PRINCIPLES OF INSURANCE

In continuation to Basics of Insurance Planning regarding what is Insurance and history of insurance, let’s now know the principles applicable to Insurance.

A contract of insurance is a mercantile contract. All the principles which are applicable to mercantile contracts are applicable to contracts of insurance. In addition to this, there are special principles applicable to contracts of insurance.

Special Principles of Insurance are as follows,

1. Insurable Interest

“Ownership should be there to evaluate financial (insurable) interest”

Insurable Interest is must for validating the contract of insurance. Insurable interest must be a financial / pecuniary interest. A person is said to have insurable interest in a property when he enjoys benefit from its existence and suffers by its destruction or loss.

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Why do we need Insurance Planning ?

CAN YOU BE SURE AS TO WHAT MAY HAPPEN TO “U” IN THE NEXT FEW MINUTES???...

DO YOU WANT TO BE FINANCIALLY SECURE IN THE EVENT OF ANY UNFORESEEN CALAMITY???...

As you know like this Life is full of uncertainties & unpredictable events, so insurance is needed to provide peace 0f mind for you;

The following Insurance benefits will provide you some idea on why do you need Insurance Planning in present situation. Need for Insurance Planning can be segregated as & known by

1) Common Insurance Benefits; 2) Life Insurance Benefits and 3) General Insurance Benefits

Common Insurance Benefits

     #      Provides the much required UNAVOIDABLE RISK COVER for us;

     #      Providing replacement income for your dependents on any unforeseen events

     #      You can’t find any parallel substitute in the financial world for the risk cover that is provided by insurance

     #      Money back plans provide risk cover & liquidity as it returns a portion of the sum assured at regular intervals to us.

    #      Unit linked plans combines market linked high risk returns along with risk cover

    #      To protect ourselves and family from financial risk

Life Insurance Benefits

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History of Insurance

Next to understand after Insurance basic knowledge is Stages of Insurance history in crisp.

    #      It started from Lloyd’s coffee house London

    #      First policy issued in England in 1583

    #      It had its origins in the early 19th century with the arrival of British enterprise in India.

    #      The insurance sector in India dates back to 1818 when first insurance company, The Oriental Life Insurance Company, was established, at Calcutta.

    #      LIC of India formed in 1956 after nationalization of life insurance Business of 245 private (Indian and Foreign) insurance companies

    #      The Life Insurance Corporation of India (LIC) came into existence by an Act of Parliament, viz. LIC act, 1956, with a capital contribution of Rs.5 Crores from the Government of India

    #      The General Insurance Business (Non-Life) in India started with the establishment of Triton Insurance Company Limited in 1850 at Calcutta by the British.

    #      General insurance business of 107 insurance companies was amalgamated and nationalized in 1972 & four public sector General Insurance Companies were formed namely, the National Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd. and the United India Insurance Company Ltd.

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What is Insurance ?

Insurance

"To understand and implement proper Insurance Planning, you should be able to grasp the following in the upcoming posts - WHAT IS INSURANCE, HISTORY OF INSURANCE and PRINCIPLES OF INSURANCE".

Insurance is based on principles of co-operation. The losses suffered by a few are spread over and shared by many. For example, collecting insurance premium from many people and sharing the loss with one person.

Insurance is protection against possible financial loss arising on the happening of an unexpected circumstance; it gives you peace of mind;

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Why do we need Investment Planning ?

We must clearly understand that all that we purchase out of our surplus money is not investment. We also need to understand that what we saving is not totally an investment. 

We assume that real estate is always an investment, but when we buy a property for our own use, we can’t treat it as an investment. i.e., buying a house is a real estate deal but is not an investment, if consumed by us. 

Likewise, Buying a Vehicle (Car/Motorbike) is not an investment as it will have depreciated value in future, unless it's a vintage car and is bought in the anticipation of selling at a higher price because of being an antique. 

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Akshaya Tritiya and Gold Buying 2012

Crisp of Akshaya Trithiya

As per Hinduism / Hindu astrology and almanac, Akshaya Trithiya, or Akha Teej, is considered as a most auspicious day which falls on the third (Tritiya) day after Amavasai (no moon day) in the Hindu calendar month of Vaishakha / Chithirai. In 2012, the Akshaya Trithiya day starts from 2012, April 23 evening 5:30pm to April 24, 2012. It is considered that it is not necessary to look for a ‘muhurat period’ on this Akshaya Tritiya day. The Word Akshaya means "Eternal (Ever Lasting)" i.e., "that which never diminishes" and Tritiya means "Third" in both Sanskrit and Hindi. This day is ideal for beginning new ventures or buying precious metals as it is believed that all investments on this day appreciates.

Akshaya Trithiya and Gold 2012

It is considered that Akshaya Tritiya was the day in which Lord Krishna gave the pandavas an "Akshaya Patram" (never diminishing vessel- "Alla Alla Kuraiyathathu" in tamil) which

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Individuals' Tax Burden Good or Bad: Budget 2012-13 Analysis

Is Budget 2012-13 a Blessing or Curse for Individual Tax Payers?

