Enjoy the benefit of a term insurance policy even after you emigrate

A term insurance policy provides you an unmatched coverage for financial security for yourself and your family. The policy is a protection oriented life insurance plan which covers the risk of premature death and compensates your family for the financial loss suffered. Moreover, given the fact that the plan has a low premium, it allows you to opt for a high sum assured so that you can create the desired financial corpus for your family’s safety. But does the plan work if you emigrate?

Foreign shores lure many individuals who go abroad for work or business. Such individuals might go and live abroad either for a specified time period or permanently. In such situations, the term insurance policy does not get affected. Let’s understand how –

A term insurance plan covers you against the risk of premature death. This death can occur on Indian soil or in another country. The term plan is not affected by the place of death. You can still enjoy the coverage under your existing policy if you emigrate during the term of the policy. Here are some points which you should keep in mind if you have a term plan and you emigrate –

  • Continue the premium payment

In your existing policy you need to continue paying the premium in Indian currency. Even if you settle abroad you should have an Indian bank account from where the premiums can be paid towards the term plan online. If the premiums are discontinued, the policy would lapse and you would lose the coverage. Moreover, term plans also do not have any surrender value or paid-up value. So, premium continuation is quite important if you want to enjoy the coverage offered by the policy.

  • Payment of claim

In case of death during the tenure of the policy, the insurance company would pay a claim even if you settle abroad. However, the claim would be paid in Indian currency. You should, therefore, ensure that your nominee can contact the insurance company in case of your demise. Claim related documents should be submitted to the company to get the claim.

  • Limited pay term plans

If you are likely to emigrate and you want to buy a term plan online, you can opt for limited pay term plans. Under limited pay term plans, premiums are payable for a limited period while you can enjoy coverage for a longer tenure. These plans, therefore, ensure that the coverage continues even when you emigrate without you having to ensure premium payments throughout the policy tenure.

  • Tax implication

You can still claim the deduction on the term insurance premium under Section 80C if you emigrate. If you have income in India, your investment in a term plan online would be eligible as a tax-free deduction from that income. This would reduce your tax liability. Furthermore, in case of death, the death benefit would be completely tax-free even if you have emigrated.

Remember these points when you emigrate and you can enjoy the benefits of a term insurance plan. Moreover, term insurance plans allow NRIs to buy the policy. So, if you are emigrating and you wish to invest in a term plan online, you can do so even after you emigrate. You can buy a policy as a NRI and enjoy the benefits which the policy has to offer.

Claims under term insurance plans are unaffected by your residency status as long as you are an Indian citizen at the time of buying the policy. Moreover, buying a term plan in India is much more cost-effective than buying the policy in a foreign country where you emigrate to. So, buy a term insurance plan in India at lower premiums and enjoy the benefits of the policy even when you emigrate.

Why debt fund returns are volatile these days?

Debt funds have always been known as the conservative investor’s best friend. They are safer (when compared to equity funds) and usually offer stability to investors. So, when the returns from this category (including the best debt funds) started witnessing volatility, it was sure to cause some arched eyebrows and palpitating hearts. But before you start making panic-struck rash decisions, it is important to understand why are the debt fund returns volatile these days.

Risks in Debt Funds

It is true that debt funds are relatively safer. However, they are not completely risk-free (in fact, no financial instrument is!). Debt Funds have two major risks:

  1. Credit Risk

Credit risk is the risk of default on the part of the borrower to repay the principal loan amount or interest thereon. Credit risk has been on the rise in the country since some time now. Factors such as a slowdown in the real estate sector, the IL&FS fiasco in the year 2018 as well as defaults by big business houses such as DHFL, Zee Group, etc. have contributed to credit risks for the Indian debt funds in the past.

  1. Interest Rate Risk

Bond prices fluctuate as a reaction to changes announced in interest rates. They have the same relationship as the opposite ends of a magnet. One goes up, the other goes down. Whenever there is an increase in the interest rates, the debt fund’s NAV (Net Asset Value) is impacted adversely. 

Reasons for volatility in debt fund returns these days

It is important to understand that debt mutual funds are a part of the overall debt market. Hence, a large-scale credit event or a liquidity crisis is bound to impact the returns of these schemes, even for the best debt funds. 

