WHY TO SELL YOUR FUNDS ?

There are many reasons why to buy a fund. But, to sell the funds the reason should be very specific. The decision about whether to sell a fund is generally tough.

You have to figure out the potential or strength of that fund, taking care of the future returns. And if the fund you invested on is going downhill, then it’s better to exit rather to face loss.

Following are the good reasons to sell your funds:-

If your need is not satisfied.

Your objectives and investment are directly proportional to each other. As if, when you decide to change your objectives, your investment should change as well.

For an instance, suppose you started investing in a balanced fund (i.e.  one that splits its assets between equity and debt) with an objective of buying a car within next 5 years. And if in case you get married and your spouse may own a house, or your parents may gift you a car or the company may allow you a car or provide you with the heavy bonus which could go towards your goal of having a car. Now, you may decide to use that money after your retirement, and in this way, your objective changed. You may sell your balanced fund and buy the equity fund. And in this way your investment is also changed.

SELL

In other situation some portfolio shifts are needed even if the goals stay stable, then you gradually reduce your exposure to stocks and increase your share in fixed – income investment. Or, you may decide to retire even few years before, as you have invested a lot for your after retirement.

So, accordingly, investment should be adjusted as per need and should be satisfactory.

When its performance is declining to an end.

If the performance is declining, then it is a serious issue. As it could send you apart of meeting your financial goals.

Although, only one year of the downfall of performance is not a serious issue. But more than that can leave you mentally disturbed. As you’re comparing your underperformer to an appropriate benchmark and its peers.

A strong outperformance may be the bigger reason to sell that underperformance. As higher gains can often indicate that the higher risk had been taken to gain the return.

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It changed or you did it.

You may create a change, but don’t mix it up with your investment objectives. A change in fund management can result in a different manner. A fund could change its investment mandate but you may not go for the new one.

It could also be a case of a fund merging with another when the fund legally decided to change its objectives.

Or in another case, maybe your fund didn’t change but you did. Perhaps you have decided that the fund is too risky for you or simply it is not a good fit for you. Hence, you changed.

The same case is with the sector funds. The investors didn’t understand the investment proposition and believe that they will get permanent returns. Not realizing that those funds are temporary. Hence, changes are made.

Sovereign Gold Bonds to open for subscription from Monday

The seventh tranche of Sovereign Gold Bonds (SGBs) will be open for subscription from February 27 under which, securities worth up to 500 grams of gold could be bought by the public. This would be the last offering for the current fiscal.

The Government of India in consultation with the RBI has decided to issue Sovereign Gold Bonds 2016-17-Series IV, applications for which will be accepted from February 27 to March 3. These bonds will be issued to eligible applicants as on March 17, 2017.

Launched in November 2015, the SBG scheme is an alternative mode of investment to physical gold. The scheme provides investors a choice to diversify their portfolio without actually buying the physical gold. Six tranches of the SGB have already been issued by the Government.

The government gathered Rs 3,060 crore from five tranches.

GOLD

The scheme at a glance

  • Issuance and sales channel: The bonds are issued by Reserve Bank of India on behalf of the Government. These Bonds are sold through scheduled commercial banks (excluding RRBs), SHCIL offices, designated Post Offices and recognized stock exchanges, NSE and BSE.
  • Tenor: The tenor of the bonds will be for a period of 8 years with exit option from 5th year to be exercised on the interest payment dates.
  • Mode of payment: The payment for the bonds will be through cash payment (up to a maximum of Rs 20,000) or demand draft or cheque or electronic banking.
  • Maximum limit: The maximum amount subscribed by an entity will not be more than 500 grams per person per fiscal year. A self- declaration to this effect will be obtained. In a case of joint holding, the investment limit of 500 grams will be applied to the first applicant only.

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  • Taxation: The capital gains tax arising on redemption of SGB to an individual has been exempted. The indexation benefits will be provided to long-term capital gains arising to any person on a transfer of bond.

