Death Claim: Is it possible to claim from more than one Life Insurance policy?

Death Claim: Is it possible to claim from more than one Life Insurance policy?

It is perfectly legal to buy and hold more than one life insurance policy. Your beneficiary can rightfully claim from all the life insurance policies you hold in the unfortunate event of your death. Multiple policies offer an extra level of protection that a single plan might not necessarily provide you.

Are you hesitant to invest in a number of covers because you feel you are not equipped to handle multiple policies? Here we take a look at how, if and when you can avail a death benefit from more than one policy. 

What is a Death Claim?                                                     

In the case of Life Insurance, in the event of the insured person’s death before the end of the policy term, his or her beneficiary will receive a pay-out known as theDeath Benefit.

This request for payment of the amount due in accordance with the terms and conditions of the policy by the beneficiary is known as Death Claim

Is it legal to acquire more than one life insurance policy and claim from all of them?

It is perfectly legal to buy and hold more than one life insurance policy under the following two circumstances:

You have disclosed all material facts

While applying for a new policy you must disclose the previously bought policies to the insurer so that they are cognizant of your existing coverage and can help you pick out the right policy that extends your coverage in line with your personal goals. Not doing so can result in misrepresentation which can be a ground for rejection of death claim.

The combined sum assured of all policies does not exceed your Human Life Value

When a life insurance company receives an application for a policy, a process of risk assessment, called ‘underwriting’ begins. In medical underwriting, health related risks are assessed. In financial underwriting, insurability is assessed by reviewing the applicant’s income and existing life cover. Based on these details, which you are asked to submit when you apply, your insurers calculate your Human Life Value. The combined death benefit of multiple policies cannot exceed this amount.

What are the benefits of holding multiple insurance policies?

Firstly, it is a hedge against claim rejection. While full disclosure is usually all that’s needed to ensure your claim is accepted, things can go awry. The last thing you would want is your family not receiving financial support in your absence. You can spread your risk by taking more than one policy from different insurers with different claim settlement ratios.

Secondly, it will help you with milestone based protection planning. You take life insurance based on your dependents. For important life events like marriage, birth of your children, their education, or the purchase of a house, you may want your policies to be reviewed and/or restructured.  So let’s say you have to replay a 30 lakh loan in 20 years. Rather than taking a 1 crore policy for 30 years, why not take a 30 lakh policy for 20 years and a 70 lakh policy for 20 years?

Word of advice

It goes without saying that taking more than one policy also means you’ll be paying additional premium. Thus, this decision has to be planned for properly.

Secondly, it may be cumbersome to have to keep track of multiple policies, but this is not a process you can afford to do away with.

You can purchase as many insurance policies as you want depending upon your financial needs and life situation. All you need to keep in mind is that the policies you hold contribute significantly towards your personal goals.

Jeevan Shironmani

Jeevan Shironmani
  LICs Jeevan Shironmani is a non linked, with profits, limited premium payment money back life insurance planspecially designed for High Net-worth Individuals.  This plan provides lump sum financial support to the family in case of death but also provides payment in case of diagnosis of specified critical illness.

Combination of Moneyback and Life Insurance

It gives you lump sum amount in case of death during policy term and in case of survival, survival benefit amount is payable on Term – 4 Years, Term – 2 Years and on completion of Term

Lump sum Benefit for Inbuilt Critical Illness

On diagnosis of any specified critical illness diseases, 10 % of Basic Sum Assured will be payable with an option to defer premium payment for next 2 policy term without any interest. Also, FREE Second Medical Opinion Option is available.

Profit Sharing in Terms of Guaranteed Additions

The policy is eligible for the guaranteed bonus at the rate of Rs. 50.00 per thousand per year during first 5 policy term and thereafter at the rate of Rs. 55.00 per thousand per year.

Additional Accidental Benefit

Standalone Additional Accident Benefit Maximum of Rs. 1,00,00,00/- is allowed other than the regular accidental benefit under other policies.

