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Information provided on this newsletter has been independently obtained from sources believed to be reliable. However, such information may include inaccuracies, errors or omissions. suriseetaram.com and its affiliates, information providers or content providers, shall have no liability to you or third parties for the accuracy, completeness, timeliness or correct sequencing of information available on this newsletter, or for any decision made or action taken by you in reliance upon such information, or for the delay or interruption of such information. suriseetaram.com, its affiliates, information providers and content providers shall have no liability for investment decisions or other actions taken or made by you based on the information provided on this newsletter.
We buy Life Insurance to ensure our loved ones are taken care of financially when we are no longer there. Proper nomination in Life Insurance is important to ensure that in the event of death, the life insurance claim money goes into the right hands.

The rules for nomination in life insurance have changed for insurance policies maturing after March 2015. This change was brought about through the Insurance Laws (Amendment) Act of 2015 and it rewrites the rules for Nomination in Life Insurance under Section 39 of the Insurance Act, 1938, among others. If you have even one life insurance policy, you must surely understand this change. The good news is that the new rules for nomination in life insurance now ‘protect’ the nominees far more than earlier. Let’s quickly see how.

Basics of Nomination in Life Insurance

  • A Life Insurance Policyholder may nominate a person or persons to whom money secured by the policy may be paid in the event of her/his death
  • If the nominee is a minor (less than 18 years of age), an Appointee (caretaker) needs to be declared who would, in case of the policyholder’s death during the minority of the nominee i.e. when the nominee is still a minor, receive the money on behalf of the nominee
  • Nomination in Life Insurance is allowed only when the Proposer (person applying for the policy) is same as the person whose life is insured
 New Rules : Concept of Beneficial Nominees

The new rules have introduced the concept of Beneficial Nominees, i.e. nominees of the kind which can directly use the benefit of claim money because of their family relationship with the deceased. Spouse, children and parents (not siblings, please note) are included as Beneficial Nominees. The reasons are pretty obvious – they are the direct dependents of the person who has taken the policy.  

 How can the New Rules affect you

1. If the policyholder nominates his spouse, children or/and parents, they would be Beneficial Nominees. As per the new rules, even if the legal heir of the deceased policyholder were to be different from any/all of the Beneficial Nominees, they would have no right on the money unless the legal heir can prove that the claim money is not beneficial to the nominees. Only the beneficial nominees have the right on the claim money. The real benefit is that for the policyholder, the uncertainty about whether his family members will indeed get the money after her/his death, has been settled for good. At the time of making the nomination in life insurance, the policyholder can now rest assured that if he is choosing Beneficial Nominees, the proceeds of the life insurance policy will work almost like a will and no one else can stake claim on the money. Do note, however, that policies under Married Woman’s Property Act (MWPA) are excluded from these new rules (which is good as well).

2. The nominee now also has right on the claim money if the policyholder dies after the policy period is over but before receiving the maturity benefit.

Flexibilities in Nomination Process will Continue
  • A policyholder can declare the nominee at the time of policy application, or any time later during the term of the policy
  • You can nominate anyone as a nominee – your spouse, your children, relatives, your friends, unrelated people, anyone. You need to provide details such as full name (as per the nominee’s documents), gender, address, age and the relationship between the nominee and you (if there is one)
  • You can also nominate multiple people in a particular ratio, e.g. 40% to person A and 60% to person B
  • Even successive/alternate nomination in life insurance is possible. This is nothing but the nomination order. e.g. nominate the money to person A. If he is not alive at the time of claim, it can go to person B. If B is not alive as well, it can go to person C. All the names of A, B and C need to be declared upfront at the time of successive nomination in life insurance. This is the best way to nominate and it is highly recommended
  • The nominees can be cancelled or changed as many times as required within the policy period. IRDAI has notified that it would cost Rs. 100 for each change.
  • To conclude, the new rules have retained everything that is good and have been modified only where it was required to be. They have been progressive and customer-centric – the nomination process is more meaningful now and outcomes of nomination in life insurance are much more likely to be as intended by the policyholder


A lot of policyholders and their families can now heave a sigh of relief on this front.

Source: www.mintwise.com

As the debate of whether investing in life insurance is a good idea or not continues till date, you can surely come to the conclusion that there are more reasons why you should do it instead of not investing if only you look around a bit. Investing in life insurance can result in being one of the best and most important financial decisions that you can make. We will list out the top ten reasons why you should invest and then you judge for yourself whether investing in it will be a good option or not. Life insurance comes down to the fact that it is a step taken to protect, care and safeguard for the future. Life insurance as mentioned earlier is a highly debatable topic but most of the points against it are based purely on misconceptions. In the following list, we will enlist every important and convincing reason as to why life insurance is an essential step and clear out any misconception in the process.

