There is something aspirational about investing in the stock market. You may choose to believe it or not, but when you see those stock prices flashing across the bottom of the television screen and hear people discussing how much money they have made in the market, even those who claim to be totally uninterested often have a temporary desire to be a part of this group.
So they open a demat account, ask a couple of friends for stock suggestions and simply put some available money into shares. But when the markets take a dip and the possibility of loosing money looms, they exit the markets with less money than they initially entered.
In fact, it is this ad-hoc attitude to investing that has caused the downfall of many a first time investor in the market. Irrespective of whether you are twenty-five or fifty-five when you first begin to invest; there are a set of thumb rules that you need to keep in mind while investing. With markets sentiments improving and many young investors showing the desire to take the ride down the investment highway, SundayET outlines these rules of the game.
Teething rings
There are two fundamental decisions that you need to make before you begin the actual formalities of investing, the first of which is an assessment of how long you propose to stay invested in the market.
Be realistic at this stage, as your investment strategy is fundamentally driven by whether you are a short-term, medium-term or long-term investor.
However, experts recommend that to reap the benefits of investing in equity, it is better for an individual to remain invested long-term.
"Post-returns on equities are likely to beat inflation and are better than most other asset classes (on a risk adjusted basis). So individuals must have a long term view and commit funds that will not be required for at least five years,” says Veer Sardesai, CEO of Sardesai Finance.
Another critical element to making successful investment is your ability to take risks or to catch a good night of sleep irrespective of volatility in the markets, especially after what we have seen happening in the markets last year. According to Rajiv Deep Bajaj, vice chairman and managing director, Bajaj Capital, “The investor needs to analyse his ability and willingness to lose some or all of his/her original investment in exchange for greater returns.”
To a great extent, the classification of whether you are a conservative, moderate or aggressive investor is also dependant on how much you earn and what your liabilities are. So, if you have good capital surpluses to offset losses in the market, then you could afford to take the aggressive route to investment.
Building blocks
When it comes to deciding on the rules of asset allocation, the thumb rule is that you should subtract your age from the number 100 and invests only that much of your portfolio in equity. But with markets currently improving, you need to be wary of brokers who will try to instill the feeling that the only way for the markets to move is upward and urge to invest more on stock.
Experts, however, recommend that in the current situation, first time investors should follow a more diversified approach to investing and look at stocks of blue-chip companies such as those in the BSE Sensex or the NSE Nifty, which are considered safer than the mid-cap stocks.
“In these current volatile situations, if the investor wishes to invest in equity, it is best if the investor sticks to investing in diversified equity funds/large cap funds, which have a proven track record,” says Bajaj. He adds that investors should further look at investing through SIP as it allows them to take advantage of the principle of compounding and also allows them to average out the cost of other investments.
But if you want to do it your own way, there here’s another adage that will help you pick right: It is better to buy great stock at a good price than fair stock at a cheap price.
According to Sardesai, people often have the tendency to buy a stock quoting at a price less than Rs.10. But he warns that there is a generally a reason for the low price and there is the possibility of it sliding down even further. Also keep an eye on the quality of the management.
Its always better to put your money behind a management which has a high level of transparency and looks after its shareholders, in contrast to simply going after cheap stock. "However, if they choose to invest in an IPO, then they should analyse the IPOs and strive to invest in the IPOs of PSUs,” says Bajaj.
Never succumb to investing in an IPO on the basis of promises that good returns are always assured.
Don't play with fire
Another battle that you will have to fight is the urge to book profits by buying when prices are low and selling when they are at their peak and re-entering the market when prices dip again. However, timing the markets rarely works and you run the risk of loosing fundamentally good stock in the process. Also remember that risk and return go hand in hand.
“Taking excessive risks may give superlative returns but you stand to loose all your capital but it is better to be safe than sorry,” says Sardesai. You should also resist the urge to follow the investment practices of your friends and to compare the returns on your portfolio with that of your friends. If in doubt, make it point to seek professional help from a financial advisor rather than from your peers.
