Cashless health insurance

            The facility of cashless claims in health insurance tries to remove the problems associated with settling hospital bills and making lump-sum payments for hospitalisation. The facility can be availed of only if the hospital, where the patient is to be treated, figures among the hospitals approved by the insurer. The list of network hospitals can be obtained from the TPA (third-party administrator) either from its website or by calling its toll-free number. The details of TPA are available in the health insurance policy.

Informing the hospital
            The hospital needs to be informed at the time of admission that the patient is covered under cashless health insurance policy and the insurance card needs to be submitted at the admission desk for this purpose.

Pre-authorisation form
            The form is available with the hospital and has to include the approximate hospitalisation cost based on an estimate from the admission desk. If the hospitalisation is planned, it is advisable to finish the pre-authorisation procedure beforehand.

Process
            On receiving the pre-authorisation form, theTPA checks the policy limits, eligibility and riders applicable in order to accept or reject the claim. After approval, the TPA sends an initial authorisation by fax to the hospital.

Settlement
            At the time of discharge, the insured has to sign the discharge form and all the bills and forms, which are sent by the hospital to the TPA for authorisation. If this authorised amount is less than the hospital bill, the difference needs to be paid by the policyholder to the hospital.

Points to note
 

·         Even if a pre-authorisation request is denied by the TPA, the insured can go ahead with treatment, settle the bills and then apply to the insurer for a possible reimbursement.

·         In case of an emergency hospitalisation, the pre-authorisation form has to be faxed to the TPA in the duration specified.

Non-medical bills and expenses not covered must be settled directly by the insured before discharge.

When to exit your mutual fund

Five situations which may warrant redemption of your fund units.

    People spend a lot of time trying to identify the right mutual fund to invest in. While choosing a good scheme is important, knowing when to exit is as crucial. This is because even though you may be holding the right mix of mutual funds at a given point in time, you may want to alter the holding pattern by disposing of some funds in the future. How do you decide when to do this? Here are five situations where you may need to consider getting rid of your investment.

Consistent underperformance

Gross underperformance of any scheme is the first signal for you to consider moving out. However, don’t dump a fund based on the performance over a short span of time. Move out only if it continues to perform poorly over three to four quarters. Remember to compare the scheme’s performance with that of its benchmark or category, not with a fund belonging to another category.

Exit of a capable fund manager

A change in the fund manager should normally not be reason enough to dump your fund. Even if a star manager leaves a fund house, it should not make you press the panic button. Instead, keep a watchful eye on the new fund manager for some time. Track his investment style, churning frequency, stock selection, asset allocation strategy, etc. If you are satisfied with his approach, stay put. If the fund house has a robust investment processes in place, the fund is likely to do well regardless of who is steering it.

Change in scheme attributes   

Investors should typically opt for a fund only if its objectives or investment mandate are aligned with their needs. So if you suddenly find that your fund has deviated from its stated objective or revised its investment mandate, you should consider exiting it. Over time, some fund managers take investment calls that do not match the stated objective of the scheme. If this happens too often, it’s time to get rid of the fund. Besides, whenever there is a change in the fundamental attributes of a scheme, the fund house is required to provide the investors an exit window, wherein those who wish to move out can do so without incurring any exit load.

Achievement of an investing goal

Financial planners advise that you should invest with a goal in mind. Once your investment reaches the targeted amount, you should redeem it. There’s no point in continuing with the investment for you will be exposing your investment to further risk. Don’t get greedy and wait for the fund to go that extra mile.

Rebalancing of the portfolio

Asset allocation is the key to success in investing. It ensures that your portfolio does not deviate from its original path, putting your goals at risk. So if you find that your equity allocation has grown beyond comfortable levels, consider redeeming the funds. A change in life stages would be another reason to change you asset allocation and consider switching to a fund that matches your needs. As you near retirement, you might want to consider more conservative funds.

Health Insurance - Does a floater cover work?

Does a floater cover work?

Such an insurance plan is a good option when the family is young, but it may not prove cost-efficient if there is an older person to be insured or when the children are grown up.

