WHAT DOES A TAX CONSULTANT DO?
This section explores some of the tasks tax consultants perform each day and what it takes to succeed in the field. Specific job duties and areas of focus vary by position. The best tax consultants enjoy solving problems and working with people, demonstrating both accuracy and honesty in their work.
Tax consultants help clients with a variety of tax-related issues. Mainly, they make sure clients comply with tax rules and regulations. They also use their expertise and knowledge of the U.S. tax code to help individuals and businesses pay what they owe. These professionals help individuals and organizations minimize tax liability by decreasing their taxable income and taking advantage of all applicable adjustments, deductions, and tax credits.
SOME TAX ADVISORS SPECIALIZE IN A NARROW AREA OF TAX LAW, WHILE OTHERS TAKE A GENERALIZED APPROACH.
Tax consultants often prepare tax returns for clients, or they provide information and advice to help clients fill out their own tax returns. They answer client questions, help them prepare for future tax situations, and analyze information to ensure compliance with government regulations. These professionals may check others' work to detect errors in tax preparation. The legal and logistical complexity of client situations varies considerably. Some tax advisors specialize in a narrow area of tax law, while others take a generalized approach.
Tax consultant services can help people deal with concrete issues like setting up trusts, managing taxes from rental incomes, and understanding the tax implications of births, deaths, divorces, marriages, and other life events.
Tax consultants should boast strong skills in communication, critical thinking, and complex problem solving. Because tax consultants work with the public, they need excellent interpersonal and customer service abilities, as well. They should know how to listen to people to understand their financial situations and what type of help they need. They must be able to clearly communicate verbally and in writing.
Tax consultants must know how to decipher complex legal information. They should work well with numbers, stay organized, and pay attention to detail. It also helps to hold strong legal research skills and an understanding of laws, legal codes, government regulations, and agency rules. Tax professionals must demonstrate proficiency in technology, including accounting software, email software, financial analysis software spreadsheet software, and tax preparation software. They should feel comfortable working with personal computers.
Tax professionals work in office environments and use personal computers with software programs to complete job responsibilities. They also use telephones to communicate with clients and may consult tax law handbooks to determine the correct procedures for dealing with atypical tax situations.
TAX PROFESSIONALS WORK IN A WIDE VARIETY OF POSITIONS AS INCOME TAX PREPARERS, CERTIFIED INCOME TAX PREPARERS (CTP), ENROLLED AGENTS, MASTER TAX ADVISORS, TAX ASSOCIATES, TAX PREPARERS, CORPORATE TAX PREPARERS, AND TAX SPECIALISTS.
A variety of organizations employ tax professionals, including professional services firms like public accounting firms, specialty tax consulting firms, and law organizations with their own tax practices. Government agencies at the local, state, and federal level also employ tax consultants. Tax consultants also work in corporate tax offices for U.S. and international corporations, and in some foundations and nonprofit groups.
Tax professionals work in a wide variety of positions as income tax preparers, certified income tax preparers (CTP), enrolled agents, master tax advisors, tax associates, tax preparers, corporate tax preparers, and tax specialists. Some consultants specialize in more narrow areas of tax consulting, such as corporate tax, income tax, or international tax. The next section delves into more detail about specific job responsibilities for tax consultants.
WHAT ARE THE RESPONSIBILITIES OF A TAX CONSULTANT?
Prepare Tax Returns
Tax consultants prepare or help prepare tax returns for individuals, organizations, and businesses. The tax returns they prepare vary from simple to complex, and they require significant knowledge of tax rules and regulations. These professionals figure out strategies to minimize taxation by taking advantage of tax deductions and credits.
Determine Taxes Owed
Tax consultants determine how much their clients owe in taxes. In some cases, they determine how much clients overpaid in taxes. They use computers and adding machines to calculate the correct amounts. They follow while following tax form instructions and consulting tax tables to make correct determinations.
Interview Clients/Gather Information
Tax consultants gather relevant financial and tax information from their clients through interviews. Such information includes clients' taxable income, allowances, and deductible expenses. In some cases, tax consultants use this information to prepare clients' tax returns. In other instances, they provide information to clients so they can prepare their own tax returns.
