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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. sanjaysinghal.co.in 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. sanjaysinghal.co.in, 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.
A lot of investors must have bought term plan or other insurance plans so that in your absence your dependents do not face any kind of financial crunch. It is good to buy life cover, but maybe buying life cover is just half job done. From last few days, I have been carrying a few thoughts in my mind which today, I would like to share with all of you. Whenever I look at the face of my little one, I feel I should do something special for him along with buying life cover for securing his future. If something happens to me, my son will get enough financial support from the insurance money, but I will lose out on the opportunity to share my wisdom (my life learning’s) with him. There are a few things, which I would like my son to learn or know from me and my life experiences. I feel that Life insurance policy is very strong support a parent can give their kids, but it lacks emotions, feelings, and love in it. To add my feelings and emotions in it – I have started capturing a few of my experiences in a short journal which I call “Notes from Daddy”. This little journal, once it gets complete will be kept next to original insurance policy document.

3 things which I captured in my “Notes from Daddy” Journal

1. List of Books that had a deep impact on my life
Since my college days, I have been a voracious reader and there have been many life-changing books that had a deep impact on my life and it has the major contribution on my overall learning and development process. I would like to share my reading list with my son when he grows up. Now, it is possible that he may or may not choose to read books from my reading list but at least I would like to share or communicate my reading experiences and my book list with him. I have started building my reading list which I would like to share with my son. My “Notes from Daddy” journal has a section called “Hidden Treasure- Personal Reading list”.

2. List of Movies that inspired me
There have been many movies and short documentaries which changed my complete outlook towards life. I am sure you also must have encountered and seen such inspiring movies. I have a section called “Movies that will move YOU” in my “Notes from daddy” journal. If you want, you can also make a list of inspiring movies which you want your son or daughter to watch in their growing years.

3.Teachers who changed my WORLD
It is said that – “when the student is ready, the teacher appears”. I have been fortunate to have right mentors and teachers at different junctions of my life. I am sure my son and your kids will also have many teachers in their life. Sharing from my life my teachers taught me some very important distinctions of life which helped me to look at the world with a new pair of eyes. I am sure you also must have had some “wow learning moments” while you were with your teacher.  Why not capture them at one place so that it gets communicated to your next generation in your absence.

Some final words
Our body is a place to observe the world from, it is a physical representation of you, be clear that your body is not you. Life is beautiful and at the same time highly unpredictable and uncertain. Having life cover is important but I feel it is still half job done. In my absence, I would not just like to pass on insurance amount to my son, I would also like to pass on my wisdom and selective life experiences to him as well. If you already have life cover and would like to create your little “experience journal” you can start working on it. If you do not have adequate life cover leave your details here and we will guide with the buying process.

Source: www.jagoinvestor.com

Most of the people think that buying life insurance will ensure the financial well-being of their family, in case of an unfortunate event. However, only buying a life insurance policy will not ensure that your spouse and/ or children will get the insurance claim amount. The death claim amount under a life policy may not reach your nominee or beneficiary. If you have accumulated debts, the creditors will have the first claim on your policy claim amount. In order to protect your family against such a scenario, you need to bring the policy under the scope of MWP Act, 1874. Once the policy is covered under MWP Act, only your wife and children are entitled to receive the sum assured in the event of your death.

What is MWP Act?
The Married Women’s Property (MWP) Act is intended to protect the properties owned by women from relatives and creditors. Under this act, any property belonging to the women remains unattached even if the court attaches their husbands’ properties for repayment of the debts. The property is also protected in case of the untimely death of the husband and bank wants to recover the dues by selling his assets. While buying life insurance, it is important for the husband to get it under the MWP act that will protect the financial interests of his wife and children. Section 6 under MWP Act specifies that a life insurance policy bought by a married man on his own life and nominated his wife and children, or any of them as beneficiary, shall be deemed to be a trustee and they are entitled to receive the benefits payable under the life insurance policy. It also mentions that if the trustee/s is not duly appointed to receive the payouts, the same will be paid to the official trustee of the state in which the office of the insurance company from which he bought the policy is situated.

