Finergo Episode 05 08dec08

04 KALEIDOSCOPE

Rewind Personal finance-related news from last week ■ RBI reduced the repo rates and reverse repo rates (rates at which RBI lends to banks, and banks can lend to RBI respectively) by 100 basis point (1%) to 6.5% and 5% respectively. The CRR & SLR remain the same. This will be effective from Monday. ■ The prices of petrol and diesel slashed. The reduction is Rs.5 for petrol and Rs.2 for diesel. The crude price in the international market has dropped to $40, the lowest in four years. ■ Vodafone’s request of no TDS has been declined by Maharastra High Court. The company can appeal in the Supreme Court. The tax liability can be as high as $2 billion if turned down by the Supreme Court too.

ERGO Monday, December 8, 2008

10 steps to manage health insurance

Mini quiz Winner gets a free Personal Finance Health Check up from Finerva. 1. What is the maximum amount for tax benefit for Health Insurance premium under 80D for a senior citizen? Choice: A. Rs.15,000/B. Rs.20,000/C. 20% of Rs.20,000/D. Rs.7,500/2. What is the tax on the claim amount of health insurance? Choice: A. 0% B. The claim amount is added to the income and taxed accordingly C. 10% of the claim amount D. 30% + surcharge on the claim amount Send your answers to [email protected] or SMS your answers to 92813 98889. For example if you choose A as the answer to question 1 and B as the answer to question 2 type it as 1A2B and send it.

Golden calendar 쑸 An employee of Japan’s jeweler Tanaka Kikinzoku displays a ox mascot wearing a gold foil calendar. AFP PHOTO

I

n today’s world, it is a given that health insurance is a necessity. The high impact of pollution, work-related stress, odd and long working hours, indifferent food habits, sedentary lifestyle and the commute to and from office add to the health hazards. Is there a way out in case you are stuck with some illness? Yes, a properly planned health insurance scheme can take care of it. Here is a ten step process for well-planned health insurance management.

10-point checklist 1.a: Based on your family history and your work style, plan for the highest expense due to medical emergency. It is ok to be paranoid when doing this estimation. 1.b: Do the same exercise for all members of your family. Include your children too (if you have any). In fact children are the most vulnerable to contagious diseases. 2. Check the cover available with your company’s health plan; check for the amount; check for the diseases covered; and finally check for the emergency facilities covered. 3. Bridge the gap between your

estimation in Step 1 and the cover in your company in Step 2. Some companies may not have health insurance. Some others may even cover pregnancy and child birth (which is not normally covered by insurance companies). 4. Look for a General Insurance company to fill the gap with their products. Consider the health insurance premiums as necessary expenses. They are not investments. One good thing is that the Government also gives us Income Tax benefits under Section 80D for all health insurance premiums (slab is Rs.15000/- per year). The premiums generally change on a yearly basis; increasing with age. 5. Take another health insurance from Life Insurance companies for Critical Illness only. There are several products in the market. For any Life Insurance based health plan - choose the longest term possible and take the plan as early in your life as possible. Here the premiums are fixed throughout he term and is dependent on the age at entry. 6. Always read the fine print of the proposal and the products.

Please don’t entertain telephone calls where the sales person says that the details will be available when you say YES and they send the document. 7. Cross check the document on whether you have got the same plan for which you applied. 8. General Insurance plans need to be renewed every year. Don’t forget the date for renewal. Writing the renewal date on your diary’s first page should be a good enough reminder for this. 9.Don’t change the insurance company – you get the advantage of discounts (no-claim bonus - upto 50%; either in the form of reduced premiums or increased cover) from general insurance companies and fixed premiums for the term from life insurance companies. 10. Once every 3 years (lesser in case there were any claims) review the cover available. Do the Steps 1 to 3 and increase the cover as per requirement. Never decrease the cover (your next company may not have all the goodies). Karthikeyan Jawahar Finerva Financial Solutions Pvt Ltd