Blog – Page 19 – Pradeept Agarwal

How To Choose A Health Insurance Plan For Your Family

An individual health insurance coverage is designed to protect only one person. The insurance coverage is limited to one person under such programmes.

If you marry and have children, your current insurance will no longer cover them. In this instance, you will need to get a family health insurance plan to cover your dependents. Individual health insurance policies are often best suited for teenagers who do not have any dependent family members. However, as you become older and have additional obligations, you may realize that such a plan is insufficient. This is where family insurance policies come into play.

A family health insurance policy covers the entire family on an individual amount insured or floater basis, with the same sum insured shared by all family members. Family is the most essential thing in everyone’s life, and individuals will go to any length to defend it. Aside from meeting their material requirements, it is critical to protect them from medical problems with the help of a decent health insurance policy. Coverfox provides a variety of health policies to keep your family protected in the case of an emergency. Our rapid disbursement and a large network of cashless hospitals ensure that you receive the best care whenever you require it.

What Will Be the Cost of Rs 10 lakh Health Insurance Policy for a Family of 4?

If you are unable to afford a large health insurance policy for all of your family members, Family Floater policies are an option. A Family floater plan allows any member of the family to use the sum insured (coverage) after paying a single premium amount. The premium is usually calculated based on the age of the oldest family member. Such programmes are ideal for young families, particularly millennials with young children.

Hospitalization costs have skyrocketed since the pandemic, so acquiring comprehensive health insurance is critical to protecting the family. If the children are young, a health insurance plan of ten lakh rupees may suffice. The premium may vary depending on the insurer’s terms and circumstances. You may use a premium calculator to calculate your premium online and find out your policy premium in minutes.

How to Use a Family Health Insurance Premium Calculator?

Getting a health insurance policy online is becoming more popular since it is convenient, and calculating the premium payable is also quite simple with the health insurance premium calculator. Follow the steps outlined below to receive the premium amount in a matter of minutes!

• Go to the insurance provider’s website and select the Health option.

• Fill in the essential information such as name, age, gender, city, pin code, insured members, mobile number, and e-mail address.

• Select an Individual or Family Floater plan.

• Select the ‘Get Quote’ option.

• You will be transported to the sum insured page, where you may view several plans and their features like coverage, add-ons, and premiums.

• When you select the appropriate plan, you will be given a preliminary premium figure that must be paid to obtain insurance coverage.

Factors Affecting the Family Health Insurance Premium

The health insurance premium is the amount you must pay to the insurer regularly to continue receiving medical treatment and to keep the policy valid. The cost of the premium varies from policy to policy, however, some elements are considered while calculating the premium, such as:

1. Age of the Applicant

The premium rises with age. This is since as we age, we become more susceptible to illnesses such as heart disease, kidney disorders, and so on, and the likelihood of filing claims due to a health issue increases.

2. Sum Insured

The premium will be lower if you have no prior medical history. However, if you have any pre-existing conditions, your premium will be greater because you may require ongoing medical attention.

3. Medical History

When calculating the premium, a person’s medical history is taken into account. If you or a member of your family has a pre-existing ailment, you will have to pay a higher premium.

4. Policy Tenure

The premium is also affected by the length of the policy. A one-year health insurance coverage will cost more than one with a longer-term.

5. Type of Policy

A critical illness health insurance coverage will have a higher premium than a typical policy. Similarly, the premium for an individual policy will differ from the premium for a family floater.

6. No Claim Bonus

NCB is a discount on your insurance premium that you will receive at the time of renewal if you do not make any claims throughout the tenure.

7. Riders

Riders are purchased on payment of additional health insurance premiums. The more riders you include in your policy, the higher will be the premium.

Family health insurance policies are perfect for people who want to ensure their complete family without having to purchase individual plans for each member. If you are a family of four and want to get a health policy with Rs 10 lakh coverage, you must utilize a family health insurance premium calculator to figure out how much it would cost. Just keep in mind that before purchasing a policy, you should compare several family health insurance policies online.

Source: Coverfox

Dos And Don’ts Before You Apply For A Personal Loan

Taking a personal loan has become one of the simplest ways to tackle cash crunches. The loan is offered at minimal eligibility criteria and can be used for several purposes making it the ideal choice for loan seekers. Be it providing financial support during an emergency or funding a purchase of an electronic item, or renovating your home, a personal loan can be availed for any of these purposes.

Another great advantage with a personal loan is that the loan is approved and disbursed in minutes. One can also apply for a personal loan online from the comfort of their home and get the loan disbursed within a few hours.
However, while applying for a personal loan, one must be aware of several factors, ignoring which can have a great impact on their finances and can also lead to future problems. For example, in the urgency of getting funds, many people ignore the interest rate factor. This impacts borrower’s future finances and can also lead to trouble if they are unable to pay the EMIs.
So, here are some of the dos and don’ts for getting approved for a personal loan.

