ELSS Mutual Funds

ELSS Mutual Funds

ELSS Mutual Funds

An Equity Linked Savings Scheme (ELSS) is a mutual fund scheme primarily focused on investments in equity and equity-related securities. ELSS funds are strategically structured to enable investors to reduce their tax liabilities under Section 80C of the Income Tax Act in India. In this article, we will provide an extensive examination of ELSS mutual funds.

                                                                                                                                                        Subas Tiwari                                                                                                                                                                               In comparison to Fixed Deposits or the National Pension Scheme (NPS), Equity Linked Saving Scheme (ELSS) provides numerous tax-saving benefits while also delivering higher returns. Mutual funds, including ELSS, typically yield greater returns than FDs or NPS. Consequently, individuals who invest in ELSS funds or equities tend to regard ELSS as a more effective option.

Imagine the advantages of accumulating funds while also enjoying a substantial tax exemption. Tax exemptions essentially translate to savings, which can then be strategically allocated to other financial objectives. A similar program, known as Equity Linked Saving Scheme (ELSS), allows individuals to save up to Rs. 46,800 in taxes.

ELSS is an investment fund that offers optimal returns within a minimal lock-in period. It is predominantly composed of stocks from large and medium-sized companies. ELSS has been thoughtfully structured to simplify tax-saving for investors. Over an extended holding period, it presents significant potential for growth and enhanced returns. This fund boasts various appealing features; for instance, you can initiate investments with as little as Rs. 500, and it accommodates systematic investment plans (SIPs). The fund comes with a minimum lock-in period of 3 years, meaning you can easily exit the fund and access your funds after this period. The most noteworthy feature is that this fund empowers taxpayers to potentially save up to Rs. 46,800 in taxes.

Fund’s salient features

There is a specified range for the minimum deposit amount in this tax-saving fund. In this particular fund, you can commence your investment with as little as Rs 500, and the upper limit for your deposit is capped at Rs 1, 50,000. Your earnings from this fund are contingent on both your deposit amount and the prevailing market conditions. Considering the performance over the past year, it has been promising, with mutual funds, as well as equities, delivering favourable returns.

Multiple benefits with single investment

Indeed, an Equity Linked Saving Scheme (ELSS) is a tax-saving fund that predominantly allocates its funds to equity schemes. Equity funds are investment schemes that channel funds into the shares of various companies. The selection of companies for investment is typically based on their market capitalization, and the fund’s assets are distributed among these companies. If an individual consistently invests Rs 1.5 lakh in an ELSS every year, they can avail a tax saving benefit of up to Rs 46,800 under section 80C of the Income Tax Act. It’s important to note that while the tax benefit is capped at Rs 1.5 lakh, you are indeed allowed to invest more than this amount in ELSS if you choose to do so.

Why invest in ELSS?

ELSS is considered to be much better than those who follow the traditional methods of tax saving. Compared to Fixed Deposit or NPS, ELSS offers many tax saving facilities along with giving higher returns. Mutual funds earn more than FDs or NPS. Therefore, people who invest in ELSS funds or equities consider ELSS to be more effective. The biggest thing is that the lock-in period of ELSS is very less as compared to FD or NPS. That is, the possibility of high returns in a short time can be found in ELSS.

Who can invest?

ELSS can be invested by any person who wants to reduce his income tax under section 80C by investing money in tax saving scheme. It is an equity investment, so those who invest money for a long term and expect returns, who are less concerned about market risk, can make the most of this fund. Since ELSS has a lock-in period of 3 years, the fund is taxed on the basis of long-term gains. If earning more than Rs 1 lakh then interest of 10% will have to be paid.

More work with less investment

You don’t have to contribute a substantial amount of money all at once to participate in this fund. You needn’t worry about having to make a large initial deposit to benefit from this tax-saving program. You can join this scheme with a minimal investment. By averaging your contributions to this fund every year, you can start your investment journey with the same amount of money. You’re not required to make substantial payments per unit of the fund. If you prefer, you can begin your investment with as little as 500 rupees, and this approach also fosters a disciplined investment strategy.

What are ELSS funds?

ELSS is a mutual fund scheme & is quite similar to diversified equity fund of Mutual Fund. As the name suggests, the scheme primarily invests in equity market by buying equity stocks of companies listed on the stock exchanges. The units of the scheme are offered at the NAV (Net Asset Value). The NAV is announced for all business days and keeps changing primarily depending upon the movement in the prices of stocks held in the portfolio of the scheme in relation to market fluctuations. Mutual Fund ELSS is a good tax-saving instrument but still is not invested in large numbers by tax-savers. So, this article is just to wake them up & take notice of this tax-saving investing option so that there is maximum participation of the public from all walks of life.

What is the urgency to invest in ELSS?

It is most likely that the Direct Tax Code (DTC) proposed by the Government will come into effect (sooner than later), and your most dependable tax saving section – Section 80C of the Income Tax Act would undergo amendments. While the DTC includes a proposal to increase the eligible deduction under Section 80 C, Equity Linked Savings Schemes (ELSS) -also known as ‘tax saving mutual funds’, would no longer continue to be a part of eligible tax saving instruments, thus leaving you with fewer market-linked investment options to accelerate the process of wealth creation.

Who are advised to invest in ELSS?

YES. This is an important aspect of tax-planning especially when you look at ELSS as a tax-saving option. The following are the factors that could be considered.

Those who have clear & focused financial goals

If you have financial goals set in your life, the same too should influence the way you do your tax planning and invest in tax saving instruments. So, say for example your goal is retiring from work 5 years from now, then your tax saving investment portfolio should be less tilted towards market-linked tax saving instruments, as you are quite near to your goal and your regular income will cease. Likewise, if you are many years away from the financial goal, you should ideally allocate maximum to market-linked tax saving instruments and less towards those instruments (tax saving) which provide you assured returns.

Those who have risk appetite

It refers to your ability to take risk while investing, and it is totally dependent on your age, income, expenses, and nearness to your goal. So, if your willingness to take risk is high (aggressive), you can tilt your tax saving investment portfolio more towards the market-linked instruments such as ELSS. But if you have a moderate-risk profile, then you can take a mix of 60:40 into market-linked tax saving instruments and assured return tax saving instruments respectively.

Thus, now if you are young, income is higher, and therefore willingness to take risk is highest along with your financial goals being far away; you may look at ELSS mutual funds to avail a tax benefit under Section 80C. Please note that ELSS mutual funds are 100% diversified equity funds and a distinguishing feature about them is the compulsory lock-in period of 3 years brings in financial discipline towards holding one’s investments for the long-term. For investment in ELSS, there is a minimum investment amount of Rs. 500 which is unlike the other equity-oriented funds (which generally demand Rs. 5,000 as the minimum investment amount).

What should be the income bracket to enter investing?

It is said that if your income is high, your willingness to take risk is generally high. This can work in your favour, as you can allot your portfolio more towards equity-related instruments such as ELSS, and make your portfolio appear more aggressive. Similarly, if your income is not high enough, you can invest in other tax-saving instruments which provide you assured returns.

At what age should one begin investing?

Your age should determine your asset allocation. If you are young, you can take more risk and vice-versa. Hence, for prudent tax planning too, if you are young, you should allocate more towards market-linked tax saving instruments such as ELSS. Moreover, you would also enjoy the advantage of greater investment tenure which would enable you make more aggressive investments and create wealth over long-term to meet your financial goals. 

How to select ELSS funds?

Ideally while evaluating ELSS mutual funds, one should assess their performance over a 3-year time frame, as this would enable you to judge whether they have created wealth for your post- lock-in period.

Moreover, the fund has to ensure to its investors to fairly low-risk, but should provide risk-adjusted returns thereby making it a low risk-high return investment proposition in the category. Also, the returns should have been achieved by the Fund without indulging in much portfolio churning.

What are the benefits of ELSS MF?

Tax benefit on the Investment

You can get full tax benefit of investment under section 80 C of Income Tax Act. Maximum taxable limit is Rs. 150000 for the current Assessment Year.

Shortest lock-in period (period during which payment will not be made if you go in for tax benefit)

Lock-in period of ELSS is 3 years which is shortest in comparison to any other tax saving investment. This lock-in period is the only difference between diversified equity mutual funds & ELSS. When compared to Bank tax-saving FDs, ELSS scores over them as Bank FDs have a lock-in period of 5 years.

Tax-free returns

Any profit/ capital gain you have from ELSS is completely tax free. If you compare the returns from NSC & Tax-Shield Bank FDs, these are completely taxable & paid interest is added to your income for tax computation. So, you end up paying tax on interest received. Only PPF offers tax- free returns but it has a maturity period of 15 years.

Tax free dividends

ELSS schemes give dividends on regular intervals and the dividend you receive is tax free.

No entry loads

Say if you invest Rs. 15000 in ELSS Scheme, your Rs. 15000 is invested in ELSS Mutual Fund. You have to decide how much want to pay your financial advisor. Take a word of caution: some insurance agents sell ULIPS as Mutual Fund + Insurance with lots of ‘load’ expenses.

High growth

Equity funds can be volatile in the short run, but have been known to beat inflation and create wealth over the long run. If you are looking at investing some money that you won’t need in future, and are willing to stand atop the ups and downs of the market, you may find ELSS an ideal tax saving option.

