Ways to Save Money for your Retirement

Save Money for your Retirement
Retirement is expensive. To maintain your standard of living when you stop working, it is estimated that you will need at least 100 percent of your pre-retirement income with inflation or more. Retirement planning is about managing your money today so that you can make the most of your retirement period. Your retirement plan should balance your needs, wants and the reality of your finances. So take charge of your financial future. The key to a secure retirement is to plan ahead for your retirement.

A strategy for how you save today can make a big difference in how much money you will have after your retirement. A solid retirement saving plan charts out methods of creating retirement income and creates a roadmap to help ensure that your money will last as long as you do.

To start with these are the ways to save money for your retirement-

Have a saving mindset
You should designate an amount of your pretax income to contribute to your retirement savings on a monthly or bi-weekly basis and have it taken out of your salary, just like your taxes. It's easiest to save money when you don't have it in your hands; you're effectively taking the decision of whether to save that money out of your control.

Start saving, keep saving, and stick to your goals
If you are already saving, whether for retirement or another goal, keep going! You know that saving is a rewarding habit. If you're not saving, it's time to get started. Start small if you have to and try to increase the amount you save each month. The sooner you start saving, the more time your money has to. Make saving for retirement a priority. Devise a plan, stick to it, and set goals. Remember, it's never too early or too late to start saving money.

Cut your unnecessary expanses
Usually when we are working and earning good money we tend to indulge in purchase of goods and luxuries which may not have a long term use. Therefore it is necessary to assess before buying anything whether you will actually need it. This way not unnecessary expenditure can be curtailed but also it will contribute to your savings for your planned goals.

Put money into an individual retirement plan
You can put up to 5000 a year into an Individual Retirement Plan; you can contribute even more if you are 50 or older. You can also start with much less. IRPs also provide tax advantages. The tax treatment of your contributions and withdrawals will depend on which option you select. IRAs can provide an easy way to save. You can set it up so that an amount is automatically deducted from your savings account and deposited in the Individual Pension Plan.

Investment in stocks is best for long-term growth
Stocks have the best chance of achieving high returns over long periods. A healthy dose will help ensure that your savings grows faster than inflation, increasing the purchasing power of your nest egg.

Contribute in employer’s pension schemes
The best method to save money for your retirement planning is to join the retirement options provided by your employers and contribute to it as much as possible. The options provided for retirement are usually much deliberated upon and offer the best returns on your savings. Moreover it is easy to handle and safe investment for the retirement.

Invest in a second house
Investment in a house can be a sure shot success method for savings for your retirement planning. The returns on real estate investment have been stupendous over a long period of time. In your working life, you should consider investing in a second house if you already own a house for accommodation. Owning a second house will provide you with a cushion for your retirement as it can be disposed off any time to meet your unexpected financial needs.

Protect against risk with an insurance policy
If you were to die unexpectedly during your working years, your family would not only suffer the loss of your income for day-to-day needs, but also the nest egg you would continue to build for retirement. Life insurance can provide for both your family’s current lifestyle as well as your survivor’s plans for retirement. The permanent life insurance you use to protect your loved ones can be another possible source of income in retirement. Permanent life insurance accumulates cash value that grows tax deferred. If you no longer need the full death benefit after you retire, you can access that cash value to help supplement your retirement income.

Avoid over-diversification of savings  
You want to diversify among different asset classes and underlying investments to manage risk, but if you are duplicating the same investments with numerous vendors, you’re probably overpaying fees and that can impact your bottom line.

Revisit your investment strategy 
Look for ways to get a little more growth without more risk than you can tolerate. If you choose only the most conservative investments for your retirement savings, your savings may not grow fast enough to give you the income you need after you retire.

Follow the sound and prudent methods of savings and investment for retirement planning and enjoy the sunset days of retirement.

5 Best Saving Options for Single Parents

Best Saving Options
Usually there are two parents for children to take care and one of them is the bread winner for the family as a whole. Under double income families with sufficient savings and investments, it is quite convenient to maintain the usual activities of the household. What if you are the only parent in your family to look after your kid or kids? What are the ways in which you can adopt best saving options for single parents?