The month of March (when coronavirus hit our country) witnessed a spike in yields (in the short-term segment) which led to a temporary dip in many debt fund NAVs. This was mainly because of:

  1. Dwindling trade volume and sluggishness in the Indian economy created a sense of panic amongst foreign investors. This led to massive outflows.
  2. Simultaneously, there was an exponential increase in redemptions from the Domestic Institutional Investors as well. 

Lockdown, extreme slowdown of businesses and bank moratorium (wherein borrowers can opt to defer their instalment payments) and tremendous rise in redemptions have increased the chances of default and rendered many papers illiquid.

Is it time to bid adieu to debt funds?

NO. The overall economic situation is in a turmoil. The current volatility in the debt market is a temporary phenomenon and will subdue with resurgence in global and domestic conditions. This category still continues to be one of the preferred investment options. However, what this pandemic and recent volatility in debt markets has taught (or revised our knowledge) is the importance of choosing the right debt fund. Debt funds invest across durations (ranging between one day to more than five years), sectors (corporate bonds, Banking and PSU) and objectives (floater, FMPs credit risk, Gilt, etc). You need to choose the best debt fund as per your risk profile, investment horizon and financial goals, rather than blindly follow recommendations of friends, etc. 

Debt fund investment online and offline

Debt fund investment online is easy, quick and hassle-free. Compared to the offline process, it involves minimal documentation and gets done with a couple of clicks. You can take the help of debt fund investment online portals that are aggregators. They provide relevant information to compare the performance and features of various debt schemes and choose the one which meets your requirements. 

Final Words

RBI has taken numerous initiatives to stimulate demand and revive the bond and money market. Cuts in repo-rates, money infusion into banks through LTRO and supply of forex (USD) to reduce the impact of rupee downfall, will slowly and steadily bring back the debt funds to their former glory. However, all good things take time and hence, patience is of utmost importance. 

Tough times do not last. Tough people (and funds) do. And debt funds are definitely meant to weather these temporary storms and emerge stronger and better in the long run.

What does Health Insurance not cover?

A health insurance policy proves to be a blessing in a medical emergency when you or your family members are hospitalised and you incur a huge medical bill. The policy covers the medical costs and provides financial relief to you and your savings. It is, therefore, advised to invest in the best health insurance for your family. 

Though the scope of a health insurance plan is quite inclusive, there are instances when claims are not paid under the policy. These instances are called policy exclusions which are the medical expenses not covered by a health insurance plan. When you buy health insurance online, you should know about these exclusions so that you know what to expect from the policy. So, here are some of the common exclusions which are not covered even when you buy the best health insurance for your family –

  • Claims during the waiting period

Under every health insurance plan, there are different types of waiting period during which specific claims are inadmissible. These waiting periods include the following –

  • Initial waiting period – claims due to illnesses which occur within the first 30-90 days of buying the policy are not covered. This is the initial waiting period during which claims for any type of illnesses are not paid. However, claims for accidental injuries are admissible from the first day of the policy.
  • Specific diseases waiting periods – specific illnesses and/or treatments are not covered during one or two years from the date of commencement of the policy. Common illnesses and treatments which have this waiting period include treatments for piles, hernia, tonsillectomy, joint replacement surgeries, fibroids, etc.
  • Pre-existing waiting period – if you or your family member suffers from an illness when buying health insurance online, such an illness is called a pre-existing illness. Such illnesses are not covered during an initial waiting period ranging from 1 year to 4 years under different plans.
  • Maternity waiting period – if your health insurance plan has an inbuilt coverage for maternity, such coverage is allowed only after a specified waiting period which can range from 9 months to up to 6 years.

Claims during the above-mentioned waiting periods are not admissible but once the waiting period is over, the health insurance plan pays the claims.

  • Specific treatments

There are specific treatments which are completely excluded from the coverage of health insurance plans. These include cosmetic treatments, dental treatments, LASIK treatments for eyesight correction, fertility treatments, weight management treatments, etc. 