Systematic Investment Plan (SIP) in ELSS

In SIP, you invest a certain amount each month in a fund. It’s an effective way of investing in ELSS as the concept of rupee cost-averaging and the power of compounding works well. Even if you have done your tax planning for this year, start from 1st AUGUST, 2015.

Comparison with Unit-Linked Insurance Plan

The investors & tax-saving public sometimes think of ELSS funds and ULIPs as alternatives. This is a mistake as functionally, there is nothing common between ELSS funds and ULIPs. It’s a basic rule of saving to not mix up insurance and investments. ELSS and ULIPs are two different products that serve different purposes.

ELSS is an equity fund in the market ULIP is a mix of life insurance and investment offered by life insurance companies
ELSS have a predictable cost, and easily understandable returns and are transparent about how the fund operates and what it invests in  From the premium paid, the insurer deducts charges towards life insurance (mortality charges), administration expenses and fund management fees. So only the balance amount is invested
Only payment of fund management charge (as expenses) per year is applicable ULIPs have high first year charges towards acquisition (including agents’ commissions)
The total investment under ELSS is in Equity Funds only In a ULIP, the mix of investment and insurance prevents savers from having a clear cost-vs-benefit understanding of either of the two components
In ELSS, there is no fixed period of maturity except for the lock-in period as the fund is open-ended With an ULIP, you have to block your money for long periods of time. So, you sacrifice on transparency and liquidity
ELSS has a 3 years lock-in period ULIPs have a 5 years lock-in
ELSS has no switching facility of funds as it is controlled by the fund manager


ULIPs provide for ‘switch’ from one fund to another


Where do ELSS stand as a preferred fund for investment?

ELSS stands out as a favored tax-saving choice for savvy investors. It not only offers diversification through its equity investments but also comes with a relatively short lock-in period of just 3 years from the date of investment. The returns generated from ELSS investments are closely tied to the performance of equity markets. Furthermore, the returns from ELSS schemes are tax-free.

In recent years, some of these funds have demonstrated exceptional growth, multiplying in value by three times within a 5-year period. It’s worth noting that there is no specific limit on the amount you can invest in ELSS funds. However, you can claim a tax deduction of up to Rs. 1,50,000 under Section 80C of the Income Tax Act.

It is always better to invest-

  • via SIP mode rather than lump-sum (for cost-averaging)
  • in GROWTH options (for wealth accumulation)
  • in DIRECT Plan (to save costs & higher returns)

ELSS vs. NPS vs. PPF

ELSS (Equity Linked Savings Scheme), NPS (National Pension System), and PPF (Public Provident Fund) are all popular tax-saving investment options in India. Each of these options has its own set of features, benefits, and limitations. Here’s a comparison of ELSS, NPS, and PPF to help you make an informed decision:

  1. Nature of Investment:

ELSS: ELSS is a mutual fund scheme primarily investing in equities. It aims for capital appreciation and carries market-related risks.

NPS: NPS is a retirement savings scheme that allows you to invest in various asset classes, including equities (up to 75% of the contribution in Tier I account). It is designed for building a retirement corpus.

PPF: PPF is a long-term fixed income investment scheme offered by the government. It offers a fixed interest rate and is considered a safe investment option.

  1. Lock-in Period:

ELSS: ELSS has a lock-in period of three years, which is the shortest among the three options.

NPS: NPS has a lock-in period until retirement (with some exceptions). Partial withdrawals are allowed under specific circumstances.

PPF: PPF has a lock-in period of 15 years, but it can be extended in blocks of five years indefinitely.

  1. Tax Benefits:

ELSS: Investments in ELSS are eligible for a tax deduction under Section 80C of the Income Tax Act, up to ₹1.5 lakh per financial year. However, returns from ELSS are subject to long-term capital gains tax.

NPS: Contributions to NPS enjoy tax benefits under Section 80CCD (1) and Section 80CCD (2) of the Income Tax Act. However, there are restrictions on withdrawals, and the maturity amount may be partially taxable.

PPF: PPF investments and interest earned are both eligible for tax deductions under Section 80C. Additionally, PPF returns are tax-free.

  1. Risks and Returns:

ELSS: ELSS investments carry market-related risks. Returns can be higher but are subject to market fluctuations.

NPS: NPS offers a mix of asset classes, including equities, which can provide potentially higher returns than PPF but with some risk.

PPF: PPF offers fixed, guaranteed returns. It is a low-risk investment but typically provides lower returns compared to ELSS and NPS.

  1. Flexibility:

ELSS: Offers flexibility in terms of investment amount and frequency (through SIPs). Post-lock-in, you can redeem or switch your investments.

NPS: Provides flexibility in asset allocation and contribution amount. It is designed for long-term retirement planning, so withdrawals are restricted.

PPF: Offers flexibility in terms of contribution amounts and frequency but has a long lock-in period.

  1. Purpose:

ELSS: Primarily used for wealth creation and tax-saving goals.

NPS: Designed for long-term retirement planning and building a retirement corpus.

PPF: Suited for long-term savings, particularly for conservative investors.

  1. Liquidity:

ELSS: Becomes liquid after the three-year lock-in period.

NPS: Generally, not liquid until retirement, with some exceptions.

PPF: Offers partial withdrawal options from the seventh year onwards.

The choice between ELSS, NPS, and PPF depends on your financial goals, risk tolerance, and investment horizon. Many individuals opt for a combination of these investment options to balance risk and returns while achieving their financial objectives. Consulting a financial advisor can help you create a tax-efficient and diversified investment portfolio based on your specific needs and circumstances.

Portability of Health Insurance

Portability of Health Insurance

Portability of Health Insurance

If you find yourself dissatisfied with the services provided by your current mobile phone service provider and wish to switch to a different company, you can easily port your mobile number. Similarly, you also have the option to port your health insurance policy, allowing you to transfer your policy from one insurance provider to another.

                                                                                                                                                                  Subas Tiwari

Portability of Health Insurance

When you change your health insurance policy from one insurance company to another, you don’t have to lose the benefits you have accumulated.

In the past in health insurance policies, such a move resulted in your losing benefits like the waiting period for covering “Pre-existing Diseases”.

Now IRDA protects you by giving you the right to port your policy to any other insurer of your choice. It has laid down that your new insurer “shall allow for credit gained by the insured for pre-existing condition(s) in terms of waiting period”.

This applies not only when you move from one insurer to another but also from one plan to another with the same insurer.


  • You can port your policy from and to any general insurance company or specialised health insurance company
  • You can port any individual/ family policies
  • Your new insurer has to give you the credit relating to waiting period for pre-existing conditions that you have gained with the old insurer
  • Your new insurer has to insure you at least up to the sum insured under the old policy
  • The two insurers should complete the porting as per the timelines prescribed in the IRDA (Protection of Policyholders’ Interests) Regulations and guidelines


  • You can port the policy only at the juncture of renewal. That is, the new insurance period will be with the new insurance company
  • Apart from the waiting period credit, all other terms of the new policy including the premium are at the discretion of the new insurance company
  • At least 45 days before your renewal is due you have to
  • Write to your old insurance company requesting a shift
  • Specify company to which you want to shift the policy
  • Renew your policy without a break (there is a 30 day grace period if porting is under process)

IRDA Facilitation

IRDA has created a web-based facility to get and maintain data about all health insurance policies issued by insurance companies to individuals so that it can be accessed by the new company to which a policyholder wishes to port his policy.

This enables the new insurer to obtain data on history of health insurance of the policyholder wishing to port his policy.

Process for Health Insurance Portability Policy

If you think that health insurance portability is an excellent choice for yourself and now you are wondering how to port your health insurance policy, here are the details of how to complete the process:

Stage 1

First of all, you may have to fill the IRDA portability form to initiate the process. Note that a policyholder can initiate a portability request when the policy is due for renewal. You will have to approach the insurance company where you wish to port your existing health insurance policy. The new insurer will send you a couple of documents that include a portability form and a proposal form. They may also send details about various health insurance products that the company offers.

Stage 2

Once you fill all the necessary forms and submit it to your new insurance company, they will get in touch with your previous insurer for obtaining your medical records and other related information. They might also ask for your claim history. Your old insurance company is bound to share this information via IRDA i.e. the insurance regulator when they receive such requests.

Stage 3

When the new insurance company receives all the required details, they will decide whether or not they wish to provide you a health insurance policy. This is called underwriting of a policy. An underwriter will analyse the data related to you and consider your risk profile to decide about providing health insurance to you. Your new insurance company is supposed to underwrite your policy within 15 days if they decide to insure you. In case of a delay in this time period, it is considered that you are insured under the new insurance company.

Documents Required For Porting a Health Insurance Policy

The process of porting a health insurance policy can differ slightly based on the terms and conditions of the insurance company. You need to get in touch with your current and previous insurer to understand the exact set of documents required for the purpose of porting the policy. You may be asked to submit the following documents to initiate the process:

  • Identity Proof
  • Address Proof
  • IRDA portability form
  • Proposal Form
  • Insurance Policy
  • Claim History if applicable
  • Declaration of no claims, if applicable
  • Documents related to medical history

Advantages & Disadvantages of Health Insurance Portability

Switching to a new health insurance company has its own set of advantages and disadvantages. We will discuss both in this section. You can read through them and then decide whether you want to make a switch to a new insurer or renew the existing health insurance policy at your current insurance company.