Use Technology
Employers often require tax professionals to possess multiple technology skills to perform their job duties. These may include an understanding of how to use accounting software (e.g. Intuit QuickBooks), email software (e.g. Microsoft Outlook), and spreadsheet software (e.g. Microsoft Excel). Tax consultants also need to know how to use tax preparation software and financial analysis software.
Give Information to Clients
Clients often hire tax consultants to gather information and perform legal research for them. Tax consultants must know how to give taxpayers the data they need to complete their tax forms correctly. They should also know how to explain state and federal tax laws to individuals and organizations.
Understand Tax Rules and Regulations
Because the tax code changes so often, tax consultants must continually update their knowledge to ensure they give clients accurate information. This may include taking professional development and continuing education courses, active membership with tax consultant professional groups, and attending conferences.
HOW ARE TAX CONSULTANTS EMPLOYED?
PUBLIC ACCOUNTING FIRMS
Many tax consultants work for public accounting firms, which provide accounting services to other organizations. These consultants provide accounting, auditing, and tax services to clients.
LOCAL, STATE, AND FEDERAL GOVERNMENT
Government agencies at the local, state, and federal level all employ tax consultants. The IRS hires tax consultants to conduct reviews of policies, evaluate taxpayer education programs, and provide technical assistance to staff.
SPECIALTY TAX CONSULTING FIRMS
Some tax consulting firms focus on specialized areas of tax law, including international tax law, income tax law, and payroll tax law. Tax consultants must possess expert knowledge to work at these specialty firms.
CORPORATE TAX OFFICES
India and international corporations often feature their own corporate tax offices, which employ tax consultants. Tax professionals who work in these settings often perform tax planning and research on behalf of their company.
LAW ORGANIZATIONS
Tax consultants may work at law organizations with their own tax practices. Tax situations for legal firms can become very complex, necessitating specialized help.
ABOUT US
We are very good at what we do. To ensure you meet your financial goals our financial planning managers use top of the line technology, knowledge and processes. Your financial plan is tailor-made to suit your requirements and all our investment advice is backed by in-depth research.
The financial planning managers are highly qualified (MBA’s / CFP’s / Financial Planning Diploma / Masters in Commerce).
At Finstar, you can rest assured your financial goals are in good hands.
Finstar was born with a single objective, of enabling wealth creation for our clients through quality and conflict free financial planning advice. The use of technology is our cornerstone in ensuring that we can reach across demographics and geographies, provide a convenient, low cost - high quality, process driven, goal oriented, financial planning led wealth creation platform.
We are experts at what we do and for us our success lies only in making our clients meet their financial goals and objectives. We love the fact that we are known and respected by our clients and the industry for our unique business model and our conflict free advice.
SERVICES
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BANKING
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PROFESSIONAL ADVISORY
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WEALTH MANAGEMENT
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MUTUAL FUNDS
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INSURANCE
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TAX AUDITING/CONSULTING
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NEW PAN CARD MAKING
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RECTIFICATION OF PAN CARD
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TWO/FOUR WHEELER LICENCE MAKING
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PASSPORT
OUR VISION
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OUR VISION IS TO PROVIDE YOU THE BEST SERVICES, AFTER ALL CUSTOMER SATISFACTION IS IMPORTANT TO US.
FINSTAR
CONSULTANCY
Ph no.- 8944832155/8617089003
Tax Consultant vs. Tax Preparer
A tax preparer is someone who prepares income tax forms, such as the 1040 or 1040 EZ, for others. The trade is loosely regulated: tax preparers typically complete a short training program, register with the IRS to receive a tax preparer number, and, in some states, must register with the state agency before starting work.
Tax professionals who have more in-depth knowledge of the tax code and tax return preparation may call themselves tax consultants. While expertise varies between individual tax consultants, these individuals may be able to assist clients who have more complex financial and taxation concerns. For example, the self-employed, business owners, individuals who are beneficiaries of trusts or who are in professions with complex taxation rules, such as the clergy, may opt to work with the tax consultant.
Financial Services & Consulting
The financial consulting services are the head of all the other services related to finance like banking, insurance, and retail management. This industry looks over all the other economic activities and tries to manage the risk that can be encountered within the economic sector. There are number of consulting firms and agencies that are providing solutions regarding the economic related queries. With the coming of internet this industry works through e-commerce.
We at FINSTAR offer personalized manpower placement services with the objective of meeting the individual specific requirements of our clients in the most efficient manner.
