, but the combined contribution cannot exceed Rs 1.5 lakh in a financial year.
Sukanya Samriddhi Scheme
Apart from post offices, the popular girl child savings scheme Sukanya Samriddhi accounts can be opened in designated banks. The interest rate on Sukanya Samriddhi accounts has been hiked to 8.5%, from 8.1% earlier. In terms of income tax implications, the Sukanya Samriddhi scheme also enjoys EEE status, making it one of the most tax efficient schemes, like the PPF. Annual deposit of up to Rs. 1.5 lakh in the popular girl child savings scheme Sukanya Samriddhi Yojana qualifies for tax deduction under Section 80C.
Under a recently amended rule, known as Sukanya Samriddhi Account (Amendment) Rules, 2018, the minimum amount required for opening a Sukanya Samriddhi account has been brought down to Rs 250 from Rs 1,000 earlier. Similarly, the minimum annual deposit requirement, or the minimum amount required to be deposited in Sukanya Samriddhi account every year, has also been lowered to Rs 250 from Rs 1,000 earlier.
5-Year Post Office Time Deposit Scheme
Investment in the 5-year post office deposit scheme qualifies for tax deduction up to Rs 1.5 lakh per financial year, just like bank five-year FDs. Interest earned in this scheme is fully taxable. The scheme comes in with a lock-in period of five years. In 5-year post office deposit schemes, the interest is payable annually but calculated on a quarterly basis. Currently, the 5-year post office deposit scheme fetches 7.8%, higher than the 7.4% offered in the previous quarter. Post offices also offer deposit schemes of less than five years, but these do not qualify for tax benefits under Section 80C.
NSC or National Savings Certificate
The five-year NSC or the National Savings Certificate have also seen a rate hike. The interest rate on the NSC has gone up to 8%, from 7.6%. In other words, Rs 100 invested in the NSC grows to Rs 146.93 after five years, payable on maturity. There is no upper limit for investment in the NSC and the minimum investment required is Rs 100.
Deposits of up to Rs 1.50 lakh in the NSC in a financial year qualifies for tax deduction under Section 80C. Interest accrued yearly on NSCs is deemed to be reinvested on behalf of the investor and qualifies for deduction under Section 80C within the total limit of Rs 1.5 lakh. But as the final year’s or the fifth year’s interest is not reinvested, it cannot be claimed as a deduction from taxable income under Section 80C. Therefore, the last year’s interest income is added to the certificate-holder’s income and taxed accordingly.
Senior Citizen Savings Scheme (SCSS)
The Senior Citizen Savings Scheme currently pays interest at the rate of 8.7% per annum, with payouts at the end of each quarter. The maturity period is five years. An individual cannot invest more than Rs 15 lakh under this scheme. Investment of up to Rs 1.5 lakh in the Senior Citizen Savings Scheme qualifies for Section 80C tax benefits but the interest earned is taxable. An individual of the age of 60 years or more can open the Senior Citizen Savings Scheme account but there is relaxation for those who have opted for early retirement.
Please do not reply back to this mail. This is sent from an unattended mail box.
Information provided on this newsletter has been independently obtained from sources believed to be reliable. However, such information may include inaccuracies, errors or omissions. Information providers or content providers, shall have no liability to you or third parties for the accuracy, completeness, timeliness or correct sequencing of information available on this newsletter, or for any decision made or action taken by you in reliance upon such information, or for the delay or interruption of such information.Its affiliates, information providers and content providers shall have no liability for investment decisions or other actions taken or made by you based on the information provided on this newsletter.