Things can go wrong if there is no savings or proper financial planning for the kids in case there is demise of the last or sole bread winner. Nobody thinks of any eventuality but if proper financial planning is done, you can save your children form many hardships if a prudent line of actions is drawn for their future. We all have a limited amount of funds, and the needs are rising day by day, and you don't know what urgent need appears up anytime. So, for those situations, we must have some ready funds, saved, to be utilized. Therefore we need to know what are the best saving options for a single parent.

Keeping in view the various financial issues involved in providing for the children, listed below are the 5 best savings options for a single parent.

Insurance
First and foremost, one should take a life insurance policy. A Life Insurance plan ensures that your family is financially secure even if tomorrow you are no longer around to care for them. Life insurance is a unique investment that helps you to meet your dual needs - saving for life's important goals, and protecting your assets against risk. Life insurance provides money typically to beneficiaries after a loved-one who has life insurance dies. There may be many types of insurance policy but for a single parent to provide for protection against unexpected eventuality, buying a term life insurance policy is an affordable alternative to costly conventional savings oriented life insurance policies.

Buy a House
Secondly, the best saving option for a single parent is to buy a house in order to provide for shelter and financial security to the dependent in case of the death of the parent. This is definitely one of the best saving options to create wealth indirectly. If the financial position of the family is strong, then the house can be bought otherwise you can buy a house by availing home loan to buy property. Buying a house serves dual purpose-savings as well as investment and keeping in view the tax benefits and other perks associated with home loan, you can create huge wealth in future for the security of the dependent.

Investment in Pension Plans
Pension is an arrangement for which people have to invest in their working life. There are hardly any companies that provide for Pension Plans today and even if they do, how many actually stick on to the same job for long to be eligible for the same? Retirement is a stage for which people do not want to think in their early working life. But if you are a single parent and have to look after the dependents then planning to save in pension options is a must. That’s why investment in pension plans needs to be planned for well in advance so that the corpus is ready by the time you plan to retire or in case of the loss of the bread winner.

Fixed Deposits
Fixed deposits as they are known because of their tenure are a safe savings cum investment option that must be resorted to by people with dependents particularly single parents. Fixed deposit is the most handy liquid tool for meeting out unexpected emergencies-be it breakdown of household goods, medical emergencies or unexpected travel. Fixed deposit or term deposits are a safe investment for which you can apportion a small amount every month on a SIP basis and deposit it as fixed term deposits for future use.

Systematic Investment Plan (SIP)
Systematic Investment Plan (SIP) is another smart financial planning tool for a single parent to create a corpus, by investing small sums of money every month, over a period of time. SIP is a method of investing a fixed sum, regularly, in a mutual fund scheme, ETF or direct purchase of stocks. SIP allows one to buy units on a given date each month, so that one can implement a saving plan for themselves. SIPs also help in availing benefits of compounding allowing investment to grow at a fast pace.

These are some of the options which should be resorted to by single parents in order to provide for the maintenance of their dependents. Even if there are no emergencies, still saving on a regular basis can go a long way to build sufficient corpus for their wards.

Save Spend or Invest- How to Manage your Money?

Save Spend or Invest- How to Manage your Money?
When you start earning, money starts pouring in and the most vital question about money that becomes important is how to manage your money? The Personal finance education needs to start young in life as it is the basics of future. At every stage of your lives, when you earn money, you will be faced with 3 choices: save, spend, or invest. How you earn money and the way in which you implement these decisions will evolve with different phases in your life. Save, spend or invest- how you manage your money is the most important aspect of your financial planning for a prosperous future.

A person who puts a portion of his pay cheque in a savings bank account of fixed deposit is fundamentally a saver. He may think of himself as an investor but from the point of this choice- Save, spend or Invest- how to manage your money? ,he is not. He objective is to withdraw the money many years from now and spend it. At that point he may become an investor because his objective will change towards getting an income from his money, but until then he is a saver because he gets no income.

Why should you Save Money?


