NO GAIN WITHOUT PAIN

1. LIVE WEBINAR
ON 5TH JULY, 2020
@ 4:00 P.M. TO 5:30 P.M.
BY CA AKASH G JADHAV,
FCA, M. Com., G. D. C. & A.

2. INSURANCEINSURANCEINSURANCEINSURANCE
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NO GAIN WITHOUT PAIN

4. • Motive : Life Risk Cover and not
Earing
• Insurance for Earning Member
• Traditional Insurance or Term
Insurance

6. • There is no minimum or maximum age for term insurance. Earlier you
purchase the policy better it is.
• Do not be very late because as time passes, your premium amount will also
increase depending on your age and also if you develop any illness or
disease, it will get tougher to get the policy later. So once you are clear that
you require a certain amount of life cover, go ahead and complete the action
within a few months.

7. • Till what age should you buy a term plan? Should a 30 years old guy buy a term
plan up to 80 years?
The answer is NO.
• You should not buy it for the longest tenure possible because you only need life
insurance policy till your retirement and not beyond that. This is because not
many family members will be financially dependent on you beyond your
retirement age.
• When we are young, we have more financial responsibilities, and hence it makes
sense to take a big cover.

8. • A lot of insurance companies have started to advertise their term insurance plans by
sharing the cost per day basis, like for example – “Buy 1 crore term plan just for
Rs.16/day”. However, note that these numbers might be applicable only for a certain
age group and tenure of the policy.
• Like it might happen that the advertised premium per day is only for the clients around
25 years and for a policy of 40 yrs.
• Your case will be different and the premiums might differ for you, so don’t get trapped
by the cheaper premiums.

9. • At times, you have to choose between single premiums vs. regular
premium while purchasing a life insurance policy. A lot of people think
that just because they can afford to pay a onetime premium, it makes
sense, but it’s not true.
• Other than some cases, it does not make much sense to pay a one-time
premium (single premium) while buying a term plan. The best option
which will work for most people is the yearly premium. So if your agent is
trying to explain to you how a one-time payment will help you save the
cost, run away and don’t fall for it.

10. • This is a big one which is critical to understand.
• When you buy a term plan (or even health insurance), sometimes your
premiums can increase after your medicals are done and you may be asked to
pay an extra premium. This increase in premium is due to health issues and
it’s very valid to ask you to pay this extra premium.
• Most of the buyers are very critical of the premium increase and choose to not
move ahead or postpone their decision of buying the plan.
• However you should understand that the premiums increase is a natural thing
to happen if you are of the high-risk category (like a smoker, alcoholic or if
some past illness). It’s actually a good thing that the company is beforehand
checking the facts and still offering you the plan, though at a little high
premium which is very fair from their point of view.
• At that point, rather than postponing the decision, the best thing is to go
ahead and buy the policy.

11. • “Riders” are great add on with a term insurance plan, but only if you really
require them or if they are specific to your case. Don’t add them just because
it’s available and gives you a sense of more security. I mean if you do a lot of
travel and are most of the time in your case, the risk of dying in an accident is
higher for you, so in that case, you can add an accidental rider. Here
are various types of term plan riders
• Accidental Death Rider
• Permanent & Partial Disability
• Critical Illness
• Waiver of Premium
• Income Benefit Rider
• In the same way, if you feel that you want to cover the risk of some critical
illness in the future and don’t want to buy a separate policy, then you can
add critical cover. But don’t add any term insurance riders for the sake of it.

12. • A term plan comes into various flavours nowadays. The most basic one is the
one which pays you a lump sum on death. However, there are other
variations now which also gives you income for 10/20 years along with the
main cover, or pays only the income for the next 10/20 years and a small
lump sum at the time of claim.
• I think one should just choose the base policy in most of the cases. Most of
the other options are designed for very specific situations and they are not
“better” or “bad” compared to the base policy. To check this, you can go to
any term insurance premium calculator and find out the premium with rider
and without a rider.