Who should opt for Life Insurance under MWP Act?
Any married man (including, widowers and divorcees) can buy the life insurance policy in India under the MWP Act. The policy can be bought in a single name with the proposer being himself. Not only term plans, you can buy any life insurance policy under this act. Here is the list of individuals who can buy the policy under MWP Act.
  • Businessman and salaried individuals who have taken loans or other debts.
  • Those who want to financially protect their wife & children from creditors/relatives who might have the intentions to cheat your family.
It is best for everyone who is buying the life insurance, to protect their loved ones under MWP Act.

The married women can also buy an insurance policy under MWP Act and nominate her children as the beneficiaries. In this scenario, children are entitled to receive the benefits payable in the policy.

Who will be the beneficiary?

The beneficiaries opted for a life policy under MWP ACT can be:
  • Your wife
  • Your children (natural or adopted)
  • Wife and children together
The policyholder can make a trust in favor of a named wife and/or named children. He also has the option to make a trust in favor of the wife and children as a class. It ensures that the wife and children surviving are entitled to receive the insurance benefits. Mohammedan policyholders can only make the trustee for the named wife and/or children.

How will the beneficiaries avail the benefit under MWP Act?

Each policy under MWP Act is considered as a separate trust. At the time of buying the policy, you are required to mention the trustees. The trustees can be the wife, his adult children or any third person. You have the flexibility to change the trustees during the term of the policy. In order to ensure financial security for your family, you need to make the wife and children as a ‘beneficial nominee’, and then only they will be able to receive the life insurance proceeds. You can also specify multiple beneficial nominees and their share in the amount payable. Once chosen, you can’t change the beneficiaries of the plan at any time. In the event of a death claim, the benefits will be received by the trustee. It will not be considered as an estate of the policyholder and can’t be claimed by the debtors as well. Upon designating your wife/ children as the trustee, the financial well-being of the wife and/or children is absolutely protected. Once covered under MWP Act, the policyholder cannot make changes in the plan. Getting policy under MWP Act is extremely helpful for those who have taken the debts. To recover their money, the creditors have the right to sell the assets of the owner and their family, such as land & buildings, jewels, savings in life insurance, bank deposits, etc. However, the creditors cannot take the claim amount received under the life insurance policy covered under MWP Act. Thus, this policy serves as an immediate asset for the dependent family members.

How to get an Insurance Plan under MWP Act?

Despite the benefits available under MWP Act, not many people are getting the life policy covered under this act. It’s due to negligible awareness about the act. When it comes to getting a life insurance policy under MWP Act, you need to fill MWP addendum which requires filling details of the beneficiaries, the percentage of the benefits that are to be paid to them and the trustees. You need to fill this form at the time of filling the proposal form.

Final Words
You can add a life insurance policy under MWP Act at the time of its buying. Once opted, you need to mention the beneficiary and trustee details such as name, relationship, date of birth and benefit share. Getting life insurance under MWP Act is the best possible way to protect your family members and that’s available at no additional cost. So, when you plan to buy a life insurance plan, make sure to buy it under the MWP Act.

Source: www.comparepolicy.com

LAP – Loan Against Property is an interesting form of a loan. Let’s first understand what is LAP. Loan Against Property is a secured type of installment-based loan. When you have a property, and you put that property on a mortgage to get the loan amount, its LAP. If someone is struggling to get a loan, specifically when the credit score is not good, banks generally deny the loans. The reason being too specific, about the sustainability of the person. The creditworthiness of that person is low. What can be done in such instances? At these instances, when one is planning for a bad credit fix, the secured type on loans help. LAP is one the secured kind of loan. Suppose if the customer takes off his/her hands to pay the EMI of the amount left, bank or NBFC in that matter can seize the property, sell it and get the amount back. However, this is not as easy as it looks. There are various factors which are taken into consideration while the LAP is applied.

Who can apply for it? What are the conditions? How is the interest rate calculated? Should the property be compulsorily on the person’s name who is applying for the loan?  Let’s Decode this one by one.

Who can apply for it?
Any salaried or self-employed person, who can bare the installment of the property which is kept against taking a loan, can apply for it. For example, if my Salary is 25,000/month and the installment of the loan which is kept against a property is 35,000, then I can’t apply for it or get the LAP. Also, there are various factors which are considered, we shall discuss those in following instances.