An investor saves money to invest it and get an income stream. A good investor can obtain more risk-adjusted income from his savings than a poor investor. But the question is why should you save money?? The main reasons are:

  1. Happiness or peace of mind
Saving money is one of the best habits people can take to increase happiness. A regular saving habit increase the satisfaction level of the person and give them a peace of mind as the cushion of having money to meet the family and personal expanses is quite important. If you have no money, it is not possible to meet out you necessary expenditure for today or tomorrow.

  1. Fulfill your Dreams
Saving is the biggest tool to realize your dreams. If you want to make your dream come true like buying a house or a bigger car or most importantly going on travel to your choicest place, it is a must to save money. The biggest regret people have is that they did not save the money to fulfill their desire at the right time. In order to realize your dreams, start saving money early.

  1. Emergencies
We hope that emergencies won’t happen, but we all know that they do. A family member can develop a health issue, you might need to make an emergency trip, you may have a car to get repaired suddenly, severe weather could flood your house or you may have to pay for any other unforeseen expense. Any of these emergencies can be expensive, and we are likely to encounter some sort of emergency from time to time. So why not be prepared rather than potentially become another victim of an emergency.

Why should you spend?


Spending is the act of disbursing the money you earn. You can’t save all the money you are earning as money is required to meet many daily expenses and to sustain. Whether to buy food, household goods, house, furniture and consumer durables as well as luxuries like car, fancy clothes, travelling, all this can be done only if you spend money. But while doing so it should be kept in mind that money is not everlasting and should be spent wisely.

Why should you invest?


Investing is the art of building wealth (financial or personal), before you write a cheque, whether it be to your bank or your broker, be honest with yourself about what is motivating you to make that financial commitment. The only way to attain financial security is to save and invest over a long period of time. Investing is to make your money work for you. You should invest because:

  • Your money earns money
Someone pays you to use your money for a period of time. You then get your money back plus “interest.” Or, if you buy stock in a company that pays “dividends” to shareholders, the company pays you a portion of its earnings on a regular basis. Now your money is making an “income.”

  • You buy something with your money that could increase in value
You become an owner of something that you hope increases in value over time. When you need your money back, you sell it, hoping someone else will pay you more for it.


Finally, when you start earning, learn the best habit of saving early, spend wisely and invest your money prudently to build wealth and be financially secure in future.

Some Things You Need To Know About Life Insurance

 Some Things You Need To Know About Life Insurance
Life insurance is an important financial tool that could benefit you at many different stages in your life. A Life Insurance plan ensures that your family is financially secure even if tomorrow you are no longer around to care for them. Life insurance is a unique investment that helps you to meet your dual needs - saving for life's important goals, and protecting your assets against risk . Life insurance provides money typically to beneficiaries after a loved-one who has life insurance dies.

Advantages of Life Insurance are enumerated below…


Life Insurance provides risk cover 
Life today is full of uncertainties and in this scenario Life Insurance ensures that your loved ones continue to enjoy a good quality of life against any unforeseen event like your absence if you are the person on whom everybody depends.. 

Life Insurance is planning for life stage needs
Life Insurance not only provides for financial support in the event of untimely death but also acts as a long term investment. You can meet your goals, be it your children's education, their marriage, building your dream home or planning a relaxed retired life, according to your life stage and risk appetite. All the traditional life insurance policies i.e. traditional endowment plans, offer in-built guarantees and defined maturity benefits through variety of product options such as Money Back, Guaranteed Cash Values, Guaranteed Maturity Values.

Life Insurance is protection against rising health expenses
Life Insurers through riders or stand alone health insurance plans offer the benefits of protection against critical diseases, accidental benefits and hospitalization expenses. This benefit has assumed critical importance given the increasing incidence of lifestyle diseases and escalating medical costs.

Life Insurance builds the habit of thrift
Life Insurance is a long-term contract where as policy holder, you have to pay a fixed amount at a defined periodicity. This builds the habit of long-term savings. Regular savings over a long period ensures that a decent corpus is built to meet financial needs at various life stages.

Life Insurance is safe and profitable long-term investment
Life Insurance is a highly regulated sector.  The regulatory bodies,  through various rules and regulations ensures that the safety of the policyholder's money is the primary responsibility of all stakeholders. Life Insurance being a long-term savings instrument, also ensures that the life insurers focus on returns over a long-term and do not take risky investment decisions for short term gains.

