Month: July 2020

Should you top up your Health Insurance

The medical costs are skyrocketing, and individuals are having either a personal insurance policy or a group insurance policy provided by their organizations. However, the average corporate or individual insurance cover is in the range of 1L-3L. In today’s life style, the complexity of diseases and the cost of treatment towards the same increased. The cost of a cardiac treatment could cost somewhere close to 5 lakhs.

The increasing cost of the same can be avoidable taking a “top up plan” and “super top up plan”. Now let us see how it works.

What is “TOP up cover”?

The top up cover means, the additional cost on top of the insurance threshold limit can be covered by this top up plans. For example, if you have a health insurance for a sum insured of Rs.200,000 and the cost of a hospitalization is 400,000. In this case, if you have only a health insurance coverage, you are eligible for only Rs.200,000 and the balance needs to be paid by the policy holder. If you have a top up cover plan, the initial 200,000 can be claimed from the basic health insurance plan and the rest 200,000 can be covered by the top up plan.

In the top up cover plan, every single instance the threshold limit will be considered for the top up cover to get implemented. For example, if your basic coverage is Rs.200,000 and the top up coverage is Rs.500,000. If the first time hospitalization is 300,000, then you can claim 200,000 from the basic plan and Rs.100,000 from the top up plan. If you would like to claim for the second time hospitalization, and the bill amount is Rs.100,000, then neither of the policy covers this. The simple reason is that the first policy was claimed fully and the second policy threshold limit is applicable for every single instance.

There are very limited health insurance companies offering the “TOP up cover”. These plans are available for individual, floater and corporate plan also. The cost of the plan is much cheaper than the regular plan and hence it is a dire need in the present scenario as the medical cost is keep increasing.

What is “SUPER Top up cover”?

This works similar to the TOP UP cover plan, however, the top up cover works on the threshold limit on every single instance of hospitalization wherein the super top up works as an aggregator. For example, if you are hospitalized for any time in a year, the plan works in favor of the basic cover and the additional claim can be done through the super top up cover.

For example, if your basic coverage is Rs.200,000 and the super top up coverage is Rs.500,000, if the first time hospitalization is Rs.300,000, then you can claim Rs.200,000 from the basic plan and Rs.100,000 can be claimed from the top up plan. If you are hospitalized in the second instance, and the claimable amount is Rs.300,000, then the same can be claimed from the super top up plan.

Who should consider the top up plan?

The top up plans are available to the extent of Rs.500,000 and would be suitable for individuals having a coverage between 1-5 lakhs. The deductible premium should also be between 1-5 lakhs. The premium for a top up plans is cheaper compared to a super top up plan as the features are lesser.

The super top-up plans are available to the extent of Rs.10 lakhs and would be suitable for individuals who would like to have a higher sum assured would go for this. Though the premium for this plan is little higher compared to top up plans, the benefits are higher.

If you are married and having two kids and paying adequate premium for a larger coverage should consider the top up & super top up plans offered by the insurance company and also this would be suitable for individuals having a group medical insurance offered by their company coverage between 1-3 lakhs.

Features of the “TOP UP” and “Super Top up” Plan:

  1. Cost effective: The cost of the regular health insurance plans is costlier, but the top up plans are very cost effective. For example, family floater plan for a 4 members with 3 Lakhs deductible with 10 lakhs sum insured on the super top up plan works out to be Rs.9112/- and the cost of the basic plan works out to be Rs.10291/-.  Thus saving 3 times of the cost by taking a super top up plan.
  2. Tax benefit : This premium payment towards this plan can be saved under the 80(D) of income tax.
  3. No Basic Plan: This top up & super top up plan can be taken even without the basic plan, if the threshold limit can be borne by the individual.
  4. Group Plan : If you have a group health insurance by the company, the same can be utilized as a basic plan and can buy top up and super top up plan in addition to the basic group plan.
  5. Buy from any company : The top up & super top up plans can be bought from any company. For example, if you have a basic plan with A company, it is not compulsory to buy the top up plan from the same company, this can be bought through any other company than this.
  6. Conversion : If you have a health coverage from your organization, you can take up a super top up plan and at the age of 55, this plan can be converted to a regular plan. This is a special feature introduced by a recent launch from a private health insurance company which may be followed by the other insurance company product too.