The investors of the scheme will be compensated at a fixed rate of 2.50 per cent per annum payable half yearly on the nominal value of an investment.

The bonds can also be used as collateral for loans. The loan-to-value ratio is to be set equal to ordinary gold loan mandated by the Reserve Bank from time to time.

The Price of a bond will be fixed on the basis of a simple average of closing price of gold of 999 purity as published by the India Bullion and Jewelers Association Limited for the week (Monday to Friday) prior to the subscription period. The issue price of the Gold Bonds will be Rs 50 per gram less than the nominal value.

The Gold Bonds will be tradable on stock exchanges from a date to be notified by the RBI.

Taurus Debt Mutual Fund fell by 7-12 percent in a day

The downgrading of the troubled Ballarpur Industries Ltd (Bilt) by India Ratings and Research (Ind-Ra) yesterday has adversely affected the schemes of Taurus Mutual Fund. The debt funds and liquid scheme of Taurus Mutual Fund fell by 7-12 per cent within a day preceding the IRR ratings.

Debt funds are generally categorized as low-risk investments except for the interest rate risk and default risk. Interest rate variations can deeply impact returns, especially in the case of long-term bonds.

The default risk is when the issuer of the bonds held by them is unable to repay, the prices of bonds can change surprisingly.

An amount worth Rs 110 crore was invested in commercial paper issued by Bilt in four debt schemes of Taurus mutual funds. Bilt had the top holdings in two severely devalued schemes namely, Taurus Dynamic Income Fund and Taurus Ultra Short Term Bond Fund.

Taurus funds lost due to revised BILT Ratings

TaurasThough SEBI has placed a 10 percent cap on the exposure to a single issuer, there is a leeway of up to 12 percent with the approval of the trustee. It looks as if the Taurus Mutual Fund has done this to increase exposure (to Bilt beyond the maximum 10 percent).

Recently, there have been some instances of drastic declines in debt funds due to the downgrading of the bonds and issuers. For instance, in February 2016, debt funds holding bonds issued by the Jindal Steel & Power Ltd (JSPL) went down after CRISIL lowered the company’s credit rating. JSPL bonds worth Rs. 3,000 crore were held in Mutual funds.

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Similarly, In August 2015, debt schemes of JP Morgan were demoted when Amtek Auto defaulted on repayment.

Credit risk is a real risk of loss of capital whereas interest rate risk is a volatility risk.

Investors should not compromise on credit quality for getting higher yields by. They should be aware of certain FMP’s that are lowering down the quality curve for chasing higher yields, and further stay away from such schemes.

Apart from 80C…

You all may be aware of the concept of deductions from gross total income available to the taxpayers. By investing in the avenues prescribed by the government, you can claim deductions from your gross total income. These deductions would be accessible under different sections of the Income Tax Act, 1961.

Section 80C is the most common deduction. But there are several deductions available for you, which you might not know. So, for your knowledge, the following are the deductions that you can claim under different sections of Income Tax Act.

TAX

Medical Insurance Premium under Section 80D

There is no guarantee of health or mishappening nowadays. So, you should always plan for such things before. Medical insurance provides you a safer side. It will help you financially when you or your family member sick or, meet with an accident, your medical bills are beyond your savings. The amount paid as medical insurance premium (mediclaim) is eligible for deductions under this section.

The maximum deduction amount that can be claimed under this section by an individual or HUF is Rs 60000, but there are many sub-limits that one has to take care of. The insurer should be approved by either the central government or the Insurance Regulatory and Development Authority of India (IRDA).

You can get an advantage of maximum deduction of Rs 25,000 for the premium paid for himself, consort or dependent children. You can also get an extra deduction of Rs 25000 for the premium you paid for your parents.

If the insured person is a senior citizen i.e. 60 years or more, then the limit of Rs 25,000 in each case would be increased to Rs 30,000.