  • Other exclusions

Other instances which are commonly excluded from health insurance plans include medical expenses incurred due to the following instances –

  • Self-inflicted injuries or attempted suicide
  • War, nuclear contamination or allied perils
  • Maternity related expenses unless they are specifically covered under the plan
  • Outpatient expenses unless they are specifically covered under the plan
  • HIV, AIDS or other types of venereal diseases
  • Congenital diseases or birth defects
  • Unproven, unscientific or experimental treatments
  • Injuries or accidents suffered due to alcohol and/drug abuse
  • Injuries or accidents suffered when committing an act of criminal nature
  • Injuries or accidents suffered when participating in hazardous activities
  • Debilitating illnesses
  • Cost of lenses, spectacles or hearing aids, etc.

These are some of the common exclusions which you would find in most health insurance plans. However, under some plans, a few of these exclusions can be a part of the coverage benefit. So, when you buy health insurance online, you should read the coverage and exclusion list of your policy to know exactly what is covered and what is not. Then you should compare and select the best health insurance for your family which has a limited exclusion list and a comprehensive range of coverage benefits. Such a plan would provide the most inclusive coverage to your family ensuring that most of your medical costs get covered and your out-of-pocket expenses are minimized.

How do you differentiate Equity funds and ELSS?

When it comes to mutual funds, the choices are many. There are different types of mutual fund schemes based on their investment portfolio, risk profile, return potential, and investment objective. Equity mutual funds are quite popular among investors who have a healthy risk appetite. They allow you to invest and get attractive returns through investment in equity-oriented securities. Moreover, if you choose ELSS funds, you can also get tax benefits. 

Equity Linked Saving Schemes, also called ELSS in short, are equity-oriented mutual fund schemes which have an added advantage of tax benefit. ELSS funds are, in fact, a type of equity mutual funds but many investors confuse them to be synonyms of each other. So, let’s understand and state the similarities and differences between these types of mutual fund schemes –

What are equity mutual funds?

Equity mutual fund is a broad category of mutual fund schemes under which different types of schemes fall. Equity mutual fund is a generic name given to those mutual fund schemes whose portfolio invests at least 65% in equity stocks and securities. 

What are ELSS schemes?

ELSS schemes are a type of equity mutual fund which allow you to avail tax benefit on the amount that you invest into the scheme. This ELSS tax benefits is not available under any other mutual fund scheme making ELSS schemes popular.

Similarities between ELSS and equity mutual funds

  • Under both these funds, the portfolio consists of at least 65% of equity investment
  • Both these types of mutual fund schemes have a high-risk profile and are suitable for investors who have tolerance of taking investment risks

Differences between ELSS and equity mutual funds

Points of differenceEquity mutual fundsELSS funds
Scope Equity mutual fund is a category of mutual fund schemes under which you can find different types of schemes like large-cap fund, mid-cap fund, small-cap fund, etc.ELSS funds are a type of equity mutual fund. They are, therefore, a subset of the equity mutual fund family
Investment tenureThere is no specific investment tenure for equity mutual funds. You can invest for as long as you want and redeem the funds as per your needELSS funds have a lock-in period of 3 years. Investments into the fund are locked in for 3 years and only after the lock-in period is over are you allowed to redeem your investment
Tax benefit on investmentNo tax benefit is available on the money that you invest in an equity mutual fund schemeOne of the ELSS tax benefits is the benefit available on investment. The money that is invested in the ELSS scheme qualifies for deduction under Section 80C. You can claim a deduction of up to INR 1.5 lakhs by investing in the ELSS fund online
Tax benefit on redemptionIf you redeem the equity mutual fund within 12 months of investment, the returns earned are treated as a short term capital gain. This gain is taxed @15%. However, if you redeem the fund after 12 months, the returns earned are called long term capital gains. Such gains are tax-free up to INR 1 lakh. If the returns exceed INR 1 lakh, 10% tax is charged on the excessAnother ELSS tax benefit is the benefit of redemption of the fund. Since ELSS schemes have a lock-in period of 3 years, there is no short term capital gain. Thus, on redemption, the returns earned are long term capital gains which are tax-free up to a limit of INR 1 lakh. If the return is more than a lakh, the excess is taxed @10%

Thus, ELSS funds are nothing different but equity mutual funds with a lock-in period and added tax benefits. So, if you are looking to save taxes and earn attractive returns, invest in an ELSS fund online and build your portfolio. Compare the different ELSS fund online and then choose a scheme which has given consistent returns over a long term period. This would ensure that you get maximum returns from your investments. 