What are the conditions?
Not all the properties could be kept against to take a loan. Only the Residential properties, Commercial properties or industrial properties can be kept for a loan against it. Agricultural plots, areas which are very near to river banks and ocean beds, near creek beds are not taken into consideration for LAP. There are various reasons why they can’t be taken. One because they are very fragile lands. The agricultural land had various variation and its highly volatile when it's about buying and selling it. When we talk about the lands which are near to water places, they are nondurable. With the flow of water, they can change or even get washed away. So, for that reason, one cannot get a LAP over these kinds of lands.

Should the property be compulsorily on the person’s name who is applying for the loan?

            The property should not be compulsorily on the applier’s name. So, there are two possibilities how LAP can be availed. First is when the property is on the applicant’s name. So, in that case, he/she can apply for LAP. Else, If the property is on someone else’s name who himself/herself is not applying for the loan, then, in that case, the applicant should be given the authority of keeping a property on the mortgage. It should be either power of attorney or the undersigned papers by the property owner which gives the authority to the applicant that he/she can take the decision for that property.

Can one get it on the property which is on forefather’s name?

There are various factors that are to be considered when it comes to the forefather’s property. In general cases, especially in India, the forefather’s properties are generally not legally sorted. The precedents are either fighting for the property or unaware of whom it was allocated, or the matters are unsolved. LAP can be given to only those cases when the precedent is clear and given the permission to do anything with the property. Any property which is legally registered and got ROC can be taken into consideration. Also, if it is distributed amongst more than one precedents than all should sign the agreement saying they have no objection if the applicant is putting an application for LAP.

So, if you are planning to take a home loan at 12.25% interest rate, but you are getting 11.75% interest rate for the property you have of you forefather with the NOC certificate from your grandfather and his brothers, or your father and your uncle and aunt’s, its a better option to opt for!

Source: blog.creditsudhaar.com
Last month late tax savers might have rushed to invest in anything that helps you lessen tax liability. But as always you should be careful in choosing what you invest in as this can not only be a dud investment but also increase your tax liability in future.

Not many would be aware but there are certain tax-saving products whose tax benefits can be nullified/reversed in the future if the rules are violated. This post is to make you aware of such hidden traps.

Life Insurance Policy:
Life insurance products like ULIPs, Endowment plans or money back plans are the most mis-sold product in the name of tax saving investments. These investments in most cases yield very low returns and there can be a reversal of tax benefits claimed in previous financial years.

As per income tax rules, the previous year tax benefits get revoked if you

  • Haven’t paid at least 2 years premium in case of traditional policies like endowment & money back
  • At least 5 years premium in case of ULIPs (unit-linked insurance plan)
So be careful if you are investing in these to save taxes.

Pension Plans:
As per tax laws, the tax benefit claimed on payment of pension plan premium is reversed if the premium is not paid for at least 2 years.

Home Loan:
You get tax exemption for payment of principal component of home loan u/s 80C. This tax benefit on home loan principal gets reversed if the house is sold within 5 years of purchase/possession. However, there is no such reversal provision for interest component of a home loan – the benefit stays even if the house is sold within 5 years.

Tax Benefit Reversal – How it Impacts you?
We take an example to show how the tax benefit reversal increases your tax outgo.

Let’s assume you bought (or were miss-sold) a pension plan with the premium of Rs 1.5 lakhs. In the first year, you paid the premium and took benefit u/s 80C for tax exemption of Rs 1.5 lakh. After few months you realize it’s a dud product and wants to move over. So, you would want to surrender it or not pay the further premium. But as per tax rules, the last year tax benefit would be nullified in case you do not pay the premium for at least 2 years.

If you were fortunate and had other investments like EPF which are eligible for 80C benefit last year, then the calculation would be: Additional income to be added = Rs 1.5 Lakh – EPF in that financial year

So even though benefits u/s 80C weren’t claimed in the return filed, you can still reduce the tax benefit reversal only to the extent of the gap between the other 80C investments and the premium amount claimed.

You should, therefore, keep investment proofs with you until the tax reversal period expires.

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 webmaster@sanjaysinghal.co.in.
Information provided on this newsletter has been independently obtained from sources believed to be reliable. However, such information may include inaccuracies, errors or omissions. sanjaysinghal.co.in 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. sanjaysinghal.co.in, 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.