Disabled Person’s Health under section 80DD

If any of the person including your consort, children, brother, sister, who is dependent on you, is disabled, then section 80DD provides you a deduction for the expenditure incurred by him on the health and maintenance of disabled persons. And in a case of HUF, it can be any of the family members dependent on you.

The maximum deduction amount that can be claimed under this section is Rs 75,000 per annum. The same will be increased to Rs 125,000 in case the dependent is suffering from a severe disability.

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Particularized disease under section 80DDB

If your spouse and dependent parents, children, brother, and sister are suffering from a particular disease then, the deduction would be available for you on the expenditure made by you (i.e. taxpayer) in the treatment of specified disease. And in the case of HUF, the deductions can be claimed for expenditure made by the treatment of any family member.

The deduction amount will be equal to the amount actually expended or Rs 40000, whichever is less. If the person for whom the expenditure is made is 60 or more, then the limit of Rs 40000 will be taken as Rs 60000 and the same will be taken as Rs 80000 if the age is 80 or more.

Interest on Education Loan under section 80E

If you have taken an education loan from any financial institution for self, consort, children, or a student whose legal guardian you are, then you can claim this deduction for the interest paid by you on the loan amount.

To claim this deduction, make it clear that the loan is taken for higher education, i.e., any course pursued after completing 12th standard. This deduction is available for 8 years, which begin from the year of payment of interest.

Interest on Home Loans under section 80EE

If you have taken a loan for the purchase of residential property then, a deduction would be available for you for the amount paid as interest on loans. Rs. 50000 per annum are the maximum amount of deductions which could be claimed under this section.

There are certain terms and conditions regarding this section to avail the deductions like the loan must be taken between 1-04-16 and 31-03-17, the value of property must be less than Rs 50 lakhs, the amount of loan should be less than Rs 35 lakhs, the house property should be only in the name of one individual person.

Donation to funds or temples under section 80G

If you have donated to a fund which is apprised by the central government under this section, then deductions would be available for you on the amount donated, but it should not be more than 10% of the adjusted gross total income. This deduction is also available for donations given for renovation of temples mosque, church, which are approved by CG.

Maximum of Rs 10000 can be donated by cash. And if it exceeds more than Rs 10000, then no deductions would be made.

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Rent for housing under section 80GG

You are allowed to claim this deduction only if you do not receive House Rent Allowance (HRA) as part of your salary, or if you are not a salaried employee. A declaration form 10BA has to be submitted to avail this deduction.

If you have a house which is owned by you or your spouse or in the name of your minor child at the place where you are residing, then you can’t claim this deduction.

Donation to particular institution under section 80GGA

If you have donated to an institution based on scientific research or to a university or college which is approved by the government (under 35(1)(ii), 35(1)(iii), 35CCA, 35CCB), then deduction would be available for on the contribution made by you.

If the deductions are more than Rs 10000 then, it can be claimed only if the contribution has been made by any method other than cash. And if your income is from any business or profession, then no deductions would be applied to you.

Donations to political party under section 80GGC

If you have donated to a political party, then you can claim deduction under this section on the actual amount donated by you. But the deduction would not be provided if payments are given in cash.

Royalty income to author under section QQB

If you are the author of a book (other than textbooks for schools and colleges) and have received payment in royalty, either in lump sum or otherwise, then deductions would be available for you on the royalty income.

The maximum deduction that can be claimed when royalty is received in a lump sum is Rs 300000. If royalty amount is not received in a lump sum then the deduction amount would be 15% of the revenue of the book of the particular year.

Royalty income from patents under section 80RRB

If you are a patentee and have registered any patent after 1st April 2003 and received royalty income for it, then deductions would be available for you on the royalty amount.

Rs 300000 are the maximum deduction amount which you can claim under this section.

Interest on savings account under section 80TTA

The deductions would be available for you on the interest earned on a savings account. The utmost amount that can be claimed as a deduction under this section is Rs 10000.