Thus we conclude that this has lot of benefit and hence to cover the increasing medical cost can be covered by taking a top up or super top up plans depends on individual needs. This would be even more suitable for individuals having a group cover from their organization.


Online Vs Offline Term Insurance – A Comparison

In the market, insurance companies are increasingly introducing online term plans for lesser premiums to customers. This, in one way, is exciting news as it means more savings. However, price shouldn’t be the main criteria for choosing something as important as term insurance. Here are a few pointers that will help you make the right decision between online and offline term insurance.

Is low premium the main criterion for choosing term plans?

In our view, low premium must never be the only criterion for choosing a term plan. Before you fall for the charms of such plans, you’ll need to look closely at the fine print. For starters, the ‘cheap’ premium paid for online term insurance often jumps up by 25% after the prospective customer undergoes a medical test. Also, after the medical test, if the proposer would like to decline the policy, the amount paid will be refunded to him only after the cost of the medical test that was borne by the insurance company has been deducted.

In some cases, a few leading insurance companies have started offering online term plans without conducting any medical test of the prospective customer. This is for term insurance policies that have a sum assured of up to Rs. 50 Lakh. One important point to note here is that such a customer has to disclose his entire medical history, and that can be used as evidence in the case of a claim.

Claim Settlement Ratio

The claim settlement ratio for online insurance is not required to be mandatorily disclosed by insurance companies to the Insurance and Regulatory Development Authority (IRDA). As per IRDA guidelines, such a ratio declared by insurance companies is the combination of both online and offline insurance plans. Further, the lack of data available on the claim ratio of online plans hinders its clarity. As insurance companies have started offering online insurance plans only from the last 4-5 years, early claims will go through high scrutiny before the claim is settled.

Customer Support

The objective of a term plan is to acquire the sum assured amount when the policy holder dies. In the case of an online term plan, the proposer’s nominee has to coordinate with the designated call centre for the claim settlement. In the case of an offline plan, the advisor/broker is the one point contact. He will work on your behalf to help you get the claim from the insurance company. As per the insurance law, the agent/broker is the first underwriter to the customer as he is meeting the insurance buyer. Insurance is thus, the contract between the insurance company and the proposer which works on “UBERRIMA FIDE” (i.e. utmost good faith). Even small details that were missed out at the time of filing the online application form by the proposer leads to cancellation of claim proceeds.

Premium Comparison

The premium of online term plans varies from company to company and this leads to a lot of confusion among customers. The premium is factored based on various parameters like mortality rates, cost of medical tests and marketing costs. While a few companies are reducing their cost by offering term insurance without any medical test of the prospective customer (for up to Rs. 50 Lakh of the sum assured), such online term plans, in most instances, do not offer additional riders like accidental death, Permanent Disability Benefit (PDB) and critical illness coverage to customers.

To conclude, you must remember that cheaper premium alone should never be the criterion for choosing a term plan. Apart from the premium, all the above factors should also be considered before signing up for a term plan. We strongly advocate that offline term plans are best suited for individuals as it offers an array of beneficial services coupled with guided advice.


A Glance On Senior Citizen Health Insurance

Why Senior Citizen Policy?

In General, the health insurance policies are available as a floater polices. In the family floater policies husband, wife, children and the parents are covered. However, the premium charges are higher if the parent ages are more than 60 years. Due to this reason, the insurance companies are started offering a separate senior citizen policies which covers the individual aged more than 60 years.

Medical Test

When someone wants to take the senior citizen policy, have to compulsorily undergo the medical test before taking the policy. Very Few insurance companies offer the senior citizen policies without medical test. The medical cost to be borne by the individual and the same will be refunded when they issue the policy.


