It is always said "Death and tax is sure".One cant avoid tax but can surely save it.
Here is the list of schemes fot different income slabs to save tax efficiently:
Upto income 300000: Bank FD of 5 yr + Term Insurance* + Elss^
3 lacs - upto5lacs: Bank FD + PPF +Term Insurance* + Elss^
Above 5lacs : PPF + Term Insurance* + Elss^
* Term Insurance is the requried for every individual to the extent of atleast 10 times his annual income. Do remember never invest in other schemes of Insurance. Insurance + investment combo policy of life insurance companies are extermely inefficient.
^Elss should be opted only if the person has risk taking ability ang longer horizon.
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nicely described.....immensly helpful
ReplyDeleteWith the financial ending at the corner; this would be of great help. I guess if you can give some details on the flip side of some of the insurance products like jeewan aastha & others and can explain the demerits of these products. It would be of immense help in case u can explain how with the same amount one can get better return in some other instruments. Thanks.
ReplyDeleterishigadia@icraindia.com
Insurance companies r supposed to provide financial stability in case of some mishappening.if something wrong happens,it will bail u or ur family out.But in India b'coz of different reasons like financial illiteracy,incopartion of tax benefits,
ReplyDeleteineffective regulation of insurance products,higher incentives to agents etc made these policy popular among ppl.Financial trouble in erstwhile UTI and brand strength of LIC made simpler these combo products to be easily sold.People thought their money is safe...agents r earning huge commission...companies sold its product easily and charged the investors exorbitant fees for the same.It looked win -win situation for all.But what suffers is the investment part of the product. As these policies r long term in nature and when investors realises this underperformance its to late to rectify it.
Now comes to ur specific question of jeevan aastha,the policy seems to be giving 9% and 10% return p.a. for 5 and 10 year respectively.But when u read the fine print its actually simple rate of return rather than compounded also there is some charges for proving live cover only in the first year so ur return comes less than even 8% what u earn in ur PPF and 8.5% in EPF For the 10 year policy return is nearer to 7% So the devil lies in the fine print almost same in other insurance cum investment products.Some of the money back and child polcy even give just 5% return p.a. in the 20/25 year policy
Furthur, the life cover in these combo products r just generally 5 times ur annual premium i.e. if u invest suppose Rs.50000 then the cover is generally of Rs.2,50,000 ofcourse u can increase the cover but with the huge cost attached to it.So ur insurance cover needs r never met by these products.
Hence i always suggest to invest in the term policy of insurance comapnies and take the cover for appropriate amount and invest the balance amount in other investment products acc. to ur risk appetite (PPF,ELSS,even NSC,NABARD BOND).
For ex: ur invst. in EPF is 50000/-U take term insurance cover of 50lacs ur premium is near about 10000 p.a.(for a 20 year term of 25 year male).So Ur 80c contibution is already 60000. U can invest balance Rs 40000 in 80 c eligible products as i mentioned and rest of investing is done in No-lock in Diversified instruments as per ur financial goal.
Thus u can achieve ur financial goal in desired manner having adequate life cover and believe me this will make u a lot wealthier than a combo plan.
Need any clarification plz do write in
thnx