A Guide to Monthly Income Plan

Diversifying one's investment portfolio is one of the most important factors to assure steady growth and accretion of profits. No single financial instrument is enough for an investor to allocate his funds.

MIP's, also known as Monthly Income Plans are hybrid instruments which invest one's funds (a small portion) in equities, while the remaining is invested in money market and debt instruments.

Many investors are under the assumption that a term insurance plan would be the best option; (if some misfortune was to occur) to help a person, in case their regular source of income suffers. However, this is not true. A term insurance plan will pay a lump sum in case of any disability or death of the person, which is most often quickly exhausted as it is used to meet the immediate family expenses.

There will be no future funds available for the family once this amount is exhausted. However, for MIP’s they involve the payment of funds to the family member/nominee as a 'fixed, monthly' income for a much longer period of time. This period can even go up to as many as 25 years. Thus, MIP's are most suitable for those people who want to rest assured with an alternative source of income (as a backup) for their regular income. It also works well for those people who retire and are seeking a guaranteed source of monthly income.

So, how do MIP's actually work?

Well, the policyholder will have to pay the premium amount on a regular basis to the company, throughout the premium payment term. At the end of this period, if the policyholder is yet alive, he will get a regular monthly income amount that is payable to him/her until the end of the policy tenure.  As soon as the policy tenure ends, then the insured will get a terminal bonus as well as simple reversionary bonus. The monthly income stops with the payment of these bonuses.

On the other hand, if the policy holder dies during the policy term than his/her nominee will be entitled to receive the regular, monthly income and premiums paid by the insured till his/her death. Once the tenure has ended, the nominee will receive the terminal bonus and simple reversionary bonus.

By opting for MIP's gives a person, a win-win situation. The insured will either get the survival benefit or the death benefit (as the situation may be).

Car Insurance: An Important Component of General Insurance

Ensuring one's financial security is one of the most important things that any person needs to do in their lifetime. Whether it is for their life or for the various items that they possess, financial security is an absolutely essential component of protecting one's future. Other than life insurance plans which are available, many other types of policies are also bought on a large scale.

They fall under the category of general insurance, protection for all the non-life items in one's life. This may include health, car, travel, two-wheeler, car and home insurance. Purchasing one's vehicle is one of the biggest investments that can be made during one’s life. It may be a first, or a second or even a third vehicle. It doesn't matter, how many vehicles you have, you will always need to financially protect yourself from any sort of accident that may occur or inevitable event from occurring leaving behind a vast financial liability on the person.

Car insurance, also known as vehicle insurance is one of the best ways by which you can not only protect yourself from incurring any sort of financial loss in case an accident occurs, but also to provide third party coverage (liability) as well. There are different car insurance plans that are available in India to choose from at various prices. They may be simple and third party plus theft policies, comprehensive plans or even third party plans. They may be available for commercial vehicles or private cars (passenger carrying vehicles).

They provide coverage for various accidents such as outbreak of fire or burglary. It is easy to read about the features of commercial motor vehicle insurance policies and private car package (insurance) policies online via the websites of bank or Non-Banking Financial Corporations (NFBCs). One can contact the company, providing their email address and mobile number so that a representative can contact them in future.

In addition to this, other key information that may be requested, include the city where one resides is also required when applying for the policy online. Once one has finalized on the policy, they have to enter certain additional details and vital information about the make of the car, its model, whether it runs on petrol or diesel and year of manufacture.

Home Loan Products: Available at Just a Click!

Loans are available for a wide variety of purposes. It could be to finance your new car, for educational purposes, for purchasing a new home, for purchasing commercial vehicles, etc. There are many banking institutes and Non-bank financial companies (NBFCs) which are known to offer various types of financing options for people to make use of.

Usually, purchasing your first house is often one of the biggest investment decisions that you will make in your life. However, you may not have sufficient funds, at such a time and may often depend on various financial options for such purposes. Here, is where banks and other non-bank financial companies come into the picture.

Housing loans or home loans are the most ideal financing option for people who want to buy a new house or renovate it. There are many different home loan products that are available in the market. Some of the popular ones include 'home purchase loans', 'home construction loans', 'home extension loans' and 'home improvement loans'. All of these products are available to meet the various requirements of people.

Most of the banks and NBFCs which offer these loans have a pan India branch network. They offer a robust service delivery model, i.e. they offer door to door services thereby ensuring easy and quick approval of the loans. Besides this, they are known to offer a variety of repayment options, which are also known to be flexible.

It is very easy to apply for these loans online, where people can download the application forms from the bank's or NBFC's website. Here, they can read about the features of the various home loan products.

Moreover, there are plenty of portals that are available online where people can compare the products offered by these banks and NBFCs, where they can compare their interest rates. This way, they get a deeper insight as to what is available in the market and can make a far more informed decision.

 Many of the websites belonging to these banks and NBFCs have a set of frequently asked questions, which people can read through so as to understand the loan process. Besides this, they can also find out the essential documents that are required, terms and conditions and the various options which are available for NRIs residing in the country.

While NBFCs are regulated by the NHB (National Housing Bank), they are exempted from the requirement of registration by the Reserve Bank of India (RBI). On the contrary, the RBI serves as the primary regulatory and supervisory body for all the banks in India.

Gold Loan: The Perfect Solution for the Informal & Unorganised Sector

Recently, the Reserve Bank of India (RBI) had finally given a level playing field to financial companies to offer loans against gold. These include the different banks in the country as well as NFBCs – Non-Banking Financial Companies.

In fact, it has been estimated that 10 percent of the country’s gold stock is pledged as collateral for loans. Out of this, 75 percent is in the unorganized market (pawn broker, money lenders, etc.) and the remaining 25 percent in the organised market. This is inclusive of specialized Non-Banking Finance Companies (NBFCs), other NBFCs, commercial and cooperative banks, etc. 

Many people who seek this financing option often face the doubt of opting either for banks or for an NFBC. To make this comparison easier, it is important to consider certain key factors such as interest rates and processing fees.  

Opted only if a person requires emergency funds, there are plenty of gold loan products that are available in the market.  One of these, a term loan is easy to avail by simply pledging the gold and borrowing the money. There is also the overdraft facility which is also offered.  These loans are especially common amongst the people who live in the rural, agrarian society where there are fluctuations in their levels of income. The bulk of their earnings usually come only during the two harvest seasons. Therefore, these loans become of high importance to these people.

These are extremely useful financing options for people residing in urban areas, in case they urgently require funds; or want to make use of the gold ornaments which are lying idle in their house. While the interest rate for banks usually is within the range of 12-16%; for NFBCs it is between the ranges of 14-26%.  The additional costs, such as the processing fees are often between the ranges of 0.025-1.5% of the loan amount. It is very easy to apply for these loans online or by visiting the bank branch to manually apply for the same.     

This year, at the end of January, 2014 the Central Bank of India had issued a circular which stated that it had decided to prescribe a loan-to-value (LTV) ratio that would not exceed 75 percent for the banks which lent loan against gold jewellery. The formalities that are associated with obtaining a gold loan are minimal and the procedure for the same is very simple. The underlying asset in gold loans is not subject to any form of depreciation.

In short, they are extremely suitable for those people who are employed in the unorganized and informal sector.