All the pre-existing deceases get covered only after 2-3 policy years.

It is inevitable to know that the insurance policy holders have to compulsorily make a co-payment when hospitalized. i.e., when the policy holder is hospitalized for treatment, if the total claim is Rs.100,000. Then the policy holder should make a payment between of 20%-30%. The insurance company will settle on 70%-80% of the total claim amount. The co-payment may vary from company to company.

This is due to the additional facilities are being provided to the senior citizen. There are few companies which offer 24 X 7 call centers to help the individual emergency medical needs and queries. The other reason is that the normal causalities like head ache, leg pain are common in the senior citizen policies where the claim is higher.

There insurance companies avoid issuing family floater health policies to the senior citizen. It is available only as an individual policy. This is due to the risk of higher claim from the floater policies along with the charges are higher for the floater policies.

Senior Citizen Policies – A Comparison

Note: For all the policies, the waiting period is 30 days from the day of issuance.

Things to remember

The policy holders to look after the below important points after taking the policy

  1. It is very important to know your TPA (third party administrator) for your policies. In general, the insurance companies will transfer the claim process to the third party which is called as TPA. All the claim process and settlement will always be looked after the TPA.
  2. It is advisable to call the TPA and understand the insurance coverage, list of network hospital and list of exclusion. The main advantage of knowing the network hospital is to take the advantage of cashless claim. Otherwise, the policy holders have to make the payment to the hospital and then the same to be claimed from the insurance company.
  3. It is advisable to note the list of hospitals that are nearer to your residence and know whether they are the part of the insurance companies net work list.
  4. It is always better to know the co-payment limit for the policy which will help you prepare the differential amount when you are hospitalized.
  5. It is always advisable to make a note of the policy renewal due date and make the premium well ahead of the due date to avoid losing the pre-existing diseases cool off period.
  6. It is always advisable to use the policy very efficiently by not claiming the smaller amount which will help you accumulate and claim for the emergency higher claim deceases.

We always recommend you to save for medical emergencies apart from taking the medical policies which will help you when you have more medical needs in a year.

Team Wealth Ladder

5 things the smart investors do with their money

There are individuals who earn a huge sum of money on a monthly basis and have huge surplus money. Many individuals doesn’t know what to do with their money and hence they tend to spend their money by buying iPhones, weekend shopping in a malls, etc.,. If you ask them a question, whether they planned for their child’s college fees 10 years down the line, or planned for his retirement, their answer is definitely no. On the other hand the smart investors do plan their spending wisely and invest for their future needs by doing a financial plan.

Money has that effect on people. It makes them want to rush towards the immediate and ignore the future. So you have more mobiles being bought than financial plans being prepared.

So, although it’s good to have money, it’s equally important to know what to do with it. We advise the below 5 things to become a smart investors.

1. Do your tax planning

If you are liable to pay tax, tie up your tax planning exercise. As a law-abiding citizen paying taxes is most important and so investing promptly in the right avenue to save tax assumes importance too. An individual can save tax upto Rs 150,000 by investing in tax-saving investment avenues. These avenues range from the traditional Public Provident Fund(PPF),life insurance to the more dynamic tax saving mutual funds(ELSS) . These avenues not only help in tax planning but if selected well can also help individuals achieve their long-term financial goals.

2. Plan now for your Retirement/Children Future

As being a responsible parent, everyone have a dream of providing a better education and provide a better wedded life to your loved children. This is considered to be the worrisome exercise for the parents. It is very much possible in the most uncompromising way if you plan it right. We help you identify and evaluate the best possible way in which you meet this goal. Always remember to consider the inflation when you plan for these goals. For instance, the cost of graduation today is 8 Lakhs for an engineering graduation today would cost Rs.20 Lakhs after 10 years.