The Best Health Insurance Plan for the Diabetic Patients

In India, diabetes is one of the major health issues. Every 1 person out of 5 is suffering from diabetes. And this number is increasing day-by-day. The number of diabetic patients in year 1980 was 108 million and this number goes up to 422 million in the year 2014. It is being predicted that diabetes will become the 7th leading cause of death on a global level till the year 2030.

So, in the case of any emergency related to diabetes, health insurance will take care of you and your family after you. There are various health insurance plans for diabetic patients, so you need to select best out of it.

Unknown facts about Diabetes in India

  • There were approx 69.1 million cases of diabetes in India in the year 2015.
  • It has been predicted that, every 5th diabetic patient in the world will be an Indian by year 2025.
  • Our India is popular as the diabetic capital of the world having a 2nd position in the number of diabetic patients worldwide.
  • The number of death from diabetes in the year 2012 was 1 million.
  • In India, 87 million cases of diabetes by the year 2030 are being predicted by World Health Organization.
  • According to research, 1 out of 5 corporate workers suffers from diabetes or hypertension.
  • In India, a number of male diabetic patients is 13% higher that of the female.
  • The risk of contracting diabetes is 50% more for the people between ages of 60-70 years.

Age-wise Claim for DiabetesAge wiseState-wise Claim for DiabetesState wiseAfter a look at all these charts, you can see how this issue of diabetes is capturing the whole India. Now, it becomes must buy a health insurance plan for diabetic patients.

There are many companies in India which cover diabetes as a pre-existing disease in their health insurance policy which also includes specific health issues arising due to diabetes. But, maximum people are not aware of these policies.

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Types of Diabetes and their policies

 1st Type– It is the type of diabetes in which the body stops producing insulin, which is very much needed to convert glucose into energy, and is known as insulin-dependent diabetes. In this type, the patient needs regular shots of insulin.

There is no policy which covers this type of diabetes.

  • 2nd Type In this type of diabetes the level of sugar (glucose) in the body goes higher than the normal and the cells of our body becomes insulin resistance and the amount of insulin produced is not sufficient.

Policies covering this type– Star Health Diabetes Safe, National Insurance Varishta Mediclaim, Energy Plan by Apollo Munich Health Insurance Plan.

  • 3rd Type– it is the type of diabetes in which opposition of insulin occurs in the brain and it is the type of Alzheimer disease.

Gestational diabetes

This occurs in a female at the time of pregnancy and if not cured, it gets converted to the type 2 diabetes.

Policies covering this type– Maternity benefit of health insurance policy cover this type of diabetes.

Premium amount for Diabetes health insurance plans

The premium amount for a diabetic patient is mostly higher than the normal premium amount because the risk is also high. The diabetic patient gets a higher chance of claim due to the frequent medical attention. So, always go for that policy which gives you maximum benefit at minimum cost.

Minimum premium amount of different policies (A person of 45 years of age and cover of 3 lakhs)Name of the policy newWaiting Period of the Plans

Each and every health insurance policy has its waiting period for which you can claim for your pre-existing disease. Waiting period varies from company to company, but mostly it is of 4 years. You should go for the policy with a minimum waiting period.

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Sum assured

Your conclusion to the sum assured should be based on your diabetes condition age, city, hospitalization requirement and the inflation rate of health care. Choose the best which offers you a wide range of sum assured.

Age & Cover for the disease arising due to Diabetes

Always inspect before your buy. Check the age limit of your health insurance policy. It should be flexible because flexibility in the age limit will allow you to get insured at advanced age also. It will also cover problems arising in other body parts due to diabetes.

Points to be remembered

Always try to buy health insurance as early as possible, especially when you have the medical history of diabetes.

  • Always get a specialized and specific plan which covers you from the inception of the policy.
  • Terms and conditions related to the policy are very important to understand.
  • In India, the number of insurance companies covering diabetes is very less but there are sufficient plans to choose the best one. Think, understand, insure, and then buy.