Benefits of Porting Health Insurance Policy

Benefits of porting to a new health insurance company are as follows:

  • Customize the Policy- You have an option to customise the policy to an extent. This way you can make changes in the policy to suit your existing needs from a medical insurance policy.
  • No Claim Bonus- In case you have an accumulated No Claim Bonus on your existing policy, your new insurer will calculate this discount and incorporate it with the amount of premium you are supposed to pay. Thus, you can continue to avail the benefit of No Claim Bonus by leading a healthy lifestyle.
  • Health Insurance Benefits- Apart from the accumulated No Claim Bonus, all the other benefits of your policy remain intact even after you make a switch. Porting allows you to keep the existing benefits and avail new ones with a new insurer.
  • Premium- The current health insurance market in India is brimming with competition. Insurers want policyholders to join them and buy a health insurance policy. Thus, porting the existing policy may lower your premium while the benefits may increase

Disadvantages of Porting Health Insurance Policy

Disadvantages of porting to a new health insurance company are as follows:

  • Porting on Renewal- As mentioned earlier, porting a health insurance policy is only possible near the date of renewal. A policyholder may not be allowed to port the policy when the renewal date is far away.
  • Changes in Plans- Changing the existing health insurance policy drastically is not allowed. You can make certain changes in the extent of coverage, however, changing the whole plan is not possible.
  • Extra Coverage- The policyholder needs to pay a higher amount of premium for buying any kind of additional coverage at the new insurance company.

What to Do If They Reject Portability Requests?

There could be a few reasons why one’s health insurance portability gets rejected. Let’s take a look at these reasons and understand what a policyholder can do in such cases.

  • Providing incomplete information-This can lead to rejection because the new insurance company is not provided with true and complete information about the policyholder. Getting in touch with the insurance company to provide all the required details might be done to get an approval.
  • Not submitting the documents in time- As mentioned earlier, there is a timeframe in which the policyholder needs to get in touch with the new insurance company and apply for a switch. If there is a delay, the request for porting the policy may get rejected. The policyholder must now wait for the next renewal date and make sure that necessary timelines are followed.
  • Claim history- There are high chances that your request for porting the policy may get rejected if the claim history is not proper. The company has a right to reject the request in case of frauds or misrepresentation of information.

Things to Remember While Porting For Health Insurance

A medical emergency can affect a person in both financial and emotional ways. It can easily deplete your savings if you do not have proper health insurance coverage. Buying a policy without considering your needs, lifestyle, and coverage can have a huge impact on the claim amount. Thus, it is important to consider the following things while porting your health insurance policy from one insurer to another.

  • Limits and Sub-limits- Each type of coverage of a health insurance policy has a certain cap on the claimable amount. For example, the daily room rent could be capped to Rs. 2500. You need to check such limits when you port health insurance policy and make sure that you are okay with the limits and sub-limits of the new policy.
  • Benefits- Each health insurance policy is designed to provide certain features that are helpful for the policyholder. You need to understand that these features or benefits are limited to the policy and cannot be ported. For example, if your old policy offers pre-hospitalization coverage for 30 days and the new insurance company offers this coverage for 15 days, you cannot change this feature. You have to make do with the new coverage.
  • Premium- The new insurance company may offer a lower premium for a similar insurance policy. However, you need to make sure that the coverage offered for a lower premium is sufficient for your needs. Lower premiums for a lower coverage will increase your out of pocket expenses at the time of a medical emergency. ‘Out of pocket expenditure’ refers to the money you pay directly to the hospital or a medical facility without the involvement of the insurance company.

Frequently Asked Questions (FAQs)

Here are some answers to the most asked questions related to Health Insurance Portability.

From the article, I understood that making a switch between two insurance companies is possible. However, is it possible to switch between plans in the same insurance company?

Yes, it is possible to switch to a new health insurance policy offered by the existing insurance company. This process will not take as much time as switching to a new insurance company, because your current insurer already has all the details required to make a switch.

I have already served half of the waiting period. Will it reset upon porting the policy to a new health insurance company?

Probably not. If the applicable waiting period for a specific condition is similar to that of the old policy, then you may only have to serve the remaining waiting period under the new plan. However, this solely depends upon the terms and conditions of the new health insurance company.

Why should I port my health insurance policy?

You should port your health insurance policy if you are not happy with the services provided, coverage, or premium with respect to the current insurance company and your health insurance policy.

Does the age of a policyholder matter while porting health insurance?

Yes, the age of a policyholder is a vital factor while porting the policy. The older the person the more will be the health insurance premium. An insurance company may also reject a proposal based on the risk factor associated with the age of a policyholder.

Is it a good idea to buy health insurance coverage from two different insurance companies?

Buying health insurance from two different insurers depends upon the coverage being purchased. There is no point in buying similar coverage from multiple insurers. Instead, consider buying different coverages to create a comprehensive health insurance portfolio. This can provide all-round coverage in the time of a medical emergency.

Info sourced from: https://policyholder.gov.in & https://www.acko.com


Insurance cover against Tsunami & Earthquake

Insurance cover against Tsunami & Earthquake

Insurance cover against Tsunami & Earthquake

Tsunamis are massive sea waves triggered primarily by earthquakes that occur under the sea. A considerable amount of water may be displaced when an earthquake or volcanic activity occurs. Waves are formed when water is disturbed. When these waves approach shallow water in coastal locations, they become high and crash into the shoreline. Tsunamis wreak extensive devastation to people and property.                                                                                                                                             


Following the tsunamis that struck Japan and India in 2004, a debate arose as to whether insurance coverage for tsunami is available in India. Tsunamis have been reported in India as long back as 1762 AD. The Indian peninsular is covered by the water bodies on three sides; therefore, those staying in the coastal area in earthquake-vulnerable areas require a tsunami insurance coverage. Coverage for tsunami insurance is not required if you are living in the inlands, comfortably far away from the sea.

Sadly, insurance companies are yet to provide a tsunami policy and the world over, the only option for tsunami insurance is through coverage provided for natural calamities like flood, landslide, earthquake, volcanic movement, etc.

The term ‘tsunami’ and ‘tidal wave’ is the same thing. The world ‘tsunami’, a Japanese word was created by the scientific community to distinguish tsunami damage from other forms of flood and earthquake damage. Earthquakes, submarine landslides and volcanic eruptions are some of the sources of these killer waves.

Why no Tsunami insurance Cover?

A characteristic that distinguishes tsunami from most other major hazards is that it does not occur from one cause. As some experts say, to define tsunami as a result of earthquake only is a narrow definition. While ‘earthquake’ is a narrow term to define the cause of tsunami, ‘earth movement’ is a broad term that includes earthquakes, landslides, rockslides, mudslides, subsidence, etc. Therefore, it is better to take insurance for both flood and earthquakes.

 Tsunami Prone Areas in India

The government has identified a list of areas prone to tsunami in India on eastern coast. These include –

1) Puri
2) Kakinada
3) Machilipatnam
4) Nizampatnam-Vetapalem
5) Chennai
6) Cuddalore-Pondicherry
7) Rameshwaram
8) Thoothukudi
9) Alappuzha-Chavara
10) Kochi

You should know that tsunamis aren’t common in India due to their geography. However, India isn’t immune to tsunamis. Past records show the tsunami-affected areas in India that suffered a major blow. These tsunamis originated in the Indian Ocean.    


How to Prepare for a Tsunami

1) Before a Tsunami

  • One should get ready before a tsunami strikes. It will help reduce damage to your home and business, it will also help you to survive.
  • Ask your council about your tsunami risk. If you live in a coastal area, always keep a check on the local warning arrangements.
  • If you have a disability or special requirements, arrange with your support network to alert you of any warnings and emergency broadcasts.
  • Always advance a Household Emergency Plan and have a Getaway Kit ready with you.
  • Know where the nearest high ground is and how you will reach it. Plan to get as high up or as far inland as you can. Plan your escape route for when you are at home, as well as for when you may be working or holidaying near the coast.

2) During a tsunami

  • If possible, keep your getaway kit with you if possible. Do not travel into the areas at risk to get your kit or belongings.
  • Try to take pets with you if you can do so safely.
  • One should move instantly to the nearest higher ground, or as far inland as you can. If you have evacuation maps handy, follow the routes shown.
  • Walk or bike if possible and drive only if essential. If driving, keep going once you are well outside the evacuation zone to allow room for others behind you.
  • If in any case, one cannot escape the tsunami, then he/she should go to an upper storey of a sturdy building or climb onto a roof or up a tree. Or grab a floating object and hang on until help arrives.
  • One should remember that boats are usually safer in water deeper than 100 metres than if they are on the shore. Always move boats out to sea only if there is time. It should be safe to do so.
  • Never go to the shore to watch for a tsunami. Always try to stay away from at-risk areas until the official all-clear is given.
  • Listen to your local radio stations as emergency management officials will be broadcasting the most appropriate advice for your community and situation.