Do’s

Do compare for the interest rate
Different lenders have different interest rate offerings for the customers and if you come across one, it is important to compare it with different lenders. Doing this will help you get the best offer at affordable pricing.
Figure out the loan amount that you require
It is important to know the exact figure of the amount you require before you apply for a personal loan. Borrow only as much as you truly need, even if you qualify for a higher sanction. This way, you don’t pay interest on a higher sum than you didn’t require.
Do compare for offerings with additional features and benefit
Before you apply for a personal loan, do your own research by comparing various loan offerings. Start by comparing the loan amount, tenure, and interest rate. Then finalize one based on the best offering and availability of additional features/offers. These can help you to reduce the cost of borrowing, or even help you get the money you need on flexible terms.
Do check eligibility criteria of the lenders
Many people do not find it important but it is important to check for the eligibility criteria of the lenders. Doing this helps you know the lender who fits best for you as per your eligibility. So, when you apply with such lenders your chances to get approved for the loan also increases.

Don’ts

Don’t accept the first loan offer you get
You might have several loan offers in your message box or mail inbox. But, this doesn’t mean that you accept the first offer you see/get. Doing this is never advisable and even after you are given an offer, it is important to check for several other offers with different backs and then go with the one which suits your requirement and pocket.
Remember to shop around before committing to a loan.
Don’t take out the maximum loan possible
Your lender might suggest you go for a full loan amount for which you are eligible. But, we don’t recommend taking out a big loan just because you are eligible for it. Personal loans are loans with high interest rates and hence one needs to be careful before going for a particular loan amount. However, it is important to analyse your repayment capacity before you apply for a personal loan. Apply as per your requirement and repayment capability. The payment that seems manageable upon approval may be a mistake down the line if you unexpectedly lose your job or in a case where you need to spend some huge amount.
Do not make several loan applications at once
People who have an urgent need for cash sometimes apply for loans with multiple lenders at the same time. Each loan application results in a credit score check, which reduces the score marginally. These checks could hurt your CIBIL score, lowering your loan eligibility and credibility both.
A personal loan is a financial tool that could help to deal with several financial crises. However, keeping the above-mentioned pointers in mind when applying for a loan will save you from future problems.

