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Information provided on this newsletter has been independently obtained from sources believed to be reliable. However, such information may include inaccuracies, errors or omissions. and its affiliates, information providers or content providers, shall have no liability to you or third parties for the accuracy, completeness, timeliness or correct sequencing of information available on this newsletter, or for any decision made or action taken by you in reliance upon such information, or for the delay or interruption of such information. , its affiliates, information providers and content providers shall have no liability for investment decisions or other actions taken or made by you based on the information provided on this newsletter.
The best time to start investing is today You are different and so are your needs Why your returns are not the same as the market’s return? Understanding Taxation in Mutual Fund Investments
Has your career graph risen vertically in the last few years? Congratulations! We are sure that your rising income has brought with it big changes in your lifestyle too. With your elevation, you and your family may have upgraded to a three-bedroom apartment, your children may have moved to international schools and you may have taken on new loans to fund a vacation or a fancy SUV that you have always dreamt of.

But all this means that your term-insurance policy badly needs an upgrade, too. The insurance cover you took five years ago may have been sufficient to cover your dependents' expenses at that time. But to make sure that your dependents don't suffer a dramatic climb-down if something happens to you, you will need a larger sum assured.

While estimating your new life cover, don't go by simplistic thumb rules such as 'ten times your annual income'. Instead, ask your adviser that scientifically calculate life cover based on your family's living expenses, inflation, the likely number of years for which you would like to support your dependents, outstanding loans and any other critical goals you may like to take care of. A Rs 1 crore cover isn't over-the-top any longer!

With lifestyle ailments on the rise, don't forget to top up the health cover for yourself and your family, too. Even if official inflation rates have fallen to 5 per cent, factor in a 10 per cent inflation rate on your healthcare costs while topping up.

Health insurance is one financial product where skimping on costs (premium) can prove injurious to your wealth. As a rule, give a greater weightage to the quantum of sum assured and the breadth of health conditions covered when choosing a plan. Apart from this, screen the product for a low waiting period on pre-existing diseases, a wide network of hospitals where cashless treatment is offered and liberal sub-limits on room rent. Skipping the medical test isn't necessarily a good thing as it can lead to disputed claims later.
A lot of investors must have bought term plan or other insurance plans so that in your absence your dependents do not face any kind of financial crunch. It is good to buy life cover, but maybe buying life cover is just half job done.

Whenever you look at the face of your little one, you should do something special for him along with buying life cover for securing his future.

If something happens to you, your child will get enough financial support from the insurance money, but you will lose out on the opportunity to share your wisdom (your life learning’s) with him. There are a few things, which you may would like your son to learn or know from you and your life experiences.

Life insurance policy is very strong support a parent can give their kids, but it lacks emotions, feelings, and love in it. To add feelings and emotions in it – one can start capturing a few of my experiences in a short journal “Notes from Daddy”. This little journal, once it gets complete will be kept next to original insurance policy document.

3 things which that can be captured in “Notes from Daddy” Journal

1. List of Books that had a deep impact on your life
Since my college days, you might have been a voracious reader and there have been many life-changing books that had a deep impact on life and it has the major contribution on overall learning and development process. You would like to share reading list with your kids when they grow up.

Now, it is possible that s/he may or may not choose to read books from the reading list but at least you would like to share or communicate the reading experiences and book list with him. Start building reading list which you would like to share. My “Notes from Daddy” journal has a section called “Hidden Treasure - Personal Reading list”.

2. List of Movies that inspired you
There have been many movies and short documentaries which changed your complete outlook towards life. Have a section called “Movies that will move YOU” in my “Notes from daddy” journal. If you want, you can also make a list of inspiring movies which you want your son or daughter to watch in their growing years.

3.Teachers who changed your WORLD
It is said that – “when the student is ready, the teacher appears”. You must have been fortunate to have right mentors and teachers at different junctions of my life. Your kids will also have many teachers in their life. Sharing from your life your teachers would have taught you some very important distinctions of life which helped to look at the world with a new pair of eyes. You must have had some “wow learning moments” while you were with your teacher.  Why not capture them at one place so that it gets communicated to your next generation in your absence.