As informed in earlier post of Personal Income Tax Slab:Budget 2012-13, Personal Income tax exemption limit raised to Rs 2,00,000 from Rs 1,80,000 by just Rs 20,000; 10 % tax rate for Rs 2 - 5 Lakhs income bracket; 20 % tax rate for Rs 5 - 10 Lakhs income bracket and 30 % tax rate for income above Rs 10 Lakhs;

There seems to be a small benefit on tax burden based on the above but the overall budget analysis will shed you some light on whether it is a savings or tax burden for individuals;

Positive / Benefits of Budget 2012-13 Analysis for Individuals

First let's look at the blessings / benefits (positive) of Budget 2012-13, as below will be

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Mastering thirty day rule: Saving Sundays

Whenever you're considering something which is needless to buy, delay for a Calendar month (30 days) and then ask yourself if you still want that product. Quite often, you'll be astonished to discover that the desire to buy has been passed away and you'll have saved yourself some cash by basically waiting & withdrawing from buying. But to the

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Personal Income Tax Slab:Budget 2012-13

Income Tax Burden has to come down a bit but not much as Personal income tax exemption limit raised from Rs 1,80,000 to Rs 2,00,000 by just Rs 20,000 only; 10 per cent tax slab will be applied for 2 lakhs-Rs 5 lakhs income bracket; 20 per cent tax slab applied for Rs 5 lakhs-Rs 10 lakhs income bracket and 30 per cent tax slab will be applied for income beyond Rs 10,00,000;

To have a clear idea & understanding, The Income Tax slabs announced by

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Highlights of Budget 2012-13: Key Proposals

Finance Minister Mr. Pranab Mukherjee presented his seventh Union Budget for the year 2012-13 on Friday, 16 March 2012 11:00 Am. While commencing his speech, Mr Pranab Mukherjee, FM said that for the Indian economy, this financial year of 2012 was "a year of recovery interrupted" which means that it was time to make tough decisions. So what has Finance Minister proposed in this Indian Union Budget 2012-13.

In Continuation to the post of What's gone up and down:Union Budget 2012-13, Here are some of the key proposals, features & highlights of the Union Budget 2012-13 presented in the Parliament on Friday, 16 March 2012.

#      Fiscal deficits targeted at 5.1 percent of GDP in 2012-13 as against 5.9 percent of GDP in 2011-12;

#      Central Government debt at 45.5 per cent of GDP.   

#      Total Expenditure in 2012-13 budgeted at

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What's gone up and down :Union Budget 2012-13

Ups and Downs of Union Budget 2012-13

Here is the bullet point list where you can find out what's gone up due to tax rate hike and what's gone down due to tax rate reduction after the Union Budget presentation for 2012-13 by Finance Minister Pranab Mukherjee on Friday, 16 March 2012 11:00 Am. . .

WHAT’S GOING UP

      #      Consumer Electronics product like Air-conditioners (ACs) , Refrigerators, Washing machine and Microwave ovens

      #      Gold, Platinum, Diamond, Emerald and Ruby Jewellery

      #      Large Luxury cars

      #      Sport Utility Vehicles ( SUVs )

      #      Air travel

      #      Cigarettes

      #      Hand-rolled Bidis (Beedies)

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What is Retirement Planning?

"Planning & Taking care of your peaceful long retirement period"

Retirement Planning Ahead in your Financial Planning

Retirement Plan is an arrangement to protect people with adequate income to have a enjoyable retirement life when the steady income from your employment comes to end;

Retirement Planning is the process of determining retirement income goals and actions & plans on how to attain those goals for a

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What is Estate Planning?

Estate Planning subramoneyplanning.blogspot.com

                                                                        

"To preserve your estate for your heirs"

      

      #      Estate Planning, in simple term, is planning for accumulation, conservation and distribution of assets;

      #      Estate planning is the process of arranging, structuring your personal, planning your succession and financial affairs so that, upon unfortunate happening, your assets are distributed according to your wishes.

      #      Estate Planning is the Planning for

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Liquid Funds Disqualified by Savings Bank Interest Rate Deregulation:Saving Sundays

Effect of Savings Bank Interest Rate Deregulation over Liquid Funds

Recent RBI's decision of Savings Bank Interest Rate Deregulation may affect money flow and growth of Liquid Funds.

Earlier for retail investors, liquid funds were trusted as suitable and superior to savings bank accounts for parking their surplus cash. But now with the Reserve Bank of India (RBI)’s decision to deregularize the savings bank account interest rate, liquid funds have become irrelevant against a guaranteed 6% & above in some (three) of the bank's saving account as mentioned in previous post of RBI De-regularizing: Savings Bank Interest Rate will increase now.