Bima Sree - Unique Features

   Bima Sree - Unique Features
  It is a non linked, with profits, limited premium payment money back life insurance plan with minimum Basic Sum Assured of Rs. 10 Lakh especially designed for targeted  High Net-worth Individuals. This plan provides lump sum financial support to family in case of death but also provides payment in case of diagnosis of specified critical illness.

Combination of Moneyback and Life Insurance

It gives you lump sum amount in case of death during policy term and in case of survival, survival benefit amount is payable on Term – 4 Years, Term – 2 Years and on completion of Term.

Premium Waiver Benefit

In case of death of Proposer wherein life assured is minor, all future premiums will be borne by LIC.

Profit Sharing in Terms of Guaranteed Additions

Policy is eligible for guaranteed bonus at the rate of Rs. 50.00 per thousand per year during first 5 policy term and thereafter at the rate of Rs. 55.00 per thousand per year.

Additional Accidental Benefit

Standalone Additional Accident Benefit Maximum of Rs. 1,00,00,00/- is allowed other than regular accidental benefit under other policies.

TDS On Interest For Senior Citizens

TDS On Interest For Senior Citizens

     UNION Budget 2018 proposes two important changes for Senior Citizens with respect to interest income.

IT Sec.194A – TDS on interest - This section has been amended hiking the limit to ₹50,000. This means TDS will be deducted only if the interest on deposits of senior citizens exceed 50,000.

80TTB – A new section has been inserted so that senior citizens can deduct upto ₹50,000 from their interest on deposits while filing returns.

   But please note that both the above are applicable only for interest from Banks, Co-op Banks and Post Offices.

These are not applicable for any interest income from Co-op Societies, Non-Banking Finance Companies, State Treasuries, Corporates,  Company deposits, Private Financial Institutions, etc.

Misreporting your income to I-T Department? Here’s how taxmen can penalise you now

Under-reporting or misreporting your income to I-T Department? Here’s how taxmen can penalise you now

May 1, 2018
Under-reporting or misreporting your income to I-T Department? Here’s how taxmen can penalise you now

As a taxpayer, it is very important for you to know that while filing the income tax return, if a person under-reports his income or inflates his deduction/exemption, then the Income Tax Department can impose a penalty on him under Section 270A of the Income Tax Act, 1961. You must be wondering that the Section 270A of the I-T Act is not a new section as it was introduced two years back in the Budget 2016. Then why is it being discussed now? Well, this section has become more important from this year because of the two recent moves of the I-T Department.

Firstly, the department has recently issued a cautionary advisory to all the salaried taxpayers who will be filing the IT returns for FY17-18 to report their income correctly. This move has apparently been taken in order to stop all the malpractices which are being resorted to by the salaried taxpayers in order to evade tax.

Secondly, the department has also come up with the changes in the ITR Form 1 (Sahaj) for FY17-18 which now seeks specific and complete details of your salary and house property income. Earlier, such details were not required; only the total figure was to be disclosed.

Now, let’s understand that what exactly is under-reporting or misreporting of income and how much penalty would be levied in such cases.

“As per Section 270A, if any person under-reports or misreports his income, then an assessing officer (AO), a commissioner (appeals), a principal commissioner or a commissioner may direct him to pay penalty in addition to the tax, if any, on such income. This penalty is to be paid over and above the taxes,” says CA Abhishek Soni, Founder, tax2win.in.

Under reporting of income can be based on various circumstances. Like, if the income of a person exceeds the basic exemption limit, but still he does not file a return, then it will be considered as a case of under-reporting. However, “the cases of misreporting of income as defined in the Income Tax Act are misrepresentation or suppression of information; failure to record investments in the books; claim of expenditure without any evidence; recording of false entry in the books, failure to record receipt in books which is having effect on total income; and failure to report any international transaction or deemed to be an international transaction,” says Soni.

What is the penalty?

If the under-reporting of income is on account of misreporting of income, then the penalty shall be leviable at the rate of 200% of the tax payable on such under-reported income. However, if it is due to any other circumstances, then the penalty shall be 50% of tax payable on under-reported income.

