DOUBLE BENEFIT

I am planning to buy a house jointly with my wife and take a joint home loan. Can we both claim benefit in income tax?

If your wife is working and has a separate source of income, both of you can claim separate deductions in your income tax returns. For claiming income deduction regarding the housing loan, the equated monthly instalment (EMI) amount is divided into the principal and interest components.
The repayment of principal amount of the loan can be claimed as a deduction under Section 80C of the Income Tax Act up to a maximum amount of Rs 1 lakh individually by each co-owner. The repayment of the interest portion of the EMI is also allowed as a deduction under Section 24 under the head ‘income from house property’.
In cases where the house is owned by more than one person and is also self occupied by each co-owner, each co-owner shall be entitled to the deduction individually on account of interest on borrowed money up to a maximum amount of Rs 1.5 lakh. If the house is given on rent, there is
no restriction on this amount and both co-owners can claim deduction in the ratio of ownership.

WHICH IS BETTER

I am a 24-year-old and have a term plan for a sum assured of Rs 5 lakh cover for 20 years. The plan will return 15 per cent return of my premium. Should I take another policy with a higher sum assured? Which is better—a pure term plan or a term plan with return of premium (ROP plan) in which premium doubles?
The need for insurance depends on numerous factors like the financial needs of your dependants, your income and the existing savings. A term plan with ROP is a term plan that returns all the premiums paid to the individual if he survives the tenure. This is unlike a regular term plan that has no maturity value. Since an ROP plan returns the amount invested, it charges higher annual premium than a pure term plan. Just like any other (endowment type) life insurance plans, ROP plans, too, have to invest a certain portion of the premium to generate returns to pay up the individual at the end of the term, apart from factoring in expenses like mortality charges and administration expenses (including agent commissions). A pure term plan still remains the cheapest form of insurance. The decision should be based on your risk-taking ability, the capacity to pay premiums and the ability to put balance funds into systematic investment funds.

ONE PLAN FOR ALL NEEDS

Is it not advisable to take one plan covering all your needs instead of taking multiple plans? Is there any restriction on the number of policies that a person can take?
Insurance companies come up with various insurance plans considering the different needs of various people. The need of insurance keeps changing with one’s age and family circumstances. If a single plan covers all your insurance needs at a particular time, it is beneficial to take a single plan to avoid confusion of payment of different policies at different times. But as the needs change, it is better to go for another policy rather than give up on an old policy and look for a plan that shall cover the changed need. There is no restriction on the number of polices one can take. The insurers will not have any problem in selling a policy to you if your financial condition
supports the payment.

HOUSEHOLD GOODS INSURANCE

Which household goods can be insured? How is the premium amount decided by insurers?
You can cover all household goods, including furniture and fixtures, jewellery and other valuables by taking a householder’s policy from any general insurance company. The list is exhaustive and generally covers all goods. For the purpose of this policy, household goods are assessed at their market value or the value of a similar new item after deducting deprecation for its usage. This means that in case of loss of any item, you shall be paid the value of a new item that could replace it, less depreciation for the usage of the lost item. Jewellery is valued at its market price and as its value does not depreciate, depreciation is not normally taken into account.

RETURN THE POLICY

A friend of mine sold me a unit-linked insurance plan (Ulip) three days back. I bought the policy but don’t want it anymore. Can I get it cancelled at this stage? Will I be charged for it?

As per the rules set by Insurance Regulatory and Development Authority (Irda), it is mandatory for all insurance companies to give the insured a free look period of minimum 15 days to re-examine the policy. The insured can surrender the policy during this period and the insurer is obliged to refund the amount collected. Since you don't want the policy, you should inform the insurers immediately.
The amount of refund, however, differs from company to company. Some insurers pay the full amount collected from the insured while some deduct some charges like stamp duty or medical examination.

FACTS OF INSURANCE POLICY

Most insurance policies have a clause in which the insured person states that all the facts have been fully disclosed. What are these facts?

The facts that need to be disclosed while taking an insurance policy are any circumstances which would influence the insurer in accepting or declining a risk, or which could change the amount of premium, or terms and conditions of the insurance contract. Any factor that has the potential of increasing the risk exposure, previous losses and claims under similar policies, special conditions imposed by previous insurers, and facts relating to the description of the subject matter of insurance needs to be disclosed.

HEALTH POLICY CLAIMS

My wife has a health policy. She recently underwent an operation and made a claim for it. Now, she needs to go for another operation. Can she make another claim?

