vinay mohanty
This Blog provides you UpToDate information on life & General insurance dealing mostly with LIC's New Plan Circulars, MillionDollarRoundTable tips on marketing,Financial analysis and INCOME TAX.
REVIVAL CAMPAIGN FROM 01-01-2016 to 29-02-2016
REVIVAL CAMPAIGN FROM 01-01-2016 to 29-02-2016
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vinay mohanty
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vinay mohanty
Life Insurance Top 10 Factors Affecting Life Insurance Premium Costs
A great way to help and protect your loved ones, is with Life Insurance which can be a huge investment as well. A lower premium paid can yield to a good amount of savings over a period of few years. Life insurance premiums are based on a number of factors, and it can be quite tedious for a few people to understand why and what the charges are, and why they pay a rate that may not be the same as another. There are some factors that many insurance companies consider when pricing their policies, there factor may not be within your control. But the life choices you make, can also lead to the factors that can affect your Life Insurance premium.
The factors that affect your premium towards Life Insurance are:
- Age: This is an obvious and not surprising factor that affects your Life Insurance premium, the age of the policyholder. If you’re young the rates will be lower in comparison to someone older. The possibility of a young individual contracting a life threatening disease or to pass away in their youth is very unlikely. The insurance companies believe that you’ll make many premium payments before they have to write a cheque for your family.
- Gender: Insurance companies aren’t against gender equality, but they believe there is a different life expectancy for different genders. As per the studies and statistical findings, women are believed to live 5 years more than men at the minimum. Therefore affecting the premium they pay, making them pay the premium for a larger period of time but at lower rate which is a plus point for the women.
- Smoking: Smoking puts the policyholders at higher risk of all ailments, so if you’re a smoker that that’s as good as raising a red flag to the insurance companies. Most smokers pay a premium twice as much as non - smoker does, thus affecting the premium to a huge extent.
- Medical history: There’s isn’t much one can do with the gene pool they come from. If a policyholder has a medical history of serious illnesses like cancer, heart diseases, or any other, then that makes them susceptible to get these from a hereditary perspective. Which increases the individual’s premium by a larger margin than if their gene pool wasn’t.
- Health records: You as the policyholder will also need to provide your own health records. These records will ensure that you don’t have any chronic diseases or potential health issues and keep your premium also in check instead of making a difference to it.
- Drinking: Drinking of alcohol is injurious to health in more ways than one. If you as the policyholder are a heavy consumer of alcohol this can affect your premium at higher insurance rates. Insurance companies ensure to ask the applicant if they are smokers or drinkers.
- The Policy: The policy itself also affects the premium you pay, the longer the tenure of the policy the larger the amount of the benefit at the time of death, since you’re paying it for that period of time. Short term policies are more expensive that long term.
- Profession: Your profession also plays an important role in the premium you end up paying, any policyholder working in the mining industry, oil and gas, fisheries or any other dangerous profession increases the premium amounts you pay for the policy you decide to take.
- Lifestyles choices: Many insurers have a higher premium for people who love to takes risks for the thrill of it. Like speeding cars, climbing treacherous mountains or other high risk activities. Thereby increasing your premium to substantially more than other.
- Obesity: Obesity is another factor that affects your premium as a policyholder, being obese can lead to a number of health problems like Osteoarthritis, High Blood Pressure, Cancer, Stroke, Coronary Heart Disease, causing overall health problems in the future and also increases your rates.
How these factors affect your rates of premium is dependent on the insurance company and the way they treat these factors and the combination of them. For example: having a history of cancer in your family and still being a smoker can affect your rate in more than one way or being obese and having a history of heart disease also affects your rates of premium. Every insurance policy is based on each individual and premiums are calculated on the insurance company's rules of rating.
Life Insurance Policies Have Worldwide Coverage
Life insurance policies issued in India have worldwide coverage. So, if a policyholder dies while traveling abroad, the nominee will be eligible to get the benefits under the policy. However, the policy sum would be payable in India.
All the documentation, including claim form, death certificate, and certificates from authorities will have to be submitted with the insurer in India. Thereafter, the claim will be settled in Indian rupees.