Source: financebuddha

What Makes ULIP A Flexible Investment Option

It’s better to bend than to break, this proverb correctly be used to define flexibility. Flexibility refers to adjusting to the changes and the challenges that life throws at you.
Being flexible helps you to tackle and adapt to the changing environment quickly. This ensures that you are ready all the time and can quickly cover lost ground. Flexibility in ULIPs makes them one of the most versatile investments possible.
Flexibility is a vital trait to possess, be it life or investment.
What is Meant by Flexibility in Investment?
You are not the only one that should possess the trait of flexibility. Your investment must also be flexible. The more flexible an investment is, the more it will benefit you.
The world is becoming more and more dynamic, and to cope with such an environment you need an investment that is not rigid and can allow you to customize.
An investment must cover the following things to be called ‘flexible’
1. Freedom to Switch Between Assets
An investment should give you an opportunity to switch between the assets you invest in. At the start of an investment, you are given options to choose from many asset classes, these can be equity, fixed instruments, real estate, etc.
It is natural that in a long-term investment, you would not want to stay invested in one fund throughout. As you move on with your goals, you might need to shift your funds as well. A flexible investment will help you do so.
2. Invest Anytime
A flexible investment gives you the option to invest as you like and not only a single time. Different people have different professions and have different payment capabilities.
For example, if you are a salaried individual, you would prefer to pay regularly. On the other hand, if you have a seasonal business, you would like to pay upfront for the whole policy.
A flexible investment considers these and gives you options to invest at your convenience.
3. Withdraw Money when Needed
Withdrawal facilities go a long way in determining the flexibility of an investment, especially when the investment is for the long term. A flexible investment allows premature withdrawal.
The ability to withdraw from your funds is necessary to meet emergencies as they do not come with notice and can occur anytime. To cater to such obstacles, you can need funds.
Withdrawing money from your fund will make sure that you do not have to borrow or take a loan from the bank.
4. Term of Investment
The term of an investment describes the period for which you will be invested in a particular instrument or option. A flexible investment allows you to choose the term you want, instead of having a fixed tenure.
A different individual can possess different goals. Every goal requires a different time. Thus, investment tenure should be flexible so that you can align your term with the wealth goal you want to achieve.
Investment Flexibility in Unit Linked Insurance Plans
Unit Linked Insurance Plans or simply ULIPs are one of the most flexible investment plans in India. This is one investment that you can use for almost all important financial goals in your life. Whether you want to invest safely to build a specific corpus in five years or want to have a great retirement in 30, ULIP can do it all.
The flexibility concept in Unit Linked Insurance Plans looks something like the following:
a) Choose the Asset Class
b) Fund allocation
c) In terms of choosing the premium payment term
d) The benefits to be received
e) Systematic Withdrawal
1. In Terms of Choosing the Funds
Most of the investments invest in one or two assets in which you have no freedom to choose. ULIP plans, on the other hand, offer you multiple asset classes that you can invest in. Some of the options offered include:
– Equity
– Debt
– Balanced Funds
– Liquid Funds
You have the full freedom to choose where to invest in.
2. Fund Allocation
In ULIPs it is not necessary that you have to select one fund to invest in. You are given the flexibility to invest in more than one fund at a time. Yes, ULIP allows you to allocate your money to different funds.
You can choose to allocate different proportions of your premium to different funds. For example, 50% to equity, 50% to debt.
3. In Terms of Choosing the Premium Payment Term
The premium payment term or the PPT is the duration for which you are required to pay your premiums. ULIPs provide you with multiple ways in which you can pay your premium.
You can choose one of the following ways
– Regular Payment
– Monthly
– Quarterly
– Yearly
– Limited Payment
– Single premium Payment
4. Benefits to be Received
There are two major benefits that are present in the ULIP plan. These are
– Maturity Benefit
– Death Benefit
The majority of the investments present in the market provide these benefits in a lump sum, especially the death benefit.
But with ULIP, you can receive your benefits in lump sum as well as in instalments.
5. Systematic Withdrawal
You can partially withdraw your funds before your policy matures in ULIP. However, you can make use of partial withdrawal only when the lock-in period of the policy is completed and you have attained the age of 18.
Flexibility of Invest 4G
Invest 4G, a ULIP offered by the trusted name of Canara HSBC Oriental Bank of Commerce Life Insurance offers all these flexibilities to you and much more.
Invest 4G | Buy ULIP Online
Here we look at other benefits it offers:
1. Transparency
ULIP is the most transparent investment option currently in the market. It shows you how your premium is allocated, in which assets it is allotted and in what proportion.
It also shows you the full list of charges that are deducted along with the amount as well.
2. Bonus Additions
In Invest 4G, you are rewarded for staying invested in the policy in the form of bonus additions.
It offers the following bonuses
a. Loyalty Additions
b. Wealth Boosters
These additions occur after 5 years of commencement of the policy. A % of your fund value is added to your existing fund as a bonus.
3. Tax Benefits
ULIP offers you tax benefits as well. Invest 4G faces no additional tax on switching of the funds. Thus, you incur zero tax liability for switching from equity to debt or debt to equity. Other investments do incur taxes on the same.
Other tax benefits are present in ULIP too, these are
a. You can avail of a deduction of up to Rs 1.5 lakh towards the premium that you pay for your policy.
b. It is also eligible for exemption u/s 10(10)D
4. Wealth Creation
ULIP is perfect for investors which have a long-term horizon in mind. With ULIP, you can create a huge corpus for yourselves in the long run.
Invest 4G provides you with 4 portfolio management strategies that help you minimize the risk and maximize the returns of ULIPs.
You have the flexibility to choose any of the 4 strategies.
a. Systematic Transfer Option (STO)
b. Return Protector Option (RPO)
c. Auto Funds Rebalancing (AFR)
d. Switch Option (SSO)
These strategies work in a pre-defined manner and help in the creation of wealth. These make sure the policy works in the way you want, without too much involvement.
5. Goal Protection Feature
This is another defining feature of the Invest 4G ULIP. If you opt for this feature then-
a. Your policy will continue to run even after your death
b. The remaining premium will be waived off and are taken care of by the company
c. At the end of the policy, your family will receive the maturity benefit
This feature ensures that the ultimate goal gets fulfilled and the family does not have to worry about the premiums.
Flexibility in ULIP plans can make your money work harder if invested right. All you need is to find a way to keep your money invested for another few years. Another aspect of ULIP flexibility you should aim to use is portfolio management strategies. These strategies are extremely helpful in managing your investment risk when you invest in equity funds.
So, why not take advantage of these features to grow your money higher.
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised to exercise their caution and not to rely on the contents of the article as conclusive in nature. Readers should research further or consult an expert in this regard.

Source: CanaraHsbcLife

Chasing Returns vs. Wealth Creation

Creating Wealth from your investments is all about return maximization, right? Wrong! It may surprise you to know that your pernicious little habit of always trying to maximize portfolio returns may in fact be what is impeding your ability to generate long-term wealth. Here’s are four reasons why.
You’ll end up Churning & Burning
The most direct and visible side-effect of perennial return-chasing is excessive churn. You’ll forever be moving in and out of investments; chasing the next hot tip or trying to invest in the “next big thing”. Resultantly, you’ll never stay in an asset class long enough for its cycle to really play out to your advantage. Remember, financial markets seldom dance in tandem with economic cycles. By constantly re-jigging your portfolio with the flavour of the month or trying to trade the news, you’ll probably miss out on the best investment periods altogether. Over time, you’ll be left wondering why you worked so hard to earn lower than fixed-deposit returns!
Your Behaviour Gap will be as wide as the Grand Canyon
It’s a well know fact that return chasing encourages short-term thinking, which in turn triggers a host of biases that create a wide behavioural gap in your long-term returns. Ironically, the very act of chasing returns is what ends up reducing your long-term portfolio growth the most. Every time your investments slip into the red, the loss aversion bias gets you all riled up. When markets turn volatile, the action bias comes to the fore and forces you to “do something” with your portfolio. You keep starting and stopping your SIP’s instead of letting them flow passively. You’re forever trying to time the markets. As a result, you neither benefit from compounding nor rupee cost averaging, negating all chances of creating wealth from your investments.
You’ll usually end up catching the Bull by its Tail
It goes without saying that return-chasers are not forward looking. In fact, they invest for the future with their eyes fixed on the rear-view mirror – as dangerous an investment habit as any. As a result of this tendency, return chasers tend to be overtly enamoured by short term past returns, and end up investing into assets that have already gone up in price. When GILT funds rallied spectacularly in 2008, return chasers jump right in; only to earn a negative 10% return in the next year. When small and midcaps rallied in 2017, they lined up to invest in 2018 just before the spectacular fall. Gold just crossed Rs. 50,000? Bring it on, baby! Wealth Creation actually entails taking the exact opposite stance – that is, going against the grain and investing in an asset that is nearing the end of a bad cycle (ergo, often reflecting poor short to medium-term returns) basis their future outlook.
You’ll probably be flying blind
In his inimitably comical style, the record-breaking Baseball star Yogi Berra once said: “If you don’t know where you are going, you might end up someplace else”. This rings especially true for return chasers, as they seldom invest with a solid Financial Plan in place. Without the tether of future Financial Goals to keep them in check, return chasers usually take investment decisions in an indisciplined and ad hoc manner, without a cool and rational mind. They tend to be mercurial and erratic, and their investments may not even be aligned correctly to their time horizons. As a result, they rarely create wealth from their investments – and often wind up an embittered lot, having had poor initial experiences with volatile growth assets that actually afford them a shot at generating long term growth.