National Pension System (NPS) investment right instrument for tax saving and building a retirement corpus

Planning a retirement corpus is essential if you want to live comfortably even after your regular income stops. That is why, during your active working life, you should put away money for your retirement. Retirement planning requires regular savings over a long term period so that you can accumulate a substantial corpus. Building a retirement corpus requires you to invest your savings in a suitable investment avenue which would create the desired funds. One such avenue for retirement is the National Pension System (NPS).

The NPS scheme was launched by the Government of India to allow the public with a market-linked investment avenue for retirement planning. The online NPS scheme allows you to invest for a long term period so that you can accumulate a substantial corpus for when you retire. Here are some salient features of NPS investment –

  • You can choose an online NPS scheme or invest through your bank’s branch. Online NPS investment is more convenient as it allows you to invest right from your home or office 
  • The age limit for NPS investment is between 18 years and 60 years. The scheme runs till you attain 60 years of age and you can even postpone the vesting age by 10 years to get the corpus at 70 years of age.
  • There are two investment accounts – Tier I and Tier II. Tier I account is mandatory and you have to open it to invest in the NPS scheme. Tier II Account is optional and can be opened if you have an existing Tier I Account
  • When you invest in online NPS scheme, you get a PRAN number which helps you track and monitor your investments
  • NPS investments are market-linked allowing you to grow your money with attractive returns and create an inflation adjusted corpus
  • Though NPS is a long term investment, you can withdraw from your corpus partially during the investment tenure. Partial withdrawals are allowed only for specific instances like meeting the cost of a marriage, medical emergency, higher studies, etc. You would be allowed to withdraw up to 25% of your accumulated corpus from the third year of investing into the scheme.
  • NPS investments are tax saving in nature and give you tax benefits both on the invested amount as well as the redemption proceeds.

Tax saving benefits of NPS investment

As mentioned earlier, NPS is tax saving in nature. Let’s understand how –

  • Tax benefits on investments

The money that you put into your NPS account is eligible to be claimed as a deduction from your taxable income. You can claim a deduction of up to INR 1.5 lakhs under Section 80CCD (1) of the Income Tax Act, 1961. Furthermore, if you are looking to save additional taxes, you can do so by investing an additional INR 50,000 in the NPS scheme. This additional investment would be allowed as a tax-free deduction from your taxable income under the provisions of Section 80 CCD (1B). Thus, by investing in the NPS scheme, you can claim a maximum deduction of INR 2 lakhs.

  • Tax benefits on redemption

When the NPS scheme matures, you are allowed to withdraw 60% of the accumulated corpus in lump sum. This lump sum withdrawal is allowed as a tax-free income in your hands.

Why NPS is the best retirement planning tool?

Besides the tax benefit, which is an obvious advantage, NPS proves to be a best retirement planning tool for the following reasons –

  • It helps you create an inflation-proof retirement corpus through market-linked investments. Since the retirement corpus grows according to the trend of the economy, it ensures that your retirement is sufficiently funded
  • The long term nature of the scheme allows your investment to get the benefit of compounding thereby yielding attractive returns
  • After maturity, 40% of the corpus is promised to be paid as lifelong annuities. Moreover, there are different annuity options to choose from. So, the NPS scheme creates a regular source of income even after you are retired.

Given these benefits, you should invest in an online NPS scheme. Start investing at the earliest so that you have the maximum possible tenure to create a retirement corpus. The tax benefit would also help in saving tax allowing a higher disposable income in your hands. So, choose NPS for retirement planning and enjoy the benefits which the scheme has to provide.

Get best health insurance quotes on ETMONEY mobile app

Smartphones and mobile applications have shrunk the whole world on your mobile screen. You can buy anything online, right from your home or office, equipped with a Smartphone and a mobile application installed on it. Even when it comes to buying health insurance, your Smartphone has a solution if you have the right mobile application.

ETMONEY mobile application is a one-stop solution for your financial needs. The application allows you to invest your money in suitable mutual funds, track your spending, take a loan and also buy insurance policies. In fact, when it comes to buying health insurance, the ETMONEY mobile app is the ideal solution.

