LOAN ON CREDIT CARDS

I have taken a loan of Rs 50,000 each from two banks through credit cards. While one of the banks is charging only a service tax of 12.24 per cent, the other is charging the interest on the equated monthly instalment (EMI) apart from the service tax. Why this discrepancy? Which bank is following the correct procedure?
Both banks will charge interest as well as service charges. Make sure you have understood the repayment process correctly. Since the EMI includes the interest component, there will be no interest on the EMI itself, unless you have not paid the EMI.

TRANSFER OF FUNDS

I have an account in HDFC Bank in Delhi and my sister has one in State Bank of India, Mumbai. What is the most cost-effective way to transfer funds from my account to my sister’s account?
Both the banks are participants in the Electronic Clearing System (ECS) and are located in metros.
You should ask your bank to give you a form that enables you to write an ECS mandate that will enable you to transfer funds, without any cost, to your sister every month. You have to specify your sister’s bank branch and account details in your mandate.

I have a salary account with ICICI Bank. This month, when my salary was credited to the account, I received an SMS about my account balance. But the amount in the SMS was Rs 60 less than my salary figure. I was not able to check up with the bank immediately and used my debit card a day before. Now, I have lost the earlier SMS also. How do I clarify with the bank?
You can use your ATM card to print out the latest list of transactions on your account. You can also call the bank’s customer service centre to seek the balances and the details of debits and credits into the account. You can also post in a request to the bank, asking it to mail you the account information to enable you to verify the transactions in your account.
If you apply for Internet banking services, you can log in to check your account at any time.

PRE REPAY LOAN

I want to prepay a loan. I am told the EMI paid till now is mostly interest and the principal is due. Why?
The bifurcation between principal and interest works on a decreasing basis, so that the interest component decreases over time, while the principal component increases. If you prepay, you lose the interest already paid. EMIs are financial structures constructed in the same manner and the effective interest paid can be higher than the quoted number. Since borrowers mostly care about how much the EMI is, lenders get away without explaining the math and the effective rates.

HOME LOAN IN JOINT NAME

My wife and I are salaried and intend to take a home loan. We want to register the house in the name of both of us. Should we apply for the loan jointly?
Every individual is entitled to deductions of up to Rs 1.5 lakh on interest repayment under Section 24(2) and up to Rs 1 lakh on principal repayment under Section 80C. When you apply for a loan jointly, here is how you end up enhancing tax savings.
If you take a Rs 25 lakh loan for 15 years at 7.5 per cent rate of interest, you will pay Rs 1.84 lakh as interest in the first year. If you apply alone, you will be able to claim a tax deduction for Rs 1.5 lakh only. Of course, you will be able to claim Rs 93,784 as deduction for principal repayment under Section 80C (maximum limit: Rs 1 lakh).
If you apply jointly with your spouse, assuming that you are both in the highest tax bracket, you would both be able to claim Rs 92,159 under Section 24(2) and thus make the interest payment fully exempt from tax. A deduction of Rs 46,892 each can be claimed for principal repayment under Section 80C by both of you. This will help you claim deductions for other permissible investments. The tax saving in joint loan application is much higher—at Rs 83,431 compared to Rs 73,135 in a single application.;

PREAPPROVED LOAN

I have seen cases of friends who suffered due to delays in the sanctioning and disbursement of their home loans. I am yet to finalise on a property. My friends suggest that I go for a pre-approved loan. Is it a good idea?
When you get a home loan pre-approved, the home loan provider gives a commitment to provide you with the loan at a contracted rate after you have chosen a property, within a stipulated period, mostly six months.
However, the bank will give early approval if it finds the chosen property suitable for mortgaging.
This commitment comes after a lender has thoroughly examined your credit-worthiness through the home loan process. You have to negotiate the home loan rates with various lenders and decide on the right lender after having done market research. Of course, you will have to pay the requisite charges, often 0.25-0.50 per cent of the applied amount, for loan processing.
These days, the period of the loan pre-approval is often extended, without the payment of any extra charge.
Apart from the certainty it lends, pre-approval helps in other ways. In many property transactions, you have to sign the buyer-seller agreement, where there might be a condition about the forfeiture of your payment amount, if the full payment isn’t made available within a certain period, mostly a month.
This delay can arise from loan processing delays. With pre-approval, half the loan processing is complete. The disbursal can materialise quickly after technical and legal scrutiny of your property. In this way, pre-approval can spare you a lot of anxiety.