Source: economictimes.com
Sunday, June 21, 2009
Sunday, June 7, 2009
How to make a hassle-free health insurance claim!
We often read or hear about health claims being rejected by insurers on flimsy grounds. Sometimes, however, the insured is also to be blamed simply because he/she is found to have made false declarations while taking the policy or failed to go through the fine print before buying one.
True, health covers are bought with a view to taking cover against any financial constraint that may arise because of a medical emergency, and insurance companies are bound to honour legitimate claims within policy limits. At the same time, however, it must be understood that insurance companies are not charitable organisations. Therefore, they can’t be expected to honour a claim if the claim is not made in accordance with agreed terms or if a particular disease is listed under the policy exclusions.
“The repudiation of a claim may be due to many reasons such as loss falling beyond the scope of policy coverage, exclusions under policy, or breach of conditions or warranties, among others,” says Shreeraj Deshpande, head – health insurance, Bajaj Allianz General Insurance.
Generally, however, “the primary reason for an insurer rejecting a claim is that a particular disease is listed under the policy exclusions and consequently cannot be covered,” says Ajay Bimbhet, managing director, Royal Sundaram Alliance Insurance Company Ltd.
Therefore, only getting a health cover is not enough. It is equally important to read and understand the terms and conditions of a policy well and be clear about the policy you plan to take in order to avoid any hassle or heartburn in the future. It would also help if one knows how to make a claim and what to do in case something goes wrong.
DIFFERENT MODES OF SETTLEMENT
While buying a health policy, the customer is required to opt for either cashless or reimbursement mode of settlement. In both the cases, however, it is important to understand the claim procedure laid down by the insurers. Simply because at the time of emergency, the understanding of the right procedure can help reduce unwarranted panic.
CASHLESS CLAIMS
Insurers have tie-ups with a network of hospitals across the country. If the customer opts for cashless claims, he/she has the facility of cashless treatment at the networked hospitals. This list of the network is generally available in the policy kit and also on the website of the insurers.
“In case of emergency hospitalisation and admission, the TPA (third party administrator) needs to be intimated through a toll-free number within 24 hours. In case of a planned admission, however, the TPA is to be informed three days in advance. Also, the insured must remember to quote his/her health card membership number and/or policy number,” says Bimbhet.
While getting admission, the cashless request form available with the hospital insurance help desk is to be filled and certified by the doctor. Having done that the form with supporting medical records is to be faxed by the hospital to the TPA’s fax number.
On scrutinizing the documents, the TPA conveys the decision to the hospital, the sanction of the cashless request or calls for additional documents if required.
On approval of the cashless facility by the TPA, the hospital bills are settled directly by the insurer (subject to policy limits). However, inadmissible amounts such as telephone, food and attendant charges are to be borne by the customer.
If the customer chooses to go to a hospital which is not part of the network, he/she can still get a reimbursement directly from the insurer.
REIMBURSEMENT OF CLAIMS
This facility is available at network hospitals as well as non-network hospitals. Under this facility, the insured can avail of treatment and settle all the bills with the hospital and file a claim for reimbursement. The insurer, however, has to be intimated immediately on admission not later than seven days from the date of discharge. The policy certificate number should be quoted and the claim can also be intimated online through the website of the company.
Generally the following claim documents (originals only) are to be submitted to the insurer within 30 days from the date of discharge:
1. Duly-filled claim form along with the doctor’s certificate (forming part of claim form)
2. Discharge summary
3. Bills and receipts (including advance and final receipts)
4. Prescriptions for medicines and doctor’s advice for lab tests
5. Diagnostic Test Reports, X Ray, scan and ECG and other films
Claims are processed on receipt of all required documents and additional documents. Information, if any, required is called for after the scrutiny of the claim. “The cheque is despatched to the customer if the claim is admissible. If not, a repudiation letter explaining the reasons for denial is sent,” says Bimbhet.