Benefits of buying health insurance from ETMONEY mobile app

The expert often say that you should buy a health insurance policy only after comparing the available plans. Since a health plan is essential, many insurance companies offer a variety of plans for your coverage needs. That is why it becomes essential to compare the available plans and then choose a policy which offers the most suitable and comprehensive coverage benefits at the most reasonable rate of premium. The ETMONEY mobile app lets you do just that. Leading companies are tied up with the ETMONEY mobile app allowing you to compare some of the best health insurance products right on your mobile screens. Here are some of the main benefits of using the ETMONEY mobile app to buy health insurance –

  1. You can compare health insurance quotes of leading health insurance plans offered by the best companies in the market. This comparison allows you to get the best price for your health insurance policy
  2. The whole process of comparing and then buying the best health insurance policy is paperless. You just have to choose the suitable policy online and then buy it through the application. No physical documents are needed to complete the purchase
  3. Once you buy the health plan through the ETMONEY mobile app, you get an instant tax proof of the premium paid. You can submit this proof and get tax benefits when filing your income tax returns
  4. If you have any queries when buying a health insurance policy, you can contact the dedicated customer care representatives who would help solve your queries. You can, in fact, get personalized assistance to buy the best policy suiting your coverage needs when you buy through the application
  5. The ETMONEY mobile app allows a secured and safe one-click premium payment through EasyPay which lets you pay the premium instantly and get coverage without any hassles
  6. You can also get claim related assistance through the claim department of the ETMONEY mobile app. This assistance helps you get your claims settled quickly and without problems

In the competitive world of the health insurance segment, comparing and buying is very important and the ETMONEY mobile app allows you to do just that. Moreover, with personalized assistance and guidance, you can also pick the most suitable policy for your needs. Assistance at the time of claims is an added benefit which makes the ETMONEY mobile app the ideal solution to get and compare health insurance quotes.

So, if you are looking for a health insurance plan, simplify your task by downloading the ETMONEY mobile application. The application is compatible with both the Android and Apple operating systems and can be downloaded on any phone. Once downloaded, choose health insurance and provide your details. Based on your details you would be suggested the leading health insurance plans. Compare the plans on their coverage features and premium rates and then choose the most suitable policy. Once shortlisted, provide your personal details and buy the policy right from the application to get instantly covered. Isn’t it simple?

So what are you waiting for? Download the ETMONEY mobile application and get the best health insurance quotes right on your Smartphone.

Why Hybrid mutual funds are called the combination of Equity and Debt assets?

Equities bring returns but are risky. Debt is stable but low on returns. What if you want to walk the middle path? What if you want returns as well as stability? If such thoughts have been keeping you up at night, you have come to the right article. 

Hybrid Funds are a type of mutual fund that is allowed to invest across multiple asset classes such as equity, debt, arbitrage positions, etc. They combine the USP of equity and debt funds while downplaying their individual weaknesses. Read on to know more.

Benefits of Hybrid Funds

The long list of benefits of hybrid funds makes them a crowd favourite. Here are the key benefits of hybrid funds and compelling reasons for their inclusion in your portfolio.

  • Balance is the name of the game

The USP of hybrid funds is that it offers the best of both worlds (i.e. equity and debt). These funds allow you to strike the perfect balance between the 2 R’s – Risk and Return. The equity exposure helps to reap higher returns while the presence of debt provides stability and softens the blow in times of volatility.

  • Something for everyone

There are six variants of hybrid funds. This, in turn, means that irrespective of your risk profile, there is a hybrid fund scheme which caters to your requirement. For instance, if you are a risk-averse investor, you can opt for conservative hybrid funds which have a higher debt and lower equity composition. For investors willing to take risks, aggressive hybrid funds are a perfect match.

  • Access to multiple asset categories

One of the biggest benefits of hybrid funds is that it provides you with a platform to access several asset categories through a single product. Hence, no need to invest in multiple funds or schemes to get the benefit of each individual asset class.

  • Diversification is their middle name

A wise person once said, if you invest and you do not diversify, it is as good as throwing out your money. Diversification is a critical risk management strategy. By bringing together two non-linked (or conversely related) asset categories – equity and debt, it helps in managing the risk quotient of your investments. Hybrid Funds help to diversify the overall portfolio across as well as within the asset categories. 