FIRE INSURANCE POLICY

I have bought a house. The earlier owner had a fire insurance policy for it. This is still in his name. Can it be transferred in my name? If yes, what is the procedure?
The fire insurance policy issued in the name of previous owner cannot be transferred in your name. You will, therefore, have to buy a fresh policy in your name. The previous owners, however, can cancel the policy and claim the refund. The insurance company will retain the premium on the short period scale and refund the balance.

My flat caught fire two months back. Since I had a fire insurance policy, my costs were covered. However, the flat just beneath mine also suffered some damages. Now, the occupants of that flat are asking for compensation. Should I approach my insurance company and ask them to cover their costs too? If they refuse to do so, what is the other option?

The standard fire and special perils policy, unfortunately, does not cover the liability of the insured towards the third parties. Therefore, you can approach your insurers only if you are also covered under a public liability policy. Public liability cover is available as a part of the householder’s package policy. The only other option is that if somebody else was responsible for the outbreak of fire—your housing society or builder—you may recover the cost of damages from that person and, in turn, pay the owners of the flat below yours.

SCOOTER INSRUANCE POLICY

I bought a scooter four years back, but stopped using it a year later. I have not renewed its insurance all these years. Now, I want to sell it. Do I need to buy a motor insurance policy before selling it?
It is obligatory on the part of vehicle owners to get a third party insurance cover if they intend to bring the vehicle on road. Since you did not use the scooter for the last three years, you don’t need to get a policy for it. Now when you want to sell the scooter, you will have to buy at least a third party cover for the vehicle. In fact, this is one of the important documents required for the registration of the vehicle in the name of new buyer.

AUTO INSURANCE

My company has given me a car. Do I need to take an auto insurance policy for it, or will the company take it?
Who will take the policy basically depends on your contract with the company. Generally speaking, if the company has purchased the car in your name and is recovering the cost of the car from your salary in instalments, the responsibility to insure the car lies with you since the owner has to insure the car. On the other hand, if the company owns the car and it has been given to you for use, it is the company that should insure the car. However, you must clarify the matter with your employers and act accordingly.

FAMILY HEALTH POLICY

I had taken a family health policy before my daughter was born. Should I take a separate policy for her?
All health insurance policies have to be issued in the name of individuals. So, for your daughter, you will have to buy a policy in her name. Normally, standalone health insurance policies are not offered to individuals below the age of five years. But, children below the age of five can be covered under a mediclaim policy if one of the parents is also covered under the same policy. In your case, since you already have a family health insurance policy, you can get her name included in it. Insurers will not offer a higher sum insured for your daughter, but you can always go for a family floater policy where, if a situation arises, the total sum insured is available for each member of the family.

PAID UP VALUE

When exactly does a life insurance policy acquire a paid-up value? How is the value determined?
If premiums are paid for three years for a policy, but not subsequently, the policy is said to have acquired a paid-up value, although literally speaking, it is a lapsed policy. The paid-up value is calculated by multiplying the sum assured by the ratio of number of premiums paid under the policy and the number of premiums payable. Most policies stipulate that if the value thus calculated is lower than Rs 250, the policy is not said to have acquired a paid-up value. Once a policy acquires a paid-up value, it is disqualified from participation in future bonuses.

TERM IS BEST

Why should one prefer term plans for life insurance over unit-linked plans and Why are term plans considered the best?
Term insurance is the purest form of insurance—it provides cover only for the risk of death of the life assured. If the life assured dies during the policy period, his legal heirs receive the ‘sum assured’ under the policy; if the life assured survives the term, there is no return. The entire premium paid in a term assurance plan, that is, the cost of buying the insurance cover, is utilised for covering the risk of death of the life assured. It is for this reason that insurers offer this plan at the lowest cost. The best thing about this plan is its cost advantage. Due to this, one can afford to secure an adequate amount of coverage.