Life Insurance is best for retirement planning 
Life Insurance is one of the best instruments for retirement planning. The money saved during the earning life span is utilized to provide a steady source of income during the retired phase of life.

Life insurance gives protection plus savings over a long term  
Since traditional policies are viewed both by the distributors as well as the customers as a long term commitment; these policies help the policyholders meet the dual need of protection and long term wealth creation efficiently. Traditional policies offer an opportunity to participate in the economic growth of the country without taking the investment risk. The investment income is distributed among the policyholders through annual announcement of dividends/bonus.

Life Insurance provides facility of loans without affecting the policy benefits  
Policyholders have the option of taking loan against the policy. This helps you meet your sudden, unplanned life stage needs without adversely affecting the benefits of the policy they have bought.

Life Insurance is eligible for tax benefits
Insurance plans provide attractive tax-benefits for both at the time of entry and exit under most of the plans.

Life insurance is a tool for mortgage redemption
Insurance acts as an effective tool to cover mortgages and loans taken by the policyholders so that, in case of any unforeseen event, the burden of repayment does not fall on the affected family.

In this way, life insurance offers several advantages not available from any other financial instrument.

What are the Advantages of Term Life Insurance Policy?

What are the Advantages of Term Life Insurance Policy?
Term insurance policy provides protection for a specific period of time and generally pays the benefit only if there is demise of the insured person during the “term” or period chosen. Term periods typically range from 1 year to 30 years, depending upon the needs and risk protection horizon of the individual which usually coincides with the active earning life of the person.

Buying a term life insurance policy is an affordable alternative to costly conventional savings oriented life insurance policies. In addition to the affordability part, Term life insurance policies are also flexible, easy to understand, and easy to buy.

Advantages of Term Life Insurance Policy are –

Low Cost or Low Premium Policy
The most important advantage or benefit of taking a term life insurance policy is the low premium you have to pay for it as term life insurance is not like other usual conventional policies. The low premium is due to the reason that the insurance company is charging you the premium only for the mortality risk and not the saving component as is done in conventional policies. Moreover the premium of the policy depends on the term of the policy. Shorter the term, lesser the premium and vice-versa.

Simple to Understand
The term insurance policies are really easy to understand as compared to other complex conventional plans. You pay a low, fixed monthly premium based on the term life insurance policy term length and amount of coverage you choose. The customer is offered insurance cover on the basis of predefined terms and conditions which do not change during the term of the policy

Invest Your Money as You like
With a term life insurance policy, you can invest your hard-earned money yourself as you like. Life insurance companies are often very conservative with how they invest your money. If you are well versed in investing, or good at saving, the extra money a conventional insurance policy costs may not be worth it. Instead, you can buy a more affordable term life insurance policy and invest the money you saved yourself to get the maximum benefits possible.

To Cover Specific Needs like Mortgage Protection
A term life insurance policy is great for covering your short-term financial needs. Term life insurance can serve as mortgage protection for your family due to premature death of the insured. The main breadwinner in a house can buy a term life insurance policy that matches the length of his or her home's loan to protect their mortgage.

No Burden of Continuing the Policy if not Needed
Another advantage of the term insurance policy is that you can discontinue it if not needed without bothering for any procedure. In other words, when you purchase term insurance, it’s sort of like renting a house. All the benefits of usage and staying in continue for as long as you continue paying rent. As soon as your lease expires, you must leave. Even if you rented the house for 30 years, you have no “lien” or value that belongs to you.

Income Tax Benefits
The amount of premium you pay for your term life insurance policy entitle you to get Income Tax rebate in many countries. Therefore if any term life insurance benefit is paid when the insured person dies during the term of the policy coverage, the beneficiary collects the face amount (death benefit) of the policy income-tax free.

A Word of Caution:  Never give false information while going for your policy — life insurance companies will investigate before paying. If you do not  provide correct information about your habits and health issues, your policy may be considered invalid in case there is a claim and your beneficiaries may not receive any money after you are no more.