 The Top Ten Reasons Are:
 Security & Assurance
The first thing that comes to your mind when you think of the pros of life insurance is the security for your family and loved ones that it offers. This is certainly the most important aspect that will concern you. You will be assured in your mind that there is enough security for your family in uncertain situations.

 The Debt Issue
If you have debt that you still need to pay, life insurance guarantees that your debts will be paid. Nobody wishes to hold their families in the position where they have to deal with the financial liabilities you left behind. Life insurance will ensure such a day never comes. Be it a property loan, a personal loan, a credit loan or any auto loan, the insurance policies that you buy will help repay these debts.

 Retirement plans
As you retire, your monthly source of income comes to an end too. This may be a source of your worries and tension. But a life insurance will ensure that you have no worries as such. As you put your money into the pension plan, at the end of your retirement you get to enjoy the fruits of those labors.

 Long Term Plans & Dreams
Using the money from your life insurance you can always fulfill those lifelong hopes, dreams, and plan. You can open up a small business after retirement or maybe buy yourself a house using this. You also get the benefits of different investment options by the variety of policies, which help you achieve those long-term goals. But be careful to read and go through the risk factors very well before signing up for a particular policy.

 No Business Worries
Life insurance apart from benefitting your family and your personal plans is a great way for your business too. There are various kinds of insurance policies like the term insurance, which lets you have protection for a fixed term and the benefits are paid during the event of your death.

 For Tax Saving
One of the many reasons why people prefer to invest in a life insurance is because of its tax saving aspect. Irrespective of the plan that you have taken, you can save tax with the different insurance policies.

 Begin As Early As Possible
The earlier you invest in life insurance, the better deals you can get. As you grow older, you will get closer to not being qualified for getting a policy. With growing age your health also becomes uncertain. Not just this, you will get cheaper deals if you are younger. You also get better policies like the death benefit rider. Therefore, it is one of the most convincing reasons why you should invest in your life insurance as early as you can.

 Helps to Buy various Options
Life insurance helps you get great deals and profits through a vast number of policies. As you invest in those policies and finish the term, you get the benefits of it. Therefore, it is an instrument, which helps you invest for a long time and achieve your goals later on. The earlier you do it, the better deals you can bargain for. Hence, you are faced with a lot of safe options that will be beneficial and affordable for you.

 A Savings Tool
There is no doubt, life insurance acts as a tool and source for saving money. It is your real life piggy bank where you can add and invest in it, take up a variety of policies to secure your future and save the money lifelong. There are various policies, which will benefit you when you invest in them as early as possible. Hence, it is imperative that you buy such policies early in life. As you pay the premium, the extra money is accrued in the form of a cash value. You can borrow this cash or sell it against a policy or take out your income from it. 

 Mental Peace 
 You cannot avoid the unexpected tragedies of life and death is the most unexpected of all. But if you have a life insurance you will have the peace of mind. You will know there are enough financial security and stability options for your loved ones when you are gone. Even the smallest policies will be of immense help during the difficult times. As you grow older, you will have the satisfaction. The need of a life insurance changes with the changing phases of life, and in the event of your demise, it will prove to be a great source of financial security for your family.

Source: www.entrepreneur.com

The interest that you earn on your fixed deposit is taxable. A fixed deposit is one of the first “investment” a lot of us make. It’s available at the bank you have an account in and it’s easy to get started with – generally you can open a fixed deposit directly from your net banking account. While it’s a pretty easy, safe, and predictable place to put our money in, a lot of people get stumped when they face something called ‘Tax Deducted at Source’ or TDS.

 Your FD interest - it’s taxable

The interest that you earn on your fixed deposit is taxable. If your bank, therefore, pays you an interest at the rate of 6%-7.5% on your FD, then this interest income will be subject to income tax. Furthermore, the bank will deduct a part of this income tax on behalf of the government even before paying the interest to you. Now here’s the catch. The bank will deduct TDS @10% of the interest amount, only if the interest payable crosses Rs. 10,000. The rate is only applicable to those who have given their PAN details to the bank. If not, then the rate at which tax is deducted goes up to 20% of the interest earned. But that’s not the end of your tax payment. If your income is higher and you fall in the 30% tax bracket, you still need to pay the remaining tax yourself. The question is how are you supposed to do that? Simple, this interest income is supposed to be added to your gross income when you are filing your taxes under the head “other interest income”. The tax rate will be based on your existing tax slab.  IMPORTANT: even if you have a 5 year FD, and you will get the accumulated amount only after 5 years, tax still needs to be paid every year. 

