Christmas is not a time nor a season, but a state of mind ... Breeze/December 2016 Br… · GUARD AGAINST MEDICAL COSTS – Health Insurance Cushions against Medical Expenses The

Shriram City—News Letter - Breeze- 1st December 2016

DECEMBER 2016

Christmas is not a time nor a season, but a state of mind. To cherish peace and goodwill,

to be plenteous in mercy, is to have the real spirit of

Christmas.

For everyone who exalts himself will be humbled, and everyone who humbles himself will be exalted. -Jesus Christ

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A lot of people think that insurance is a waste of money. They contend that if the premium was invested in other

avenues, it would grow to a sizeable amount. But life can take unexpected turns. The death of the sole breadwinner

can transform the lifestyle of a family. An accident can leave a person disabled, impairing his livelihood. The

treatment of a critical illness can drain the life savings of a family. Even 3-4 days in a hospital can leave a person

with a bill equal to 10 years' medical insurance premium.

What price are you willing to pay for peace of mind? It is estimated that a 35-year-old needs to pay only Rs 2,620 a

month to protect his family's financial future from life's uncertainties. That is the cost of five essential insurance

policies that one needs.

All these policies are very cheap. The low costs is the reason why agents don't want to sell these policies.

Thankfully, you no longer have to depend on agents. Most of these plans can be bought online. Buy these covers

and you can sleep easy that most of the risks faced by your family in everyday life have been covered.

WHY LIFE INSURANCE IS CRITICAL

A thumb rule is that one needs an insurance cover of at least 6-8 times his monthly income. But this is a

rudimentary calculation and does not take into account the liabilities of the person. The cover should be big

enough to settle all outstanding loans, provide for big-ticket expenses, as also generate an income for the living

expenses of the family.

Term Plans offer High Cover at Low Cost

Thankfully, one needs to spend roughly 1% of one's annual income for a sufficient cover. Pure protection term

plans give high cover at low price. A 30-year-old male will pay about Rs10,000.00 a year for a cover of Rs 1 crore

for 30 years. The daily cost of the cover works out to Rs 28.00

Now term plans are no longer plain vanilla products. Insurance companies have innovated to suit various custom-

ers and situations. Worried about inflation?

You can buy a plan where the insurance cover increases every year. Won't be able to spare money later? Buy a

single premium policy. Your nominee is not investment savvy? There are policies that don't give a lump sum on

death but stagger the payment over 10-15 years. Think that buying a pure term plan is a waste of money?

There are plans that give back the entire premium you paid at the end of the term.

Not all of these innovations are good though. Increasing the cover to adjust for inflation is a good idea but you will

pay a higher premium than a regular plan. Similarly, plans that return the premium are costlier. If adjusted for

inflation, what you get back at the end of 20-25 years is peanuts. The staggered payment plan is also not a good

idea. If the same amount was taken as a lump sum and put in a bank FD, it would generate a higher income. But

these plans may be useful for families where the dependents are not very financially savvy.

Apart from the size of the cover and the pay-out structure, you should also be careful about the tenure of the

policy. In their advertisements, insurance companies highlight premium rates for short term plans. If someone buys

a 20-year plan when he is 30, the premium will be very low, but the plan will end when his insurance needs are

high. At that age, a new policy will cost a bomb. He might even be denied the cover if his health is not good. Don't

take a 15-20 year plan that will terminate when you are in your 50s. Buy a cover till the age of 60-65 years.

If you are single and your parents or other relatives do not depend on your income, you don't need to buy life

insurance. At the same time, if you intend to get married, it is a good idea to buy life insurance and lock in at a low

premium when you are young.

Five insurance policies everyone must have


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You also need to review your insurance cover at various stages of your life. If you have taken a home loan, be sure

to take a term cover equal to that amount. However, don't take a mortgaged linked insurance plan. It is better to

take an independent term plan, which will continue even after the loan has ended. The premium rates is based on

with the buyer carries the normal risk in terms of health, family medical history and occupation. If the buyer suffers

from any ailment that can potentially be life threatening or if there is a family history of a medical condition, the

premium would be higher. If the buyer smokes or chews Gotha, the premium will be 25-30% higher.