Market Cap to GDP Ratio Signals Upside for equity

Weak earnings, lackluster IPO market and inconsistency make market cap lag GDP growth.

The market cap to GDP ratio is currently well below 100 percent, indicating that equity has room to move higher.

This ratio measures the value of all the stocks listed on Indian exchanges against the GDP and is used by analysts to see if the stock market is rightly valued.

As a thumb rule, when the ratio moves well above 100 per cent, stocks are said to be expensive and when it is far below 100 percent, stocks are assumed to be cheap.

Based on the GDP growth estimate for 2016-17 (which was revised down recently), the current market cap to GDP stands at 74 per cent. While this is an improvement from the 64 percent recorded in 2012-13, the current level is almost half of the 149 percent recorded in the bull market frenzy of 2006-07.

Market cap to GDP

Weak earnings

The poor performance of listed companies has led to the diminishing market cap/GDP ratio. Revenue of companies in the CNX 500 index has been declining over the past few years. While revenue for these companies has grown by 5.4 per cent annually between 2011-12 and 2015-16, net profit has been more or less flat (0.2 percent) during this period.

There has been a vast difference in the sector-wise growth too. For example, while revenue and profit for software companies have grown (annually) by a vigorous 16 and 18 per cent, respectively, capital goods companies’ sales and earnings have declined annually by 4.4 and 11.7 percent, respectively, during this period.

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Lackluster IPO market

Another reason for a poor Market cap/GDP ratio could be lackluster IPO market. Market capitalization can rise rapidly only when fundraising takes place actively. But, due to constriction in demand and companies postponing their capital expenditure, the primary market in the country has not been too strong.

The Indian IPO market also went through a lean phase since 2010. Between 2005 and 2010, the number of new initial public offerings was 345, nearly three times the offers made between 2011 and 2016.

Foreign Fund Flows also have an impact on Market Cap. While foreign portfolio investors have mostly been pumping money into the Indian equity market, there have been periods when they have turned net sellers, due to global upheavals, influencing market capitalization. Between 2011-12 and 2014-15, FPIs net purchased 3,74,813 crore of stocks. But, in 2015-16, FPIs pulled out 14,172 crores, leading to falling in stock prices.

Inconsistency

The lower ratio could also be a result of a difference in their constituents. For instance, companies within the agriculture sector contribute close to 2 percent of the total market capitalization of BSE-listed companies. The contribution of agriculture to the GDP is much higher at 17 per cent.

Similarly, in the GDP estimates for 2015-16, banking, finance and business services contribute close to 20.6 per cent. But banking, financial and information technology companies account for close to 24 per cent of BSE’s market cap. Such variations make the comparison across market cap and GDP very difficult.

Aditi Nayar, Senior Economist, ICRA, says, “The correlation between GDP and market cap growth rates is not direct. Moreover, the growth in various indexes also reflects the possible political, geopolitical and sector-specific risks. Besides, the unlisted companies are many. In some sectors, their component is very high.”

Know these 20 hidden charges associated with your credit card

Credit cards are pretty much an essential item today. These are convenient and safer to carry around than cash. Also, they are widely accepted online, in most stores, and prove very useful during travelling.

But, is buying a credit card always a good idea? It is a bit difficult to refuse an offer of a “free” credit card by a sales representative. But what these credit card companies do not tell you is that there are a whole host of charges that are associated with them. Given below are several credit card charges that you should be aware of if you are planning to buy a new credit card.

  • Joining fees & annual fees – The initial fees applicable for the availing credit card is known as a joining fee. This is usually waived off for a maximum period of one year from the date of issuance. But after one year the annual maintenance fee is applicable to your card ranging between Rs.1000 to Rs.3000.
  • Duplicate Statement Fees – While the monthly statements are delivered free of cost to your address, if you request for a duplicate statement, your card issuer will levy a duplicate statement fee which is usually fixed.
  • Late payment charges – You need to pay late fees levied by the card company when late payment is made by you. This fee is either fixed or changes depending upon the credit card companies. The charges are over and above interest rate charged by credit card companies.
  • Interest on Overdraft – When you exceed the credit limit then you are charged higher fee which is a fixed interest on the overdrawn amount.