However, insurers ask for a travel questionnaire to be filled by an insurance applicant to understand their risk profile.
vinay mohanty
11 tax-free income in India – every investor should know
11 tax-free income in India – every investor should know
Paying Income tax is one thing, which most of the people do not like. Everyone tries to minimize their income tax y some or the other means. So today, I will be sharing with you list of some income’s which are 100% tax-free in your hand.
Yes – you heard it right. if you earn these income’s, then you do not pay any income tax on them at all. This article is mainly for information purpose, because I have seen many investors who are yet not clear on the taxation rules of few income’s. Here we go
1. Interst on saving bank interest – upto Rs 10,000 a year
From 2013 onwards, a new section 80TTA is introduced under which, the interest on your saving bank account upto Rs 10,000 is not taxable. So if your saving bank interest for a year is Rs 20,000 . Then out of that Rs 10,000 is exempted and only the rest Rs 10,000 will be added to your taxable income.
This is a great relief for tax payers, because it was really a big headache to find out the saving bank interest from all the accounts and add them up and pay income tax, because for most of the people, it would be few hundreds or thousands of interest income. Now that is gone !
2. Interest earned in NRE account
Any interest you earn on your NRE account is 100% Tax-free in India. Here we are talking about both, the Fixed Deposit and normal saving bank interst. Both of them are tax free for NRI. NRE deposists are a great way to earn a decent interest on the savings done by NRI. Some of our clients even go an extent of taking loan from the country they are working in like UAE/Singapore because they get it at 2-3% and then reinvest the same in NRE deposits here in India where they earn around 8-9%. Also because there is no tax, hence TDS is also not applicable to the NRE account deposits.
And the best part is that the money in NRE accounts is repatriable, means if you are in US and you invest some money in India in your NRE account, the principle and interest money can be taken back to US 
.
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3. Share of Profits paid to partners in firm
If a partnership firm earns some profit and instead of retaining it within the partnership firm, its paid to the partners as a share of profits, then its tax free in the hands of the partner, because the tax is already paid by the firm on it.
So is A and B are partners in a firm, and they get 5 lacs each in a year as the share in the profits earned by the firm, then it will be tax-free in their hands. Note that if they are receiving any salary from the firm, then its taxed in their hands only.
I would like to request that as this is related to corporate tax, please consult a qualified CA on this issue.
4. Maturity or Claim amount received by Life Insurance Company
The money you get from life insurance companies on maturity, claim or surrender is 100% tax-free provided,the premium paid did not exceed 20% of the sum assured. I am quoting new amendments which have come in recent years
As per amendments introduced in the Finance Act, 2003, (i.e., with effect from April 1, 2003), any proceeds received on account of maturity/surrender of an insurance policy were exempt from tax only if the premium paid did not exceed 20% of the sum assured. As an example, if the annual premium is R10,000, to qualify for exemption, the minimum sum assured under the policy was required to be R50,000.If the sum assured was less than the said value, the entire maturity proceeds would be taxable. Such limit of 20% was later reduced to 10% by the Finance Act, 2012, (i.e., with effect from April 1, 2012) to increase the insurance coverage amount, i.e., the sum assured threshold was increased from a minimum of five times of annual premium to 10 times. For policies taken on the life of a disabled person or person suffering from certain ailments, the limit was relaxed to 15% of the sum assured with effect from April 1, 2013.
5. LTA money received from Employer
Most of the companies pay LTA each year to their employees, which can be utilized for traveling purpose. This LTA is not taxable in hands of the investor provided they provide the proof of travel. So if your company is not paying you any LTA, ask them to restructure your salary and label some part as LTA, because almost everyone spends a minimum amount traveling in a year.
For example, if you are getting a salary of Rs 5 lacs and their is no LTA in your salary component, you can ask your employer to label 20k as LTA and rest 4.8 lacs as other components, this way you will be able to save tax on that 20k part at least.
6. Money got under VRS scheme upto Rs 5 lacs
If a person takes VRS (Voluntary retirement scheme) than any amount received up to Rs 5 lacs is income tax-free. However, not everyone is eligible for it. Only employees of Public sector companies or an authority established under a Central or State govt is eligible for this.