CHILDERN POLICY

I want to insure the life of my two-year-old son. Should I take a policy in his name or mine?
The basic aim of taking a policy is to provide for those who are financially dependant on the life assured. Since children do not have dependants, the purpose of securing a child policy is to save for the child’s future. An earning parent is an integral part of child policies as they have to propose the policy and pay the premiums. Different insurers offer different products. Whether you insure your son or yourself will depend on the policy you choose. The best, in our opinion, will be to insure your son under a policy, which provides for premium waiver in case something happens to you. Normally, children policies cover the risk after the deferment period, which may be two years after the commencement of the policy.

EDUCATION LOAN

I have just finished my MA in political science and want to do research from a foreign university, preferably in US, or UK. What is the procedure for taking a loan for my studies? Which banks should I approach? How do banks fix the modality for paying back the loan?
The willingness of a bank to give you an educational loan will depend on what they see as employment prospects for the course they are funding. The bank is well within its rights to deny a loan to this PhD course, after such an assessment. You will have to provide them adequate information so that the decision can be made in your favour.
For funding education, banks tend to prefer shorter duration courses, like an MBA with a campus placement, rather than longer tenure PhD courses. But you can still try your luck. Public sector banks give more education loans than private banks. If your university has high credentials, foreign banks could be interested. Several educational loans for large amounts require guarantees and collaterals, so check with the bank. Educational loans are repayable in instalments only after the borrower has begun to earn money to repay it. If you already have credentials and papers, the university will be willing to offer you fellowships to fund your studies. Most PhDs are funded by fellowships, grants for research and by tutorial earnings of the candidates. Explore these options before going for a loan.

ZERO BALANCE ACCOUNT

I had a zero balance salary bank account in my previous job. I quit that job three years back and did not operate the account after that. Recently, I got a mail from the bank saying it had debited money from my account because the account was switched from zero balance to a normal savings one and it did not have the minimum deposit for a savings account. What should I do?
The zero balance facility was linked to the fact that your employer held their accounts with the bank and, therefore, it was able to extend this facility to the employees. The facility ceases to exist when you are no longer an employee. Close the account if you do not need it or use it, or cannot maintain the required minimum balance.

You do not have any rights in this case because the facility offered to you was conditional upon your employment. Banks determine the minimum balance required based on their assessment of costs to keep and maintain an account and offer the facilities thereon. It is their business decision to fix this amount. You need to make your choice of the bank, based on your needs and abilities.;

COMMRCIAL LOAN

I want to take a bank loan to start a small grocery store. How will the bank decide the maximum amount it can give me? What can I furnish as security? I own a two-bedroom apartment. Can it be considered as security for the loan?
Banks are usually comfortable lending to an existing business, rather than funding start-ups. Some of them do have special schemes for small entrepreneurs, and may be willing to fund your venture.
The loan will be sanctioned after you have submitted a project plan, which describes the prospects for your business, and also has the information about your finances and net worth. Some banks are willing to fund up to Rs 15 lakh without collateral, provided you are able to bring in your own capital into the business. Banks usually do not offer mortgage-based loans for businesses, but the value of your home will add to your net worth and can increase your credit-worthiness. There is no standard set of practices when it comes to small business loans. Approach a bank that you are dealing with already since they know you and are familiar with your transactions.

LOAN FOR NGO

I run an NGO in Ahmedabad, which works for slum children. What are the requirements for taking a bank loan for my NGO?
Since your NGO is not involved in the activity of on-lending, you may not be able to obtain a bank loan for your activities. A bank loan is usually routed to activities that have the potential to generate cash flows, but have the constraint of mobilising a large amount of initial capital to lend in the first place. The ability of your NGO to borrow will, therefore, be limited. You may have to depend on donations to run your NGO. The Rashtriya Mahila Kosh (RMK) scheme does have some lending initiatives for education, but the procedures remain cumbersome. See http://www.rmk.nic.in/.

BAD SERVICE

I took a house loan last year. The property price are declining, will the bank recover the difference in price?

The loan amount is based on the borrower’s ability to repay, or the worth of the property, or both. Most loans are based on the borrower’s income. Fall in the value of property will be a loss to the borrower, not the bank. If the loan amount is linked to the property value, the bank will seek a revision of the terms. In either case, the bank will act on possible default from fall in prices. You should use your own funds to the extent of expected decline in value, and take the loan only for the rest.