13. • One of the worst things you can do while purchasing any life insurance plan
is to hide the fact that you are a smoker or consume alcohol. Please don’t
hide it. There is nothing like a best term insurance plan for smokers in India
at the moment.
• Your premium calculation happens based on this critical information and if
you hide these facts, then you are actually breaching the contract with the
company and almost always your claim will be rejected at the end.
• Also, don’t think that just because you smoke just once in a while does not
make you a non-smoker.
• If you smoke (even though every fewer number of times), you are a smoker in
the eyes of the life insurance company. Same is the case with those who take
alcohol.
• Make sure you fill your own form because there have been cases when an
agent just mentions the policyholder as non-smoker or non-alcoholic to make
sure the policy is easily issued.

14. • Another grave mistake done by policy buyers is to hide any critical health
information while purchasing the policy. If you have any health issues or
have gone through any major operations/surgeries then you should clearly
communicate that to the insurance company. One of the reasons for term
insurance claim rejection is hiding important facts while purchasing the
policy.
• Please don’t wait for the insurance form to ask you the exact details.
• An insurance policy is actually a proposal from your end in the eyes of law
where you have to disclose all the facts and the company will accept your
case or reject it. So the onus of providing all the information is on you.

15. • Even your family health history matters.
• If your parents or siblings have some illness, then please shared it.
• Please don’t hide any illness because even that information impacts on your
premium.
• Many people think that just because their parents had diabetes, it does not
matter at all. That’s not true.

16. • Indians on average are highly uninsured, however, that’s mostly true for
those who do not have term plans. But even those who have term plan try
to cut the corners and eventually take less term insurance cover.
• The most favourite number nowadays is Rs 1 crore. I see most of the
people just taking a 1 crore term insurance plan thinking that it’s the
right number. No, it’s not the case.

17. • One of the biggest issues with most of the potential policy buyers is that they want to
buy the best term insurance policy and don’t want to make any mistake. They are
aware that they need a life cover, they also start searching for the policy, do the term
insurance comparison, but then start to over-analyse the policy, its features, the
premium comparison and all that stuff….
• Finally, they just don’t take any decision because of their deep analysis. They
postpone the decision and think that they will “soon” buy it.
Don’t do this
• Do some study, but don’t get into that zone where you are just stuck because of
small points. It’s better to have a good term cover with any company, rather than
having no cover.

18. • While filling the insurance form, make sure you carefully put the nominee name.
But who can be a nominee in insurance? Ideally, it should be wife, children or
someone whom you want to pass the term plan money. But try to avoid very old
people as the nominee (in general).
• Also make sure you mention this fact in your WILL too.
• If you have bought the term plan long back and now your preference has changed,
it’s better to change the nominee name.

19. • You should ideally have 1 term plan policy in your life insurance portfolio,
the max can be 2 policies. But nothing more than that.
• I have seen some people dividing their 2 crores of the cover into 4 policies of
50 lacs each with 4 different companies and it’s a little bit of stretch. In
almost all cases, 1 single policy of a big amount is good enough.
• However, if you still feel that you want to break it into two policies, that’s
the maximum you should do.

20. • When you buy any life insurance policy, it’s mandatory as per their rules to disclose
the old insurance policy you already have. In most the cases, when people buy a
term plan for the first time, they already have a couple of traditional insurance
plans, but they fail to declare that.
• I suggest you don’t do that because as per life insurance policies, a company
should know how much coverage you already have and only based on that they will
offer you additional cover.
• If you have already bought a term plan without mentioning your old policies, you
should reach the customer care of your term plan company and share with them
about your old policies.

21. • One of the things which you should immediately do after receiving the policy
is to check all the fine points and a copy of your medical examination.
Nowadays, the policy papers have your medical records.
• Kindly go through each point and make sure things like your age, name,
blood group, address and other important things are mentioned correctly.
• There have been cases, where the information has been wrong. If things are
wrong, you can contact to customer care to get it corrected.

22. • You should share about buying the term plan with your family immediately
along with the policy papers and the contact number of the insurer.
• You can also write down the claim process on paper and keep that at a safe
location and share it with family. I know it’s not an easy conversation to do
even though it’s a logical thing to do. But at least communicate with your
family about the important things they should be aware about.

23. Mr. Smart.
Age: 25 years Old
Earning : Rs.5,00,000/-

27. Accidental Insurance Coverage:
You can avail the following coverage benefits with a PAI
policy –
1. Accidental Death Cover
2. Permanent/Total Disability Cover
3. Permanent Partial Disability Cover
4. Temporary Total Disability

29. • To secure your medical needs.
• For every individual in India, health insurance has become a necessity.
• It provides risk coverage against expenditure which is caused by unforeseen
medical emergencies.
• Today, when the medical inflation rates are so high, failing to hold an adequate
health cover can prove costly financially.