For example, “if your income is, say, Rs 15,00,000, i.e. you are in the 30% tax bracket, and have under-reported an income of Rs 2 lakh in ITR, then the AO can impose a penalty of up to about Rs 30,000 (50% of the tax on under-reported income, i.e., Rs 60,000 (200000*30%)). However, if the under-reporting is due to misreporting of income, then penalty can be up to 200% of the tax on unreported income, i.e. 200% of Rs 60,000, amounting to Rs 1,20,000,” says Soni.

However, an assessee may apply to the AO with explanation that why under-reporting or misreporting occurred. If satisfied, then the AO may not penalise the assessee or may reduce the quantum of penalty.

Therefore, from this year onwards you must be extra careful while filing your income tax return for FY 17-18, and disclose all your incomes under the respective heads. Otherwise, you may have to pay penalty u/s 270A for under-reporting or misreporting of your income along with the applicable taxes. So, be vigilant and file your IT return correctly.

Source by financialexpress.

Good news for senior citizens: Here’s how PMVVY can ensure fixed income in old age

Good news for senior citizens: Here’s how PMVVY can ensure fixed income in old age

Senior citizens can now invest up to Rs 15 lakh in Pradhan Mantri Vaya Vandana Yojana (PMVVY) offered by Life Insurance Corporation of India and get a fixed monthly payout of up to `10,000 for 10 years.

The cabinet has now approved to double the investment limit from `7.5 lakh to `15 lakh under PMVVY, a pension scheme with 8% assured returns. The decision, which follows a Budget announcement on February 1, will help senior citizens to park their retirement corpus in the assured return scheme. With this, PMVVY is now on par with Senior Citizen Savings Scheme (SCSS) of banks and post offices where the investment limit is `15 lakh. The time limit for subscription under PMVVY scheme has been extended from May 4, 2018 to March 31, 2020. The scheme, launched in May last year has benefited 2.2 lakh senior citizens.

Fixed payouts

In this pension scheme operated by LIC for citizens aged 60 years and above, if an individual invests `15 lakh, he will get a monthly pension of Rs 10,000 for 10 years. If one invests `7.5 lakh, the monthly pension will be `5,000 for 10 years. Income from annuities of pension plans such as PMVVY are taxable. On death of the pensioner during the policy term of 10 years, the purchase price will be paid to the beneficiary.

The subscriber has an option to opt for pension on a monthly or quarterly or half yearly and annual basis. The differential return, i.e., the difference between the return generated by LIC and the assured return of 8% per annum would be borne by Centre as subsidy on an annual basis.

The scheme allows for premature exit for the treatment of any critical, terminal illness of the pensioner or spouse. On such premature exit, 98% of the purchase price will be refunded. One can avail loan up to 75% of purchase price after three years of the policy. The interest for the loan will be recovered from the pension installments.

Returns from SCSS

The SCSS account can be opened in any authorised bank or post office branch. At present (April-June 2018 quarter), 5-year SCSS offers interest rate of 8.3%. An individual of 60 years or more can open the account and deposit up to Rs 15 lakh. An individual above 55 years but below 60 years who has retired on superannuation or under VRS can also open account subject to the condition that the account is opened within one month of receipt of retirement benefits and amount should not exceed the amount of retirement benefits.

Investment under this scheme qualifies for the benefit of Section 80C of the Income Tax Act, 1961. Nomination facility is available at the time of opening and also after opening of account. Any number of accounts can be opened subject to maximum investment limit by adding balance in all accounts. Joint account can be opened with spouse only and first depositor in the joint account is the investor. After maturity, the account can be extended for further three years within one year of the maturity by giving application in prescribed format.

Annuity products from life insurers

An annuity is a guaranteed amount paid to a subscriber for lifetime for a lumpsum investment. There is an option to extend the pension to the spouse and even return the corpus to the child, but this lowers effective returns. Typically, annuity products offer interest rates of 6-7%, which is taxable. As a result, annuity products do not account for a high proportion of the insurance business.

In case of bank deposits, for instance, SBI is offering 7.25% to senior citizens if they invest for five to 10 years. So, it makes sense for senior citizens to park a part of their retirement corpus in PMVVY.