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  • Charges on cash withdrawal – There is a transaction fees applicable whenever you use a credit card to withdraw money from ATM.
  • Foreign Currency Transaction – If you are making any transaction online but the currency used is other than INR then be ready to pay a pre-determined fee for every transaction depending on the amount.This credit card charges are in the range of 3-5% of transaction amount.
  • Outstation cheque fees – If you are using outstation cheque to make the credit card payment then you need to pay an additional service fees known as outstation cheque fees.
  • Service Charges – The charges applied by the vendor on the use of payment gateway is known as service charges. This fee is also known as user fee or convenience charges.
  • Cost of revolving credit – If due payment is not made before the final date then every month 1.99% to 4.00% interest rate is imposed on the customer. The payment due is known as the cost of revolving credit or revolving interest rate.
  • Petrol Transaction Surcharge – Transaction surcharge applicable when you use a credit card for filling up petrol is known as petrol transaction surcharge. Some banks offer a waiver on the fuel surcharge, but these depend upon your petrol usage limits.
  • Card replacement Fees – If you lose your card, your bank will charge you a card replacement fee. This is known as card replacement fees.
  • Cheque Pickup Fee – You can opt for cheque pickup services for paying your credit card dues. This fee is known as cheque pickup fees.
  • Payment Dishonour Fees – In case, you make a payment of credit card dues via cheque and it bounces or there is a failure of ECS, the penalty payable is known as cheque bounce or payment dishonour fees.
  • Additional Card Fees – If you opt for additional card along with your main card, you need to pay additional card fees.

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  • Cash Processing Fees – If you decide to clear your dues by making a card payment in cash at ATM, you need to pay extra fees called as cash processing fees.
  • Railway Ticket Purchase Fees – When you use a credit card for getting a railway reservation you need to pay charges known as railway ticket purchase fees.
  • Emergency Card Replacement Fees – If you are at overseas and need your credit card to be replaced in an urgent situation, you need to pay additional fees for the same.
  • Mobile Alert for Transactions – Availing the service of transaction alert on mobile involves certain charges.
  • Other Charges – In addition to above charges you are also liable to pay certain other charges and tax such as service tax, Swachh Bharat cess and Krishi Kalyan

Ways to minimize these charges

In order to avoid or minimize the charges mentioned above you should follow the tips given below:

  • Carry out detailed research to compare among the various options and choose the best credit card for yourself.
  • Understand all credit card charges by going through the “Most Important terms and conditions” document.
  • Avoid using credit card and at all places.
  • Pay your credit card dues before time. If possible, choose auto payment services.
  • Avoid exceeding your credit limit.
  • Review your credit card statement on regular basis.

Knowing these tips will put you in good stead and help you use your card     wisely.

Shift to short-term debt funds ?

Investors in debt mutual fund schemes are ending up in few days because of the massive rush in bond yields which has resulted in sharp market-to-market loss. Long-term income funds, gilt funds and dynamic bond funds were slowed their value down between 0.25% and 2.5% on 8th February, 2017 after the benchmark bond yield jumped 31 basis points. Reserve Bank of India indicates that there would be very small cuts in interest rates in the coming days.

The bond yield has grown up 12 basis points on 9th February 2017, which will result in further losses for debt mutual fund investors. Within last 2 working days, yields have raised about 43 basis points to 6.86% on 9th February, which resulted in the downfall of bond prices.

safe and higher returns compared to bank FDs

Yields and prices are independent of each other i.e. when yields grow up, prices slow down and similarly when yields decreases, prices rises up. Long-term debt funds always try to ease themselves from hike in prices as they get gains from bond trading.