The major reasons (advantage) of a savings bank deposit account disqualifying liquid mutual fund scheme (short-term) is that investors don’t have

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What is Insurance Planning?

Let us see what is Insurance Planning in Layman meaning:

# Insurance Planning, in simple terms, is nothing but managing the risk by planning to deal with contingencies and unforeseen events to help out our family's future.

# Proper Insurance Planning can help you to compare and evaluate various options with regard to different insurance companies & insurance products for

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Tax Planning Definition

“TAX PLANNING IS NOT TAX EVASION”

Tax Planning involves selecting the right tax saving instruments and making investments accordingly. Tax Planning leads to making investments or contributions in line with prescribed guidelines of available tax exemptions, deductions, rebates and allowances that lead to a reduction in tax liability. 

Prudent Tax Planning is judiciously using provisions of the

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RBI De-regularizing: Savings Bank Interest Rate will increase now

Savings Bank Interest Rate Deregulated by RBI

Previously on May 03,2011, Savings Bank Interest Rate was increased of 0.5 % point from 3.5 per cent to 4.0 per cent per annum; But now vide its Notification No.RBI/2011-12/233, DBOD.dir.BC.No.42/13.03.00/2011-12 dtd. October 25, 2011, the RBI has ended the era of controlled interest rate regime by deregulating the savings bank deposit interest rate with effect from October 25, 2011.

Banks are now free to determine their savings bank account interest rate instead of

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CRR and its Effects on Money Supply…

In Continuation to CRR Reduction by RBI in the previous post, now it’s time to understand CRR and its Effects on money supply…

CRR Explained

# Cash reserve Ratio (CRR) is the amount of Cash (liquid cash like gold) that the banks have to keep with RBI. This Ratio is basically to secure solvency of the bank and to drain out the excessive money from the banks;

# Cash Reserve Ratio (CRR) is a bank regulation that sets the minimum reserves each bank must hold by way of customer deposits and notes;

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Benefits of Investment Planning

Be it a regular income in your retired life, or savings for purchasing a new house / car; there is no way you can do it without investing your surplus money (apart from meeting your daily needs) in right investment portfolio mix.

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What is Investment Planning ?

Investment Planning Explained…

# Investment Planning is the Part of financial Planning that pertains to the allocation of investment assets.

# The basic idea to save is to use it when we face emergency (i.e., deficit in our cash flow). To ensure that your saving money's grow well to take care of our future financial dreams to reap adequate benefits from it, it is very important to begin a proper investment planning.

# It is an ongoing process of relating the clients' changing position to financial objectives within a constantly altering financial environment.

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CRR reduced to 5.5% from 6% with effect from January 28, 2012

After nearly two years of tight check on money supply to tame inflation, Reserve Bank of India (India's central bank) took steps on 24.01.2012 (Tuesday) to infuse more liquidity in the system by reducing a key rate (CRR) to help industry out of the current downturn.

The Cash ReserveRatio (CRR), the amount against deposits which commercial banks have to keep as liquid assets such as cash, has been lowered by 50 basis points to 5.5 percent from 6 percent with effect from 28 January 2012.

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Validity of Cheques Reduced from 6 to 3 Months: Saving Sundays

Payment of Cheques/Drafts/Pay Orders/Banker’s Cheques – Validity period slashed to 3 months from 6 months : RBI Circular

This is to inform you guys that with effect from 1st Apr 2012, Reserve Bank of India (RBI) vide its Notification No.RBI/2011-12/251, DBOD.AML BC.No.47/14.01.001/2011-12 dtd. November 4, 2011, has announced a major change in slashing the validity period for Cheques/Drafts/Pay orders/Banker’s cheques from 6 months to 3 months.

This was done to protect public interest & banking policy, as in practice some persons were taking undue advantage over these instruments by circulating it in the market like cash for six months.

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Turn off the Television: Saving Sundays

One of the biggest ways to save money is to watching less television.

If you turn off your television, you will get the following benefits (financially and mentally):

            1)      You will not lose the opportunities

            2)     You will not become TV Shows addictive

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Steps in Financial Planning Process

In Continuation to the previous posts regarding What is Financial Planning and its scope, Benefits of financial planning, How To Make Financial Planning Work For You?, now are ready to know the 6 step Financial Planning Process Guide in this post.

This step by step Financial Planning Guide is designed to help you overcome all of the obstacles faced in the way of your personalized financial plan preparation.

The financial planning process is a logical, six-step procedure:

(1) Determining your current financial situation

(2) Developing financial goals

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Drink More Water: Saving Sundays

Benefits of Drinking Water

Not only does drinking plenty of water have great health benefits, drinking water has financial benefits too. Before each meal, drink a glass of water which will not only help to digest your meal better and also you wonʼt eat too much, leads to saving on your food bill & medical bill. You will also find yourself feeling a bit better as you begin to get adequately hydrated (most People are perpetually somewhat dehydrated).

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