  • Stepping stone to the world of investing

The equity market can give an overwhelming experience to first-time investors. If not dealt deftly, equity investments can leave quite a sour taste for such investors and even scar them for life. Hybrid funds help these investors to take baby steps into the world of equity without getting greatly impacted by the market fluctuations. 

  • Balance and re-balance

You already know that hybrid funds help to balance the two concerns of every investor. But do you also know that the portfolio of these funds is continuously re-balanced as per the market conditions? The concerned fund managers scan the market for updates, trends or future events that may impact the fund’s performance and rebalance the portfolio whenever the need arises. This activity, if being done by you, would require significant time, effort and technical knowledge to understand the market movements.

How to invest in the best hybrid fund online?

It is human tendency to wants the maximum result with the least possible effort. So, in this case, it becomes the choice of the best hybrid fund in the easiest way possible. The perfect solution is to go through the online route. Investment portals provide you with all the required information (performance, consistency, rating, expense ratio, AUM, etc.) of all the funds in one website. They help you choose the best hybrid fund online and also complete all the necessary formalities in just a couple of clicks. e-KYC, a pre-requisite for online mutual fund applications takes lesser time than making a pot of instant noodles! Best is to go with investment portals that are completely paperless. 

Final Words

Hybrid Funds are the all-rounder of mutual funds. They combine the best features of equity and debt funds and give you a balanced investment instrument. Moreover, selecting the best hybrid fund online is extremely easy and effective. So, if you wish to grow your wealth but simultaneously manage risk, inject hybrid funds into your portfolio.

New Withdrawal Rules of NPS due to COVID -19

2020 so far has been the year of the global pandemic created by Coronavirus. It has impacted the health and wealth of millions of people across the world. Closer home a sluggish economy, pay-cuts, lay-offs and a general sense of insecurity surround all of us. In such unprecedented times, even the smallest help or concession can help make lives of people easier and happier. With this same thought in mind, PFRDA (Pension Funds Regulatory and Development Authority of India) has announced some revision regarding the NPS withdrawal rules.

NPS and its features

NPS or National Pension Scheme is a government-backed pension cum investment scheme. Participation in this social- security scheme is voluntary in nature. Though at the time of launch (2004) it was intended only for government employees in 2009 it was made open to all employees (irrespective of sector – i.e. public, private or unorganized sector) except those part of the Armed Forces. 

Some key features of this scheme are:

  1. All Indian citizens (from the age group of 18-60 years) are eligible to join this scheme, provided they comply with the KYC guidelines.
  2. Even NRIs can take part in this saving scheme. However, if there is any modification in the NRI’s citizenship status, the membership will get closed.
  3. There are two ways to invest in NPS Online and Offline.
  4. The funds are managed by PFRDA authorized managers also known as NPS Fund Managers. Currently, subscribers can choose from 8 NPS Fund Managers –
    • Aditya Birla Sun Life Pension Management Limited
    • HDFC Pension Management Company Limited
    • ICICI Prudential Pension Funds Management Company Limited
    • Kotak Mahindra Pension Fund Limited
    • LIC Pension Fund
    • SBI Pension Funds Private Limited
    • UTI Retirement Solutions Limited
    • Reliance Capital Pension Fund
  1. In case you are not satisfied with the performance of the scheme or NPS Fund manager, you have the freedom to request a change. This benefit is extended to all accounts (Tier-I and Tier-II)
  2. NPS allocates its corpus across different schemes. You cannot invest more than half of your investment in the equity market. 
  3. NPS qualifies for tax deduction at all stages – investment, accrual and maturity. Investments made in NPS can be claimed for a tax deduction as per Section 80C of the Income Tax Act. Moreover, Section 80CCD(1B) allows additional investment (till Rs. 50,000) to be put forward for tax deduction. For subscribers falling in the highest tax slab, this can translate into yearly tax savings to the tune of Rs. 15,600.