Some final words

Our body is a place to observe the world from, it is a physical representation of you, be clear that your body is not you. Life is beautiful and at the same time highly unpredictable and uncertain. Having life cover is important but it is still half job done. In your absence, do not just pass on insurance amount to your children, also pass on your wisdom and selective life experiences to them.

If you already have life cover and would like to create your little “experience journal” you can start working on it. If you do not have adequate life cover contact your insurance adviser and the will be delighted to you guide with the buying process.

The main function of a life insurance policy was originally to provide protective cover. However, life insurance is a far more versatile investment option nowadays, also giving policyholders the benefit of availing a loan against the policy. So, not only does it provide security, but it also helps when one is going through a cash crunch. What’s more, loans against life insurance are becoming a popular choice for customers, since a lower rate of interest is charged in comparison to a personal loan. One additional benefit is that the policy value does not change with the market as in the case of loans against gold or shares.

There are however a number of factors one needs to bear in mind before opting for a loan, as under:

Eligibility of Policy

You need to confirm whether your policy qualifies for a loan first and foremost, as all insurance policies do not provide this benefit. You can take a loan against the surrender value of permanent or whole life insurance but not against term insurance. Unlike other plans, term plans do not contain cash value and they expire at the end of the term without earning returns; hence the limitation. If you have paid premiums for at least 3 years and on time then you may avail of a loan, as far as non-term plans go. When borrowing against an insurance policy, you are essentially borrowing from yourself. You can thus borrow the money for any kind of expense without having to provide an explanation, and you do not have to undergo intense scrutiny or a stringent approval process. Though the income of the borrower is also not a deciding factor for deciding their eligibility, their credit-worthiness is considered nevertheless.

Loan Amount

You need to check the amount you are eligible for, with the insurance company or the bank. The loan amount is a percentage of its surrender value. Loans can be up to 85-90% against traditional plans with guaranteed returns. Not all unit-linked policies provide loan facilities, but if they are provided, then the loan amount depends on the current value of the corpus and the type of fund. Once the loan amount is decided, then the policy is assigned to the lender. This means that all rights of the policy are transferred to the lender, and the loan is sanctioned to the borrower thereafter. Furthermore, since the loan amount is not recognized as income by the Income Tax authorities, it is not taxable.

Interest Charged

The interest rate charged is based on the premium already paid and the number of premiums that would have been paid later. The more the premium amount and number of premiums paid, the lower the rate of interest charged. Banks link the rate of interest with their base rate, in most instances. Since banks consider loans of this nature like an overdraft facility against pledging of the insurance policy, it can be more expensive in comparison to the loan provided by life insurance companies. The rates of interest of bank loans are between 10-14%, based on the type of insurance and the tenure of the loan.

Documentation Needed

The policyholder would have to contact the insurance company to inquire about the process and documents needed. A pre-prescribed form will have to be filled, and the original insurance policy will have to be submitted. The policyholder would also have to sign a deed of assignment which states that the benefits of the policy are being assigned to the lender during the loan tenure. The policy will act as collateral until the loan is repaid.


Upon taking a loan against a life insurance policy, policyholders need to continue paying premiums. In such an event where the policyholder desists from doing so, some insurers may terminate the policy.

Repayment of loan

The loan should be repaid during the term of the policy. The policyholder has the option of either paying back the principal along with interest or only the interest amount. If one pays only interest, the principal amount due will be deducted from the claim amount at the time of settlement. Furthermore, if the policyholder should choose to pay back only the interest, in the event that they die during the loan term, the pending amount due will be deducted from the claim amount and only what remains will be paid to the nominee. One should bear in mind the fact that the dependents of the policyholder will not be the sole beneficiaries of the policy if the policyholder should die unexpectedly before the loan is repaid. Policyholders should thus exercise caution while taking up a loan against a life insurance policy because the policy is supposed to protect one’s loved ones in the event of their death. By using the policy to take up a loan, the nominees of the policy might be deprived of this benefit. It is thus prudent to pay back the loan in a timely manner as the interest keeps getting added to the balance whether the loan is being repaid or not. This increases the risk of the loan amount exceeding the policy’s cash value, which can cause for the policy to lapse. In such a case, taxes might have to be paid on the cash value. In case of non-payment of the loan, the amount owed will be taken from the accumulated surrender value of the policy and the policy will be terminated.