Source: Finedge

Why you should diversify your portfolio

Diversification is a time-tested technique to reduce risk in investments. One would have heard the phrase “Don’t put all of your eggs in one basket.” In the financial world, that maxim is the quintessence of diversification. In simpler terms, diversification is the act of spreading the investments across a range of asset baskets to reduce investment risks.
Diversification not only reduces the overall risks but also tries to maximize returns over long time. This is because all assets behave differently over differently tenures. By having elements of different investment classes in the portfolio — be it Equity, Fixed Income, Real Estate, Gold, or other Commodities, a diversified portfolio tends to earn above-average long-term returns.
The need to diversify a portfolio is accentuated by a variety of reasons – and not limited to the economic environment and the macro or micro business factors. Portfolio diversification is a methodical process. Thus, a mindless diversification serves no purpose. The net effect of diversification should result in steady performance and smoother returns – never moving up or down too quickly – the reduced volatility putting investors at ease.
Main asset classes
The main asset classes in diversification include Equity, Fixed Income, Real estate and Alternative Investments.
A smart approach for individual investors is to diversify using Mutual funds. Mutual funds are high quality investment options which are highly transparent and cost-efficient alternatives. Given the wide availability of options in Mutual fund space one can entirely build one’s portfolio only by using MF’s.
Different assets such as bonds and stocks, generally tend to have a negative correlation. Hence, a combination of asset classes is ideal for diversification benefits. A diversified portfolio across both the areas is better as unpleasant movements in one is likely to be offset by results in another.
While investments in Fixed Income could tend to reduce a portfolio’s overall returns, it could also lessen the overall risk profile and volatility. One can also venture into having some exposures into Gold as it provides a good hedge against USD depreciation.
Different sectors
Secondly, it is vital to diversify the portfolio into different sectors. This will minimize the exposure to a single economic shock and improve their flexibility to rebalance the portfolio. Diversification by industry and size is also useful for an investor looking to limit their exposure to a certain industry. It could be cyclical (financial services, real estate), defensive (healthcare, utilities) or sensitive (energy, industrials).
You will never yield the benefits of diversification by stuffing the portfolio with concentrated exposures in companies from one industry or market. Investments in different markets across the globe reduces the risks of unpredictable natural disasters or an adverse change in the political environment in a particular market severely impacting the portfolio.
It is important to note that the more uncorrelated the investments, the better it is. That way, they weather the market differently. The companies within an industry have similar risks, so a portfolio needs a broad swath of industries. To reduce company-specific risk, portfolios should vary by industry, size, and geography.
Diversification may help an investor manage risk and reduce the volatility of an asset’s price movements. Remember though, that no matter how diversified your portfolio is, the risk can never be eliminated completely. In an uncertain environment, volatile market and shortened economic cycles, it is essential to have your portfolio invested across different asset classes. Most importantly, it is recommended to take professional help in creating a portfolio. The investment professional can guide on how to systematically diversify the portfolio and look at long-term returns and mitigating the risks – both in the short-term and the long-term. The professional help can guide you to determine what level of risk is acceptable to you, and tailor your portfolio to meet that tolerance.
Ultimately, what matters is whether you want liquidity, or if you are willing to wait it out in the long term. This will affect how your investments should be structured. Also, the risk tolerance, the investment goals and financial means of every investor is different. That plays a huge role in dictating the investments mix. Lastly, evidence-based strategies using logic and knowledge rather than emotion usually do well.
As mentioned earlier, diversification does not work the same way with every asset class across every industry in every market. Still, it is an important tool to improve risk-adjusted returns over the long haul.