Pre-corona withdrawal rules

National Pension Scheme allows its investors to make early withdrawals (i.e. before attaining the age of 60), provided:

  • The contribution has been done for a minimum period of three years
  • Withdrawal request cannot be more than 25% of the invested amount
  • More than three requests have not been made 
  • The withdrawal is for purposes like child’s education or marriage, construction or acquisition of a residential house, treatment of critical diseases

New withdrawal rules due to Covid-19

COVID-19 has been categorized as a global pandemic by WHO. Taking the fact that this is a critical and life-threatening illness, PFRDA has now allowed partial withdrawals by subscribers to fund Covid-19 treatment expenses. The announcement was made on 9th April 2020. The rules for the same are:

  • The withdrawal request can be made for meeting the financial expenses for treatment of self, spouse (legally wedded), children (biological and adopted) and dependent parents.
  • In order to avail this facility, you need to submit the withdrawal request along with a medical certificate. The request can be done digitally using the NPS online portal or through the offline mode. If taking the NPS Online route, they need to initiate the request by logging into the portal using their 12-digit PRAN (Permanent Retirement Account Number) details.
  • This benefit will not be extended to subscribers of Atal Pension Yojana (APY).
  • The withdrawal amount cannot go beyond 25% of the total contribution made.

Final Words

Health is wealth. So, if you are facing an immense financial crunch and need funds for medical treatment (Covid-19 related), you can look towards your NPS account. However, try to ensure that it is the last resort because it means taking away from your retirement savings. 

Health insurance ensures the best healthcare for you & your family in a medical emergency

Medical emergencies strike unannounced and when they do, besides incurring physiological stress, you also face financial stress. Medical treatments have become quite expensive as new and modern day treatments have revolutionized the healthcare sector. While modern medicine has found cures of many dreaded illnesses, it has also become unaffordable for the common man. Moreover, illnesses and injuries are on the rise and in this situation you need financial protection against the expensive medical costs. The best health insurance policy comes to your assistance in meeting the medical expenses and gives you financial relief.

Health insurance plans in India are also offered as family floater plans which help you avail coverage for all your family members under a single policy. The plan has a single sum insured and a single premium but all your family members are covered. If any insured member needs medical assistance, the policy covers the medical costs incurred up to the sum insured. Some of the coverage benefits provided by family floater health insurance plans in India are as follows –

  • Inpatient hospitalisation 

When you or your family member is admitted to a hospital, a lot of expenses are incurred on accommodation, nursing expenses, cost of surgeries, doctor’s fee, medicines, diagnostic tests, oxygen, blood, etc. These costs can easily amount to lakhs of rupees and a health insurance policy covers all these costs under its scope. The hospital bills are paid by the policy and you don’t have to face a financial strain paying for the hospitalisation expenses of your family.

  • Day care treatments

Day care treatments are those where hospitalisation for 24 hours is not required. These treatments are done within a few hours due to medically advanced techniques. Even though day care treatments do not require continuous hospitalisation, they are covered under health insurance plans so that you can avail such treatments without worrying about their associated costs.

  • Organ donor treatments

Organ transplant surgeries require considerable funds and they are, therefore, covered under health insurance plans. The cost of harvesting an organ from a donor and then its transplantation is covered under most health insurance policies so that you don’t incur huge bills.

  • Maternity expenses

There are health insurance plans which cover the costs associated with pregnancy and child birth. Since maternity costs can be considerable, these plans help you financially when you start a family. The cost of child birth and pre and post-natal medical care is covered under maternity oriented health insurance plans.

  • Critical illness coverage 

Critical illnesses can blow a serious hole in your pockets as they require intensive treatments which cost a bomb. Moreover, if you suffer from such illnesses, you might lose the ability to work for some time which would impact your income. There are, therefore, critical illness health plans and critical illness riders which offer to cover specific critical illnesses. If you or an insured family member is diagnosed with any of the covered illness, the policy pays the sum insured in a lump sum. What’s better is that the benefit paid can be used in any way that you like. You can use the financial assistance to avail advanced treatments or you can simply pay off your financial liabilities so that your family does not face a financial burden.

Besides these coverage benefits, health insurance plans in India also allow you to opt for high sum insured levels which go up to crores. You can choose a sufficient sum insured so that you and your family members are comprehensively covered against any type of medical cost. The premiums are also affordable ensuring that you can afford a comprehensive policy without putting a big dent in your wallet. You also get tax benefits on health insurance premiums which help in saving taxes. 

So, invest in the best health insurance policy covering yourself and your family and get quality healthcare facilities if you or your family members face any medical contingency. 