Source: scripbox.com
A good saving and investment plan and the intent to see it through may come undone if you let emotions dictate investment decisions

Personal biases may cloud your judgement when choosing the type of investments you make, how you select them, your response to market movements and your reactions to gains and losses and other important aspects of managing your portfolio. Here are some common biases that affect the decision-making process and financial security.

Optimism and overconfidence
The optimism bias in financial matters manifests itself as a positive and upbeat outlook of how your future money matters are going to pan out. When such optimism is not supported by actions such as disciplined saving and investing for the goals or the performance of the investment portfolio, then it can be detrimental to your financial security, as it makes you underestimate the risks. For example, if you underestimate the expenses in retirement and believe that a small pension will be adequate, then by the time you accept the reality, it may be too late to rectify the situation. Optimism may also beget over-confidence in how you manage your finances and you may believe that you have the Midas touch and anything that goes wrong is sheer bad luck and not a reflection on your skills or efficiency. Overconfidence leads you to take on higher levels of risks in your investment decisions. You may hold on to losing investments because you cannot accept that you made an error in selection. This impacts the long-term returns from your portfolio and consequently your ability to meet your goals.

Loss Aversion
While loss aversion is ingrained in all of us, when the primary driving force in making decisions related to money matters is the desire to avoid loss, even more that the potential gains possible, then you are exhibiting a behavioural bias of loss aversion. You may pay a steep price for this desire to protect yourself. The most common manifestation of this bias is holding your investible surpluses in low-return products that protect the absolute value of the capital invested and ignore the loss in real value over time with inflation and the risk to your goals. You may be jeopardizing your long-term goals as your portfolio’s returns are sub-par because of your actions. Another erroneous investment behaviour is to ignore flashing signs that an investment is a loser and needs to be cut out of your portfolio. On the other hand, you sell winning investments and book profits because you don’t want a situation of the price going down and incurring losses. Over time, your portfolio may have more of losers as you sell off the winners. Other detrimental emotional reaction is to hold on to an investment even when rational analysis tells you that you need to cut your losses. This bias may be exacerbated by over-confidence in your ability to forecast performance. Or, you only seek and use information that confirms your investment decisions and ignore any red flags. The most common of all biases that inhibit investment action is inertia. You take the easy way out and maintain status quo when decisions need to be taken on making investments, rebalancing, and others. Decisions based on instincts can inhibit your investment success. Take a step back and ask yourself the basis for the decision. Unless it is backed by research-based facts and the move is aligned to your goals and their investment horizon, or for managing the risks in your portfolio, it is unwarranted and should be avoided.

Course Correction
Make annual goal check-ups an integral part of your financial plan. Look at hard numbers and then decide whether goals are on track and not merely on the basis of an optimistic outlook. There are three steps to overcome this. First, acknowledge and recognise that these biases exist and how they may affect your decision-making process. Second, stop and ask yourself if an investment decision was an objective one based on factual data or an emotional response. And third, adopt disciplined strategies to emotion-proof your investment decisions. Saving, investing and rebalancing the portfolio become objective when you have an asset allocation aligned to your investment horizon and risk and return preference. Other tools that will help keep emotional responses at bay include using systematic investment processes, rebalancing the portfolio to a schedule, having stop-loss rules to help initiate exit decisions, and quality control checks to review the performance of the portfolio. Taking professional advice is another way to keep your personal biases from impinging on your financial success.

Source: LiveMint
Please do not reply back to this mail. This is sent from an unattended mail box. Please mark all your queries / responses to suri@suriseetaram.com.
Information provided on this newsletter has been independently obtained from sources believed to be reliable. However, such information may include inaccuracies, errors or omissions. suriseetaram.com and its affiliates, information providers or content providers, shall have no liability to you or third parties for the accuracy, completeness, timeliness or correct sequencing of information available on this newsletter, or for any decision made or action taken by you in reliance upon such information, or for the delay or interruption of such information. suriseetaram.com, its affiliates, information providers and content providers shall have no liability for investment decisions or other actions taken or made by you based on the information provided on this newsletter.