Looking for regular and guaranteed income in your sunset years? Investing your hard-earned money in a suitable annuity product may be the answer. more...
If you are looking for ways to take a loan, here is a solution at hand through Assignment of life insurance policy. more...
No matter how good you are with your investment management, your plan to financial freedom will be incomplete if there is no insurance in place. more...
From salary advance to loans against shares, the cash-generating options to explore are many. more...
Please do not reply back to this mail. This is sent from an unattended mail box. Please mark all your queries / responses to .
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.
Looking for regular and guaranteed income in your sunset years? Investing your hard-earned money in a suitable annuity product may be the answer. After all, such products are specifically designed to meet long-term retirement needs. However, before taking a look at further details, let us first try to understand the product itself. 

What are annuity plans? 

The most common type of annuity plan works like the reverse of a typical pure life insurance policy . In a pure life insurance plan, also known as a term insurance plan, a person pays premiums during the policy period and the beneficiary (often the family) gets the sum assured under the policy in case the insured dies during the policy period. In an annuity plan, however, a person pays either a lump sum or regular installments in the accumulation period and gets regular payments as long as he/she lives or for a pre-specified fixed period. 

How to choose among different types of annuities based on their features? 

There are many types of annuity plans. Essentially they can be classified based on the timing of the benefit, variability of the benefit and coverage of the benefit. 

Timing 

If a person wants annuity payments to commence immediately, he should buy an 'immediate annuity plan'. However, if he wants the regular pension payments to start after a specified period (usually after retirement), he should go for a 'deferred annuity plan'. This choice depends on the age at which he is making the buying decision.  If he has just started his career and is far away from retirement, choosing a deferred annuity product may make more sense as he does not really need regular pension payments as long as he is earning a monthly salary. Purchasing an immediate annuity would suit someone who has just retired and now requires a regular income stream in place of his salary. In such a situation, a person may consider using any lump sum that he gets on retirement, e.g. gratuity or provident fund to buy an immediate annuity.

Variability 

If the annuity amount is a fixed amount, either guaranteed or not guaranteed, it's called 'fixed annuity'. If it varies based on the performance of the underlying investments, it's a 'variable annuity'. 

"A person with lower-risk appetite may choose a fixed annuity where the returns may be less but uncertainty is also less, while in variable annuities, returns may vary depending on the market conditions. So there's higher risk but the possibility of higher returns too," says Dr Nandagopal. 

Coverage 

An annuity plan can cover one life (say, husband) or two lives (husband and wife) where after the death of one person, the other person would continue to receive annuity payments for his/her lifetime. In the case of a joint life annuity, the annuity is first paid to the primary annuitant (life assured). After the death of the primary annuitant, the second annuitant (spouse) continues to receive the annuity. Upon the demise of the secondary annuitant, the annuity payouts cease. 

The advantage of buying a joint life annuity is that your financial dependant (spouse) will continue to receive payments after you die, while in the case of a single life annuity your spouse will not receive regular cash support if you pass away. However, it is to be noted that a single life annuity usually pays a higher level of income than a joint life annuity. That is because it does not provide your spouse with an income in the case of your demise. Therefore, a single life annuity is suitable for those who don't have any financial dependant. 

Whichever option you choose, there are also many other optional features and benefits such as partial withdrawal facility, indexation benefit that can be added to annuity plans. 

Criteria for choosing an annuity plan 

Like in any financial product, the key parameters for annuity selection are (a) safety, (b) returns, and (c) liquidity. 

Safety 

The safety aspect is paramount in annuities because these are extremely long-run products. A person buying a deferred annuity would keep saving regularly, via premiums paid to the insurer, for a long time before retirement, say for 20-30 years. On retirement he would expect the pay back to continue for another 20-30 years on an average.  "This means the provider of annuity must be in a position to meet the liabilities that may change dramatically due to a variety of factors such as increasing longevity, decreasing interest rates, inflation etc. Therefore, solvency of the company providing annuity is critical. The higher the financial standing of the company, the better it is," observes Dr Nandagopal

Returns 

After safety, returns play a vital role. As annuity products are very long term, most companies are conservative in terms of giving returns. These companies do not fully pass on the returns earned to the customers but retain a substantial portion of earnings as reserves to meet contingencies. This conservative approach may be detrimental to the interests of older people who depend solely on annuity payouts to meet living expenses. As inflation erodes the real value of the returns, small annuity payments would cause financial misery at an age when they would find it difficult to shift to a better provider. 

Liquidity 

Liquidity is another aspect to be taken into account when choosing a pension policy "While annuity products due to their very structure are not very liquid and cannot be encashed whenever required at one go like a fixed deposit, life insurance policy or mutual fund units, there could be financial contingencies that compel the customers to go for such options. In critical circumstances, partial withdrawal -- though not ordinarily recommended -- may come in handy," says Dr Nandagopal. 

How to go for the right annuity product? 