We are a team of highly experienced manpower placement consultants, who work with the highest integrity to ensure best fitting manpower staffing solutions for each assignment. All our manpower staffing consultants have previous experience in world's leading corporations and human resource consulting firms and thereby provide the best staffing solutions.
Our range of recruitment and placement services includes executive search and selection, advertised selection and vendor management services.
Unlike executive selection, executive search does not depend on advertisements to attract candidates or database to reveal who have applied for job. An executive search process usually throws up candidates who are happy where they are, doing well and not actively looking for a change. We carry out employee recruitment procedure in a carefully selected set of organizations where the candidates are likely to be in similar functions.
Our traditional headhunting techniques and print advertising facilitate us in finding executives across the cross functional levels and our Vendor Management Services model assist organisations in staff acquisitions in minimum time and with the involvement of fewer resources. We provide the best deal in staffing service fee and offer the flexibility to separate the enrolment project with completion of recruitment drive.
Our Values
Vision
“FINSTAR strives to seamlessly get integrated into Customers’ business as an inevitable HR services provider.”
Mission
To be “THE CHOICE of Client as Strategic Partner in Talent Search & of Candidate in Career Progression”.
Our clients, people, partners and overall society are our significant stakeholders towards whom we are committed to be responsible, honest, respectful, accountable and transparent. Thus, we aspire to build:
Valuable Clients
Our client success signifies our success. We truly believe in delivering qualitative, scalable and flexible solutions to our clients that satisfy their utmost needs. We aspire to provide them an unmatched combination of solutions that can assist them in making the right kind of choices.
Responsible Professionals
Through our solutions we give opportunity for capabilities to grow and to emerge as responsible professionals. We value standard, experience, commitment and sincerity which can become an asset to a company.
Long term Partners
Through our workforce solutions we connect with the best kind of talent and clients with whom we have established continuing relations. Our role as a catalyst in the domain has helped us to create encouraging associations where we channelize and serve the best of interest.
Sustainable Society
Traditional workforce solutions are not compatible to match with the current employment demands. Thus, we are in a continuous process of changing our methods and technology to keep pace with the changing employment scenario. We tend to innovative solutions that align with businesses, government, world economies and market to deliver quality of talent.
What Is Tax Consultancy?
For many people, the process of filing an income tax return is daunting. Tax laws change frequently, and many individuals and business owners are simply unaware of the myriad of rules that govern deductions, credits and reportable income. As a result, the average taxpayer may make mistakes that can result in the underpayment or over payment of taxes. If the taxpayer underpays his taxes, he may be subject to an IRS audit, with possible penalties. If the taxpayer overpays his taxes, he loses money that's rightfully his.
A tax consultancy is a business that provides expert advice to tax filers. A good tax consultant understands tax laws, and is able to advise strategies that minimize obligations while also reducing the chance of an audit that could lead to a conflict with the IRS or with a state tax agency. In addition, tax consultants can prepare tax returns and other documents on behalf of their clients.
FINSTAR
CONSULTANCY
Ph no.- 8944832155/8617089003
What Makes a Great Financial Plan?
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Risk Assessment
We understand that no two people are alike when it comes to investing. Risk assessment is the foundation upon which investment portfolios are built & provide clear insight on the investment instruments optimal for your requirements.
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Asset Allocation
We design your optimal split between equity & debt funds, based on a combination of your unique situation & leading market indicators. The asset allocation is closely monitored to create the right balance of risk vs return for your portfolio.
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Goal Mapping
Aligning goals to your investments makes it 300% more likely for you to meet them. We use a high-level technology & review platform along with our proprietary goal report, so that you’re always on track to meet your goals.
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Customized Roadmap
We draft a detailed financial report based on your comprehensive discussion with your Financial Planner; this serves as a critical roadmap for meeting your life’s objectives & provides absolute clarity on your investment purpose.
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Portfolio Review
We conduct periodic reviews on your investment portfolio; weeding out laggards, optimizing your asset allocation & revisiting your life goals in the process. Reviews make a critical difference in reducing risk & return out performance of your investments.
Our
Philosophy
From being a means to an end, to fuelling the engine of the global economy, money has travelled a long journey. From building empires to creating industry and making scientific breakthroughs, money has seen it all. But we see money a little differently.