30. Things to be Consider Before Buying Health Insurance
Claim Process:
• Check the policy wordings and go through the health insurance claim process that is
followed by the insurance company. A smooth claim procedure is a beneficial at the time of
settling health claims.
• You can do some research, read customer reviews online and select a health insurance
provider that is known for its seamless claim settlement services.
Cashless Hospitalization Benefits:
• Health Insurance companies usually have a tie-up with network hospitals where the insured
members can avail cashless treatment in case of a medical emergency.
• It saves you from the tedious paperwork that is required at the time of admission and claim.
• You don’t need to arrange for funds and then file for its reimbursement.
• It will be helpful if you check with your insurance company for the list of empanelled
hospitals and know what all network hospitals are there in your near area.

31. No-Claim-Bonus
Claim Free Year Sum Insured
1st claim-free year ₹ 5,50,000
2nd claim-free year ₹ 6,00,000
3rd claim-free year ₹ 6,50,000
4th claim-free year ₹ 7,00,000
5th claim-free year ₹ 7,50,000
No-Claim-Bonus/No-Claim-Discount:
• NCB refers to the discount offered by the insurance company for all the years that you have
not filed a claim. Basically your coverage amount is increased at the time of subsequent
policy renewals for all claim-free years.
• However, most health insurance provides specify the NCB limit. And the increase in the
sum insured would depend on the limit that is specified by the insurer.
• For example, if you buy a health insurance plan of Rs. 5 lakh and the insurer offers 10%
NCB for every claim-free year up to a maximum of 50%. The table below illustrates how
NCB will affect your sum insured amount:
Things to be Consider Before Buying Health Insurance

32. Things to be Consider Before Buying Health Insurance
Co-Payment Clause:
• A lot of people find this term confusing and tend to ignore it at the time of purchase.
• It is basically the percentage of the amount that you would need to pay at the time of claim
and the rest will be paid by the insurer.
• So, before you sign your Mediclaim policy check if there is any co-payment clause
applicable that might impact your claim amount.
• If possible buy a plan that does not have sub-limits. However, if you have any pre-existing
medical issues or have crossed a certain age limit most insurers would have a co-payment
clause.

33. Things to be Consider Before Buying Health Insurance
The Waiting Period Clause:
• If you are aware of the waiting period clause then you would be in a better position to
make a decision.
• The insurer will not accept any claim arising out of pre-existing illnesses or specific
illnesses during this period.
• It can range anywhere between 24 months and 48 months depending on the insurer and
the plan that you have chosen. Moreover, you will be able to claim the benefits only when
this period is over.
• This waiting period shall apply to pre-existing illnesses like thyroid, blood pressure,
diabetes, etc. that one may have before buying the policy.
• So, you can compare and choose a plan that comes with a minimum waiting period to be
able to claim the benefits in case of a health emergency.

34. Things to be Consider Before Buying Health Insurance
The Right Combination of Premium and Coverage:
• It can be profitable to buy health insurance with the lowest premium.
• But there can be two sides to it.
• A policy with a lesser premium can be good if it is offering you extensive coverage at a
premium that you can pay. The other aspect is lesser premium at the cost of the insurance
coverage.
• So, the best approach is to look for the reasons behind a reduced premium, as it should not
be at the cost of the insurance coverage.
• Check if there is any additional clause of co-payment, deductibles, and sub-limits, and if it
is then you would actually end up paying more at the time of claim.
• You should buy a policy that offers adequate coverage, without compromising on the
benefits and at a premium that you can afford.

35. *****Important:
• Don’t change your Medical Insurance Company
Every Year.
• Don’t claim for small amount.

43. Particulars Mr. Smart liable to pay
Income Tax @ 30%
Mr. Smart liable to pay
Income Tax @ 20%
Investment in PPF (A) 1,50,000 1,50,000
Tax Saving on A 45,000 30,000
Tax Free Interest Earned @ 7.10% w.e.f.
1.4.2020
10,650 10,650
Tax Saving on Interest 3,195 2,130
Total Saving from your one decision i.e.
investment in PPF
58,845 42,780
Return on Your PPF Decision. 39.23% 28.52%

44. Interest Rate w.e.f. 1.4.202020 : 7.90% p.a.

45. The NSC has a maturity period of 5 years. The NSC rate of interest
is 7.9% per annum compounded half-yearly but payable at
maturity. That means, your investment of Rs. 1,00,000 will yield
you Rs. 1,44,231 after 5 years.
(Rs.44,231/Rs.1,00,000)*100=44.231% /5 years = 8.85%p.a.