3) After a tsunami

  • Always try to be connected to the radio for civil defence advice and do not return to the evacuation zones until authorities have given the all-clear.
  • Be aware that there may be more than one wave and it may not be safe for up to 24 hours, or longer. The waves that follow the first one may also be bigger.
  • Check yourself for injuries and get first aid if needed. Help others if you can.
  • Do not visit for any sightseeing.
  • One should extreme caution while re-entering homes or buildings, floodwaters may have damaged buildings. 
  • Be sure to take notes and photographs for insurance purposes if the building gets into damage state. If you rent your property, contact your landlord and your contents insurance company as soon as possible.

A tsunami is actually a series of waves. One must not go to an affected coastal area until it is declared to be safe by authorities.

Sourced: https://www.vedantu.com

Types of possible insurance coverage

In India insurance for perils due to tsunami can be ensured through some coverage provided in Home, Auto, and Fire and special peril insurance policies.                                                                                           Earthquake Insurance in India Insurance as a whole has a very low penetration in India. Total insurance premium In India hovers around 0.5 % of the global premium and around 1.5 % of GDP of India. Majority of the population remains uninsured. Penetration of insurance can also be adjudged by the fact that insured losses are a small fraction of total economic losses in the event of catastrophe. The Bhuj Earthquake of Gujarat is one of the greatest earthquake disasters that India has faced in the last 200 years. An official figure published by the government states a death of 17,122 persons, a figure that has since been reduced to 14,000. However, the number of fatalities is likely to have been much higher. The economic loss is US$ 4.5bn, with insured losses in the range of US$ 100m (Annual Review: Natural Catastrophes 2001, Munich Re). Earthquake risk is inbuilt in many of the Life and Non-Life policies. Life policies cover death due to various causes and the risk of earthquake is not excluded. Non-life policies provide for cover against accidental death or injury under various kinds of personal accident policies and hospitalization benefit for treatment of accidental injury under Mediclaim. As far as property insurance is concerned, Householders Insurance provides insurance coverage to the Building and its Contents. The granted covers include Fire and allied perils including earthquake. The own damage section for two wheelers and four wheelers under motor package policy provides cover against earthquake risk. Other classes of insurance such as Marine, Engineering, Rural and other miscellaneous insurance also cover earthquake risk in some form or the other.

What does the policy against calamities cover?

The policy (Cost: Rs 0.6 per Rs 1,000) insures your house against fire, natural calamities like floods, storms, cyclones and earthquakes, riots, terrorist attacks, gas cylinder explosions, etc. What are covered are loss of the building and its contents. What are not covered are loss or damage to documents, bonds, securities, precious stones, jewellery, cash, and valuables.

Who among earthquake victims can claim insurance benefits? For what?

All those individuals who are policyholders (or their nominees) can claim insurance cover. The earthquake falls within the purview of personal accident insurance policy and fire insurance cover taken by organizations, companies, business establishments and institutions. Individuals may submit that earthquake is a personal accident and claim benefits. It is legal. Only a token premium needs to be paid. Claims can be made for damages to households and business establishments, loss of belongings, death, and injuries.

What should be done to fine-tune insurance sector for India-specific situations?

Experts suggest that insurance against fires, earthquakes and other such calamities must be made mandatory for housing establishments, just as in the case of motor insurance, where insurance against risk due to a third party is compulsory. It is being pointed out that developed countries have exclusive property insurance policies tailor-made for specific localities. So an earthquake-prone state like Gujarat ought to have a law that makes property insurance mandatory. This, experts feel, has multiple benefits: survivors of calamities would not have to depend on charity; liability-averse insurance companies would offer housing cover only for good structures; this, in turn, would pressure builders to construct top-quality houses/complexes; priceless data on disaster-prone areas/zones would be created.

TAC* Rates for earthquake

  *Tariff Advisory Committee on insurance
BIS ZoneRisk ZoneRates Remarks
Zone I 1.00% High Damage Risk Zone
Zone II0.50% Moderate Damage Risk Zone
Zone III0.20% LowDamage Risk Zone
Zone IV0.10% Very LowDamage Risk Zone
Zone-I comprises of entire north-eastern India, parts of Jammu and Kashmir, Himachal Pradesh, Uttaranchal, Rann of Kutch in Gujarat, parts of North Bihar and Andaman & Nicobar Islands. Zone-II covers remaining parts of Jammu & Kashmir and Himachal Pradesh, Union Territory of Delhi, Sikkim, northern parts of Uttar Pradesh, Bihar and West Bengal, parts of Gujarat and small portions of Maharashtra near the west coast and Rajasthan. Zone-III comprises of Kerala, Goa, Lakshadweep islands, and remaining parts of Uttar Pradesh, Gujarat and West Bengal, parts of Punjab, Rajasthan, Madhya Pradesh, Bihar, Jharkhand, Chhattisgarh, Maharashtra, Orissa, Andhra Pradesh, Tamil Nadu and Karnataka. Zone-IV covers remaining parts of the country.
Home/Household Insurance Policy

Home/Household Insurance Policy

Home/Household Insurance Policy

It is very important to have a roof over the head. Having your own house automatically reduces many problems. Along with this, the care and maintenance of one’s own house is also in one’s own hands. At the same time, to protect your home from any kind of natural calamity, home insurance is also very important.

                                                                                                                                    Subas Tiwari

Due to natural calamities like flood and earthquake, there is a lot of loss of life and property. The worst thing is that these disasters never come without warning and when they do come, the scene of destruction is also horrifying. Many times due to natural calamities like floods, earthquakes, houses and even the biggest buildings have been seen to be destroyed. In such a situation, it is necessary to take home insurance to avoid any untoward incident and loss.

Why it is necessary?

What do you understand when you are told to take a household package insurance policy? A layman like you could only guess- it is for households where insurance cover is available on the happening of an unfortunate event. If it is not enough & the policy coverage is wider than this understanding, does that mean that the wider scope needs to be fully understood? YES, that’s why we are offering here a deep insight into this whole gamut of household insurance to understand the concept & applicability in real-life situations for the average consumer.

Read this article fully to get some knowledge awareness & education so that when the need arises (events come without advance notice), you are not left high & dry and that you are fully competent to deal with the situation for your benefit. If you have already bought a policy, you can assess whether you have the best policy on hand.

What it means for household effects?

Coverage for household effects means insurance cover against accidents due to fire due to short-circuits, or theft of household goods, theft of jewellery, household appliances, etc. There are 3 insurable components in a home insurance – the structure (building), the contents (material assets) and people (family members and third party). You can get a specific coverage either for the structure or the contents of your home. You can also opt for a comprehensive coverage that includes both the structure and the contents. Home Insurance provides coverage for the loss or damage to your personal property and possessions against natural and man-made calamities as under. IRDA calls this type of insurance as ‘Property Insurance’.

(i)Natural- Fire, Storm, Earthquake (see BOX), Tornado, Cyclone, Flood, Landslide, Lightning, etc.

(ii)Man-Made -Fire, Burglary, Theft, Aircraft Damage, Malicious Damage, Terrorism, Strike, Riot, Explosion, etc.

Perils Covered

Allied (special) perils covered under a Fire Policy

Insurance against fire is invariably linked to perils associated with it such as fire damaging fixed glass, breakdown of domestic appliances (TV,VCP/VCR/DVD, PC, Laptop) pedal cycle, baggage, payment of professional fees paid for reconstruction after damage, rent paid on relocation due to damaged house, loss of documents (Passport, Driving License). It also includes damages caused by fire, lightening, explosion/implosion, aircraft damage, riot, strike, malicious & terrorism damage, storm, cyclone, typhoon, tempest, hurricane, tornado, flood & inundation, impact damage, subsidence and  landslide including rock-slide, bursting and/or overflowing of water tanks, apparatus & pipes, missile testing operations, leakage from Automatic Sprinkler Installations, Bush fire & Earthquake (fire & shock). So, if you take a household policy with fire cover, you are automatically covered for all these perils.

Benefits covered in a Burglary Policy

Burglary or theft to home, robbery/dacoity of the contents of the home, contents that has been placed in safe custody during temporary absence from home, contents that have been removed to private accommodation (other than one’s home) that is being occupied by insured/his family for the period of insurance, impact damage by falling trees/electric poles/lamp-posts, breakage or collapse of television or radio aerial/satellite dishes & damage by civic authorities in prevention of fire. When you buy a burglary policy, you are protected against burglary, housebreaking, theft & larceny, damage to your house or safe due to burglary/housebreaking.

Can articles in bank lockers be covered?

No. This household policy only covers material assets which are housed where you stay. So, locker contents in a bank cannot be covered. However, there are insurance companies which offer a separate policy insuring such locker contents in a bank. 

Can it cover Home Loan amount?

Except one private insurer, the insurance cover on a home loan amount taken for the construction/outright buy of a flat/apartment is not available under this policy. However, banks have been offered a tailor-made policy insurance cover for death/disability due to personal accident of the borrower covering the outstanding amount of the home loan by the insurance companies which have a tie-up. This cover helps the legal heirs in not getting the burden of the home loan repayment, as the insurance company directly remits the claim to the loan account of the deceased borrower.

Who offers the policies?