We see money as the difference between a comfy 1 BHK to a more convenient 2BHK. We see it as the source of a great wardrobe and the key to filling up a huge bookshelf. We see money as the reason why you drive past all that haggling and negotiating, in a brand new car. This is how we see money, just like how most of you reading this see money.
Each paisa goes towards a dream vacation, a better car, a better house and a better life. And it is here, in this life-long journey of financial well being, that WealthApp comes into the picture. We realize the importance of money in our lives, is to make our lives better.
Why Life Insurance?
Your family enjoys financial security in your absence. Your wife gets the money to meet daily expenses and pay back loans like home loan, car loan and any other liability. Your children enjoy a quality education and there’s money for their marriage.
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Life Insurance is a contingency plan for death and family’s financial security.
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Life Insurance must be availed for risk protection. Your family gets the money on an unexpected demise.
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Life Insurance also has savings and investment plans. They invest your money in equity or fixed income.
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The loan facility is available against Life Insurance Plans. You can assign the Life Insurance Plan and take a loan against it.
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Life Insurance enjoys tax benefits. You get tax deductions under Section 80C of the Income Tax Act up to Rs 1.5 Lakhs a year.
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Life insurers offer annuity plans for retirement. Annuity plans give you regular income after retirement.
The policyholder gets the following benefits from Life Insurance Plans :
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Term insurance plans are pure risk cover. The death benefit is paid only on the death of the insured within the term of the plan. There are no survival benefits.
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The survival benefit is paid by endowment life plans at maturity. These plans combine savings and protection.
Terms of Life Insurance
Insured : This is the person whose life in being insured under the Life Insurance Plan. If the person availing the plan is different from the person being insured, the buyer is the proposer of the plan. The proposer must have an insurable interest in the person being insured under the plan.
Term of the contract : This is the time period of the Life Insurance Plan or the period when Life Insurance is available. The life insurer specifies an upper age limit (maximum age), when the term of the policy ends.
Sum assured : The amount being insured is the sum assured of the Life Insurance Plan. According to IRDA regulations, life insurers with terms of more than 10 years must provide a minimum sum assured of at least 10 times annual premium for people below 45 years of age and 7 times for those above 45 years of age.
How is the sum assured paid?
The payment of sum assured takes place on death of the policyholder or expiry of the policy term. The mode of payment of the sum assured is either through a lump sum or in periodic installments. This is specified under the contract.
Premium paid : The premium paid depends on sum assured. Premiums could be monthly, quarterly, half-yearly or annually and is clearly mentioned in the contract. Some Life Insurance Plans have a single premium paid at the start of the plan. A grace period is provided for delayed premium payments. You can revive the Life Insurance policy within the time frame specified by the life insurer, on payment of pending premiums + penalties.
Bonus in Life Insurance
Life insurers periodically announce a bonus, as a percentage of the sum assured. This amount is added to the sum assured and paid to the policyholder on maturity of the plan. This amount is paid on maturity or in case of death within the term of the plan, the sum assured + accrued bonus is paid by the insurer.
Types of bonuses under Life Insurance
Guaranteed Bonus : Guaranteed bonus is paid as a percentage of the sum assured. It’s paid for the first few years of the Life Insurance Plan, say 5 years. The guaranteed bonus is received at the end of the term of the plan.
Reversionary bonus : An insurer declares a reversionary bonus, if it performs well. This bonus is completely at the discretion of the insurer. This bonus is declared after the completion of the guaranteed bonus period and is applicable only on participating policies.
What is surrender of a Life Insurance Plan?
If you surrender the Life Insurance Plan before the full term of the plan is completed, you get a portion of the money paid in premiums, after certain charges are deducted.If you decide to terminate the Life Insurance Plan before maturity, the insurer pays you (policyholder), what is known as the surrender value.
A surrender charge is deducted which varies across Life Insurance Plans. You can surrender traditional Life Insurance Plans. These are whole Life Insurance Plans, money back plans or endowment plans. Life insurers cannot levy surrender charges if you terminate the plan after 5 years as per IRDA rules and guidelines.
Types of surrender value
Guaranteed surrender value
You get guaranteed surrender value only after paying at least 2-3 annual premiums. If the premium paying term is less than 10 years, your Life Insurance Plan acquires a surrender value after paying two annual premiums. If the premium paying term is more than 10 years, your Life Insurance Plan acquires a surrender value after paying three annual premiums.