According to experts, the best way is to look at the past track record of the annuity provider than being carried away by product features or promotions. Industry track record, returns provided on past annuities and the current financial strength of the company are some of the key factors to be considered before going for an annuity product, the experts add.

Source: http://economictimes.indiatimes.com

If you are looking for ways to take a loan, here is a solution at hand through Assignment of life insurance policy. A life insurance Policy is a protection plan with Death Benefit and/ or Maturity benefit which is entitled to the beneficiary. How about keeping it as a pledge to another person or an institution so that you can get some financial assistance in lieu of it?,

Assignment of life insurance policy is something similar where a policy holder transfers the rights of holding a life insurance policy to another person or a company – say, the same insurance company which provided the policy – with a hope of getting a loan or financial help in exchange for that policy. The policy holder who transfers his or her right from the policy is the Assignor while the buyer of the rights is the assignee. The assignment of the policy can be done various types of life insurance, such as Pension plans, Unit Linked Insurance Plans (ULIP) s, and any policies with a sum assured.

Does assignment of life insurance policy really help the policy holder? How important and viable is it in the insurance sector? Take a look at various aspects of assignment of life insurance policy.

Unconditional Assignment and its Popularity
Unconditional or absolute assignment of life insurance policy allows an assignor to “sell” the life insurance plan to the Assignee totally where all the rights are transferred. The assignor has no financial commitments on the policy nor has any rights on the payouts promised in the policy. Often, an assignor assigns life insurance policy to the insurance company itself or a trust, unconditionally. Sometimes, an extra life insurance policy is sold or gifted to another person. Assignment is generally hassle-free. Many online life insurance policies today allow assignment of the plan. Consider a situation where an elderly person has a life insurance policy and is seriously ill. He requires money for his treatment and well being. He plans to assign his life insurance policy to a trust that would give him the much needed cash now in exchange for the policy itself. The value of the assignment is based on the cash value of the policy.

Conditional Assignment and its Utility
Conditional assignment refers to the transfer of policy rights from an assignor to assignee if only certain conditions are met. These conditions are based on events where assignor has no say. In other words, this form of assignment is known as collateral assignment where the transfer is not done wholly but partially during the assignment.

Consider a situation where a person is in debt or needs to take a loan. He uses his policy as a security for loan repayment. If the assignor dies before paying the debt, the assignee gets the policy benefit. If such conditions are not met, the policy does not get transferred to the assignee. It is possible for the Beneficiary to get a certain amount of the benefit from the policy. The funds left over after loan repayment to the assignee is awarded to the beneficiary.

Assignment of Transfer
The process of assigning life insurance policy to the assignee is done easily through legal paperwork. Apart from an individual, life insurance firm, or a trust, there can be financial institutions that can also be an assignee of your life insurance policy. Here’s a point to note: although assigning has its advantages, it reduces the benefit that you would original bargain from an insurance company in case the assignment is a conditional one. Many people there consider getting a pure protection life insurance plan to protect the reduced value of the assigned policy for a time when loan is still required to be paid. Although this option is not the best life insurance plan, it provides some financial protection nevertheless.

So, you can get life insurance policy and assign it and use it as collateral to get loans in case you need it in future.

Source: www.easypolicy.com

No matter how good you are with your investment management, your plan to financial freedom will be incomplete if there is no insurance in place.

We all strive for financial freedom. Who doesn’t want to have the joy of fulfilling yours and your families’ wishes and not having to worry about money? Unless we inherit some royalty’s wealth or discover oil in our backyard; all of us need to actively plan our finances to achieve this kind of independence.

Financial planning in the true sense, is not just about growing wealth and countering inflation, it is also about managing risks and seeing us through uncertainties. While most of us Indians have a savings mindset, what we lack is in our understanding of risk management. Uncertainties such as accidents, deaths or sickness have the potential of becoming huge financial adversities besides being huge personal losses. Without management of risks for financial losses or catastrophes in life, any kind of a well planned corpus created through fixed deposits, investment in Gold, SIPs, the right equity portfolio mix can go for a toss.

That’s why it is imperative that we understand insurance and invest in it. Insurance, as the definition states: “is an arrangement by which a company or the state undertakes to provide a guarantee of compensation for specified loss, damage, illness, or death in return for payment of a specified premium.”

Sadly insurance penetration (ratio of premium to GDP) in India stands at an abysmal 3.9%, much lower than the world average of 6.3% per Govt. sources. Although the Indian multi-player insurance market is fairly young, it is fast growing and has a lot of sophisticated products on offer to help Indians manage their risks well. Even the IRDA is actively developing guidelines and processes to ensure Indians are covered well.

If you don’t want to throw your life plans off track or simply, don’t want the stress of large bills when something untoward was to happen, there are primarily 5 kinds of insurance you definitely must have. All of these 5 types of plans together for an average 30-32 year old man, won’t cost more than a 30-40,000 rupees annually.