Short-term bond funds have less effect of all these. The RBI has changed their position from being accommodative to neutral. This suggests you that there is very less chance of cutting the rates in the coming month. The benchmark yield can reach to 7% in coming 2 months period.

The RBI may have to involve them in the bond market. To reduce supply and support prices to lower the yield, the Central Bank could buy back bonds from the markets. Many investors had started investing in debt mutual funds as bank fixed deposit rates fell and they deposited cash in banks post demonetization.

According to the data received from AMFI, investors have to put in Rs 1, 66,016 crore in income funds from 1st April.

Even after the rush of yields in two-days, there is no profit in their hands. With no further capital appreciation in sight, investors should either bet on 8% GoI Saving’s bonds or simple bank fixed deposits, which will give them safety of capital.

In the same way, investors with a time period of 1-2 years could choose short term debt funds, with a similar maturity profile.

Your first home loan could cost Rs 2.4 lakh less

Planning to buy home for the first time? Well here’s some good news for you. If your income is up to Rs. 18 lakh per annum, your first house will cost about Rs 2.4 lakh less as the government will subsidise a part of your home loan interest. 

The government has reportedly worked out on the two new subsidy schemes which were announced last year, under the Prime Minister Awas Yojana (PMAY). These schemes until now available only to those earning up to Rs 6 lakhs per annum, will henceforth apply to all buyers based on the income bracket under which they fall. The scheme will apply to loans taken for a period of up to 20 years, as against the earlier set limit of 15 years.

The aim of this initiative is to accelerate the real estate market and achieve “Housing for all by 2022”.

The schemes are being governed by the two agencies namely, National Housing Bank (NHB) and the Housing and Urban Development Corporation (HUDCO).

Benefits for homebuyers

EMI Benefit

The homebuyers will get subsidy at different rates as per the income bracket they are in.

People earning less than Rs 6lakh per annum will get a subsidy of 6.5 percentage points on a principal component of Rs 6 lakh, irrespective of their total loan amount. For instance, if a person borrowed money at 9% interest, he will pay only 2.5% interest on Rs 6 lakh, and 9% on the remaining Rs. 3,00,000.

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The next group of people earning up to Rs 12 lakh per annum will get interest subsidy of 4 percentage points on a principal component of Rs 9 lakh and under the highest income category of Rs 18 lakh per annum, home-buyers can avail a subsidy of three percentage points on a principal component of Rs 12 lakh.

Assuming an interest rate of 9%, the net benefit to all the three categories over a 20-year loan tenure is roughly Rs 2.4 lakh, with a reduction of around Rs. 2200 in the monthly Instalments. These PMAY subsidies will be in addition to the income tax benefits on home loans which can go up to Rs 61,800 per annum for someone in the 30% tax bracket.

For the low-income group, the government has subsidised around 18,000 first time homebuyers, at a cost of around Rs 310 crore. However, with the inclusion of the middle-income category, the disbursal rate is expected to rise.

Recent Claim Settlement Ratio issued by IRDA : Top Leading Insurance Companies In 2017

According to the data of claim settlement ratio, we’ll be able to finalize the best insurance companies for the coming year 2017.

  1. Claim Settlement Ratio
  2. Average Claim Settlement Amount
  3. Average Claim Rejection Amount of Life Insurers in 2015-16
  4. Claim Pending Status of Life Insurance Companies in 2015-16
  5. Top Life Insurance Companies in 2017
  6. Few points to be considered before selecting Life Insurance Companies.

1. Claim Settlement Ratio

It works as an indicator for the life insurance companies which tell them how much death claims have been settled in the particular financial year.

You can calculate it by dividing total number of claims received by total number of claims settled.

However, this claim settlement ratio is the raw data. But we can assume that how many death claim deals are made by the life insurance companies.

IRDA Claim Settlement Ratio 2015-16

The given chart shows the Claim Settlement Ratio of 2015-16 i.e. up to March 31, 2016.

In the chart, life insurance companies are differentiated by the colour code.