Source: Financial express

Investing in Uncertain Times

Investors, like most people going about their daily lives, don’t like doubts and uncertainties – like the Covid-19 pandemic, or the Russia-Ukraine crisis. So, we would anything we can to avoid it.
Of course, it’s a good idea to avoid entirely what you can’t totally get your mind around, successful investing is largely about dealing well with uncertainties.
In fact, uncertainties are the most fundamental condition of the investing world.
Seth Klarman wrote in Margin of Safety –
“ Most investors strive fruitlessly for certainty and precision, avoiding situations in which information is difficult to obtain. Yet high uncertainty is frequently accompanied by low prices. By the time the uncertainty is resolved, prices are likely to have risen.
Investors frequently benefit from making investment decisions with less than perfect knowledge and are well rewarded for bearing the risk of uncertainty. The time other investors spend delving into the last unanswered detail may cost them the chance to buy in at prices so low that they offer a margin of safety despite the incomplete information.
What Klarman suggests is that if you need reassurance and certainty, you’re giving up quite a bit to get it. Like high fees to experts who would predict the future (which you falsely believe as certainty, which it isn’t), or expensive prices for stocks (because everyone knows their future is clear, which often isn’t).
On the other hand, if you can get in the habit of seeking out uncertainty, you’ll have developed a great instinct. Plus, in the long term, it’s highly profitable.
Mohnish Pabrai wrote in his brilliant book The Dhandho Investor –
“ Wall Street sometimes gets confused between risk and uncertainty, and you can profit handsomely from that confusion. The Street just hates uncertainty, and it demonstrates that hate by collapsing the quoted stock price of the underlying business. Here are a few scenarios that are likely to lead to a depressed stock price:
High risk, low uncertainty
High risk, high uncertainty
Low risk, high uncertainty
The fourth logical combination, low risk and low uncertainty, is loved by Wall Street, and stock prices of these securities sport some of the highest trading multiples. Avoid investing in these businesses. Of the three, the only one of interest to us connoisseurs of the fine art of Dhandho is the low-risk, high-uncertainty combination, which gives us our most sought after coin-toss odds. Heads, I win; tails, I don’t lose much!

While value investors are typically averse to taking high risks, that’s more a reflection of the price they’re willing to pay for any given investment than the types of situations they most often pursue, which are often fraught with uncertainty.

As businesses constantly evolve and change in response to challenges and opportunities, the lack of clarity around those changes. And the risks inherent in the potential outcomes can cause share prices to diverge widely from underlying business values.

The ability to recognize and capitalize upon that dynamic, and understand whether it’s temporary or permanent, is a key element of what sets the best investors apart.

Source: SafalNiveshak

How To Rebalance Your Investment Portfolio

Let’s have a look at how portfolio rebalancing works. In a word, rebalancing is selling one or more assets and reinvesting the proceeds to reach your target asset proportions. In order to realign your asset allocation with your risk tolerance, you would either sell some of your stock investments and transfer the money into bonds or buy more bonds or any other asset class in the portfolio.
Why is balancing and rebalancing a portfolio so important?
The goal of portfolio balancing is to attain your ideal risk and return potential proportions in your investment portfolio.
When you first design and commit funds to an investment strategy, that is known allocating your assets. As a simplified example, you may want to have 70% of your portfolio in stocks and 30% in bonds. When you initially fund your portfolio in this manner, it would be what you consider a balanced portfolio.
The issue is that these proportions in your portfolio do not remain constant over time. Let’s imagine the stock market doubles in value in five years, while the bond market rises at a slower rate. The value of the equities in your portfolio would outperform the value of the bonds, putting your investment portfolio out of balance dramatically.
You can and should rebalance your investment account to maintain a balanced portfolio over time. If your original risk tolerance spurred you to invest 70% of your money in stocks, then your rebalanced portfolio should be 70% stocks once again.
Which rebalancing method is ideal?
Option 1 : Sell high-performing investments and buy lower-performing ones.
Option 2: Allocate new money strategically. For example, if one stock has become overweighted in your portfolio, invest your new deposits into other stocks you like until your portfolio is balanced again.
You may prefer the second option because rebalancing in the “traditional” way — without investing any additional money — requires you to sell your highest-performing assets. We’re generally fans of the second option since rebalancing by contributing new funds enables you to leave your winners alone to (hopefully) continue to outperform.
Determining how a balanced portfolio looks for you
Unfortunately, there’s no perfect method of determining your ideal asset allocation in a balanced portfolio.
One method of determining the best asset allocation for you is called the Rule of 110. Subtract your age from 110 to determine what percentage of your portfolio should be allocated to stocks, with the remainder mostly in bonds. For example, I’m 39, so this means that about 71% of my portfolio should be in stocks, with the other 29% in bonds.
You can use this method, but it’s also important to consider your individual situation. For example, if you consider yourself to be a risk-tolerant person and short-term market fluctuations don’t bother you, then your balanced portfolio could shift a bit in favor of stocks. On the other hand, if stock market volatility keeps you up at night, then you can err on the side of caution by allocating more money to bonds or even to cash. A portfolio that is balanced for me may not be — and is probably not — balanced for you!
When should you rebalance your portfolio?
Once you’ve determined your target asset allocation and have created a balanced portfolio, the next logical question is, When should I rebalance my portfolio?
There are two basic approaches to rebalancing. You can either rebalance your portfolio at a regular interval (such as once a year) or just when it becomes plainly unbalanced. There is no right or wrong way to rebalance your portfolio, but once or twice a year should do unless your portfolio’s value is exceptionally volatile.
One big advantage of portfolio rebalancing for long-term investors is when market values plummet, our tendency is to liquidate our holdings before things worsen. And, when market prices appear to be rising and “everyone” appears to be making money, that’s when we want to invest. This is natural human behaviour, yet it is the polar opposite of buying low and selling high.
One of the most significant advantages of having a balanced portfolio over time is being compelled to sell high and purchase low. For example, if the stock market falls and equities lose 30% of their value, your bond allocation is likely to become excessively high in your portfolio. Selling some of your bond investments and buying equities while they’re cheap could help you restore balance to your portfolio. Having a well-balanced portfolio and taking steps to maintain it can help you avoid depending too heavily on emotions when making key investing decisions.