The sum insured under a health policy signifies the total amount insured for the policy period. If a claim is made, the sum insured reduces to the extent of the claim. Health policies are taken for a specific period, usually 12 months, and have to be renewed after that. The maximum claim amount is fixed when the policy is bought. Suppose a person has made a claim of Rs 1.5 lakh against the sum insured of Rs 2 lakh, only Rs 50,000 will be available for any claim which may arise during the remaining policy period. The sum insured can be restored by paying extra premium. Also, the premium would be higher next year as you made a claim last year. Sometimes insurers also put a restriction on the number of claims a person can make in one year and the time gap between two claims. You need to go through your policy to find out the exact conditions.

CHILD INSURANCE PLANS

What are the advantages and disadvantages of child insurance plans?

Child care plans are essentially saving plans specially designed to meet the increasing costs of a child’s needs like education. These plans insure the life of the parent, or the child and the benefits are available as lump sum payments when the child reaches a certain age. Also, in most policies if the parent dies or suffers a disability during the tenure of the policy, it will continue even if the annual premium is not paid. Moreover the sum insured for the parent is also paid. The disadvantage is that these plans are not self-sustaining, that is, if the premium is not paid for any reason other than the death or disability of the parent, it will lapse. Therefore, once you commit to a child care plan, you have to ensure that the premiums are paid on time. To avoid this you can consider the Ulip version of such plans.

AM I COMPLETELY COVERED

I want a cover of Rs 20 lakh as I feel my insurance is inadequate. Should I split the cover, with one half in a term plan and the other half in a Ulip?First, you have to understand your need for an insurance plan—is it purely for insurance, or is it a saving instrument, or both?

Term insurance plans would best cover your need for protection if you feel you are not adequately insured. These plans are generally for one year and have to be renewed every year. The sum assured is payable on death only, and that too if the death occurs during the specified term. The insured will not receive anything if he survives the term. As this is the most basic kind of insurance, all insurers have similar premiums. Also, the premium is lowest for such plans since it offers no other benefit.
Ulips, on the other hand, offer both insurance and savings, but require long-term commitment. The premium for the same amount of cover would be higher as it offers returns also. Investments in Ulips are subject to market risks and the amount accumulated at any time depends on the market value of units.

Minor Insurance Riders

I had bought a Ulip in my son’s name. At that time, I wanted accident and medical riders, but the insurance company turned down the request, saying my son was a minor. Now, my son has
crossed 18 years of age. So, I asked the company to include the accident rider. But the company rejected the application, saying I should have opted for it when I took the policy. What should I do?

Riders in a life insurance policy are generally taken at the time of issuance of the policy and its addition at a future date can only be done as per the policy terms of the insurer. Riders in a life policy have a limited scope and for a wider cover you can consider taking separate health and personal accident policies.

ARE MY MONEY SAFE WITH INDIAN BANKS?????

Going by the fiscal 2008 data, none of the Indian banks, big or small, can fail.
This fiscal, beginning April, the situation has changed slightly for certain banks as their non-performing assets,
or NPAs, are going up as consumers have started defaulting on their payment obligations with the rise in interest
rates.
The best way of judging a bank’s health is looking at the most critical parameters such as capital adequacy ratio, asset quality and earnings, which define their ability to pay service depositors. On all these parameters, Indian banks more than meet the accepted norms.
NET WORTH State Bank of India has the highest net worth—capital and reserves—among all Indian banks, followed by ICICI Bank.
Each has about four times the net worth of the third biggest bank in this category, Punjab National Bank. Overall, seven banks have more than Rs10,000 crore net worth.
Net worth (capital+reserve) in Rs crore NET NPAs Most Indian banks have less than 1% NPA. The average NPA of all banks operating in India (including foreign banks) is 1%. So, no worry on the quality of assets, as of now. % of net NPA to net advances CAPITAL ADEQUACY RATIO Among the big Indian banks, ICICI Bank has the highest capital adquacy ratio, or CAR—13.97% against the regulatory requirement of 9%.
Four banks have a higher CAR than ICICI Bank, but they are relatively smaller banks.
Overall, 30 banks have more than 12% CAR. Not a single bank has less than 9% CAR.
Under the norms, for every Rs. 100 worth of assets, banks need Rs. 9 worth of capital. The higher capital base shows they are less leveraged and, hence, strong.

FRIENDLY LOAN WILL COST TOO.....

Now you a Interest on friendly loan also.
Mumbai High Court bench, Justice B H Marlapalle and D B Bhosale said while ruling one such case, "people who default on friendly loans should be treated in there stages while determining the rate of interest".

• No interest is applicable from the day the loan was given to the day the lender approached to the court to recover it.
• 9% of interest should be paid for the period the suit remained pending in the court.
• 6% of interest was to be paid from the day of the court decree to the day the loan amount was finally realized.

Court also said that while dealing such matters, judges should "exercise sound judicial principles". The bench said judges could even deny or reduce the rate of interest to the time the matter was pending in court. Court also warned that doing so would only, amount to penalising the creditor for approaching the court and encouraging the debtor deliberately to prolong the litigation.