ACCIDENT POLICY FOR ABROAD TREATMENT COVER

I lost my left leg in a car accident when I was 20 years old and took a health policy at the age of 26. I plan to get an artificial leg made for me from the US. Will my health policy cover the cost of this artificial limb and the cost of any repairs? Is there a rule that the cost of artificial limbs will be covered only if they are made in India?
As a general rule, all health insurance policies exclude the pre-existing diseases or any sort of physical handicap from the scope of coverage of the policy. Since you lost your leg six years before the commencement of your health insurance policy, unfortunately, the policy will neither cover the cost of the artificial limb nor the cost of any repairs. Mediclaim insurance policies, which are issued in India, are operative within the geographical territory of India. Therefore, in order to qualify for the claim (if coverage is established under the policy), the treatment must be taken in India itself.

I purchased a car recently. Should I take a motor insurance policy now, or wait for detariffing to get implemented fully? I have heard that premiums will come down after detariffing.
It is true that after the detariffing of motor premiums has taken place, the premium has started coming down because of competition in the market. But, in our opinion, once you have purchased the car, you must get it insured immediately. You may get a slight advantage in pricing by delaying buying of the insurance policy for your car, but at the same time you are running a very heavy risk by not insuring your vehicle, especially for third-party losses. In any case, third-party insurance is compulsory by law. Therefore, you must have at least that part of the cover if you are bringing the car on the road.

BURGLARY POLICY

I have a burglary policy for my belongings, including jewellery. I went to a wedding, where I lost one of the pieces of jewellery I was wearing. Will I get compensation for it?
From your question it is not clear which policy are you holding to cover your belongings, including the jewellery. If you have a stand-alone burglary policy on the premises, the loss will not be payable. However, if you have covered your jewellery, under the ‘all risks’ section of the householder’s policy, you will be entitled to claim the loss of the jewellery from your insurers. In order to be able to claim the loss, you must inform the police.

PET ANIMAL INSURANCE POLICY

I plan to move my pet dogs from Ahmedabad to Delhi by train. Can I insure the dogs for the journey?
There is no particular insurance to cover the pet dog for the journey. However, you can always take a pet dog insurance policy, which will provide coverage to your dog anywhere in India, including the journey from Ahmedabad to Delhi by train.

NO CLAIM BONUS

If I change my health policy from one company to another, can I carry over my no-claims bonus?
When you change your health policy from one company to another, usually the company renewing the policy will give you the credit for the accumulated bonus earned by you during the previous policy periods. Some insurers pass the benefit of no-claims bonus on the basis of renewal notice issued by the previous insurer. Some may, however, first renew the policy without mentioning the amount of no-claims bonus credited on the face of the policy and later pass an endorsement to that effect after receiving a written confirmation from the previous insurer in respect of no-claims bonus. The policy renewing company may also ask you to undergo a medical examination before the grant of the policy.

PENSION PLAN

I purchased a Jeevan Nidhi policy from LIC, choosing the deferment age of 50 years for pension. What happens if I die before the age of 50?
In case of Jeevan Nidhi policy of LIC, on the death of the life assured during the deferment period of the policy, that is before the annuity vests (in your case it is the age of 50 years), an amount equal to the sum assured under the basic plan along with the accrued guaranteed additions, simple reversionary bonuses and terminal bonus, if any, will be paid in a lump sum to the appointed nominee. The nominee will also have the option to buy an annuity with the amount payable to him/her.

LOSS OF POLICY DOCUMENT

The term of my life policy is over but my policy bond seems to have been lost. What is the procedure of making a claim under such circumstances?
First of all you need to inform your policy issuing office about the loss of bond. You have to fill a form and return it to them along with some documents. If the claim amount is less than Rs 5,000, you will have to submit a simple indemnity letter along with the discharge form and a Declaration of ‘No Assignment’ of the policy. However, if the claim amount is more than Rs 5,000, you will have to submit the documents mentioned above as well as a surety having sound financial status to get your claim released.

POLICY PREMIUM

Can an insurance company increase the amount of premium after the commencement of the policy?
Typically, when you buy an insurance policy, you enter into an agreement with the insurance company. It is a fixed price (premium amount) that you agree to pay in order to remain insured for the term of the policy. Thus, such a price (or the premium amount) is pre-fixed through an agreement and the insurance company cannot increase the same later. However, although once fixed the premium on a policy cannot be changed, the amount payable by you can increase with the levy of taxes by the government; for instance, due to the introduction of service tax on life insurance policies.