Retirement is a bigger word for the one who is a working professional as they feel comfort living in a current scenario doesn’t think about the future. Do think about a cost of “dosa” 5 years ago and the cost now. The inflation will always play a vital role in retirement.At one point in time everyone has to retire from either from their professional life or from the business life. The cost of living and the life style keeps changing from time to time. Having the lifestyle changes, and the improvement in the medical sciences, the life expectancy is increased.

3. Get yourself insured

securing your family’s well-being is one of the most important goals of life. Insurance Protection plan helps you secure your loved one’s future against life’s uncertainties. An untimely death can cause a major setback to your family – both emotionally as well as financially, especially if you are the sole breadwinner. This is available at extremely nominal cost.

Anyone can fall sick anytime. You’ll probably have to sacrifice a dream or compromise a fund you have saved for something else. That’s where Health insurance steps in, so that one can have access to the best healthcare without fearing the financial strain. Guaranteeing this peace of mind is what we call, “taking the fear out of faces.”

4. Prepare yourself for contingencies

Contingencies/emergencies never announce their arrival. But that does not mean we close our minds to the possibility of their intrusion in our lives. As always, the best way to deal with such a situation is to provide for it well in advance. Such situations could possibly arise out of an accident / operation that is either not covered by medical insurance or exceeds the medi-claim limit or it could be another expense that you have provided for (like a buying a house) which actually falls short at the time of purchase. At times like these, having a contingency fund can prove to be a boon. How do you know how much to save for contingencies? While there is no formula for the same, you should have minimum of 6 months expenses to the maximum of 24 months of your expenses to meet the emergency needs.

5. Don’t forget charity 

Charity is always necessary. If you have the money, it’s only fitting that you share some of it with the less or under privileged. Although some charities qualify for tax benefits, our advice is you ignore them and just focus on giving some money away without worrying about how you can benefit from it one way or another.

Team Wealth Ladder

EMI Moratorium- What to do

Warm Greetings!

This is in continuation with the RBI’s announcement on the 27th Mar-2020 to provide the moratorium on all the loan facilities to be extended for 3 months. The PSU banks and private banks have started offering these moratoriums to their borrowers. At this juncture, the borrowers are in confusion on what to do.

What does it mean to you?

The RBI’s announcement on the 3 months moratorium on all loans. This means that the principal payment can be postponed for a period of 3 months without any delinquencies. It doesn’t affect the individual in anyway on their credit score. However, the interest for the period of 3 months will be added to the principal. The principal amount will increase to the extent of 3 months interest.

Do you have to Opt for the moratorium?

As per the RBI’s announcement on the 3 months moratorium, there is only the postponement of EMI and no holiday for the interest accrual. If the interest is added to the principal, the loan tenure will be extended to the tune of the interest added to the principal. It is not the exact extension of  3 months added at the end of the tenure. The longer the loan tenure, the longer the duration of repayment.

For example, if someone availed a loan of 50,00,000 at 9% interest with the tenor of 20 years. Assuming the remaining tenure of 19 years, then the tenure will be extended for 10 more months instead of adding 3 months at the end of the tenure due to the interest accrual at the beginning of the moratorium.

What should you do?

If you are a government employee or a private sector employee without any threat on your employment, would be advised to continue the EMI and opt out of the RBI’s moratorium to save the interest.

If you are in a business or in a private sector employee having a threat on the cash flow, it is recommended to opt in for the RBI’s moratorium. This will ease out your worry for the loan repayment for the next 3 months and can pay the EMI later.

Each bank follows a different process. Few of the banks processes are below.

If you need any advice on investments, do call us at 044-48612114/9940116967/9600048801.

Team Wealth Ladder


Investment Ideas Note – July-2020 – Wealth Ladder

July 2020 – for private circulation only

The Market Outlook

 The Indian benchmark index was trading positive for the entire month of Jun-2020. The market during the month of June was driven by the sentiment that the hope in the recovery of economy due to Unlock-1.0 announced by the government. The easing of lock-down, slowdown in infection, recovery rate and progress of COVID-19 vaccine development led to positive sentiments.