Today, homeowners have plenty of choices when it comes to home insurance plans. You can choose a plan from any one of the several home insurers in India. Make sure to evaluate the features and benefits of the plans offered by different home insurers and choose the right one that meets your specific requirements.

Here, we list some of the top home insurance companies in India, along with the different home insurance plans offered by them.

  1. Bharti AXA Home Insurance

Bharti AXA offers the Smart Plan Householder’s Package Policy that offers extended coverage to homeowners. The plan consists of various subsections to meet the requirements of different homeowners.

Some of the major coverage offered by this plan includes:

Section I – Building, Fittings, Fixtures, and Renovation

Section II – Home contents, valuables, appliances, documents, title deeds, removal of household contents to a new property

Section III – Personal accident

Section IV – Loss of rent

Section V – Additional rent for an alternate accommodation

Section VI – Pedigree pet

Section VII – Baggage

Section VII – Legal liabilities

  1. ICICI Lombard Home Insurance

ICICI Lombard offers a comprehensive home insurance plan that offers coverage for structural damage as well as damage to contents. Countrywide service network, doorstep delivery of the policy, 24 x 7 call centre and comprehensive coverage are the salient highlights of home insurance plan from ICICI Lombard.

  1. Chola MS Home Insurance

Cholamandalam insurance company offers two home insurance plans:

  • Chola MS Total Home Protect – This plan offers three-fold protection: protection for the structure of the home, protection for the contents inside the house, and protection for your family members during a disaster.
  • Chola MS Long Term Dwellings Plan – This plan is offered exclusively to flats and apartments in high-rises used exclusively for residential purposes.

Hassle-free claims process, complete flexibility, and affordable premiums are some of the reasons to choose a home insurance policy from Cholamandalam.

  1. IFFCO Tokio Home Insurance

IFFCO Tokio offers three home insurance plans:

  • All in one Home Protector Policy – This plan has twelve subsections, out of which at least three has to be chosen by the policyholder.
  • Home Suvidha Policy – This plan offers protection to the home during natural calamities as well as due to man-made calamities like thefts and burglaries.
  • Home Family Protector Policy – This plan offers protection to your home as well as your family members during an emergency.
  1. HDFC ERGO Home Insurance

HDFC ERGO offers three different home insurance plans to meet the requirements of different individuals.

  • Home insurance for tenants
  • Home insurance for owners
  • Housing society insurance

HDFC ERGO is one of the leading general insurance companies in India and has sold more than one crore policies. 24×7 customer support, 16 years of experience in the insurance industry in India, transparent and hassle-free claim settlements are some of the reasons to choose HDFC Ergo.

  1. Universal Sompo Home Insurance

Sampoorna Griha Suraksha is the home insurance policy from Universal Sompo. It’s a comprehensive house owner’s package policy that offers extended coverage. This is a package policy offering you all-in-one protection. Thereby you need not purchase add-on covers to increase your overall coverage.

  1. Shriram General Home Insurance

Shriram General Insurance Company offers Dwelling Coverage, a home insurance plan with plenty of benefits. This plan not only covers structural damage to your home but also offers coverage for other structures that are not directly attached to your home like an outhouse, guest house, gardening shed, etc.

  1. Reliance Home Insurance

Reliance General Insurance Company is one of the upcoming insurance providers in India. The company offers two different home insurance plans to cater to the requirements of different individuals. They are:

  • Home Insurance – Structure Protection
  • Home Insurance – Content Protection
  1. Royal Sundaram Home Insurance

Royal Sundaram offers affordable home insurance packages to meet the requirements of homeowners in India. The Gruh Suraksha Home Insurance plan from Royal Sundaram has two major categories:

  • Building Insurance of up to Rs. 5 crores without any prior inspection
  • Household Articles coverage of up to Rs. 1.5 crores for your household possessions

You can choose either of these plans or both for comprehensive coverage.

  1. Future Generali Home Insurance

Home Secure is the home insurance plan from Future Generali. It’s an all-inclusive protection plan offering coverage for the structure of the building, the contents inside your home, and your family members during a crisis. Pan-India support network, affordable premium, in-house claims are some of the highlights of this plan.

Sourced From: https://www.creditmantri.com

What are the Exclusions?

(1) Exclusions in the structure – Property under construction, residential property used for official/business purposes and kachcha construction (Third Class).

(2) Exclusions in the contents – Books, manuscripts, money (some do not cover them), bonds, shares, securities, consumables, vehicles, etc.

(3) Willful destruction of property,

(4) Loss, damage, or destruction caused by negligence, wear and tear, civil war and nuclear weapons, etc.

(5) Terrorism (some of the insurance companies load extra premium for covering this insurance risk).

Under what circumstances, extra premium becomes payable? 

Customers can opt for plans in which the sum assured is increased by a certain percentage every year. A few insurers offer this plan, with a nominal add-on premium. Otherwise, based on risk-assessment of a structure, material assets, etc., insurance companies load additional premium. Extra premium also becomes payable if you include domestic servants on permanent employment (maids, drivers, etc.) which are called “Legal Liability towards servants/third party”.

What are the inclusions without extra premium payment?

Expensive belongings, electronic goods such as laptops, televisions, etc., precious goods like gemstones, jewellery, etc., appliances such as washing machine, refrigerator, kitchen appliances, furniture and furnishing items, personal accidents, etc. But insurance cover inclusions vary from company to company & cannot be standardized.

Period of the Insurance Policy

Generally, the term of home insurance is one year & renewable thereafter, but a few insurers offer plans up to a term of 3 years.

Advantages of a Home Insurance Policy

  • Since almost all insurance companies are offering online policies, it becomes easier to buy a policy from the comforts of your home.
  • Complete peace of mind regarding your property /investments.
  • When you are away on holiday/tour/going abroad for a longer stay, you can go without thinking about your home & its safety.
  • For a nominal premium (approx. Rs.0.50 paisa per Rs.1000), it is the cheapest of the premiums in an insurance policy.
  • Some of the insurers are offering discount on premium (even up to 50%) if one takes a long-term policy.
  • All unintentional damage to structures/assets is adequately compensated with repairs/ reimbursement of rent paid on lease (up to one year), transportation costs involved, therebyminimizing the hassles and documentation.


  • Perils covered are not uniform thereby the consumer is not able to take an informed decision quickly while comparing the home insurance product on offer.
  • Sum insured & premium cannot be clearly defined as it is based on risk-assessment of building (value, age & class of construction), material assets and additional insurance covers.
  • Individual ceiling on compensation on each item damaged thwarts full compensation of costly items.
  • Structural damage due to earthquake (fire & shock) are covered in some of the policies but seldom settled in a home insurance claim.

Complicated Issues & Solution

(1) Why should anyone insure a building? Fire cannot possibly do any harm to the building.

Fire and other perils (normally covered under a fire insurance policy) can cause loss/damage to buildings. There have been fire accidents that have completely destroyed multi-storied buildings. Floods can also bring about devastating losses. Similarly, riots and acts of terrorism can also produce huge losses to human lives as well as property.

(2) One has taken an insurance policy covering his building. The bank which has financed his business has also taken insurance separately. Both policies are in force covering same property. How then is a claim settled?

In the event of a claim, each insurer will pay the loss amount in proportion to the Sum Insured under their respective policies, in accordance with the principle of contribution. The object of the principle of indemnity is to place the insured in the same place as he occupied prior to occurrence. Insured is prevented from making claim for full amount of loss under each policy. Insurance company indemnifies the insured only to the extent of actual loss suffered subject to depreciation, policy excess etc., and not permit to make profit out of a loss.

(3) One wants to cover his household goods against burglary when he is away. Can he get a burglary insurance policy?

A burglary insurance policy covers goods against the risk of burglary. A burglary insurance policy may also offer extension of cover against theft. A burglary insurance policy will usually cease to operate if the house is not occupied beyond a certain defined period unless you have intimated the insurance company and they specifically agree to extend the cover even when the house is not occupied. It is a good idea to ensure that you have a burglary policy always rather than opting for one only when you are away. You might not get one if you want to ensure to insure the contents only when the house is locked.

(4) One needs to cover his jewellery. What policy should he take?

Insurers offer ‘All Risks’ policy for covering jewellery. You must ensure that your jewellery is valued correctly and you are able to show proof of valuation should a claim occur. An All Risks policy also has exclusions, so go through the terms and conditions thoroughly.

Conclusion-Obligations of the insured

Every insured is expected to behave as though he is uninsured. It is better to take all precautions to prevent / aggravate the loss. After lodging an FIR with your area Police Station, please inform Insurance Company also who have to be given an opportunity to inspect the damages. You have to first call the Fire Brigade also who will assist you to put out the fire. During firefighting, any damage caused to other insured property caused by water, will be paid by the Insurance Company. It is beneficial to extend cooperation to surveyor while inspecting and assessing the loss. If arrival of surveyor is likely to be delayed, then, you can take photos / and shift unaffected assets to a place of safety. Please give completed claim form and documents as required by Insurer, in support of your claim. After repairs / replacement, you have to submit bills to the Insurer.