PRECAUTIONS/DOS & DON’TS WHILE BUYING A COVER
You need to exercise precaution not only while making a claim, but also while planning to buy a health cover, because here you start with choosing the right product for yourself, and opting for any unsuitable one may land you in trouble later on.
First, you need to understand whether the health insurance coverage fulfils your requirement or not. Then decide on which members of your family should be part of the health insurance policy. Ideally everyone should be covered including children.
The third step would be to settle on the total amount of health coverage needed – either on an individual basis or on a family floater basis. Besides, you also need to scrutinise the list of exclusions of the policy – both permanent and period-based.
Also check the network coverage of the Third Party Administrator (TPA) engaged by the insurance company.
PRECAUTIONS/DOS & DON’TS WHILE MAKING A CLAIM
You need to take precautions while filing a claim too. For instance, in case of a cashless claim, always carry the health card which gives you the unique membership number that is used by the TPA to identify you and provide the cashless benefit.
In the case of reimbursement of claims, however, always insist on getting the original discharge summary and reports from the hospital.
Also keep copies of all lab reports for future medical follow-ups, and retain copies of all claim documents before submission to the insurance company (This will help in case of an unfortunate event of the documents getting lost in transit).
Besides, insist on getting a properly-numbered, stamped, signed and sealed receipts from the hospital/ physician / surgeon for any payments made. Preserve the prescriptions given by the doctors for medicines and lab tests as these are to be submitted along with other claim documents.
For all traffic accidents, however, ensure that a complaint is lodged with the police and get a copy of the FIR.
WHAT IF AN INSURER REFUSES TO HONOUR A CLAIM?
Despite choosing a heath cover carefully and filing the claim as per the agreed terms, sometimes claiming insurance compensation becomes a hard nut to crack, particularly in cases when insurance companies are able to find some loopholes to repudiate a claim. In such cases, you need to approach higher authorities to seek compensation.
“If an insurer repudiates a claim, insist on a repudiation letter which explains the basis on which the claim is repudiated. If the customer is not happy with the contents, he may represent the claim again as per the escalation matrix in the grievance redressal machinery. If the customer is still not satisfied, he/she may approach the insurance Ombudsman, whose decision is binding on the insurer,” says Deshpande.
Thus, if a customer is not satisfied with the response of the insurer, he/she can always approach the Ombudsman who is specially appointed by the regulator to redress the grievances of the customer. The complaint by an aggrieved person has to be made in writing, and addressed to the insurance Ombudsman of the jurisdiction under which the office of the insurer falls.
“The governing body has appointed 12 Ombudsmen across the country allotting them different geographical areas as their areas of jurisdiction. The Ombudsman may hold sitting at various places within their area of jurisdiction in order to expedite disposal of complaints. The Ombudsman shall pass an award within a period of three months from the receipt of the complaint. The awards are binding upon the insurance companies,” says Bimbhet, adding, “the policy holder also has the option of approaching consumer forums and courts of law for redressal of his/her grievances.”
However, if you are still unable to get justice, then just blame your luck! And what else can you do?
Source:www.economictimes.com
True, health covers are bought with a view to taking cover against any financial constraint that may arise because of a medical emergency, and insurance companies are bound to honour legitimate claims within policy limits. At the same time, however, it must be understood that insurance companies are not charitable organisations. Therefore, they can’t be expected to honour a claim if the claim is not made in accordance with agreed terms or if a particular disease is listed under the policy exclusions.
“The repudiation of a claim may be due to many reasons such as loss falling beyond the scope of policy coverage, exclusions under policy, or breach of conditions or warranties, among others,” says Shreeraj Deshpande, head – health insurance, Bajaj Allianz General Insurance.
Generally, however, “the primary reason for an insurer rejecting a claim is that a particular disease is listed under the policy exclusions and consequently cannot be covered,” says Ajay Bimbhet, managing director, Royal Sundaram Alliance Insurance Company Ltd.