UNFORGETFUL

I took a life insurance policy last year. Since there was no reminder from the company or the agent, I forgot to pay the premium this year that was due in October. Will my policy be cancelled or will they take a late fee and let my policy continue?
It actually depends on the terms of the issue of the policy. Generally speaking, any insurance policy lapses if the due premium is not paid within six months of the date when the premium became due. In your case the premium is late by about three months. You should approach the policy issuing office and get the figure of total amount due as on date along with the interest. On payment of the dues, your policy will be regularised.

INSURANCE POLICY

I am 28 and I want to take an insurance policy, which can also give me tax benefits?

Which one should I go for? If you want adequate insurance cover along with income tax benefits, the best option for you is to go for a term insurance policy. Since the premium in a term policy is quite low as compared to endowment covers, one is able to get adequate coverage. The premium paid on these policies also qualifies for deduction under Section 80C of the Income Tax Act, 1961. You may go for term insurance policy offered by any of the life insurance companies. Since they are covering pure risk only, their premiums and terms are similar.

MONEY BACK POLICY

Four years back, I bought a money-back endowment plan. The first money-back instalment is due next year. Now, I am finding the annual premium of Rs 10,000 too expensive, and don’t want to continue with the policy. Should I surrender the policy at this stage and switch to a term insurance policy, which is cheaper?
If you surrender the policy at this stage, you will get only the surrender value, which will be just about 50 per cent of what you have already paid. Therefore, in my view it is not advisable to surrender the policy at this stage. It would be best to continue. You can meet some of your premium obligations from the periodic money-back installments that you will get under the present plan.

MY PENSION

My pension plan is maturing next month, but I am already getting a government pension. Is it possible to get the returns in bulk so that I can invest the amount somewhere else?
To get a lump sum amount you can always withdraw a portion, though not the whole amount, of your pension receivable under the policy. This type of withdrawal is called commutation. This amount would be tax-free and can be invested elsewhere by you. Normally, it is possible to commute up to one third of your pension amount. You can receive a lump sum amount against the commuted portion and the balance amount will come in the form of monthly pension. The exact amount available for commutation, however, depends on the terms and conditions of your pension plan.

PROFIT

What are ‘with profit’ and ‘without profit’ insurance plans?
Policies that participate in the profit of an insurance company are called ‘with profit’ policies, while the policies on which the amount of bonus is fixed at the time of issue itself are called ‘without profit’ policies. This means that irrespective of the profit earned by the insurers, the policyholders of without-profit policies will get fixed returns on the amount they have invested. Whereas, in the case of with-profit policies the amount of bonus payable is based on the net surplus earned by the insurers. Therefore, returns on these varies from year to year and can be more or less than the returns on without-profit policies.

I had taken a loan from my existing life insurance policy, which I repaid along with my quarterly premiums. Will my final returns from the policy be affected in any way?
Once you take a loan on a life insurance policy, it is independent of the returns under the policy. Insurance companies charge interest on the amount of loan advanced against the policy. Once the principal amount, along with the interest, is repaid, it does not have any affect the final returns from the policy.

PORTECTION OF POLICY

Can the proceeds of a policy be protected against creditor’s claims in the event of the insolvency of a policyholder?
The proceeds of a life insurance policy can be protected against the claims of creditors under specific circumstances. One, if the policy is issued under the Married Women’s Property Act and, second, if the policy is legally assigned in favour of a third party. The option of taking a policy under the MWPA has to be exercised at the time of taking the policy. It cannot be done later. A policy that has been legally assigned in favour of somebody becomes that person’s or assignee’s property and, therefore, cannot be attached by the creditors of the policyholder.

DECLINE OF CLAIM

I bought a house in June 2007. The fire insurance policy on the building acquired by the previous owner is valid till March 2008. Can the insurance company decline to pay a small loss, which occurred in July 2007, on the pretext of change of ownership?
As per the conditions of the fire insurance policy, the interest of the insured in the insured property must exist at the time of buying the policy and also at the time of occurrence of loss. Typically, the policy gets cancelled on the sale, or transfer of property. Therefore, in your case, since you were not the owner at the time of the inception of the policy, you would not be eligible to prefer claim under the fire insurance policy.