Single Premium Insurance Plan

Single Premium Insurance Plan

Single Premium Insurance Plan

Nowadays people are getting more attracted towards seasonal employment or business instead of regular salary job. In such a situation, they do not know whether they will have the capital to pay regular premiums or not. That’s why the trend of single premium insurance policy has increased a lot. In single premium insurance policy, you do not have to pay premium from time to time. You get rid of the hassle by paying the amount once, so at first sight this policy looks better.

                                                                                                                              Subas Tiwari

A single premium insurance plan is one in which the policy premium is paid only once during the term period of the plan. These plans provide a life cover on payment of a onetime lump sum premium amount.

 How do single premium term insurance plans work?

 As the name indicates, single premium plans are policies that need you to pay the premium just once and never again during the remaining term of the policy and continue to enjoy the cover for the full term of the insurance policy. Obviously, in the case of single premium policies, the premium that you pay upfront will be a larger amount.

Are they good?

  • The policyholder thinks that he will pay the premium just once in his life and it’s all done. The thought does have some merit because paying premiums regularly each year calls for discipline. If you miss it, then your policy might lapse.
  • For regular payment of premium, you need to have the money in the bank account to keep the policy alive. So paying the premium just once is easy.
  • Many investors buy regular premium-payment policies during the tax-saving season (January to March each year) as a tax saving instrument rather than for protection, which is not what insurance is meant to be.
  • For people with fluctuating income, this is possibly one of the best instruments available today. Single premium is simply a mode of payment and comes handy for those with shorter career spans.
  • People who have made some windfall gains or are sitting on huge investible surplus prefer single premium plans.
  • These plans are suitable for those who do not wish to make recurring payments or fear lapse of the policy.
  • If you have a sizable amount such as bonus, proceeds from sale of property, etc. and want to invest one time for life cover for a particular term, then this plan would suit you.

What else do they give?

  • These are tax savings instruments as the premium paid is allowed as Section 80C deductions. You are entitled for a tax free maturity/death benefit under Section 10 (10D) only if the minimum sum assured throughout the policy term remains 10 times the single premium paid.
  • The tax benefit under Section 80 C is available only if the annual premium is at least 10% of the sum assured.
  • But to avail tax benefits every year, you may have to buy such policies every year, which is not always practicable.
  • Bonus is paid on the declared rate every year, thereby enabling the paid-up value to grow.
  • Loan is available against this type of policy either from the Insurance Company itself or by assigning the Policy in favour of the lending institution as security for the loan.

What then are its limitations/drawbacks?

  • Many investors feel the pinch when they are told of a host of charges which are loaded on the single-premium policy. So in a way, it acts as a dampener for further investments.
  • There are justified objections that such loading of charges offset any growth achieved on the policy and thus erode the paid-up value of the policy, generating genuine concerns of the investors.
  • When comparisons are made between them and returns are compared, the case that regular investment options are preferable because they provide more opportunities for greater returns rather than choosing the single premium kind of insurance is strengthened.
  • Under Section 80 (C) of the Income Tax Act, to be eligible for IT deductions, you would have to have a policy with a life cover 10 times higher than the annual premium. Thus, you may be required to either change the yearly premium significantly to get that life cover or opt for an altogether a new policy. This is cumbersome to a few, though not difficult to fulfill. For example, if you want to save Rs. 30,000 with your policy, you would have to buy a minimum life cover of Rs 3, 00,000/-.

With the above mentioned criteria, you may also have to choose a policy with a longer tenure, irrespective of whether you require it or not.

 What is in store for the future?

IRDA is bringing out new guidelines to be framed for appointment of Insurance Agents and capping on payment of commissions to insurance agents & reducing the rates of commissions during the first year of the policy & for its renewals from the second year onwards.

The salient features are-

  • Insurance Agents will be appointed on a fixed salary structure thereby ensuring and assuring them on fixed monthly income;
  • Everyone in the insurance business knows that insurance agents’ commission on the first year’s premium is much higher (sometimes @ 25% & above) and tapers down for each year renewal; now the revised policy will bring them further down not to exceed to an aggregate of 10 per cent of all first year premiums and four per cent of all renewal premiums on policies with deferred annuities. It further suggested that the insurer should be capped at not more than five per cent of premiums received during the year on single-premium annuity products and 1/20th of one per cent of the average of the total sums assured by policies excluding single-premium policies.
  • IRDA guidelines further speak of cancelling payment on any upfront commissions by insurance companies to distributors like banks. IRDA also suggested cancelling the system of advance payments to insurance intermediaries. Insurance companies, which are selling their products through bank branches, will then need to come up with a different model.
  • The proposed IRDA guidelines, if adopted into law, will enable the common man to hope to get premiums at a low cost since insurance companies would not be spending a huge sum of money on commissions.

As an investor, it is your responsibility to enquire all the details of a product before choosing it. If you have been suggested any insurance plan by your friendly insurance agent, make sure that the agent has your objective as the paramount factor and nothing else.

 Certain variables explained

  • Almost all the Insurance companies offering the single premium policy are offering “Surrender Value” after the mandatory 5 years (lock-in period) from the date of the policy.
  • Partial withdrawals are allowed under this policy after the completion of “lock-in period” which extends from a minimum of Rs.1000 (only on the policyholder reaching the age of 18 years as on the date of exercising such an option) to a maximum of 50% of the premium paid without interruption during the last 5 years from the date of the policy. A small fee is charged as “surcharge” for facilitating this partial withdrawal.
  • There are certain companies which also levy a “miscellaneous charge” to meet the cost of duplicate statement if sought; change in name; change/incorporation of date of birth; addition of contact numbers; and so on.
  • Some Companies are offering “top up” on premium to increase sum assured proportionately and this situation could come if the insured is laden with surplus money & want to invest the same in this policy.
  • “switching” means that the insured is offered opportunities to switch from one Fund to another under the same Insurance product (like from “dividend” option to “growth” option or from “equity’ to “debt” option or vice versa), which is again subject to availability of such options in the Fund.  


7 Most Popular Single Premium Insurance Plan

  1. Aviva LifeBond Advantage

LifeBond is a very flexible single premium ULIP with one of the widest bracket for the policy term. The premium starts with Rs 50,000 with no maximum limits. The sum assured is 5 times the premium, hence the insured becomes eligible for the tax benefits under the new IRDA guidelines.

Owing to its beneficial features, LifeBond Advantage is a great value for money. The plan comes with an inbuilt Accidental Death Benefit. The insured can opt for systematic partial withdrawals after a lock in period of 5 years. It also offers top-ups to earn additional life cover. The top-ups start with a minimum of Rs 5,000. But the string of benefits doesn’t end here, the insured also gets to earn loyalty additions (4% of fund value) for staying invested for 10 years.

  1. Bajaj Allianz New Risk Care II

New Risk Care II is a pure term plan where you get a cover for a specific term by paying a single premium. The reason why it made it to our list is that it offers a high insurance cover at a very low premium.

Since it’s a pure term plan, there are no maturity benefits (that’s why the premium is so low). The cover can be enhanced by opting for additional riders and benefits. If the insured opts for a high sum assured, he gets to enjoy saving in premium.  The plan offers insured the flexibility in choosing the sum assured and policy term.

  1. LIC Jeevan Vriddhi

LIC rules the rooster when it comes to single premium policies. LIC has launched many successful single premium policies in the market out of which we picked out Jeevan Vriddhi. The guaranteed maturity sum assured on this plan depends on the single premium amount and the entry age of the insured. The policy can be surrendered just after a year with 90% of the single premium paid back.

Other benefits include loyalty additions to the maturity benefit if the insured stays invested for a term as specified in the plan. The insured also gets to enjoy incentives for higher single premium (up to 3%, when premium > Rs 1, 00,000). Moreover, a loan can be applied against this plan at an optimal interest rate.

  1. HDFC Life Single Premium Pension Super

Single Premium Pension Super is a Pension ULIP. The USP of this plan is that the minimum sum assured is figured out as the higher of either two – fund value or at least 101% of the sum of all the premiums. So it’s a win-win proposition for the buyer. It’s like getting the ULIP advantage minus ULIP uncertainty.

The policy can be surrendered after a lock in period of 5 years. The insured can also buy top-ups starting with a minimum of Rs 10,000 to enhance the existing coverage. The investment is made in equity and debt instruments in a way so as to maximize potential of returns without exposing the funds to risk.

The maturity benefit can be availed in either of the following modes –

  • 1/3rd amount will be paid as a lump sum and will not be taxable, the rest 2/3rd will be paid as a regular annuity and will be taxable
  • The entire proceeds is converted to annuity
  • The entire proceeds is used to purchase another single premium health plan
  • The policy term is extended if you haven’t reached the age of 55 yet
  1. ICICI Pru iAssure Single Premium

iAssure Single Premium is an endowment plan offering a substantial risk free return along with a life cover. In case the insured dies, during the policy term, the beneficiary gets either sum assured or guaranteed maturity benefit, whichever is higher. Guaranteed maturity benefit is calculated taking into account factors such as premium amount, age, gender, policy term, sum assured multiple and the applicable reference rates.

The minimum sum assured is 125% of the single premium. The maximum sum assured is 500% of the single premium in case the entry age is 55 years or below and 125% of the single premium in case the entry age is above 55 years.