Source: Pickright

5 Ways You Can Take Advantage Of A Stock Market Crash

No matter how hard you prepare, there is also some impact on your investments when the stock market crashes. A lot of experts list things to be prepared for when the stock market crashes but what after it does? There are not many experts who have listed foolproof solutions. Not everyone is patient or financially stable until the stock prices go back up again and, in such situations, the pressure is quite high. To start off, we suggest you take a deep breath and relax your body and the second step would be to check out the checklist below that will help you with what to do when the stock market crashes.
Nothing – If you are a long-term investor
The first and foremost thing to do if you are a long-term investor is do nothing. A long-term investor has less to worry about the stock market situation as it doesn’t impact them with major hits. The reason for this is simple, the stock market’s volatility; if the market is on its knees today, in the coming few days, it will be up in the sky again. It is best to do nothing as a long-term investor as the wave continues to flow with both upward and downward thresholds.
Additionally, it is an open window to buy more stocks for long-term investment as the prices are on the downward threshold. This way, you can book more profit for the future by spending only a little during these times.
Invest only as much as you can after saving enough for the next 5 years
A stock market crash is no good news for the short-term marketers and it is always disturbing. The common reason for this is the money involved in the market is actually the money taken as a loan or by submission of entire assets. We do not recommend any marketer to invest money in the stock market without saving enough for the next 5 years.
A stock marketer needs to be intelligent and know the stock market’s volatility. Blindly investing in the stock market is no good and will ultimately lead to heavy losses. If you are investing in stocks today, ensure you have enough fuel left if the money is taken away. A trick that I personally use is to invest certain money in the stock market which is meaningless to me. So, even if the money is drowned tomorrow, I am still running with the regular stream of income.
Diversifying Income Portfolio
As a clever marketer, one should also build assets outside the stock market that can ensure continuous money flow even when the stock market crashes. Diversifying the income portfolio can reduce the impact of the stock market crash. We suggest you build more and more assets when the stock market is working in profits for you. A continuous running stream of income ensures you are financially stable even after the stock market crash. Start today and build a strong and more diversified income portfolio excluding the stock market. As the saying goes by Warren Buffet, “Don’t put all your eggs in one basket,” we suggest you do the same, be diversified.
Buy More Stocks, if you can
There is a perfect opportunity to buy more stocks when the market crashes. If you have saved enough and have other assets that generate income for you, this is the right time to buy more stocks. The reason for this is simple, a stock market crash signifies all the prices are down and this is the perfect opportunity to buy low and sell high.
We all know the thumb rule of the stock market, buy low and sell high. In the case of a stock market crash, you can buy more short-term and long-term stocks that will book profits when the market is up again. But are you going to buy the stocks blindly because they are at a low price? I bet that would be a mistake. We get it, the stock market crash is luring investors who want to buy more but that does not mean you can buy stock blindly. Here, as a stock marketer, one needs to have patience and solid research of the company. This research includes important data such as the estimation of how long it will take the companies to raise the stock prices by giving a great performance if the expense ratio and other statistical data point the investors in the right direction and if the stock market crash has, directly and indirectly, impacted the company in a way that can disturb the performance of the companies.
After all of the above is taken into consideration, one can invest and book more profit after the stock market crash. However, all of this hard research needs to be done in minimum time before the stock market crash impact is reduced and the prices rise again.
Get more long-term investments
This is a perfect opportunity to invest in long-term stocks is right when the market is hit the rock bottom. The reason for this is simple, long-term stocks that last for over 10-25 years yield more profit because of the indirect impact of deflation and high-profit margins. You must be wondering how deflation can be one of the reasons for higher profits, the reason is what you invest today will hold lesser value in the coming 10,12,15 years because of the deflation, and that time, the investment may be considered minimal but the profits will be much more in numbers.
Final Words
We understand stock market crashes are disheartening but to make a wise decision is all it takes along with patience. If you can, buy more stocks after the crash and look into investing in long-term stocks. The stock market is volatile, if it is rock bottom today, it will also rise in the near future.