7. Money received from your EPF account after 5 yrs
The money one gets from their EPF account is also tax-free, provided the money is taken out after 5 yrs of service. A lot of times investors change their jobs in 3-4 yrs and withdraw their EPF money only to realise that they could have timed their withdraw in better manner and save 30% of their EPF money which went into income tax (assuming they are in 30% tax bracket).
8. Profits from shares or equity mutual funds after a year
When you earn any profits from your shares or equity mutual funds after holding it for minimum 1 yrs, its called Long term Capital gains, and its 100% tax exempt as per current tax rules.
For example, if you invest Rs 1 lac in shares and after 2 yrs its worth is now Rs 2 lacs. In this case when you sell your shares, you will not be paying any income tax on this Rs 1 lac profit because of long term capital gains rules.
However, it’s important to know that exemption is allowed only when Security Transaction Tax (STT) has been paid (which is paid by you when you buy on recognised stock exchange such as BSE or NSE). But if you do a out of exchange sales, then STT might not get paid and hence in future when you sell shares, you will have to pay tax on profits.
9. Dividends received from your shares or equity mutual funds
You receive dividends from your stocks or equity mutual funds (dividend option). That dividend money you get is also tax-free in your hand. However, the bad side of the story is that company anyways pays the dividend distribution tax to govt before giving the dividends to its shareholders. Hence, anyways we are getting slightly less share of profits in our hand anyways.
10. Amount received by way of gift on marriage
Any amount you get as gift on your marriage is tax free. So your friends, relatives or any random person can gift you any amount or something valuable as a gift on your marriage, and it will be non-taxable for you. Just make sure that the timing is matched with your marriage and the gift date. It should not happen that you get some gift after 2 yrs of marriage and you try to justify that it was a gift for your marriage.
Its like this, If you are getting a gift of Rs 10 lacs from a friend (which is nearly impossible), ask them to hold on for a while and gift it to you after few months or a year when your wedding is in place and you will save a lot of taxation issues
11. Any amount received through WILL or Inheritance
There is no inheritance tax in India now. So any-thing you get in inheritance through WILL is not taxable in your hands. It becomes your property and now when you invest that money, only the interest part earned on that property will be taxed.
And Many more
Note that, it’s not possible to list down each and every income which is tax-free. Here I have listed 10 income’s which I think most of the investors should be aware about this. There are many other things which are not taxable, but it applies to certain section of investors.
crackdown on fake call centers, 115 employees including 40 women were arrested
In a crackdown on fake call centers, 115 employees including 40 women were arrested by Special Task Force of Uttar Pradesh Police from three offices in Delhi and Noida.
These call centers allegedly cheated many by falsely by offering huge bonus amounts to people on their existing insurance policies.
Cops are also going to tighten noose around insurance companies as their data, which was used to make Rs 20 crores by the gang, was leaked.
The gang ran fake call centers posing as officers of leading insurance companies. The gang had illegally bought insurance holders data at Rs 35,000 from an employee of a leading insurance brokerage firm. They set up three call centers, two in Krishna nagar area in East Delhi and another in Sector 4 of Noida. The gang floated 11 companies.
The gang lured victims into depositing large sums of money claiming that they were just expenses for clearance of the bonus amounts in different bank accounts. They used fake identity documents to open bank accounts to withdraw the duped amount. As they knew details of customers, they used to quote the bonus amount according to the customers policy. They also used to mail them a cheque to sound genuine.
The fake call centers functioned in a corporate style and set targets for each employee. Those hired were briefed about their job profile and were offered lucrative salary. Their phones were kept on silent and locked outside the calling bay. They had daily targets and the best performer was rewarded with a bonus and a picture on performance of the month board.
The directors of the company used luxury cars and had opened 12 bank accounts using fake documents. A total of Rs 20 crores were found in 12 fake bank accounts. The gang had one account in each bank so that if the bank takes action after a customer complaint, they could withdraw the entire amount.
The fraud came into light after Aligarh resident Shivam Mittal registered a First Information Report (FIR) claiming that he was duped of Rs 54 lakhs.
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