Personal Loan - Tips To Get The Best Loan For You

Whether it is to buy the latest model of smart phone, modify the house to accommodate additions to the family, to fund weddings or need to go on a vacation for which kids have been asking you for long or at all to deal with an unexpected emergency- there are times when we all need to have a large amount of extra cash. And when you are short of this extra cash to get those things, personal loans are one of the methods of making it possible. All personal expenses you want to make can be made by availing a personal loan.

Personal Loan - Tips To Get The Best Loan For You

Personal loan is an amount which you can borrow from banks, money landing agencies, credit card companies or from any other authorized or unauthorized organizations on certain decided conditions and interest rates. But it's hugely important to make sure you get the personal loan that's right for you to avoid problems in the future.

Personal loans are one of the most expensive forms of loan available in the market. Choose carefully after conducting due research and understanding of the cost & the benefits involved. So 

What are the tips and check points before you go for a personal loan ?


Opt for the minimum required loans

The golden rule of personal loan is that one should take out the smallest loan which you can and arrange to pay it off as quickly as possible. If there is any delay in payment of loan instalments, the loan amount would get compounded along with interest and could create problems in the long term.

Choose a reputed bank or lending agency

While applying for any personal, ensure that you opt for a reputed bank or a lending agency which are customer friendly and do not indulge in malpractices. There have been instances of people who have been burdened by the unfair charges being levied by the unscrupulous organizations. Avoid money lenders for taking personal loan as it can become quite cumbersome to repay the hefty amount of interest.

Know the interest rates in advance before signing the loan agreement

The most important tip for you to get personal loan is the check before hand the interest rate being charged to you. Also ensure that the interest rate mentioned in the loan agreement is the same as discussed with you. Also insist on getting the copy of the loan agreement for the interest rates and the terms and conditions of the loan.

Check the expenses involved

There are usually 2 types of charges that are levied when applying for a personal loan. First, at the time of application which can typically vary between 2-3% of the Loan amount?   And secondly, when you prepay your loan i.e., if you pay-up the loan before the loan tenure then, there is a prepayment charge varying from 2-3%.

Check whether loan is subject to any collateral securities?

If the bank or the lending agency is offering you a low rate loan on the basis of any collateral securities like your house or car, the low rate of loan may sound good but if you happen to default on payments, the bank can take over your security, putting you in difficult situation. Therefore avoid any loan subject to collateral and go for pure loan based on your repaying capacity only.

Impact on credit rating in case of any defaults

While applying for a Personal Loan, make sure you borrow within your means or else the repayment will become a long and tedious process which could affect your credit history and credit score if you have outstanding payments. If your credit rating is affected due to defaults in payments, then you may not be eligible to avail necessary loans like home loan or car loans if required.

These are some of the tips for you before opting for a personal loan. Though personal loans are easy to get but if they are not handled properly, these can create an uncomfortable situation for you. Therefore choose your personal loan carefully after conducting due research and understanding of the cost & the benefits involved.

How to Build Wealth through Investment in Tax Saving Schemes?

How to Build Wealth through Investment in Tax Saving Schemes?
Savings and planning is a very much essential task, in today's era for any human being to lead a comfortable financial life. The steps to build wealth through investment are not so different, as lots of savings plans with tax-favorable characteristics that are available to us. Investing is about making your money grow through a plan that suits your need.

The steps to building wealth begin with a clear intention to attain it. After all, accumulating money is not a haphazard occurrence, but a deliberate process. Once you determine that attaining wealth is a priority, focus your energies on maximizing your income, saving a portion of it and investing it for growth. Building wealth also requires you to make decisions on potentially destructive forces that erode wealth, such as inflation, taxes and overspending.

Wealth-building strategies include investing in paper assets such as stocks and bonds, buying income-producing real estate etc., however the best options to build wealth through investment in tax saving schemes are following:

PUBLIC PROVIDENT FUND (PPF)
The Public Provident Fund (PPF) is one of the most popular tax-saving schemes. It can also be a very good investment option for retirement Public Provident Fund (PPF) account is a safe investment option with attractive interest rates and returns that are fully exempted from. Public Provident Fund (PPF) is one of the most popular savings-cum-tax-saving instruments in India. The PPF scheme serves as an excellent long term savings option. At present, PPF is one of only three exempt-exempt-exempt (EEE) investment schemes available in India.

