Flame Newsletter - August 13, 2014     


QUOTE OF THE WEEK:

“While foreign investors are coming in, we have not been able to convince the trustees of provident funds in the country that they can invest in the Indian market and that things are well regulated and well-governed in the Indian market. That should be one of our tasks” - UK Sinha, SEBI Chairman

YOUR FINANCE DEMYSTIFIED:

Guide to planning health insurance

Medical costs have been increasing day by day. From hospital expenses, to surgical costs, a medical emergency could bring about a sudden jolt not only emotionally but financially too. At such times of medical emergencies a health insurance plan is the best way to protect you and your family. It takes care of all medical expenses in case of an unforeseen illness / surgery, thereby reducing the financial burden.

Tax benefits: Investments made towards payment of health insurance premiums, qualify for a tax deduction under Section 80D. For individuals less than 65 years of age, amount of health insurance premium paid or Rs. 15,000, whichever is lesser. For senior citizens above 65 years, amount of health insurance premium paid or Rs. 20,000, whichever is lesser... Read more

Top up plan: Enhance your medical cover at low-cost premium

Most people on an average buy health insurance cover between Rs. 1 lakh and Rs. 3 lakh. This amount may be sufficient for minor surgery. However with rising healthcare expenses, the above sum insured may not be sufficient.

Many people are also concerned about the limited amount of sum insured—which their health insurance plans offer—since medical expenses have increased tremendously. At the same time, these expenses can neither be delayed and unavoidable.

Hence, a common man may find himself in a “Catch 22” situation, where he wants to buy a sufficient amount of health insurance but also fears about the high premium amount which he has to pay.

It is here that one can consider the option of buying a top up plan. The plan is normally beneficial for those who already have a basic health plan and want to enhance their sum insured at an affordable premium amount.

 

DID YOU KNOW?

How do SIPs help?

All market-linked investments go through ups and downs. To create wealth over the long run, a disciplined, far-sighted approach is critical. In this context systematic investment plans (SIPs) can be a preferred option. The concept of SIP is similar to recurring bank deposits wherein investors contribute a fixed sum of money at regular intervals.

Negates the need to time the market: SIP’s biggest advantage is that it negates the need to time the market. In timing the market, one can miss the larger rally; one may stay out in a bull phase or may just enter when the market is entering the bear phase. In a nutshell, one can never accurately predict how the market may behave in the future... Read more

TERM OF THE WEEK

Section 87A of the Income Tax Act 1961: Section 87A provides for Income Tax Rebate of Rs. 2,000 to Individuals earning Income below Rs. 5 Lakh. This Rebate of Rs. 2,000 would be given from the Total Tax payable by an Individual. It is pertinent to note here that this Rs. 2,000 is to be subtracted from the Total Tax Payable and not from the Total Income of an Individual.

IN THE NEWS THIS WEEK

RBI releases monthly bulletin for August 2014

Bring more retail investors to market: Jaitley to Sebi

Lok Sabha passes Securities Laws Amendment Bill, 2014

MF assets recover Rs. 10 trillion mark: CRISIL

IRDA launches long-term insurance for 2-wheelers

ABOUT FLAME

FLAME (Financial Literacy Agenda for Mass Empowerment) is an IIFL initiative to promote financial literacy amongst the masses in order to make them an integral part of India’s spectacular growth story.

In an era of accelerating GDP and rising per capita growth, financial literacy has become more critical than ever before such that we all reap the tangible benefits of the nation’s economic prosperity. Financial inclusion has been quite high on the governmental agenda, given its emphasis on widening the Banking & Financial services network across the country. IIFL’s FLAME initiative stands committed to complement this effort by helping common people gain financial growth and security though better awareness and education on the variety of financial products while avoiding the lure of and loss from unrealistic claims made by unscrupulous agents and ponzi schemes.

Our objective is to light a FLAME, as the name suggests, which will set ablaze a chain of FLAMEs across the country. The new-found light of knowledge will undoubtedly dispel the dark clouds of financial illiteracy and ensure the bright sunshine of financial growth and prosperity.

This portal is but one of the various IIFL initiatives that would be part of FLAME.



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