90%-100% are indicated by blue colour.

80%-89% are indicated by red colour.

70%-79% are indicated by green colour.

And lastly, 60%-69% are indicated by purple colour.

CLAIM SETTELEMENTAs per the given chart, there are 24 life insurance companies and 12 companies are above 90% in claim settlement ratio. And LIC comes first in the rank by providing 98% in the list.

Let us see the claim amount settled by each company to serve their best:

Reliance life comes with the great increase in the claim settle ratio as compared to that of previous one. The previous data shows it as 84% but this year it goes up to 94%.

Birla Sunlife had a drop this year. The previous data shows that its settlement ratio was 95%. But this year it decreased to 85%.

Star Union is also facing loss this year. As per previous data its settlement ratio was 94% but this year it falls to 81%.

PNB Met Life dropped down from 93% to 85% this year.

Edelweiss Tokio has done a massive increase in their settlement ratio this year. Previously it was 60% and it came up to 85%.

IDBI Federal Life had a change of 9%. It rises up from 76% to 85%.

DHFL Pramerica had a huge increase of claim settlement ratio this year from 57% to 84%.

Aegon Religare Life has a slight increase in settlement ratio. It rose from 90% to 95%.   

As we can see above, most of the new companies are moving their position towards the highest peak. Very few of them dropped from higher position. So, how could to decide which life insurance will give highest claim settlement ratio in the coming future. It might be very difficult for you.

2. Average Claim Settlement Amount

As the claim settlement ratio doesn’t give us the transparency of the type of products the insurance companies settle. So, this average claim ratio will clear our doubts.

IRDA CLAIM SETTELMENT

Here we can see that LIC which was leading in claim settlement ratio is standing in the lowest position in average claim amount settled by insurance companies along with Exide, Sahara, Reliance Life, and Future Genereli (mentioned in the graph by green colour).

The graph shows that even though LIC had settled highest number of claims but maximum the claims are below Rs 200,000 which unveils that the LIC claim settlement is mostly in the group of Endowment Plans but not Term Insurance.

3. Average Claim Rejection Amount of Life Insurers in 2015-16

If we study about the Claim Settlement Ratio 2015-16 in depth, we can analyze how many claims the insurance companies had rejected.

AVG CLAIM

The graph shows that LIC is in the second position in claim rejection amount just after Sahara. LIC’s claim rejection is less because the quantum of claims it handles is high but value is less.

4. Claim Pending Status of Life Insurance Companies in 2015-16

The fast growing settlement of claims in the life insurance companies is the topic of consternation for all of us.

CLAIMAs in the graph we can see that, Kotak Life, Reliance Life, SBI Life, Shriram and LIC are leading in pending cases which are more than a year. We don’t know the reason but it may be fault of insured or the insurer.

5. Top Life Insurance Companies in 2017

According to the Claim Settlement Ratio 2015-16 issued by IRDA I got these selected life insurance companies. But your idea may differ that of mine. My choices are:

ICICI, HDFC, Aviva etc..

6. Few points to be considered before selecting Life Insurance Companies

  • Claim Settlement Ratio is a Primary/Raw data.

It means that it will not provide you with the transparency of data i.e. data will not be clear or up to the mark.

So, never depend on only this much data while choosing your life insurance company.

  • Focus on product, not on company

Go for the product will is as per your requirement and premium cost which you can afford. Do not conceal any fact and material.

  • Section 45 of Insurance Act will help you

According to Section 45 of Insurance Act “No policy of life insurance shall be called in question on any ground after the expiry of 3 years from the date of the policy, i.e. from the date of issuance of the policy or the date of commencement of risk or the date of revival of the policy or the date of the rider to the policy, whichever is later”.

  • Reveal all facts perfectly

When you decide to buy certain life insurance products, you have to fill a proposal form on your own. Do not ask or allow anybody else to fill it. And open up all the facts properly which will help you anyway. And will not give any chance for the insurers to reject your claim.