If you surrender the Life Insurance Plan after 3 years, the life insurer has to pay at least 30% of the total premiums, excluding the premiums paid for the first year. Any additional premium paid for riders and bonus that you have received from the insurer, is excluded.
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If you terminate the Life Insurance Plan after 4-7 years, you get 50% of premiums paid.
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If you surrender the Life Insurance Plan in the last two policy years, you get up to 90% of the premiums paid.
Special Surrender Value
This surrender value depends on sum assured, term of the plan, premiums paid on the plan and bonuses. You can calculate special surrender value by
Special surrender value = Surrender Value of the Life Insurance Plan = [{(Number of premiums paid on the plan / Number of premiums payable on the plan) X Sum Assured of the plan} + Accumulated Bonus on the plan] X Surrender Value Factor.
The Surrender value factor is basically a percentage of Paid-up value + bonus.
What are paid-up insurance policies?
If you stop paying premiums on your Life Insurance Plan after a certain time/period, your Life Insurance policy continues, but with a lower sum assured. This happens for Life Insurance Plans which invest a part of your money for savings/investments.
The Paid-Up Value of Life Insurance = (Number of premiums paid by the policyholder X Sum Assured) / Total number of premiums.
Let’s understand this with an example:
You have availed a Life Insurance Plan with a sum assured of Rs 15 Lakhs. The policy term is 20 years. You have paid premiums for 5 years and then stopped paying premiums. What is the paid-up value of the policy?
Paid-up Value = 15,00,000 * 5 / 20 = Rs 3,75,000.
Insurance cover continues till death of the policyholder or end of the policy term, whichever is earlier. Insurance cover is reduced to paid-up value. The paid-up policy also receives a proportionate bonus. You can avail loans against paid-up insurance plans.
Types of Life Insurance Plans
Term Life Insurance
Term Life Insurance is pure risk cover. You pay a premium for a sum assured (This is specific cover under the plan) for a specific tenure. If the policyholder dies within the term of the plan, nominees get the sum assured called death benefit. This plan has no survival benefits.
Term Life Insurance Plans have low premiums as they are pure risk plans. They offer protection only in the event of death. These plans have no maturity value.
The 3 key factors of term Life Insurance :
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Sum assured
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Premium to be paid by the insured
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Term of coverage
These factors define a term Life Insurance Plan. The term can be a year or more than one year. The premium may be constant or could change with time. The policy holder’s life is insured for a specific term. If the policyholder dies within the term of the plan, nominees get the death benefit. Term life plans have no survival benefits.
Term life plans have several variants
Increasing cover term plans : With increasing cover term plans the sum assured increases by a certain percentage each year. An increasing sum assured helps beat inflation. The increment stops after a certain limit.
Decreasing cover term plans : This is the opposite of the increasing cover term plan. The decreasing term Life Insurance policy reduces your sum assured each year. The decreasing term life plan, addresses various needs at different life stages.
Term insurance plan with return of premium or TROP : The premium is higher than pure term life plans. This is because if you (policyholder) survive the term of the plan, the premiums paid are returned.
Endowment Life Insurance Plans
Endowment Life Insurance Plans have a savings feature. You get a lump sum at maturity. This is the sum assured + any accrued bonus. On death of the policyholder within the term, you get sum assured + accrued bonus. Endowment Life Insurance Plans have tenure ranging from 5-30 years.
You also have the non-participating/no profit version of the endowment Life Insurance Plan. These plans have much lower premium than participating plans. Endowment Life Insurance Plans offer survival benefits unlike term life plans. You enjoy guaranteed and reversionary bonuses on endowment plans. Some Endowment Life Insurance Plans offer the compounded reversionary bonus. The bonus amount is added to the sum assured when it’s declared. Subsequent bonuses are calculated on the enhanced sum assured.
Money Back Plans
Money back Life Insurance Plans are a type of endowment Life Insurance Plan. They not only cover the life of the policyholder across the term, they also pay up a certain percentage of the sum assured as cash payments, at regular intervals within the term of the plan. Money back plans have the added advantage of life cover and regular cash inflow. Money back Life Insurance Plans are participating plans, where the sum assured + accrued bonuses are paid. Money back plans offer low returns.