What is the difference between hybrid funds and debt funds?

Mutual Funds have taken the Indian markets by a huge storm. As per AMFI reports for the year 2019-20, 9.83 lakh SIP accounts have been added each month! Broadly speaking, there are five categories of mutual funds for Indian investors:

  • Equity schemes, 
  • Debt schemes, 
  • Hybrid schemes, 
  • solution oriented schemes, and
  • other schemes such as ETFs, FOFs, etc.

In this article, we will compare hybrid funds and debt funds and see if one of them has an edge over the other. But before we determine if you should invest in hybrid funds or debt funds, let us look at their meaning.

Debt Funds are mutual funds which invest predominantly in debt and money market instruments. As these schemes allocate a majority of their total assets in fixed-income or interest generating instruments, they are considered a relatively low-risk investment option. Debt funds seek to generate average (but stable) income for the investors. 

Hybrid Funds are mutual funds that vest across asset categories (for instance, equity, debt, arbitrage positions, etc.). The core benefits of hybrid funds are that they seek to combine the best of both worlds – higher capital appreciation from equity exposure as well as stability through the presence of debt. They are also referred as Balanced or Asset Allocation Funds.

Comparison of Hybrid and Debt Funds

  1. Portfolio Composition

The portfolio of debt funds consists predominantly of debt and money market instruments. The benefits of Hybrid funds, on the other hand, is that they come in all shapes and sizes. For instance, aggressive hybrid funds have a higher equity exposure and a small debt allocation. Conservative hybrid funds have a significant debt presence and marginal equity exposure. As a result, regardless of your risk appetite, there will be a hybrid fund which is aligned to your investment profile.

  1. Risk

Debt funds have a low-risk profile when compared to equity funds. However, contrary to popular opinion they are not completely risk-less investments. They have three risk agents – credit risk, interest rate risk and liquidity risk. Usually, longer is the maturity period of the debt funds’ underlying instruments, higher is their risk quotient.

The risk profile of hybrid funds is derived basis its asset allocation. Schemes with significant equity exposure (such as aggressive hybrid funds) have a higher degree of risk. Schemes with majority allocation in debt instruments (such as conservative hybrid) have a lower risk quotient.

  1. Returns

Higher the risk, higher is the return. As a result, debt funds which carry relatively less risk yield low returns. However, they are usually stable in nature. 

Hybrid Funds, on the other hand, have the potential to generate higher returns by increasing their exposure.

  1. Liquidity

Debt Funds (especially Liquid or Overnight schemes) score over Hybrid Funds in this aspect. These funds are extremely liquid in nature. Some even have the provision of instant redemption. Hybrid Funds take longer to liquidate because of the presence of equity in their asset allocation.

  1. Taxation

Income Tax framework considers only two categories of mutual funds – Equity Funds or Debt Funds. Gains from Debt Funds are treated as long-term capital gains if the holding period exceeds three years. They are taxed at 20% with the benefit of indexation. Short-term capital gains from these schemes are taxed as per the applicable income tax slab (As part of your overall income).

When it comes to hybrid funds, the taxation guidelines are dependent on their asset allocation. If the scheme invests more than 65% of the total assets in equity (or related instruments), it is taxed as an equity fund. Otherwise, the tax rules for debt funds are levied.

  1. Investment Horizon

Debt Funds are a good option for short-term financial needs. Hybrid Funds are more suited for investors with a medium – long term investment horizon. This is because, equity markets are extremely volatile, especially in the long run. You need to remain invested for a significant time period (at least a full-term government) to get the maximum return on your equity investment.

Final Words

So, should you invest in hybrid funds or are debt funds? Unfortunately, there is no one answer that will apply to all investors. Active risk management, diversification and auto portfolio rebalancing are some of the key benefits of hybrid funds. On the other hand, debt mutual funds are less volatile, safer and financially more lucrative than conventional instruments such as FDs. 

The final decision (whether you invest in hybrid funds or debt, or in fact any financial instrument) your own investment profile – risk appetite, financial goal as well as investment duration. Even the best performing mutual fund may not generate the desired results for you if there is a mismatch between the scheme’s objective and your investment profile. So, align yourself and rake in the moolah!

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