INVEST IN SINGLE PREMIUM POLICY
With single-premium life insurance, the cash invested builds up quickly because the policy is fully funded. The main benefit of life insurance is to leverage funds to create an estate that can provide for survivors in case of any eventuality.

NATIONAL SAVING CERTIFICATES (NSC)
National Savings Certificate are issued by the Post Office and help in savings in the right direction. NSC offers assured returns and tax benefits.The National Savings Certificate (NSC) is a popular and safe small savings instrument which can be used to create wealth since NSCs do not have a limit of how much you can invest. What's more, interest earned on NSC investments up to Rs 1 lakh is tax free. You read that correctly. NSCs offer you the possibility of earning up to Rs 1 lakh without paying tax whatsoever. This is because NSC is the only saving scheme wherein not only the initial deposit, but also the interest for the first five years, out of its term of six years, is eligible for a deduction under section 80C.

PURCHAHSE OF REAL ESTATE BY AVAILING HOME LOANS
This is definitely one of the best options to build wealth but not utilized properly. The growth in house property prices has been 5 times in last 10 years. You can use this method by availing home loan to buy property. Usually the EMI for housing loan is 1% of the loan availed. If you calculate the net outgo keeping in view the tax benefits and other perks associated with home loan, you can create huge wealth in no time.

SYSTEMATIC INVESTMENT PLAN (SIP)
Systematic Investment Plan (SIP) is a smart financial planning tool that helps you to create wealth, by investing small sums of money every month, over a period of time. SIP is a method of investing a fixed sum, regularly, in a mutual fund scheme, ETF or direct purchase of stocks. SIP allows one to buy units on a given date each month, so that one can implement a saving plan for themselves. SIPs also help in availing benefits of compounding allowing investment to grow at a fast pace.

EQUITY LINKED SAVING SCHEMES (ELSS)
ELSS is a type of diversified equity mutual fund which is qualified for tax exemption under section 80C of the Income Tax Act, and offers the twin-advantage of capital appreciation and tax benefits. ELSS funds are one of the best avenues to save tax under Section 80C. This is because along with the tax deduction, the investor also gets the potential upside of investing in the equity markets. Also, no tax is levied on the long-term capital gains from these funds. Moreover, compared to other tax saving options, ELSS has the shortest lock-in period of three years.

STOCKS
When you purchase stocks, or equities, as your adviser might put it, you become a part owner of the business. This entitles you to vote at the shareholders' meeting and allows you to receive any profits that the company allocates to its owners. These profits are referred to as dividends. However share market is volatile and you may gain or lose your money.

MUTUAL FUND
An investment vehicle that allows you to invest your money in a professionally-managed portfolio of assets that, depending on the specific fund, could contain a variety of stocks, bonds, market-related indexes, and other investment opportunities.

TAX FREE BONDS
Tax Free Bonds are tax free because interest earned from them does not form part of the total income. When you sell the bond on the exchange, you will have to pay capital gains tax, though. The post-tax return you earn on this bond is better than what you would have earned for a fixed deposit. The coupon on these bonds are linked to the government securities market, where the prevailing economic uncertainties have pushed up yields.

INVESTMENT IN GOLD
Investment in gold is a good option for both long term and short term time period. It is observed that investment in gold has provided almost 24 percent yearly returns in the last 10 years. There are various options to invest in gold like gold bricks, ornament and gold ETFs and lately the Gold Schemes from Jewellers.

EXCHANGE-TRADED FUND (ETF)
ETFs are funds – sometimes referred to as baskets or portfolios of securities – that trade like stocks on an exchange. When you purchase an ETF,  there are a number of advantages of Investment in Exchange Traded Funds- (ETFs)  as you are purchasing shares of the overall fund rather than actual shares of the individual underlying investments. An ETF holds assets such as stocks, commodities, or bond and  ETFs are popular world over with less risk and much scope for returns on investment. 