  1. IndiaFirst Smart Save Plan

IndiaFirst is fast emerging as one of the leading life insurers in India. The brand is renowned for designing new innovative insurance products. Smart Save is one such plan boasting of a gamut of features. It is an ULIP with a fixed policy term of 15 years. However, the insured can make partial withdrawals as and when need arises.

The investment can be made in a choice of five funds with different growth potentials. The insured can allocate the premium proportionately among these five funds and enjoys the freedom of switching from one fund to another.  The minimum sum assured is 125% of the single premium in case the entry age is 45 years or below and 110% of the single premium in case the entry age is above 45 years. The maximum sum assured is 500% of the single premium in case the entry age is 50 years or below and 110% of the single premium in case the entry age is above 50 years.

  1. Max New York SMART Steps Single Premium

What could be a better use of a surplus than to guarantee a better future for your child? SMART Steps from Max New York is a Child ULIP offering the insured, liquidity and flexibility. The investment is made in a wide choice of funds such as front-line equity fund, dynamic floor fund, dynamic bond fund and so forth. Apart from the regular maturity benefits and death benefits, the insured gets to enjoy tax benefits under section 80C and section 10 (10D).

The policy offers the insured top-ups starting with a minimum of Rs 5,000. The buyer can also avail partial withdrawals benefit for meeting unplanned expenses.

Sourced from- https://www.policybazaar.com


Highlights of Finance Bill 2023

Highlights of Finance Bill 2023

Highlights of Finance Bill 2023

The 2024 general elections are just one year away. When the 2023 budget was unveiled, it was expected that taxpayers wouldn’t be burdened in any way, although the average taxpayer did expect to see tax relief. Find out what they were relieved about and what they were dissatisfied about.

Subas Tiwari

Proposed Changes in Tax Rates

  • In the alternate tax regime under Section 115BAC, a revision to the basic exemption limit and the number of slabs has been proposed. The revised basic exemption limit shall be INR 3, 00,000 and for every additional INR 3, 00,000 of income, the next slab rate will be applicable. The highest slab rate of 30% shall continue to apply to income above INR 15, 00,000.
  • The threshold limit for total income eligible for rebate under Section 87A has been proposed to be increased from INR 5, 00,000 to INR 7, 00,000 for assesses opting for the new tax regime.
  • Under the new tax regime, the highest surcharge rate of 37% on income above INR 5, 00, 00,000 has been proposed to be reduced to 25%.
  • The alternate tax regime of Section 115BAC is proposed to be applicable to Association of Persons (AOP) [other than a co-operative society], Body of Individuals (BOI), and Artificial Juridical Persons (AJP).
  • Standard deduction from salary income and deduction from family pension is proposed to be extended to employees who opt for new tax regime.
  • The new tax regime under Section 115BAC is proposed to serve as the default regime.
  • A new section 115BAE is proposed to be inserted, which provides for reduced rate of tax of 15% (plus surcharge of 10% and cess) for manufacturing co-operative societies established on or after April 1st, 2023, and commencing production on or before March 31st, 2024 [provided that specified incentives or deductions are not availed]. Further, income not derived or incidental to manufacturing or production of an article or thing shall be taxed at 22%.
  • Section 115BBJ is proposed to be inserted which provides the tax rate of 30% on any winning from online gaming.
  • Provisions of Alternate Minimum Tax (AMT) and credit thereof shall not apply to cooperative societies opting for an alternate tax regime under Section 115BAE.

Proposed amendments w.r.t. Deductions and Exemptions

  • Receipts arising from life insurance policies issued on or after April 1st, 2023 shall be considered as income from other sources if the premium paid exceeds Rs. 5, 00,000 in a given year. The exemption for receipts in the event of the insured person’s death shall remain unchanged.
  • To avail a deduction under Section 10AA, the assessee must submit a return of income on or before the due date specified under Section 139(1).
  • Deduction under Section 10AA shall only be allowed if the proceeds from the sale of goods or provision of services are received within 6 months from the end of the previous year or within such further period as the competent authority may allow in this behalf.
  • Income distributed from offshore derivative instruments (ODI) entered into with an offshore banking unit of an IFSC shall be exempt from tax under Section 10(4E).
  • The exemption under Section 10(22B) for news agencies is proposed to be withdrawn.
  • Tax exemption under Section 10(46A) is proposed to be extended to ‘Non-corporate entities (Such as bodies, authorities, boards, trusts, or commissions), established by a Central or State Act for the purpose of providing housing, planning urban development, and regulating activities for the benefit of the public.

Proposed Tax Benefits to Agniveers

  • Receipts from the ‘Agniveer Corpus Fund’ by a person enrolled under the ‘Agnipath Scheme 2022’ shall be exempt from tax under Section 10(12C).
  • A new deduction under Section 80CCH is proposed, which provides for deductions to Individual enrolled in Agnipath Scheme on or after 01st November, 2022. The deduction shall be equal to the amount of contributions made to the Agniveer Corpus Fund. This deduction is available in old as well as new tax regime.
  • The Central Government’s contribution to the Agniveer Corpus Fund account of an individual enrolled in the Agnipath Scheme shall be considered as salary in accordance with the provisions of Section 17. A corresponding deduction shall be allowed under Section 80CCH for the same.

Proposed amendments w.r.t. Income from Business or Profession

  • Under Section 43B, deductions for sums payable to Micro, Small, and Medium Enterprises (MSMEs) proposed to be allowed on payment basis.
  • It is proposed that for sugar co-operatives societies, for years prior to A.Y. 2016-17, if any deduction claimed for expenditure made on purchase of sugar has been disallowed, an application may be made to the Assessing Officer, who shall recomputed the income of the relevant previous year after allowing such deduction up to the price fixed or approved by the Government for such previous year.
  • Non-Banking Financial Companies (NBFCs) proposed to be notified for the purposes of Sections 43B and 43D.
  • It is proposed to clarify that the benefit could also be in cash for taxability under section 28 of the Act and for tax deduction at source under Section 194R of the Act.
  • Restrictions are proposed for set off of losses and unabsorbed depreciation by the assesse who opt for presumptive tax schemes under Sections 44BB and 44BBB.
  • The threshold limits for presumptive taxation schemes under Section 44AD and Section 44ADA have been proposed to be increased to INR 3 crores and INR 75 lakhs respectively, provided at least 95% of receipts and payments are made through non-cash methods.
  • It is proposed to amend Section 35D to remove the condition of activity in connection with these expenses to be carried out by a concern approved by the Board. Instead, the assessee shall be required to furnish a statement containing the particulars of this expenditure within prescribed period to the prescribed income-tax authority in the prescribed form and manner.
  • The threshold limit for opting for the presumptive taxation scheme under section 44AD and section 44ADA is proposed to be increased to Rs. 3 crores or Rs. 75 lakhs, respectively, where 95% of the transaction are made in non-cash mode. The consequential amendments have been made under section 44AB to remove the tax audit requirement for persons opting for such presumptive schemes.

Proposed amendments w.r.t. Capital Gains

  • The transformation of physical gold into Electronic Gold Receipts and vice versa by a Vault Manager registered with the Securities and Exchange Board of India (SEBI) shall not be considered as a transfer for purposes of capital gains taxation.
  • The cost of any intangible assets and rights shall be considered as nil for which no consideration has been paid for acquisition.
  • The gains derived from the transfer, redemption, or maturity of Market Linked Debentures shall be taxed at applicable rate as short-term capital gains under Section 50AA.
  • An individual or HUF can claim a maximum exemption of Rs. 10 crores under Sections 54 and 54F.
  • No tax shall be imposed on the transfer of capital assets in connection with the relocation of an offshore fund to an International Financial Services Centre (IFSC). The deadline for this relocation has been extended to 31-03-2025.
  • To align the provisions of Joint Development Agreement with the TDS provisions under section 194-IC, amendment is proposed in section 45 to provide that the full value of consideration shall be taken as the stamp duty value of the property received as increased by any consideration received in cash or by a cheque or draft or by any other mode

Proposed amendments w.r.t. Charitable & Religious Trusts

  • The utilization of corpus, loans or borrowings by a charitable or religious trust prior to 01-04-2021 will not be considered an application for charitable or religious purposes if the amount is subsequently deposited back into the corpus or the loan is repaid.
  • The repayment of a loan or investment into the corpus will only be considered an application for charitable or religious purposes if it occurs within 5 years of the initial utilization.
  • The donations made by one trust or institution to another trust or institution shall be deemed to be an application of up to 85% of the donated amount.
  • The Jawaharlal Nehru Memorial Fund, Indira Gandhi Memorial Trust, and Rajiv Gandhi Foundation have been excluded from the list of eligible funds for deductions under Section 80G.
  • Trusts and institutions that have initiated their activities must apply directly for regular registration, rather than provisional registration.
  • The submission of an application for registration containing false, inaccurate, or incomplete information is considered a designated violation and may result in the revocation of the registration of trusts or institutions by the Principal Commissioner of Income Tax/Commissioner of Income Tax.
  • The provisions for tax on accreted income as specified in Section 115TD have been extended to trusts or institutions, if they fail to apply for re-registration.
  • In order to claim the accumulation of income, trusts or institutions must file Form 9A and
  • Form 10 at least two months prior to the deadline for filing the return of income.
  • Time provided for furnishing a return of income for claiming exemption by trusts or institutions under Section 10(23C) or Section 11 or Section 12 shall not include the time provided for furnishing an updated return. In other words, the exemption shall be allowed if the return of income is furnished within the time allowed under Section 139(1) or Section 139(4) and not Section 139(8A).
  • The second, third and fourth proviso to Section 12A(2) allows trusts and institutions to claim an exemption under sections 11 and 12 for the previous year in which application for registration is made even though registration is granted in the subsequent year. However, under the new registration rules proposed by the Finance Bill 2023, provisional registration must be applied before the commencement of the activities. So, these rollback provisions are removed.