Buyers should not try to hide these facts in the application. If the insurance company finds out that a policyholder

concealed information that affected the risk to his life, out goes the claim.

GUARD AGAINST MEDICAL COSTS – Health Insurance Cushions against Medical Expenses

The second most essential cover is a medical insurance policy. Some say medical insurance is more important than

life insurance because the probability of a family member needing medical care is higher than the death of the

breadwinner. Medical care costs are rising very fast and even a 3-4 day stay in a hospital can leave you with a bill

of Rs 50,000-60,000. In comparison, the cost of medical insurance is only Rs 10,000-15,000 a year. If you take into

account the tax benefits under Sec 80D, the costs for those in the 30% tax bracket are much lower at Rs 7,000-

10,500 a year.

Don't fall for plans that promise you plenty of advantages. Most of the time the exclusions are not explained to the

buyer and he ends up paying extra for a benefit that won't come to him. Even if you read the fine print, you will

not be able to understand the legalese and jargon. This is why a plain vanilla indemnity policy, which allows cash-

less hospitalisation or reimburses the expenses incurred, is the best medical policy you can buy.

Even if you want additional coverage, choose a policy that offers relevant benefits. If there is an elderly person in

the family, it's best to buy a separate insurance for them. This is because the premium of the floater plan is linked

to the age of the oldest member and will bump up the overall cost of the insurance.

Some people don't buy health insurance because they are covered by the group cover from their employer. While

group covers are helpful, they are usually not sufficient. There are a lot of exclusions and co-pay clauses. Besides,

they are available as long as you are an employee. When you change jobs, the medical cover also goes, leaving

you vulnerable. This is why planners suggest that you buy medical insurance on your own.

If you have group cover but want to enhance the cover, you can buy a top-up plan. Top-up plans are very cheap

because they kick in only after expenses cross a certain threshold. If your group cover is for Rs 3 lakh, buy an Rs 2

lakh top-up plan with an Rs 2 lakh threshold. In case of hospitalisation, the initial expenses of Rs 2 lakh will be

borne by your group cover. If expenses exceed Rs 2 lakh, the top-up plan will come into play

ACCIDENT INSURANCE TO THE RESCUE – Accident Insurance covers the risk of death, disability

What happens if you are injured in an accident that disables you, either temporarily or permanently? India is the

accident capital of the world. According to the National Crime Records Bureau, 4.52 lakh Indians died in accidents

in 2014, with nearly 1.7 lakh dying in road accidents. The number of injured in road accidents is at least three times

bigger.

This is why an accidental death and disability cover is third on our list of essential covers. The policy will pay your

nominee a lump sum in case of death due to accident. In case you are disabled, the policy will pay out a lump sum.

There is additional cover that provides a monthly income if you are unable to resume work.

PROTECT YOUR COSTLIEST ASSET – Home Insurance is cheap

Though home insurance covers what is possibly their costliest asset, very few Indians understand this and even

fewer take steps to cover the risk. The cost of insuring the structure against damage is as low as Rs 40 per


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Rs 1 lakh. Keep in mind that you don't need to insure the house for the value of the

property but only for the cost of reconstructing it. A 1,000 sq. feet house should be

insured for Rs 18-30 lakh and the cost will be Rs 800-2,400 a year.

You can buy a fire and other perils policy as a standalone cover, but most insurance

companies encourage buyers to go for a comprehensive plan that covers a wide

range of risks.

You also need to insure the contents of the house. The cost of insuring contents worth `10 lakh against natural and

manmade calamities is just Rs 255 a year. Then come the covers against burglary and breakage.

These are also important and will not cost too much. You can enhance the coverage if you perceive a risk, and if

your pocket allows.