Therefore, only getting a health cover is not enough. It is equally important to read and understand the terms and conditions of a policy well and be clear about the policy you plan to take in order to avoid any hassle or heartburn in the future. It would also help if one knows how to make a claim and what to do in case something goes wrong.
DIFFERENT MODES OF SETTLEMENT
While buying a health policy, the customer is required to opt for either cashless or reimbursement mode of settlement. In both the cases, however, it is important to understand the claim procedure laid down by the insurers. Simply because at the time of emergency, the understanding of the right procedure can help reduce unwarranted panic.
CASHLESS CLAIMS
Insurers have tie-ups with a network of hospitals across the country. If the customer opts for cashless claims, he/she has the facility of cashless treatment at the networked hospitals. This list of the network is generally available in the policy kit and also on the website of the insurers.
“In case of emergency hospitalisation and admission, the TPA (third party administrator) needs to be intimated through a toll-free number within 24 hours. In case of a planned admission, however, the TPA is to be informed three days in advance. Also, the insured must remember to quote his/her health card membership number and/or policy number,” says Bimbhet.
While getting admission, the cashless request form available with the hospital insurance help desk is to be filled and certified by the doctor. Having done that the form with supporting medical records is to be faxed by the hospital to the TPA’s fax number.
On scrutinizing the documents, the TPA conveys the decision to the hospital, the sanction of the cashless request or calls for additional documents if required.
On approval of the cashless facility by the TPA, the hospital bills are settled directly by the insurer (subject to policy limits). However, inadmissible amounts such as telephone, food and attendant charges are to be borne by the customer.
If the customer chooses to go to a hospital which is not part of the network, he/she can still get a reimbursement directly from the insurer.
REIMBURSEMENT OF CLAIMS
This facility is available at network hospitals as well as non-network hospitals. Under this facility, the insured can avail of treatment and settle all the bills with the hospital and file a claim for reimbursement. The insurer, however, has to be intimated immediately on admission not later than seven days from the date of discharge. The policy certificate number should be quoted and the claim can also be intimated online through the website of the company.
Generally the following claim documents (originals only) are to be submitted to the insurer within 30 days from the date of discharge:
1. Duly-filled claim form along with the doctor’s certificate (forming part of claim form)
2. Discharge summary
3. Bills and receipts (including advance and final receipts)
4. Prescriptions for medicines and doctor’s advice for lab tests
5. Diagnostic Test Reports, X Ray, scan and ECG and other films
Claims are processed on receipt of all required documents and additional documents. Information, if any, required is called for after the scrutiny of the claim. “The cheque is despatched to the customer if the claim is admissible. If not, a repudiation letter explaining the reasons for denial is sent,” says Bimbhet.
PRECAUTIONS/DOS & DON’TS WHILE BUYING A COVER
You need to exercise precaution not only while making a claim, but also while planning to buy a health cover, because here you start with choosing the right product for yourself, and opting for any unsuitable one may land you in trouble later on.
First, you need to understand whether the health insurance coverage fulfils your requirement or not. Then decide on which members of your family should be part of the health insurance policy. Ideally everyone should be covered including children.
The third step would be to settle on the total amount of health coverage needed – either on an individual basis or on a family floater basis. Besides, you also need to scrutinise the list of exclusions of the policy – both permanent and period-based.
Also check the network coverage of the Third Party Administrator (TPA) engaged by the insurance company.
PRECAUTIONS/DOS & DON’TS WHILE MAKING A CLAIM
You need to take precautions while filing a claim too. For instance, in case of a cashless claim, always carry the health card which gives you the unique membership number that is used by the TPA to identify you and provide the cashless benefit.
In the case of reimbursement of claims, however, always insist on getting the original discharge summary and reports from the hospital.
Also keep copies of all lab reports for future medical follow-ups, and retain copies of all claim documents before submission to the insurance company (This will help in case of an unfortunate event of the documents getting lost in transit).