Direct tax collections are one of the easiest and safest ways of collecting revenues by the Government. In spite of our greatest reluctance, all of us are in the tax net and contribute a sizable portion of the revenue of the exchequer. The law provides for levying of taxes at different stages and forms of income. On the contrary, it provides the impetus for efficiency savings out of the income generated by us through which we can reduce our tax liability. Such investments provide a dual purpose for both the assessee and for the Government. On the one hand, it reduces tax liabilities in our hand and on the other hand it provides sizable funds in the hands of the Government. Tips to save Income tax for Salaried Person

Our main aim in tax planning is to pay minimum taxes by abiding by the legal statute and maximizing return on our investments by investing in the correct instruments at the correct time of our life. 

In brief, some of the important aspects in this respect:

Some people have a wrong notion that tax planning is useful only once you reach an advanced stage of life or are well settled in a business or profession. That is not true. In fact, the best time to start tax planning is right from day one when you start having any income in your name. The sooner you enter the wonderland of tax planning, the better it will be for you in the long run. The benefits of tax planning adopted in the initial years of life will come in very handy when you are planning your retirement. The longer the duration of your tax planning, the better results it will yield to you in years to come. Thus, the right time to begin tax planning is when a person becomes a major. And, it should be continued in right earnest, year after year. Here is how …

Tax Planning upon Becoming a Major

  • Take your first lesson of tax planning when you attain the age of 18
  • Document all the amounts you receive
  • Small cash presents you receive on various ceremonial occasions should be put into the bank
  • Separate income tax files for each individual so that one’s income is not added with that of other family members.
Tax Planning Once You Start Earning
  • Systematically maintain your withdrawals, banks deposits, etc.
  • Save as much as you can because being single you have fewer financial commitments
  • Open a PPF account and put money in the account as much as you can. This investment is tax free and also remains blocked for a minimum period of 15 years.
  • Stop luxurious spending as this is not the age for that.
  • Go for some insurance policy with a long period of maturity.
Tax Planning When You Get Married
  • Avoid gifts to your spouse after marriage as the income arising from the same will be clubbed with your income. Best planning would be to make a gift to your prospective spouse just a few months before your marriage.
  • If your spouse is not a working woman, do not withdraw from household expenses from her account. Utilize that fund for tax saving investments.
  • Start some pension plan investment which will be beneficial when you retire.
  • Start saving for a house of your own if you don’t have one
  • If yours is a joint family open a HUF account and maintain the separate file for the same.
  • Tax Planning after a Decade of Your Marriage
  • Start investments in the name of your children
  • In the case of a fund, constraints take some small but long-term insurance policies in the children name for their education and marriage.
  • Invest the maturity value of your certain early age investments into long-term risk-free investments.
Tax Planning after the Marriage of Your Children
  • Income in the group is distributed amongst yourself your spouse and your son, daughter in law
  • Prepare your will and adopt tax planning relating to your will to secure tax saving for the family members.
Tax Planning for Senior Citizens
  • Open joint bank accounts and put all your maturity value in the same.
  • Invest in safe instruments and in joint names.
Intelligent tax planning calls for changes in approach every few years. It is, therefore, recommended that you must review your investment and tax planning perspective at least every decade and reorient it depending on the facts and circumstances of the situation.
Please mark all your queries / responses to
Information provided on this newsletter has been independently obtained from sources believed to be reliable. However, such information may include inaccuracies, errors or omissions. and its affiliates, information providers or content providers, shall have no liability to you or third parties for the accuracy, completeness, timeliness or correct sequencing of information available on this newsletter, or for any decision made or action taken by you in reliance upon such information, or for the delay or interruption of such information. , its affiliates, information providers and content providers shall have no liability for investment decisions or other actions taken or made by you based on the information provided on this newsletter.