Whole Life Insurance
Whole Life Insurance offers Life Insurance cover across the entire life of the insured (policyholder), or up to a maximum age specified by the insurer, whichever is earlier. You have to pay the premiums in time, to avail the benefits of whole Life Insurance. Whole Life Insurance also has the shorter premium payment option and the return of premium plan. The whole Life Insurance offers guaranteed additions along with the bonus if any, added to the sum assured. The whole Life Insurance offers guaranteed death benefits and guaranteed cash value among others. Whole Life Insurance is excellent for estate planning as it helps leave a legacy behind. Sadly, Whole Life Insurance doesn’t offer high returns unlike some saving plans.
Unit Linked Insurance Plans
Unit Linked Insurance Plans or ULIPs is a Life Insurance Plan which offers insurance + investment. ULIPs help you earn market-linked returns by investing a part of the premium either in equity or debt (fixed income). ULIPs offer returns in-line with the performance of the market. Part of the ULIP premium is used for mortality cover (life cover) and the remaining amount is invested in equity or debt or a mix of both.
The performance of the ULIP depends on the returns from the investment. The risk and return from the ULIP depends on the fund the ULIP invests. You can choose the fund mix based on a comfortable asset allocation.
Switching of ULIPs
If you avail ULIPs, part of the premium is used for mortality cover and the remaining is invested in equity or debt funds. You have the choice to move between funds called switching. ULIPs give you the option of Fund Switch.
If you are not happy with the returns from the ULIP, switch from debt fund to equity fund. If you want steady returns from the ULIP, switch from equity fund to debt fund.
Fund switch option in ULIP
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Register for the fund switch option in ULIPs with the website of the life insurer. You can also do this online with the help of the Life Insurance agent and have the form delivered to your residence.
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Fill the form and the Life Insurance agent submits it to the Life Insurance branch.
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Attach a self-attested photo identity proof like passport, Aadhaar Card, PAN Card or Driving License along with the form.
Why switch ULIPs?
ULIPs offer an opportunity to earn high returns from the investment with the fund switch option. Let’s say 65% of your premium was invested in debt and 35% in equity. If the stock market is doing well, you can switch part of the funds from debt to equity. If you feel stock markets are going down, switch from equity to debt. You can also make the switch based on life stages.
How ULIPs work?
Part of the premium is for mortality cover and the remaining is invested in your fund of choice. You have the allocation rate which is basically the portion of premium invested. The allocation rate is low in the initial years as charges are high. It increases in the subsequent years. ULIPs offer the top-up option where you make additional premium payments. These are invested in funds after the assignment of the mandatory risk cover.
ULIPs offer both death and maturity benefit. When ULIPs mature (at maturity of ULIPs), the policyholder gets the value of the fund on that date. This value is the number of units credited to the policyholder, multiplied by the NAV of the ULIP on that date. If the policyholder dies within the term of the plan, the life insurer pays the sum assured, higher of sum assured and fund value or both sum assured + fund value, depending on the terms of the ULIP plan. ULIPs may offer guaranteed bonus in the initial years or loyalty bonus at the end of the plan.
Important Charges in ULIPs
1.Premium Allocation Charges
Premium allocation charges are deducted as a fixed percentage on premiums. Premium allocation charges are high during the initial years of the plan. Premium allocation charges include initial/renewal expenses and commission expenses.
2.Mortality charges
Mortality charges depend on sum assured, age and are deducted each month. Mortality charges depend on the fund you have chosen.
3.Fund Management charge
The insurer charges a fund management fee to manage ULIP funds. Fund management fees are deducted before calculating NAV. Fund management fees are adjusted from NAV each day. The maximum fund management fees are 1.35% of the fund value. They are charged each day. Insurers charge higher fund management fees for equity funds vis-à-vis debt funds.
4.Policy administration charge
These fees are charged for administration of the policy. Policy administration fees are charged each month.
5.Fund switch charge
If you switch between funds in ULIPs, you incur fund switch charges. You enjoy a limited number of free fund switches each year. Subsequent switches beyond the free limit are charged at Rs 100 or Rs 250 a switch.
Riders on Life Insurance
1.Accidental death benefit rider
In accidental death benefit rider, the life insurer pays sum assured + rider benefit to the nominees of the plan, if the policyholder dies in an accident. The percentage of accidental death benefit rider sum assured is calculated on the original sum assured and varies across life insurers. Some insurers have a cap on maximum sum assured.