ULIPs
Unit-linked insurance policies (UILPs) have both life insurance and investment components. Your premiums are used to pay for units in investment–linked fund(s) of your choice. Some of the units you buy are then sold to pay for insurance and other charges, while the rest remain invested.

INVEST IN REAL ESTATE INVESTMENT TRUSTS (REITs)
If buying real estate is a bit expensive you might consider investing in Real Estate Investment Trusts (REIT), a public company that owns and manages a lot of real estate such as apartments, shopping malls, and office buildings. Though it is not really available in India right now but in other countries if you are interested in real estate investments, you can buy shares of REIT stock and not worry about managing your own buildings.

These are some of the methods to build wealth which can be used by you depending upon your financial goals and long term financial planning. Though all the options to build wealth through investment in tax saving schemes are not best suited to all but you should go for the one or more options which can cater to your needs to achieve your financial goals.

7 Important Factors in Choosing the Right Life Insurance Policy

7 Important Factors in Choosing the Right Life Insurance Policy
Life risk cover i.e. financial protection to the family in case of an unforeseen event- say death, illness, disability on account of accident, etc –is the main purpose of taking an  insurance policy. In order to meet various socio-economic needs of different people, it is suggested that every individual should plan their insurance products based on the human life value of the life assured. 

What are the important factors in choosing the right life insurance policy  is based upon different needs of the different people. Though insurance is seen as a ‘compulsory savings’ leading to creation of wealth which can be utilized for education/marriage of children; for old age provision; for construction of house; etc. but policies are also taken to get exemption from Income Tax and to assign these to financial institutions as collateral security while availing different type of credit facilities including housing loan.

Therefore while choosing the right life insurance policy; following factors need to be given a thought: 

Do You Need Life Insurance?

Nothing could be more devastating to a family than to lose the bread winner prematurely. While the emotional impact is huge, the impact on finances can be equally overwhelming. A way of understanding the magnitude of the risks involved is to consider how much you earn a year and multiply it by the number of years to your retirement. Ignoring insurance means that you have made a decision to live with the risk.

The alternatives to properly insuring your life may be either inadequate or impractical. Saving to provide an emergency nest egg may not accumulate enough funds in time. Relying on Social Security will provide at best a basic survival income. Life insurance may be the only efficient way of creating the ready funds to replace your ‘life value’. 

Check Your Financial Position

In the initial phases of earning life, people are careless about making provision for the life ahead. They want to enjoy and have fun with all the money they have. Those who are born with silver spoon in their mouth may not think about financial planning but not all are so blessed. Another key factor in deciding the life insurance policy is to check your own financial status whether you family can sustain the loss of income in case of sudden stoppage of regular income.

Check Your Assets and Liabilities

Your current assets and liabilities would help you assess how much insurance you would need. One should keep in mind that there should always be a balancing factor for the assets you are creating by availing mortgage etc or by raising other liabilities. If it is not binding upon you to pay for the assets you have like house, car etc, then no insurance cover is necessary but if you have raised loans then it is necessary to have your Net Worth checked. More liabilities than your assets means indicate that you should go for a right life insurance policy.

How Much Life Insurance Do You Need?

The most important factor that comes into mind is the question that how much life insurance do I need. This can be decided by calculating your current income. The first general rule about how much life insurance you need to buy is to take your income, multiply it by 10 and that will then determine how much you should buy. 

Another way you can determine how much you need to buy is dependent upon the style of living the family has become used to. Life insurance, is not just a lump of cash, it represents food on the table, a comfortable home, a school of choice for your kids, a reliable car – everything that makes up your lifestyle. For that amount of insurance to decide, you should know how much you want your wife to have as an annual income in case something happened to you. Then take that number and divide it at least by 5% thinking that if she invested the money she could earn at least 5% and that should get her that number. 


How Long of a Term Do You Need? 

Individual insurance needs change with every stage in life. However, the known fact is that the earlier one buys a life cover, the cheaper it works out for him. So buying life insurance even if you are currently a young professional is a wise option. Typically, you’re going to see 10-year, 20-year, and 30-year policies. Depending on your situation, your age, how long you plan on living for, how much debt you have will determine how long of a term you should go for.