Besides, insist on getting a properly-numbered, stamped, signed and sealed receipts from the hospital/ physician / surgeon for any payments made. Preserve the prescriptions given by the doctors for medicines and lab tests as these are to be submitted along with other claim documents.
For all traffic accidents, however, ensure that a complaint is lodged with the police and get a copy of the FIR.
WHAT IF AN INSURER REFUSES TO HONOUR A CLAIM?
Despite choosing a heath cover carefully and filing the claim as per the agreed terms, sometimes claiming insurance compensation becomes a hard nut to crack, particularly in cases when insurance companies are able to find some loopholes to repudiate a claim. In such cases, you need to approach higher authorities to seek compensation.
“If an insurer repudiates a claim, insist on a repudiation letter which explains the basis on which the claim is repudiated. If the customer is not happy with the contents, he may represent the claim again as per the escalation matrix in the grievance redressal machinery. If the customer is still not satisfied, he/she may approach the insurance Ombudsman, whose decision is binding on the insurer,” says Deshpande.
Thus, if a customer is not satisfied with the response of the insurer, he/she can always approach the Ombudsman who is specially appointed by the regulator to redress the grievances of the customer. The complaint by an aggrieved person has to be made in writing, and addressed to the insurance Ombudsman of the jurisdiction under which the office of the insurer falls.
“The governing body has appointed 12 Ombudsmen across the country allotting them different geographical areas as their areas of jurisdiction. The Ombudsman may hold sitting at various places within their area of jurisdiction in order to expedite disposal of complaints. The Ombudsman shall pass an award within a period of three months from the receipt of the complaint. The awards are binding upon the insurance companies,” says Bimbhet, adding, “the policy holder also has the option of approaching consumer forums and courts of law for redressal of his/her grievances.”
However, if you are still unable to get justice, then just blame your luck! And what else can you do?
Source:www.economictimes.com
Saturday, June 6, 2009
Post Office MIS: Blessing for investors in times of falling deposit rate
Tough times stare at investors looking for fixed income instruments. The deposit rates offered by banks have fallen to five-year lows. Bank FDs
were the favourites till some months back as public and private sector banks offered upto 9% interest on deposits with maturity of 3 years and above. This has now declined to around 7%. The future looks bleaker, with the deposit rates expected to decline further by 50-100 basis points. What should the fixed income lovers do in such a scenario? Is there an alternative to bank FDs?
The Post Office Monthly Income Scheme, commonly known as MIS, is the answer. MIS was quite popular some years back. Its appeal, however, declined in the face of a rise in interest rates on FDs and aggressive marketing strategies unleashed by banks to woo new depositors. MIS could come into limelight once again in the backdrop of declining interest rates. Moreover, the post office deposits come with unique features such as a government guarantee on the deposit amount and fixed rate of interest.
Like any fixed deposit, a lump sum amount deposited with the post office under the aegis of MIS will earn an interest at a fixed rate of 8% per annum. And, unlike bank FDs, the interest is paid out every month. The tenure is fixed at 6 years. Apart from monthly interest-payout , MIS offers 5% bonus on maturity. The effective annual yield therefore works out to 8.9%, which is much higher than the bank deposit. The value add-on is that the monthly MIS proceeds could be invested directly in Post Office’s Recurring deposit (RD), which gives annual returns of almost 10.5% per annum.
How does it work?
Suppose Mr A invests Rs 90,000 in Bank FD for six years. With the rate of deposit hovering around 7%, Mr A will receive almost Rs 46,500 as interest at maturity and an option of compounded interest. On the other hand, if Mr B put Rs 90,000 into MIS today, he will receive Rs 600 every month for 72 months. He is entitled to Rs 43,200 in the form of monthly interest till maturity and Rs 4500 as bonus at the time of maturity. Mr B’s returns total Rs 47,700 in six years, which is higher than interest earned on the bank FD of the same tenure.