Source: Nirmal Bang

Things you didn’t know about Life Insurance

On the surface, a Life Insurance seems quite straightforward. An insurance company will receive premiums from the policyholder and in exchange, they will choose to pay out a death benefit to the policyholder’s beneficiaries. However, most life insurance plans can be a lot more complex than this. People fail to realise that there are a lot more options and types of life insurance policies out there that have perks and can be used to one’s advantage.
Here are a few things you didn’t know about Life Insurance:
1. Income source in your time of need
A policyholder need not have to pass away to receive their death benefit early from their Life Insurance policy. In fact, this is a common life insurance myth. The fact is that many plans offer critical illness riders that can pay out funds in case someone were to become disabled, experience a heart attack, suffer from an invasive form of cancer, stroke, or more such things. Hence, Life Insurance plans can provide an important safety net for those who are unable to work or have mounting medical bills. For these reasons, it is recommended that one use these funds while a person is alive, rather than using them solely as a death benefit.
2. A personal pension plan
Some financial advisors recommend that one can treat a Life Insurance as one’s own personal pension plan. In fact, there exist many retirement-oriented Life Insurance plans. These are pension plans, ULIPs, endowment plans etc. To add to this, Life Insurance is very tax-friendly in India, making it an attractive means of lowering one’s tax burden, both prior to and during one’s retirement.
3. Waiver premiums by adding a rider
Did you know that you have the option of premium waive riders that come with multiple policies? It is these provisions that often help those who are disabled keep their coverage, without continuing to pay premiums. As suggested in the name itself, this kind of rider eliminates the need to pay premiums for those who have a qualifying illness or injury. Similar to living benefits afforded to policyholders by some Life Insurance policies, premium waivers are rarely utilised but are incredibly useful.
4. Maturity Payout
One of the biggest Life Insurance myths is that the company will not return your premiums if you survive your policy’s term. This may be true for some policies but not all. In fact, you can opt for the return of all your premiums if you reach the Life Insurance policy’s end and never make a claim. You will be required to pay extra money for the return of your premium rider. However, without being aware of this feature, some people may let go of all of their invested premiums when they could have had it returned to them. Many policies naturally offer a maturity payout in the form of the Sum Assured which is secured to the policyholder, if they survive the policy term.
5. Can be utilised as collateral
A Life Insurance fun fact that you probably weren’t aware of, is that depending upon the policy, one can use their Life Insurance as a collateral to secure a loan. Besides term insurance plans, this feature tends to apply to all other Life Insurance plans. To explain this simply, a plan that comes with a maturity benefit can also be used as a collateral if one wishes to borrow funds, thereby offering you financial flexibility when you are in need of it the most. Hence, if you are desperately seeking to take a loan, you can use your Sum Assured as a collateral for the same.
6. Tax-Free Source of Income
A whole Life Insurance plan that builds up a cash value over a time period can serve as a tax-favored repository of funds that can be utilised by you in your time of need. This cash value can be used for nearly any financial requirement you might have, whether it is to fund your children’s education or to pay for a vacation. This cash value is also completely tax-free since it is not considered to be a profit.
Conclusion
The truth about Life Insurance is that it is more than just a financial security for your loved ones, in case you are not around. This Life Insurance myth needs to be busted so more people can discover Life Insurance plans worth putting their money into. Some other Life Insurance fun facts are that it can serve as a loan collateral, become a tax-free income source and aid your retirement goals. You also have the flexibility to waive off your premiums in case of an accidental disability or illness.

Source: ICICI Bank

Everything you ever wanted to know about Package Motor Insurance

A package policy is an insurance cover which in addition to covering third party liabilities, covers the insured against damages caused to their own vehicle such as accidental damage, fire, vandalism, acts of god, natural calamities, etc. A package cover comes at a higher premium compared to a plain third-party (TP) cover simply because it offers wider protection.
A basic third-party insurance protects the vehicle owner against any liability that could arise when a third-party gets injured or dies in case of an accident. Third party insurance is mandatory by law in order to drive on Indian roads, and hence, most people buy it to adhere to regulatory requirements. However, a package motor insurance covers damages to one’s own vehicle in addition to third-party damages and liabilities.
Factors Affecting Motor Insurance Premiums
A host of factors influence the premium of package insurance covers. Key factors include:

• Make and model of the vehicle

• Age of the vehicle

• Add-ons opted for

• Customer profile

• City of the customer

Motorists can choose the suitable coverage required for their vehicle. In case of only a TP cover, the premiums are regulated by the Insurance Regulatory and Development Authority of India (IRDAI).

What Makes a Package Motor Insurance Policy Attractive?

- • Extensive coverage: A package motor insurance provides protection to the insured’s own vehicle, personal injuries to oneself and passengers based on the type of policy chosen. For instance, a package policy will cover the damages caused due to rain or natural disasters like floods and earthquakes. If the vehicle owner has only a third-party cover, they would have to bear the expenses arising out of such events from their own pocket.
- • Value for money: Car owners can be at ease, as they do not have to fret over costly repair expenses. In fact, if they take add-ons such as depreciation cover and consumables, the only requirement would be for them to pay for the voluntary excess (in the case opted for) and compulsory deductibles during the claim amount. Note that unless the insured has opted for a zero depreciation cover, the depreciation in addition to the deductible would be payable out of pocket.
- • Relevant Add-ons: Unlike a third-party car insurance cover that gives the applicant limited coverage on their vehicle, package insurance offers enhanced coverage options. Also, it can be further leveraged by opting for add-on covers such as zero depreciation cover, roadside assistance, engine protection and passenger cover etc., at a small added cost.
- • Option to customize IDV (Insured’s Declared Value): IDV is the current market value of your car. A lower IDV can result in a lower premium, which can be tempting, but it also offers lower coverage in case of theft or loss of the vehicle. New-age insurers offer the benefit of customizing the IDV of the vehicle (subject to prescribed limits) while opting for insurance, and we suggest taking adequate cover.