Who will be the Beneficiary of Your Insurance Amount?

The money received in lieu of your life should not become financial windfall for those who do not deserve it. You should think before taking a life insurance policy whether someone is going to suffer in case of loss of your life like wife, kids or old dependent parents etc. as funds are required to pay out large debts such as a mortgage, and the balance invested to provide an ongoing income for the family. But if none of these are going to be the beneficiaries, think twice before opting for an insurance policy.



Which is the Right life Insurance Policy?


Currently most of the insurance companies are providing different insurance plans according to the diverse needs of the public. Mainly, you can choose a Term Plan, Whole Life Plan, Endowment Plan, ULIP and Pension Plan as per your needs and financial conditions



Finally, it is good to review your income changes and needs periodically and checking regularly the insurance arrangement , to ensure that you’re getting the most out of your life insurance policy.

Last Date for Filing Income Tax Returns is 31-03-2014 : e-file Your Tax Returns

Last Date for Filing Income Tax Returns is 31-03-2014 : e-file Your Tax Returns
Last date for income tax return filing for 2013-14 is approaching fast. For those who had not filed their income tax returns during the year, 31st March 2014 is the last opportunity to file tax returns online. You can file your tax return for the Asst Year 2013-13 and 2013-14 without any penalty and minimize payment of interest.

As such , from the current Assessment Year 2013-14, it has  become mandatory to e-file your tax return for income above 5 lacs.

Usually to file tax returns, some people tend to take the help of consultants, tax return prepares(TRP) and practicing CAs but it is worthwhile to know the bit of procedure about filing IT returns electronically.

The type of return forms which are required to file your income tax return, can be understood from the list as following:

Types of Income Tax Return Forms:


ITR 1: For Individuals having Income from Salary / Pension, Income from One House Property (excluding loss brought forward from previous years) / Income from Other Sources (Excluding Winning from Lottery and Income from Race Horses)]

This form CANNOT BE USED by an individual if income for FY 2012-13 includes:
  • Income from more than one house property or
  • Income from Winnings from Lottery / Race Horses or
  • Income from Capital Gains, which are not exempt from tax or
  • Income from Agriculture in excess of Rs. 5000/- or
  • Exempt Income (includes exempt amount of Conveyance Allowance, HRA, Other Exempt Allowances, Maturity amount of Insurance etc. ) in excess of Rs. 5000/- or
  • Loss under Head "income from Other Sources" or
  • Person claiming benefit of Foreign Tax paid u/s 90, 90A or 91 or
  • Income from Business or Profession or
  • A resident having any asset located outside India or signing authority in any account located outside India.

ITR 2: This form is applicable for Individuals and HUFs having Income from:
  • Income from Salary/Pension;
  • Income from House Property;
  • Income from Capital Gains;
  • Income from Other Sources

This form should not be used by an individual or HUF whose income includes income from Business or Profession.

ITR 3: For Individuals/HUFs being partners in firms and not carrying out business or profession under any proprietorship.

ITR 4: This form is applicable for an individual who has income from business/profession.

SUGAM -ITR 4S: This return form is to be used by an Individual/HUF having income from:
  • Business income where such income is computed in accordance with special provisions referred to in Section 44AD and 44AE.
  • Income from one house property (excluding loss brought forward from previous years)
  • Income from Other Sources (Excluding Winning from Lottery and Income from Race Horses)

ITR 5: For Firms, Co-operative Banks, Co-operative Societies, Limited Liability Partnerships (LLP), Associaltion of Persons (AOP), Body of Individuals (BOI) and Artificial Judicial Persons.

ITR 6: This form is applicable for a Company.

ITR 7: This form  is applicable for a Trust.

ITR 8: This form is used for filing only Fringe Benefit Tax Return.

ITR V: Acknowledgement Form for all ITR Forms except ITR 7.


Avail the last minute chance for filling income  tax return online to avoid imposition of penalty and interest.You can also check the status of  tax return subsequently and for that you can login to Status