FAMILY MDDICLAIM POLICY

I am 40-year-old diabetic. My wife is 37 and child seven. Am I eligible to take a family mediclaim policy?
You can certainly secure a family mediclaim policy for your family. Since you are already suffering from diabetes, it will be excluded from the scope of the policy. Your wife and child can have a normal cover according to the terms and conditions of the policy, which you choose.

PLEASE GUIDE ME

I have bought a house in Delhi. What kind of insurance should I look at?

You need to ensure the building and the contents of the house. For the building, you can take a separate policy, covering the risks of fire and allied perils. You can also add a cover for earthquake. Alternatively, you may buy a comprehensive householders’ policy. This covers the building and also its contents against various risks. You can also cover your electrical equipment against the risk of breakdown. Jewellery and other valuables can be covered against all risks, including loss within the geographical territory of India.

INDEMNITY POLICY

What does a professional indemnity policy for lawyers include?
Professional Indemnity policy issued to lawyers, advocates, solicitors and counsels is basically meant to cover liability falling on them as a result of errors and omissions committed by them while rendering professional service. The policy covers all sums, which the insured professional becomes legally liable to pay as damages to a third party in respect of any error and/or omission on his/her part committed while rendering professional services. Legal cost and expenses incurred in defence of the case, with the prior consent of the insurance company, are also payable, subject to the overall limit of indemnity selected. The policy, however, covers only the civil liability claims. Any liability arising out of any criminal act, or act committed in violation of any law, is not covered. The sum insured under the policy is referred to as the limit of liability in a professional indemnity policy. This limit is fixed per accident and per policy period, which is called any one accident limit and any one year limit, respectively.

RAILWAY COVER

Does railways give cover to its passengers? If yes, what kind of cover is it?

Yes, the railways does provide personal accident insurance cover to the passengers. The cover is provided to bone fide passenger ticket-holders, platform ticket-holders and season ticket-holders. Children up to the age of five years, who are not required to buy tickets, are also covered, provided they are travelling with ticket-holders. The compensation for injuries sustained varies between Rs 32,000 and Rs 4 lakh as defined in the schedule of injuries under the Railways Act, 1989. The policy covers all the passengers in the railway premises. For any unscheduled injuries, the compensation of up to Rs 80,000 may also be given. The compensation amount is decided by the Railways Claims Tribunal. Once the claim is decided by the tribunal, the insurance company reimburses the claim amount to the railways.

INSURANCE OMBUDSMAN

I want to file a complaint against my insurance company for the mental agony I have suffered due to the inordinate delay in the settlement of an insurance claim, which necessitated, among other things, repeated visits to its office. What is the procedure for filing a complaint with the insurance ombudsman?

First, you need to approach the insurance ombudsman under whose jurisdiction the servicing office of the insurance company against which you want to complain falls. The complaint must be in writing and accompanied by the documentary evidence of the circumstances giving rise to the dispute, nature of loss sustained and relief sought from the ombudsman.
The ombudsman will first try to settle the dispute through mediation between the parties involved. If a settlement is reached through mediation, he will make recommendations as he deems fit, within one month from the date of receipt of the complaint.
If the complaint is not settled through mediation, the ombudsman will pass an award, which he thinks is fair in the light of the facts and circumstances of the complaint. Such an award is passed within three months from the receipt of the complaint. If the award is acceptable to the complainant, in this case you, the insurance company needs to comply with it without fail. If the ombudsman deems fit, he may award an ex-gratia payment.

FLOATER POLICY

My son is admitted to a hospital for a heart problem. My husband’s medical policy provided by his company is covering part of the expenses. Will our family floater policy cover the remaining expenses? Can two policies be used together for a single expenditure?
Both the medical policies can be used simultaneously for the same incident of disease. In fact, under the terms of all insurance policies, you are obliged to disclose the details of all the policies operative on the day of hospitalisation.
All mediclaim policies pay the insured in the proportion of the sum insured under respective policies. You can file the claim under any of the policies mentioning the particulars and the sum insured under the other policy. The insurers will automatically share the claim amount between them.