Source: FINANCIAL EXPRESS 7/5/18

10 financial planning values you should teach your children

   10 financial planning values you should teach your children
     Financial Planning is a concept most of us are not aliens to but it's still essential for us to teach children essential money lessons early in life which will hold them in good stead in the future. Let's take a look at 10 key values that you should pass on to your kids. 

Finance isn't scary; it isn't rocket science either

Unfortunately, a lot of people are intimidated by the prospect of financial planning, shying away from the associated jargon and seemingly befuddling workings of personal finance. Teach your children early on that money and numbers are not to be feared and personal finance skills can be learnt just like anything else, just as easily as learning to tie shoe laces or using a spoon to eat! Lead by example and involve your kids in your weekly budgetary planning or calculations of expenses. With numerous financial mobile apps and given how easily kids embrace technology these days, the job at hand is possibly easier than ever. An open, calm and eager mind is fertile ground for new learning.

The importance of saving

How often were we lectured by our parents about the "value of money"? A better way to go about it is to introduce young kids to the concept of saving. Show them the wisdom in putting aside a little bit of money every month to save for something they want. When they eventually learn to manage their pocket money, learning to strike that good balance between spending and saving wisely, they would have gained the skills to manage monthly budgets when they grow up.

Instant gratification is more the norm than the exception in this day and age. However, it's important to teach your child the importance of distinguishing between want and need (or just pure greed). Smart planning and patiently saving for major purchases will teach them the value of tactical planning and breaking down a major goal into smaller, actionable pieces that will ultimately help them reach that goal.

Hard work pays, literally

Try to teach them that it is hard work that will reward you. So try to make them work for a challenge and if it's met, reward them. This will teach them that money and gratification can come only with hard work.

Don't be a parasite

Of course, we all love to pamper our kids and provide the best for them. Nonetheless, it's important to teach them that they must learn to stand on their own feet at all times and not be dependent. Dipping into their parents' pockets should not be an option they take for granted. Similarly, teach them not to depend on a partner to fund them or take care of their financial planning or tackle their financial issues. They need to take charge, and equipped with the right financial basics, they can set themselves up for a stable, self-reliant future.

Never undermine the importance of an emergency fund

We hate thinking about negative possibilities in the future and just hope they don't happen to us. We hate even more having to tell our kids that every silver lining may just have a dark cloud. After all, why dampen their rosy dreams? While we shouldn't scare them by turning into doomsday prophets, it is important to keep it real for a child. Teach them the need to build a rainy day fund and how to go about building it. Having their own personal financial security will give them a sense of comfort when the going gets tough and they'll thank you for it.

Be disciplined

Discipline is important for any aspect of life. It holds true for financial dealings as well. That is to say never owe anyone anything, always pay your taxes on time, and ensure your financial books are clean. Inculcating this sense of discipline in kids will help them grow into sensible, responsible and very sorted young adults.

Have a neatly prioritized budget

Once your kids have mastered the basics of saving and spending, introduce them to budgeting. Show them your own monthly budget and why you prioritize certain items over others. When I lived abroad for the first time on my stipend salary, I learnt to start keeping track of my expenses and logging them on a daily basis. It helped me have a clear view of my books and alleviated the possibility of month-end shockers! Drawing on this experience, I feel that with the realization that there is a limited inflow of money within which they must accommodate all their needs, children soon figure out when to save and when to splurge. The added bonus is sharpened math skills!

Invest to get more

Most kids in India receive cash gifts from parents or relatives during their birthdays and festivals. When the accumulated sum is large enough, you can open a Fixed Deposit for your child and explain to them how depositing money for a certain amount of time will yield a little bit extra. Although investment instruments such as Mutual Funds are much trickier to explain to a young child, you can encourage him/her to keep tabs on the accumulating gift money and alert you when it reaches a certain figure.