Life insurance: This simply helps your family tide over the huge financial loss they would suffer, in case you, an active contributor to family’s earnings were to lose your life. The amount of cover needs to be a function of your income, current and future liabilities & expenditure (student loan, children’s education, household expenses etc). An average 30 yr old should definitely have a term cover of Rs. 1 Crore, but the exact amount will vary for everyone depending on income & liabilities. This should set you back by about Rs. 20,000

Source: moneycontrol
From salary advance to loans against shares, the cash-generating options to explore are many.

A financial emergency can hit anytime - a sudden hospitalization, a natural calamity or even an unexpected celebrations at short notice. While money pundits say you must have an emergency fund equal to six months expenses in place, not everyone follows this rule diligently. So, where do you get cash instantly to tide over a financial disaster?

Don’t despair.There are few ways you can get money in a pinch, depending on how urgently you want the funds. “The key things that will determine where you get the money from are how urgently you want the funds, the tenure of the loan, the interest and how expensive will it be to source the funds,” says Navin Chandani, Chief Business Development Officer, BankBazaar.com. Before you opt to borrow money, be sure that it is really needed. Even then, borrow as little as possible. Remember, it is a loan and you need to ultimately repay it. If you are unable to do it on time, you could end up in a debt trap.

Borrow From Your Employer:
“ If you need funds ASAP, consider your workplace first. Many companies extend an advance on salaries,” says financial trainer P.V. Subramanyam. The funds could be equivalent to 1-6 months take home pay and will be deducted from the salary over 3-24 months.
Upside: The loan can be customised to your needs, and you will be able to get the money within three days.
Downside: The loan will be taxable as a part of your salary. It will be exempt only if the funds are used for certain medical treatments of the amount is less than Rs.20,000.
Interest Rate: 5-8% (Could also be interest free)

Cash Withdrawal On Credit Card:
A credit card can be used to withdraw money from an ATM, the amount being equivalent to 40-80% of your card limit. However, their might be a cap on daily cash withdrawal. Most banks will allow you to over-extend your limit on case-to-case basis. Be ready to cough up an over-limit fee over and above the usual interest rate on cash advance.
Upside: Instant cash, available anywhere, anytime.
Downside: A transaction fee of 2.5-3%. Interest is levied on the money from the day it is withdrawn until it is fully repaid.
Interest Rate: 2-3.5% a month

Top Up Loan:
Already have a home loan? If yes, you can use it to get a top-up loan of upto Rs. 50 Lakhs for a maximum of 20 years or till the balance tenure of your original home loan. This option works if you have repaid the original home loan for some years as the combined value of the home loan and the top-up cannot exceed 75% of the value of the house.
Upside: You can get a loan quickly, in three days, since the bank has your documents.
Downside: Any default in repayment will cost you big.
Interest Rate: 9-13%

Loan Against Property:
If you want a large loan and own a house, you could take a loan against property. You can loan Rs.5 Lakhs to 1 Crore, depending on the market value of your house. The loan tenure varies between 2 and 15 years. Both residential and commercial properties can be used as collateral. Banks could lend you up to 65% of the value of your property. However, the house must be insured. Processing fee is 1.5-2% while prepayment charges are 2-3% of the outstanding.
Upside: Lower interest rates, larger loans
Downside: Longer process of 3-10 days to get the loan
Interest Rate: 9.5-13%

Loan Against Securities:
You can pledge your shares, mutual funds, FDs and insurance policies as collateral. Incase of mutual funds and shares, banks will loan you funds equal to 50% of their value, while they will offer you up to 75% of a fixed deposit (FD). The funds are transferred into a current account from where you can access them.
Upside: Quick disbursement, lower interest charges
Downside: If portfolio value declines, you will have to put in the differential or pledge more funds/shares.
Interest Rate: 9-15%

Personal Loan:
One of the quickest options for borrowing money. You can get a loan within 30 minutes to 3 days, depending on your relationship with the bank. In fact, you might already have a pre-approved loan in your name from your bank which will make the process faster.
Upside: Quick disbursement if you borrow from your own bank
Downside: High interest rate and processing fee of 2-3%. You will also have to pay GST on EMIs. For pre-payment, a foreclosure fee of 2.5% of the outstanding amount is charged
Interest Rate: 13-24%

Loan Against Gold:
You can get 60% value of your gold and can borrow from Rs.10,000 to Rs.25 Lakhs. The tenure is usually 6 months or 12 months but you can renew the loan at a nominal charge. While you can repay part of the loan whenever you want, gold you have pledged as collateral is released only after you repay the entire loan.
Upside: You can get funds within a day
Downside: Gold appraisal charges of Rs.250-2500. If you are unable to repay loan, you will lose the gold.
Interest Rate: 10-17% banks
14-26% (non-banking financial companies)

Source:Economic Times
Please do not reply back to this mail. This is sent from an unattended mail box. Please mark all your queries / responses to .
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.