NO CLAIM BONUS TRANSFER

Can a no-claim bonus on a health policy be transferred from one insurance company to another?
A no-claim bonus is a discount given by insurance companies to the insured at the time of renewal of policy if the insured has not filed any medical expenses claim in the last one year. A no-claim bonus is given either as a discount in the premium or as enhanced cover without the incremental increase in premium. In this way, insurance companies also build customer loyalty towards them.
If you take a fresh medical insurance policy from a new company, you cannot get a no-claim discount as a matter of right. Insurers, however, do consider pervious history with the other insurance companies and give suitable discounts to attract new customers.

RENEW A LAPSED POLICY

I forgot to pay the premium of my life insurance policy and the policy lapsed. How can I revive my policy?
A policy lapses if the premiums are not paid within the due date or the grace period permitted by the insurance company. However, a policy that has lapsed can be revived within five years from the date of first unpaid premium. In your case, your policy can be revived under the ordinary revival scheme. For this all the arrears of unpaid premiums with interest will have to be paid. Along with this the insurers may ask you to submit a ‘Declaration of Good Health’ (form no. 680).

PARTIAL WITHDRAWAL IN ULIP

I took a unit-linked insurance plan (Ulip). I have paid the premium for six years. I want to withdraw some of this amount. Should I make partial withdrawal or surrender the policy?
The decision to choose between partial withdrawal and surrender should depend on the severity of your need and the returns from the policy. Partial withdrawal is allowed only after the completion of the lock-in period (which varies from three to five years as per the terms of the policy). As you have paid premium for six years, you can make partial withdrawals.
The sum assured as per your policy will be proportionately reduced by the amount of partial withdrawal made. Partial withdrawal is a good option if the Ulip fund is performing very well and you do not want to quit the policy. This way you can get the required amount as well as continue with the policy.
A policy can be surrendered any time after the lock-in period. The insurer will pay as per the prevalent market rate of the net asset value (NAV) of the units on the day of surrender. The decision to quit the policy should be taken only after considering the current and future returns from a policy.

POLICY AS A COLLATERAL

Can I use my life insurance policies as collateral when taking a personal loan from a bank?
Yes, you can use your life insurance policies as a collateral security for the loan liability. Banks usually insist on having a collateral security in addition to the primary security provided by the loan applicant. These can be in the form of certain financial assets such as National Savings Certificates (NSCs) or life insurance policies. Generally, this is done through the assignment of the policy.
Assignment of a policy means that the title, rights and benefits under the policy get legally transferred to another person or entity.
In this case, you can assign the policy in the name of the bank which is giving you the loan, thereby pledging the policy with the loan provider as collateral security.

TAX DEDUCTIONS

What tax deductions can I get for repayment of home loan?
Primarily, you can get two types of deductions for a home loan, one on repayment of the principal amount of the loan and the other on the interest on the loan. Whether you reside in your house or give it out on rent, the repayment of principal amount of loan will qualify for deduction under Section 80C. The maximum amount of deduction available for repayment of principal amount is Rs 1 lakh. Under Section 24(b), up to Rs 1.5 lakh can be claimed as deduction under the head ‘Income from House Property’ for the interest component of a loan in case of a self-occupied house. However, the full amount of interest can be claimed as deduction in case the house is given on rent.

APPLICATION DECLINED

I had applied for a credit card two months back. I submitted all the necessary papers. The bank executive assured me that I would be getting the card soon as I fulfilled the necessary criteria. However, a few days back my application was rejected. Is the bank within its rights to do so?
A credit card is like a non-secured loan. Therefore, the amount of risk associated while giving a card is higher for the bank compared to giving a secured loan like a home loan. Banks take many factors into account while evaluating an individual’s creditworthiness through the credit card application that you fill. Some of these factors include your income and job stability. Another major determinant is your residential address. Most banks have a list of negative areas. If you happen to live in any of these areas, your application may not be approved even if you qualify on other factors.
Recently, credit scores were introduced in India in which a person’s credit history is reflected in numbers. Banks and financial institutions have already started using these scores. They use this score as a major input while deciding your creditworthiness before extending any fresh line of credit, including a credit card.
Therefore, the bank is within its rights to reject your application.!!