The BSE Sensex has delivered a positive return of 8%, BSE midcap delivered 10% return and the BSE Small cap index have delivered 14% in the month of Jun-2020.

The Sensex was trading 25,000 level in Jul-2014 and 36,000 level in 2018. It delivered 39% returns in 4 years. But the same return was delivered in 4 months between Mar-2020 to Jun-2020.

During the month of Jun-2020, the FII’s were the net sellers in the debt market to the tune of 1,500 Crs. and net buying in equity to the tune of 21,800 Crs.

The Fundamental Attribute of Indian Economy

 There is a famous quote by Arnold Glasgow, “Nothing last for Ever, not even your troubles”

This is applicable for the Indian Economy as well. Tough times do not last, but tough economies do. The Indian economy has grown steadily despite several challenges in the past and present. The below chart shows, the different crisis and events happened during the last few decades.

Source : HDFC Market outlook

The below table depicts the nominal GDP during the same period. Though there were various events and crisis during the last few decade, the average decadal nominal GDP growth was above 13%. This means the long-term average equity return could be in the range of 12-15%. The nominal GDP is the addition of GDP and Inflation.

The trigger that may chart the future course of market direction             

  • The trajectory of COVID-19 Growth
  • The second wave of COVID-19
  • Vaccine development
  • US-China Trade Tensions
  • Indo-China Border Tensions

Though the market during the last quarter was driven by the liquidity available in the market. The market may move in either direction based on the above situation.

The rural India is unaffected by Lockdown and is poised to benefit from higher price, output and government spending. Long pending reforms in the agri sector lead to better supply chain and higher pricing for farmers. The amendment of essential commodity act, agricultural product marketing company is benefiting the farmers and exclusively the rural India. The MNREGA employment during Jun-2020 is awfully close to Feb-2020 level.

What the investor should do now?  Why Invest Now?

The last few months run up in the market makes the investor baffling whether we missed the bus. Always, the crisis presents an opportunity, but we are not sure the long-term sustainability of the runup happened in the short period of time.

The last few weeks rally in the market is discounting the future on various factors like oil prices, gold import, trade deficit with China, Rebound economic activities, monetary stimulus, Potential higher FPI inflows, economic recovery and vaccine for COVID-19 is near from far.

The results of Apr-Jun quarter going to be worst due to the lock-down. However, the market has discounted this factor. The results of the companies would be declared during this month. The corporate results would trigger the market negatively if the results are poorer than the expectation. We recommend the investor to take a middle path so that there is no shock in the short term and not missing the opportunity on the other side.

We always advise the investor to stay invest for a long period to avoid the surprise in the short term.


It is the time to review your portfolio and rebalance the asset allocation. We recommend the investors not to invest lumpsum money in equity mutual funds. It is advisable to move the money into equity in a staggered manner. We recommend the investor to stay away from small cap right now as it takes a little longer time to recover the losses incurred during the last 5 years.

As the market has done well across the market categories, it is the time to look at Multicap, Value and selective midcap funds that would tend to provide a better return over a 3-5years period.


 The Yield to maturity on various debt funds have shrunk. The positive news is that the recovery in few of the debt securities that were defaulted.

We recommend the investors to look at the funds that holds the portfolio in a AAA in long term and A1 in short term papers. We recommend the investors to look at short term funds with short maturity papers. We recommend low duration, ultra-short term, and money market funds if one would like to hold the investment for a period of around 1 year. If you have a time horizon of 2-3 years, it is ideal to look at banking & PSU Debt and corporate bond funds. We strongly recommend the investors to avoid credit risk/medium term duration funds to have a shock after the lock-down. We expect the credit rating would be revised downwards for few companies that may impact the credit risk/medium term funds.

If you need any advice on investments, do call us at 044-48612114/9940116967/9600048801.

Team Wealth Ladder