Proposed amendments w.r.t. Assessment & Appeals

  • Assessee can file an appeal against the penalty orders imposed by the Commissioner (Appeals) under Sections 271AAB, 271AAC, and 271AAD and revision orders passed by the Principal Chief Commissioner or Chief Commissioner under Section 263. The amendment also allows for the filing of a memorandum of cross-objections in all cases that are appealable to the Appellate Tribunal.
  • A new appellate authority, the Joint Commissioner (Appeal), has been introduced for specific categories of taxpayers, such as individuals and HUFs, to speed up the resolution process in appeal proceedings.
  • Where any direction has been issued to give the effect to faceless schemes and e-proceedings before the expiry of the limitation period, the relevant provisions are proposed to be amended to empower Central Government to make amendments in such directions at any time by notification in the Official Gazette.
  • Time limit for disposing of pending rectification applications by “Interim Board for Settlement” has been extended. If the time-limit for amending an order by it or for making an application to it expires on or after 01.02.2021 but before 01.02.2022, such time-limit shall stand extended to 30.09.2023.
  • The deadline for completing the scrutiny and best judgment assessment has been extended from 9 months to 12 months, starting from Assessment Year 2022-23.
  • A provision has been proposed to empower the Assessing Officer to require a cost audit for inventory valuation before assessment.
  • Return in response to a notice under Section 148 shall be furnished within 3 months from the end of the month in which such notice is issued or within such further time as may be allowed by the Assessing Officer on a request made in this behalf by the assesse.
  • Specified authority for granting approval for issuance of notice under Section 148 and Section 148A shall be Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General, where more than three years have elapsed from the end of the relevant assessment year.
  • Where search related information is available after 15th March of any financial year, an additional period of fifteen days shall be allowed for the issuance of the notice, for assessment/reassessments etc., under Section 148 of the Act.
  • The time limit for completion of any pending assessment or reassessment is proposed to be extended by 12 months, where a search is initiated under Section 132 or requisition is made under Section 132A. The extension shall be applicable for the assessee being searched and to whom any seized or requisitioned items (money, bullion, jewellery, valuable articles, books of account, documents) belong or pertain.
  • The amendment proposed to Section 132 allows the authorized Officer to receive assistance from approved professionals, such as digital forensic experts and registered valuers, during the search and seizure process.
  • The timelines for completing assessment or reassessment in search cases are linked to the execution of the last of the authorizations during such procedure. It is proposed to provide the meaning of execution of the last authorization under section 132 itself.

Proposed amendments w.r.t. Set-off and Carry Forward of Losses

  • The definition of ‘strategic disinvestment’ in Section 72A has been proposed to be modified to include the sale of shares by the Central or State Governments, or by a public sector company in another public sector company resulting in a reduction of its shareholding below 51% and transfer of control to the buyer.
  • Section 72AA proposed to be amended to allow the carry forward of accumulated losses and unabsorbed depreciation in the case of the amalgamation of a banking company with another banking company within five years of the strategic disinvestment.
  • Eligible start-ups will be able to set off and carry forward losses incurred during their first ten years of incorporation, even if there has been a change in shareholding, as long as all shareholders continue during the relevant period. The previous time limit of seven years has been proposed to be increased to ten years.

Proposed amendments w.r.t. TDS & TCS

  • The threshold limit for TDS under Section 194N has been proposed to be raised from INR 1 crore to INR 3 crore for recipients who are cooperative societies.
  • The rate of TCS for foreign remittances, for other purposes under LRS and purchase of overseas tour program, is proposed to increase from 5 % to 20 %
  • TDS on winning from online gaming is proposed without any threshold benefit. The tax will be deducted either upon withdrawal or at the end of financial year.
  • The exemption from TDS available on interest payments on listed debenture is proposed to be removed.
  • If the recipient of EPF withdrawal does not provide his PAN, TDS on the withdrawal will be 20%, instead of the maximum marginal rate.
  • Section 197 is proposed to be amended to include section 194LBA in its scope. Thus, unit holders receiving income from business trusts can obtain lower or nil deduction certificates.
  • Sections 206AB and 206CCA have been amended to exclude certain persons from the scope who are not required to file a return of income and are notified by the government.
  • For certain income paid to non-residents or foreign companies, TDS will be deducted at a rate of 20% or the rate specified in a tax treaty, whichever is lower. This relief will be available if the payee provides a tax residency certificate.
  • Section 155 is amended to solve a TDS mismatch problem. When a taxpayer reports income using the accrual method, it may be taxed before the TDS is deducted. It causes a TDS mismatch and prevents the taxpayer from claiming TDS credit. The amendment in section 155 allows taxpayers to apply to the assessing Officer within two years of the financial year in which the tax was withheld. The Assessing Officer will then amend the assessment to allow the taxpayer to claim TDS credit. Section 244A is also amended to provide that the interest on refund arising out of the above rectification shall be for the period from the date of the application to the date on which the refund is granted.

Proposed amendments w.r.t. Penalties and prosecutions

  • A penalty of Rs. 5,000 will be imposed on financial establishments for submitting inaccurate SFTs as a result of incorrect information provided by account holders. The financial institution has the right to recover the fine from the account holder.
  • It is proposed to amend section 271C and section 276B to provide for penalty and prosecution where deductor fails to ensure that tax has been paid under Section 194R, Section 194S and Section 194BA.
  • It is proposed to decriminalize certain acts of omission of liquidators under section 276A of the Act with effect from 1st April, 2023.

Other Proposed Amendments

  • Central Govt. will prescribe a uniform method for the valuation of perquisites arising from rent-free or concessional accommodation provided by an employer to an employee.
  • Distributions by business trusts to unit holders that are classified as debt repayment proposed to be taxed in the hands of unit holders.
  • The authorities can adjust the Income tax refunds with any outstanding tax due after written intimation only. In the case of pending assessment/ reassessment, written reasons must also be provided for withholding the refund. In such cases, the additional interest on the refund will not be payable from the time of withholding until the assessment is made.
  • Primary Agricultural Credit Societies (PACS) and Primary Co-Operative Agricultural and Rural Development Banks (PCARD) can now accept deposits or offer loans to their members in cash up to Rs. 2 lakhs. This increased limit of Rs. 2 lakh also applies to the repayment of these loans or deposits.
  • The provisions for thin capitalization in Section 94B will not apply notified NBFCs.
  • The interest calculation for updated tax returns will be based on the difference between the assessed tax and the advance tax claimed in the earlier returns.
  • Double deductions by claiming interest on housing loan under Section 24 and including it as part of the cost of acquisition shall not be allowed.
  • The eligibility period for tax deductions for start-ups under Section 80-IAC is proposed to be increased by one year. The start-ups incorporated before 01-04-2024 shall be eligible for deduction.
  • The proposed amendment to Section 92D shortens the deadline for submitting information or documents in tax proceedings related to international or domestic transactions from 30 days to 10 days, with an option to extend by another 30 days.
  • Section 56(2)(viib) is amended to make it applicable to share application money/premium received from any person, regardless of their residential status. It means the angel tax may also be levied on receiving excess share application money or premium from non-resident investors.
  • Section 92BA is amended to include the transaction between the cooperative society (opting for an alternate tax regime under section 115BAE) and the other person with a close connection within the purview of ‘specified domestic transaction’.
  • Section 9 is amended to provide that gifts received by an RNOR shall also be deemed to accrue or arise in India.
  • Section 88 is abolished to simplify the act and remove redundant provisions. Consequential amendments have been proposed to sections 80C, 80CCC, 80CCD, 54EA, 54EB, 54EC, 54ED, 111A and 112.
  • The International Financial Services Centres Authority has made the International Financial Services Centres Authority (Fund Management) Regulations, 2022 to regulate fund management entities. A corresponding amendment is proposed in sections 115UB, 56(2)(viib), 47(viiad), 10(4D) to provide that the AIFs should be regulated under the said regulation.

Key Findings

  • 88% of the users reported that their interest in sports increased after participating in Online Fantasy Sports contests. 
  • 81% of the users agreed that by virtue of using Online Fantasy Sports platforms, they have become more aware of non-cricket sports like Kabaddi, Hockey, and Handball.
  • 85% of the users agreed that the option of participating in free contests allowed them to participate without fear of incurring any financial loss. 
  • Close to 90% of the users said that the terms of use for paid contests were easy to find and understand before they participated in paid contests. 
  • 73% of users spend over 30 minutes researching statistics and other information to make their Online Fantasy Sports teams before a match.

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