Suppose that Mr B did not require the monthly interest. So he opts for automatic transfer of MIS interest to Recurring Deposit. A sum of Rs 600 is deposited in his RD account every month, offering 7.5% per annum compounded quarterly. At the end of the sixth year, Mr B will receive almost Rs 51,400 from his RD account. The receivables from RD and the bonus on MIS total Rs 56,000 in six years. As a result, Mr B, who invested in MIS and monthly proceeds in RD, will accumulate Rs 9500 more than Mr A, who opted to invest in Bank FD of the same tenure.
The same features of MIS make it unattractive. The interest income is fully taxable as in the case of bank FDs. MIS do have an edge over bank FDs as there is no tax deduction at source (TDS). However, the bank FDs maturing above 5 years are subject to tax benefits under Sec 80C.
It will be definitely a better bet if one neglects the tax implications of the scheme. The rate of return is not interest rate sensitive. Though the general interest rates may fall further, the scheme will continue to fetch 8% fixed rate of interest. Further, a combination with RD will even earn an effective yield of 10.5%, which is attractive in times of uncertainty and falling interest rates.
Source: economicTimes.com
were the favourites till some months back as public and private sector banks offered upto 9% interest on deposits with maturity of 3 years and above. This has now declined to around 7%. The future looks bleaker, with the deposit rates expected to decline further by 50-100 basis points. What should the fixed income lovers do in such a scenario? Is there an alternative to bank FDs?
The Post Office Monthly Income Scheme, commonly known as MIS, is the answer. MIS was quite popular some years back. Its appeal, however, declined in the face of a rise in interest rates on FDs and aggressive marketing strategies unleashed by banks to woo new depositors. MIS could come into limelight once again in the backdrop of declining interest rates. Moreover, the post office deposits come with unique features such as a government guarantee on the deposit amount and fixed rate of interest.
Like any fixed deposit, a lump sum amount deposited with the post office under the aegis of MIS will earn an interest at a fixed rate of 8% per annum. And, unlike bank FDs, the interest is paid out every month. The tenure is fixed at 6 years. Apart from monthly interest-payout , MIS offers 5% bonus on maturity. The effective annual yield therefore works out to 8.9%, which is much higher than the bank deposit. The value add-on is that the monthly MIS proceeds could be invested directly in Post Office’s Recurring deposit (RD), which gives annual returns of almost 10.5% per annum.
How does it work?
Suppose Mr A invests Rs 90,000 in Bank FD for six years. With the rate of deposit hovering around 7%, Mr A will receive almost Rs 46,500 as interest at maturity and an option of compounded interest. On the other hand, if Mr B put Rs 90,000 into MIS today, he will receive Rs 600 every month for 72 months. He is entitled to Rs 43,200 in the form of monthly interest till maturity and Rs 4500 as bonus at the time of maturity. Mr B’s returns total Rs 47,700 in six years, which is higher than interest earned on the bank FD of the same tenure.
Suppose that Mr B did not require the monthly interest. So he opts for automatic transfer of MIS interest to Recurring Deposit. A sum of Rs 600 is deposited in his RD account every month, offering 7.5% per annum compounded quarterly. At the end of the sixth year, Mr B will receive almost Rs 51,400 from his RD account. The receivables from RD and the bonus on MIS total Rs 56,000 in six years. As a result, Mr B, who invested in MIS and monthly proceeds in RD, will accumulate Rs 9500 more than Mr A, who opted to invest in Bank FD of the same tenure.
The same features of MIS make it unattractive. The interest income is fully taxable as in the case of bank FDs. MIS do have an edge over bank FDs as there is no tax deduction at source (TDS). However, the bank FDs maturing above 5 years are subject to tax benefits under Sec 80C.
It will be definitely a better bet if one neglects the tax implications of the scheme. The rate of return is not interest rate sensitive. Though the general interest rates may fall further, the scheme will continue to fetch 8% fixed rate of interest. Further, a combination with RD will even earn an effective yield of 10.5%, which is attractive in times of uncertainty and falling interest rates.
Source: economicTimes.com
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