THE BIGGEST RISK ON THE ROAD – Third party Car Insurance cover is Mandatory

Insuring your vehicle is important because in case of an accident, the insurance company picks up the bill for repairs.

What only a few people know is that the insurance company also compensates victims of accidents in which the

insured vehicle is involved. This compensation can run into several lakhs of rupees and has on occasions even

touched the nine figure mark.

This third-party liability insurance is mandatory for all vehicles and offers unlimited cover for injuries and death

caused by the vehicle. Third-party premiums were hiked in April this year but are still low. For Rs 2,000 a year, the

owner of a mid-sized car is fully protected against claims by victims.

Some owners avoid buying insurance when their vehicle is very old. This can be a costly mistake. Even if you don't

want to insure your old vehicle against theft or damage, don't miss paying the third-party liability premium.

General insurance companies have been lobbying for a cap on the liability for several years. They contend they are

losing money because the compensation is higher than the premium earned.

These insurance covers are absolutely essential. Buy them and you would have covered most of the risks

faced in everyday life

(*) The premium amount quoted above are only indicative – need to check with the actual workings based on the

risk & amount of Coverage

Article Courtesy: Times of India

Contributed by R Sankar Asst. Vice President


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Demonetization–a long term positive? Well . . .

Contributed by : Mr. Jai Singh Ponde, Vice President, Mumbai


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Two sides of the same coin :


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DYKS – December 2016

PART I – Rules of DYKS

“Did You Know Series” would appear every month. The details and rules of the DYKS are as follows:

Each issue will contain 3 multiple answer questions

All employees are eligible and are encouraged to reply to the questions

All replies to be sent only to [email protected] only. The mails should be sent from the official mail

ID of the employee.

The response mail should be as follows;

The name of the staff from whom the first correct response comes will be published in the subsequent

issue of ‘Breeze’. This will be for each of the states.

SNo Required Information Employee Entry/ Answer

to Quiz

1 Employee Name

2 Employee Number

3 Designation

4 Email ID

5 Branch code and name

6 State

7 Answers:1

2

3

mailto:[email protected]


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DYKS - December 2016 1. Expand the term ALM as used in Banking/Finance sector?

a) Asset Liability Mismatch b) Asset Liability Maturity c) Asset Liability Management d) Asset Liability Manpower 2. Term ‘’Balance of payment ‘’ is used in relation to which of the

following?

a) Diplomatic Relations b) Exports and Imports c) Annual production in a factory d) Deficit in Union Budget 3. Which of the following is NOT the part of the scheduled banking

structure in India?

a) Money Lenders b) Public Sector Banks c) Private Sector Banks d) Regional Rural Banks

PART IV – Answers to Quiz of November 2016 issue

Sl No Question Answer

1

When the growth of GDP in a country slows down suddenly, people start losing their jobs and the situation continues for several weeks, what name is given to this state of economy? B. Recession

2

OMO (Open Market Operation) is a tool used to control supply of money by purchasing or selling government securities. It is regulated by B. RBI

3

If a company which is not a non-banking financial company wants to collect public deposits, it is governed by ……. Act. C. Companies Act


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Editorial Committee

Shri K.Subramaniam

CO, Mylapore

Smt M.Subhashree

BSC, Santhome

Shri M.Radhakrishnan

BSC, Santhome

Shri N.R. Sivakumar

SFPS,Santhome

Communication Address:

Editorial Committee, (News Letter—Breeze)

Shriram City Union Finance

144, Santhome High Road, Chennai—600 004

Phone: 044 43925300

Email: [email protected]

THOUGHT FOR THE MONTH

Always Do Your Best.

Your best is going to change

from moment to moment ;

it will be different

when you are healthy

as opposed to sick.

Under any circumstance,

simply do your best,

and you will avoid

self-judgment,

self-abuse and regret.

Documents

Christmas is not a time nor a season, but a state of mind ... Breeze/December 2016 Br… · GUARD AGAINST MEDICAL COSTS – Health Insurance Cushions against Medical Expenses The