There is joy in giving

Kindness is a quality too easily cast aside in our quest to build wealth. The joy of giving is an important lesson for children. Ask your child to make a list of the causes or issues they care about and donate regularly towards those causes. If you make a ritual of donating money to charity on special occasions like birthdays or anniversaries, you'll encourage an altruistic nature in your child. While the concept of 80G benefit under the Income Tax Act is a far reach for a young child, they will learn the simple lessons of saving and the joy of giving.

Be mindful of Credit Score and Credit/Debit Card usage

Before your children ship off to college, talk to them about the importance of a good Credit Score and how unpaid debt (in any form) could throw a spanner in the works for their financial health. You'll soon be the proud parent of financially responsible young adults!

Remember, children pick up most of their habits from their parents. This includes financial behaviour. They're never going to take you seriously if you preach to them about financial planning but are careless about money yourself. Leading by example with positive financial behaviour will help them see logic in your actions and they'll follow suit.
Source : BUSINESS TODA 11/05/2018

LIC returns are tax free .....

LIC returns are tax free .....
The general impression among people is that proceeds of life insurance policies are totally tax free. However, this is actually subject to certain conditions and also some exceptions. It is necessary for one to be aware of when these proceeds are tax-free and when not, in order to take advantage of the tax benefit. Let us examine the tax treatment of payouts under a life insurance policy in detail.

Pension Policy

Pension policies, some of which include a life insurance element, are treated differently for tax purposes. Therefore these have not been covered here.

Section 10(10)D of the Income Tax Act, 1961
As per Section 10(10D) of the Income Tax Act, 1961 the amount of sum assured plus any bonus (i.e. the policy proceeds) paid on maturity or surrender of policy or on death of the insured are completely tax free for the receiver subject to certain conditions.

These policy proceeds will be taxable in the hands of the insured in the following situations:

o As per section 10(10D) in case of a life insurance policy issued after 1.4.2003 but on or before 31.3.2012 if the premium payable in any year exceeds 20% of the actual sum assured, then the policy proceeds would be taxable in the hands of the insured. As per section 10(10D) read with explanation to Section 80C(3A), actual sum assured simply means the sum assured which is least in all the policy years and does not include any bonus amount which is to be received over and above the assured amount. This 'actual sum assured' shall also not include any premiums which are to be returned to the policyholder.

o For policies issued on or after 1.4.2012, the above mentioned limit of 20% has been changed to 10%.

In case the insured suffers from severe disability or disease as specified by the Income Tax Act and rules and his/her policy was issued on or after 1.4.2013, then for them the limit of 10% will be increased to 15%. For this purpose, disability has to be one of those specified in section 80U (like autism, mental retardation) and disease has to be one of those specified in section 80DDB read with Rule 11DD of income tax rules such as blindness.

o In case the premium payable in any year exceeds the prescribed percentage i.e. 10%, 15% or 20% of actual sum assured, as described in the preceding paragraphs, then the whole proceeds from the policy would get taxed in the year of receipt. However, in case of death of the insured, where his nominees receive the policy proceeds the same shall be tax free in the hands of the nominee(s) even if premium paid in any year crossed the prescribed percentage of sum assured.

Proceeds of Keyman insurance policy not tax free

If a policy is a Keyman insurance policy then its proceeds are not tax free as per section 10(10D) of the Income Tax Act.

Is TDS applicable to payment of life insurance policy proceeds?

As per section 194DA of the Income Tax Act, 1961, any sum received by an insured Indian resident from an insurer under a life insurance policy shall be subject to TDS @ 2% if the said sum is not exempted under section 10(10D). This means that policy proceeds exempted under section 10(10D) will be given to the insured without TDS (Tax Deduction at Source). Further, even if these proceeds are taxable as per section 10(10D) but do not exceed Rs 100,000, then also no TDS is to be deducted by the insurer when making the payment to the insured.

It is important for you to know that you have to submit you PAN to your insurer or else the rate of TDS would be 20% instead of 2% in cases where TDS is applicable.

Further, it is to be mentioned that tax treatment of life insurance policies bought from foreign insurers (those not registered in India) may involve additional conditions which would vary from case to case
For more details
Contact
DHAMODHARAN  K
Financial Counsellor
9940857995
licdhamu@gmail.com