2.Accelerated death benefit rider
If you avail accelerated death benefit rider, your family gets a part of the sum assured if you/policyholder suffer from a terminal illness. This money comes in handy to meet medical expenses of the illness. This rider specifies how much of the sum assured is payable in advance.
3.Critical Illness rider
If you avail the critical Illness rider along with Life Insurance Plan, you/policyholder get a lump sum on diagnosis of critical illness like cancer, stroke, heart attack or kidney failure. Treatment for critical illnesses can be expensive. A critical illness rider can easily tide over high costs of medical treatment. After detection of a critical illness, the policy may continue or get terminated.
4.Accidental disability benefit rider
If a policyholder is partially or permanently disabled in an accident, the accidental disability benefit rider comes into play. The rider pays a certain percentage of the sum assured to the disabled policyholder for a period of 5-10 years after the disability caused in the accident. The policyholder and his family can live on this income. The rider comes into play only for disabilities caused in an accident.
5.Waiver of premium rider
The waiver of premium rider is very important if you are unable to pay future premiums due to disability/income loss. The life insurer waives off future premiums, while the policy continues to remain active. This is just like insuring premiums payments on Life Insurance Plans, till the expiry of the policy. What happens if you don’t avail waiver of premium riders? Well, the policy will expire as you cannot pay the premiums. Your family won’t get the death benefits under Life Insurance.
6.Income Benefit Rider
The income benefit rider offers regular income in case of demise/disability of the policyholder. The rider pays monthly income on death of the insured for a period of 5-10 years along with the sum assured.
Loan against Life Insurance Plan
You can avail loan against endowment Life Insurance, ULIPs and Money Back Plans. Premiums must be paid for at least 3 years on these Life Insurance Plans to avail loan against Life Insurance Plan. Term Life Insurance Plans have no surrender value and are not eligible for loan against Life Insurance Plan.
Why loan against Life Insurance Plan?
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Banks don’t check credit score before sanctioning loan against Life Insurance Plan.
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Lower interest rate than personal loans.
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Minimal documentation and quick loan disbursement.
Interest rate on loan against Life Insurance
Interest rates on loan against Life Insurance are around 10-14% and depend on Life Insurance Plan and loan tenure.
Loan amount
You get around 80-90% of surrender value as loan against Life Insurance Plan. You get 40% of the NAV as a loan for equity-oriented ULIPs and 50% of the NAV as a loan for debt-oriented ULIPs.
Documents for loan against Life Insurance
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Fill the loan application form.
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Submit the original insurance policy document.
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Submit payment receipt for loan amount and a copy of the cancelled cheque.
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Deed of assignment : Assign the policy in favor of the institution or insurer. The policy serves as collateral. The policy holder must execute the assignment and endorse the policy document. (This is transfer of Life Insurance title till loan is repaid). The policyholder must pay all future premiums.
Processing fees
The insurer charges a nominal processing fee for disbursing the loan against Life Insurance.
Repayment
You don’t need to pay the principal as long as you are regular with interest payments. The principal outstanding is deducted from policy value at maturity or claim. If you don’t pay premiums on the Life Insurance Plan or default on repayment, the policy lapses. The insurer recovers dues from the surrender value of the policy. On repayment of the loan, the insurer reassigns the Life Insurance Plan through an endorsement.
Free-look in Life Insurance
You have a 15 day free-look period from the date of receipt of the Life Insurance policy documents. You can cancel the policy within this period and get a refund, if you are not happy with terms and conditions. Only Life Insurance Plans enjoy the free-look period. Health insurance plans which have the free-look period must have term of at least three years.
How to cancel Life Insurance Plan within free-look period?
If you are not satisfied with the terms and conditions of the Life Insurance Plan, communicate the intention of cancelling this in writing, within the free-look period. Life insurers have a standard form for cancelling the Life Insurance Plan. State the policy details, receipt date of policy documents, agent details and reason for cancellation.
The insurer processes your request and refunds the premium after deducting stamp duty charges, medical examination fees which had been incurred by the insurer, pro-rated risk premium for the period of cover. You will have to prove the date of receipt of policy documents. For online Life Insurance Plans, the free-look period is 30 days.