Events Covered Under a Package Insurance Cover
Accidental damage: If the insured or the insured’s car suffers any loss due to an accident, a package cover will pay for the damages.
Theft: Car thefts are not very common in India. However, a few localities are prone to thefts, and hence, such an eventuality cannot be ignored completely. If an insured’s car gets stolen, they can file a claim for the same if the vehicle is covered under a package motor insurance policy.
Damage caused by natural disasters or severe weather: Damages sustained by the vehicle due to natural disasters such as floods, earthquakes, hurricanes, tornadoes, etc., can be covered under a package insurance scheme. People who live in disaster-prone areas would benefit by opting for one such policy. For example, residents that live near the coastal belt can insure their vehicles against damages from frequent cyclones and floods that occur during monsoons.
Vehicle damage caused due to civil disturbance: Due to the political instability in certain areas of the country, often, vehicles tend to sustain damages in the event of riots or violent protests. Such damages too are covered under a package policy.
Fire: Destruction to the car caused by fire can be recovered by opting for a package insurance policy. Such covers reimburse damages caused due to garage fire, engine fire, and fire caused due to mechanical dysfunction.

What’s Not Covered In Package Motor Insurance

Certain events and incidents may not be covered even if you have a package motor policy. One such example is if your vehicle endures damage due to a collision, then a car insurance claim cannot be made. A few other situations that are not covered under the package insurance cover include:

Electrical or mechanical breakdown: Generally, under the standard motor policy, a mechanical and electrical breakdown is not covered unless the insured can prove that damage was caused due to flooding.

Driving without a license: In case you are found driving the car without any valid driving license, then the damages and/or losses incurred will not be covered.

Drunk driving: A package policy does not cover any losses or damages incurred if you are caught driving the car under the influence of alcohol.

Damage to tyres: It does not cover any loss or damages to the tyres of your vehicle unless it is a direct result of a car accident.

Loss caused due to nuclear weapon/war: It does not cover any loss or damage caused to your vehicle as a result of war, mutiny, nuclear weapon or other such dangers.

Advantages of Opting for Package Insurance

Covering damage to one’s own vehicle: It ensures that the insured wouldn’t need to bear the resulting financial loss regardless of the severity of the damage. However, the cover wouldn’t pay for the exclusions that are explicitly mentioned in the policy document.

Covering third-party damage: In cases where the insured ends up injuring another person due to their negligence, a package insurance policy guarantees the coverage of the loss caused to the third party. This policy covers the non-criminal liability expenses even when the insured is proven at fault and has caused bodily or property damage to a third party.

Provision of add-on covers: Facilities such as zero depreciation cover and engine protection cover are not offered under a third-party liability policy, but they can be bought as add-on covers to ensure maximum protection from unfavorable events.

Procedure of Filing a Package Insurance Claim

Step 1: Registration of claim: The insured would be required to intimate their insurer about the claim. This can be done by visiting the official website or by writing to the insurer via email.

Step 2: Submission of the form and documents: The insured will need to download and fill the claim intimation form with details of the insurance policy, insured vehicle, owner of the insured car, etc. In cases of theft, the insured may also have to submit a copy of the First Information Report (FIR).

Step 3: Survey the damages: In this step, either one can perform a self-survey or opt for a digital survey . If the insured opts for self-inspection, the insurer will require you to share images for inspecting the damages caused to the vehicle. In the absence of a self-survey facility, the damages are evaluated by a surveyor or a workshop partner.

Step 4: Tracking the claim: Once the insurer is informed and the claim form is submitted along with the required documents, the claim is processed. The insured can track their claim status on the insurer’s website or a designated portal.

During renewals, one can also upgrade their policy from a third-party cover to a package insurance policy. The process of renewing car insurance has been made simple by new-age Insurtech companies. After choosing the insurer, policy and add-ons of one’s choice, the process can be initiated by filling in the vehicle details like make, model, variant, registration date and previous policy details.

Despite the extensive coverage a package motor policy offers, you may still wonder if you should opt for a package cover or stick to only a third-party cover. It is more effective to have package car insurance for a relatively new vehicle as the market value would be high, and any potential damage can result in a huge financial burden.

Bottom Line

Even if one does not choose a package coverage, it is important to bear in mind that in case of any unforeseen damage to the car, the steep bill and potential losses will be borne by the individual alone. Hence, it is necessary to weigh the costs of such potential repairs/ fixes against the premium that one would pay towards a package insurance cover. In most cases, opting for a package policy is a smarter option as it covers the insured against most forms of unforeseen events or damages that can be caused to their vehicle.

Source: Forbes