CLASSES FOR ATM AND DEBIT CARD TRAINING

How can one learn how to use an ATM/ debit card? Do banks give such information?
W hen you open a savings or a no-frills account with a bank, apart from the cheque book and the ATM-cum-debit card, you also get an instruction manual that explains how to use your card. The manual talks about, among other things, the precautions that you should take while using the card, like keeping the PIN number in a secure place or making sure no one is watching when you enter the PIN while using the ATM.
If you go the bank’s website you can get a list of things you should keep in mind while using a debit card.

CRITICAL ILLNESS INSURANCE

I want to get a critical illness insurance cover. What conditions have to be fulfilled to get this cover?
A critical illness policy is available for specific critical illnesses named under the policy that you opt for. Such policies invariably include diseases like coronary artery surgery, cancer, stroke, renal failure, and many others.
Normally, such a cover is granted to the proposer whose minimum income from gainful employment is Rs 2 lakh or more (income tax return form to be submitted as proof). The pre-existing disease exclusion condition applies to this policy. No claims are allowed within 90 days of taking the policy and the insured person needs to survive for 30 successive days after the diagnosis of the critical illness in order to make his claim.

PAY PREMIUM THROUGH CREDIT CARD

Can I pay my insurance premium through a credit card? Do they charge any extra interest?
Yes, you can pay the premium of your life insurance policy through a credit card, provided your insurers have an arrangement to accept payment through credit cards. Nowadays, most insurance companies do have this option. Deduction of extra charges would depend on whether your credit card company has a tie-up with your insurance company. If they do have such an arrangement, then there will be no extra charge as long as you pay off the full amount due on the credit card by the due date.

POLICY DOCUMENT LOSS

I recently lost my life insurance policy papers in a fire. How can I get a duplicate copy?
You can always get a duplicate policy bond from your insurance company. For this you need to apply to your insurers in a prescribed form. In order to facilitate the verification process, give the company the premium receipt and other identification proofs.
Further, you may be required to submit an indemnity bond and pay the necessary fees for obtaining duplicate policy papers. Also, in cases where the policy documents have been partially destroyed due to natural causes like fire, flood, earthquake, or other such reasons, the physical remains of the half burnt or destroyed documents may be returned to the insurance company as evidence of loss of policy.

SERVICE TAX

Can service tax paid be deducted from income tax?
Service tax as such cannot be deducted from the income tax payable by an assessee. However, the entire cost of any service availed for the purpose of business, including the service tax paid, is considered a deductible expense while computing the income under the head income from business or profession. For example, your business telephone bill, including the service tax, is a deductible expense while computing the business income.

OOH!!!!!!!!!!!!!!! AAH!!!!!!!!!!!1 OUCH!!!!!!!!!!!!!

I was shopping online and just as I had entered my debit card details, the Internet connection broke. When I checked my account later, the amount was debited but the transaction was incomplete. The bank says the money will be credited to my account in the next billing cycle. What can I do if it isn’t?

Such issues usually get settled in the next billing cycle of the debit card, so it is better if you wait till then. However, if the correction doesn’t happen, raise a formal complaint and get an acknowledgment. A complaint raised over the telephone does not have any legal standing, so do it in writing or by email. If the bank does not take any action, you should complain to the banking ombudsman that has jurisdiction over your area (www.bankingombudsman.rbi.org.in).

ATM MACHINE IS A MACHINE AFTER ALL

An ICICI Bank ATM declined the transaction when I tried to withdraw money using my SBI debit card a month back but the money was deducted from my SBI account. Both the banks told me that SBI would resolve the issue. But the SBI manager concerned is refusing to take it up, saying that he hasn’t handled such a case before. What action can I take?
Since you haven’t been able to get a response directly from the person concerned in SBI, you can send a complaint through the bank’s website. If you do not get a satisfactory response in two to three weeks, approach the banking ombudsman (www.bankingombudsman.rbi.org.in).

I want to purchase land. Which banks give loans for that?
Not all banks or housing financing lending institutions extend land loans since there is difficulty in documentation and security of the property (risk of encroachments). Most banks that offer these loans insist that the land be purchased from a development authority or from a society. Some banks also permit purchase of land from a developer.
Banks and lenders such as Standard Chartered Bank, Indian Bank, Bank of India, UCO Bank, State Bank of India, HDFC Bank, Housing Development Finance Corporation (HDFC) and LIC Housing Finance give loans for purchasing plots or land.