46. w.e.f. 1.4.2020 @ 7.60%

50. What is an HUF?:
• As the name suggests, an HUF is a family of Hindus. However, even Buddhists,
Jains and Sikhs are regarded as Hindus, and can, therefore, set up HUFs.
• A HUF is a separate entity for taxation under the provisions of S.2 (31) of the
Income Tax Act, 1961.
• This is in addition to an individual as a separate taxable entity.
• This indicates that a person may be assessed in two different capacities- as an
individual and as a Karta of his HUF.

51. Basic criteria for an HUF:
There are some essential conditions that must be fulfilled to qualify as an HUF. These
are outlined below:
• To form an HUF all you have to do get Married. The HUF is created the moment you
get married.
• One member or co-parcener cannot form an HUF.
• The joint family continues even in the hands of females after the death of the sole
male member.
• An HUF need not consist of two male members. One male member is enough. For
example, a father and his unmarried daughters may form and HUF.

52. Who can be members?
1. All the members in your family, including :
your wife,
children,
their wives and their children.
2. The senior-most male member is called the karta (manager), and a
typical HUF consists of a karta, his sons, grandsons, and great-
grandsons and their wives and unmarried daughters.

53. Now the question is how to Create an HUF:
• Prepare an HUF Creation Deed by transferring ancestor Assets, gift to
the HUF account..
• To create an HUF you need to apply for a PAN card.
• Open a HUF Bank account.
How to create capital In HUF?
You can mentioned in Deed say Rs.5,000/- is belonging to ….your HUF.

54. Can HUF run a Sole Proprietorship Business?
Since HUF is one “person” as per Income Tax Act, a Proprietor of a
business can be an Individual or a HUF. A Proprietorship concern is not
governed by any specific law as such, and therefore there is no bar on
HUF becoming a Proprietor of any concern.

56. Income From
Different Source
Mr. Smart (without
HUF)
Mr. Smart With HUF HUF Income
Salary (Net) 20,00,000 20,00,000 -
Other Income 6,50,000 - 6,50,000
Total Taxable Income 26,50,000 20,00,000 6,50,000
Less: Ch. VI-A
Deductions
1,50,000 1,50,000 1,50,000
Net Taxable Income 25,00,000 18,50,000 5,00,000
Tax Payable (Incl.
Surcharge)
5,85,000 3,82,200 Nil
Total Tax Payable by
Mr. Smart incl. HUF
3,82,200
Total Tax Saving After
Creating HUF
2,02,800
(5,85,000 Less 3,82,200)

58. Creating a Will is an essential part of your financial planning that cannot be
ignored.
Imagine, when your life’s hard earned wealth is not distributed to your legal
heirs or not taken care as per your wish?
What Is A Will?
A Will is a document which acts as the legal medium through which one’s
property can be distributed among heirs/ beneficiaries. The document has to
be printed on a plain paper and signed before two witnesses.

61. Mr. Smart 25 Years Old MONTHLY YEARLY
Term Insurance for 75 L 560 6,726
Mediclaim for 10 L 600 7,200
Personal Accident for 10 L 83 1,000
Atal Pension Yojana for 5,000 Monthly 376 4,438
Total Expenses For Mr. Smart Peaceful Life 1,619 19,364
PPF of Self, Spouse & Child
NSC
School Fees (Education Expenses)
Repayment of Housing Loan
TOTALBASICOUTFLOWFORPEACEFULLIFETOTALBASICOUTFLOWFORPEACEFULLIFETOTALBASICOUTFLOWFORPEACEFULLIFETOTALBASICOUTFLOWFORPEACEFULLIFE

63. Disclaimer:
The information contained in the above are solely for informational
purpose after exercising the due care and is on based on the speaker’s
interpretation of the relevant provisions. The speaker accepts no
responsibility whatsoever and will not be liable for any losses, claims or
damages which may arise because of the contents of this video.