    One of the biggest dilemmas faced by health insurance buyers is whether they should go for individual policies or a floating cover for the entire family. In an individual policy, the cost of the cover is generally lower compared with a floating plan. However, in the case of the latter, a higher cover is available to all members of the family since each member can avail of the combined cover. The logic is simple. There is a low probability that more than one or two family members will require hospitalization in a year. It is a calculated risk which reduces the cost of the cover substantially.
    Floaters work best in case of young families. The premium is low because it is linked to the age of the eldest member in the plan. “A family floater cover is advisable when the oldest member is less than 45 years old,” says Neeraj Basur, chief financial officer, Max Bupa Health Insurance. For 34-year-old Rakesh Somani, it is an ideal choice for insuring his family (see picture). “Since we are a young family and our healthcare costs are not too high, a floater plan of 5 lakh should be sufficient for us,” he says.

Costly for older families
However, the same may not be true for an older family, where the eldest member is more than 45 years old and the children are grown up. In such a case, individual policies may work out to be cheaper (see graphic). The same is true if you want to insure an elderly member of the family. The premium can be prohibitive when you include a senior citizen (above 60) in the floater plan. For instance, a 3 lakh floater cover for a family of four, where the eldest member is 35 years old, will cost less than 9,000 a year. However, if you add senior citizen parents (65 and 60 years), the premium jumps to 52,500. “When older family members have to be covered, it is better to buy separate plans for them,” says Gaurav D Garg, managing director & CEO, Tata AIG General Insurance. Individual covers of 3 lakh each for the two senior citizens would cost about 30,000 ( 18,000 for the 65-year-old man and 12,000 for the 60-year-old woman). This still works out cheaper than a combined floater for the entire six-member family.

Go for individual cover after 45
Taking an individual plan could also be an option when the eldest member of the family crosses 45 years. He can take a standalone policy for himself, while the rest of the family is covered under a floater plan. Insurers allow members to branch out and take individual policies when the plan comes up for renewal. This is also useful when a dependent child grows up and starts earning. He may need to buy a separate health insurance plan for his own family.
    Check if your insurer will carry forward the benefits accumulated by the individual in the floater plan when he shifts to the individual cover. This is important since there is a 3-4 month cooling off period for all claims as well as a 2-3 year waiting period before pre-existing diseases are covered by health insurance companies.

Top-up plans are cheaper
The health insurance provided by employers usually includes floater plans that cover the employee and his dependants. It is not advisable to depend entirely on such a cover because if you change jobs or stop working, your family may be rendered uninsured. If you think buying a fresh insurance plan is very expensive, go for a top up health cover. Top-up policies cover medical expenses beyond a certain threshold. Suppose an individual has an insurance cover of 3 lakh from his employer and takes an additional top-up cover of 5 lakh, with a deductible of 3 lakh. If he is hospitalised for an illness and the bill comes to 7 lakh, his employer’s cover will pay for the initial 3 lakh and his top-up policy will pay the remaining 4 lakh. The deductible in the top-up covers brings down their cost substantially. Since almost 85-90% of the claims are below 3 lakh, the risk for insurance companies is minimal. Therefore, a top-up plan is 40-60% cheaper compared with a full-fledged cover. If a regular cover of 3 lakh costs 3,500, a top-up cover of 5 lakh with a 3 lakh deductible will cost only 1,600.

Source: The Economic Times Wealth April 16, 2012

Income Tax - E-filling must for income over Rs 10 lakh

The government has made it mandatory for individuals with income of over 10 lakh to file their tax returns electronically for 2011-12. E-filing has been made compulsory for individuals and Hindu undivided families (HUFs) if the total assessable income during the previous year exceeds 10 lakh for the assessment year 2012-13, said the Income Tax Department. However, digital signature will not be mandatory. Till last year, e-filing was optional for such individuals and HUFs. The IT department received a record number of 1.64 crore income tax returns electronically in 2011-12. Currently, business houses with receipts of 60 lakh and professionals with income of 15 lakh are mandatorily required to efile their return with digital signatures.

Source: The Economic Times Wealth April 16, 2012

What you should check when reading a mutual fund statement

Much like a bank account statement, this document offers all transaction details carried out within a defined time period. It is also available online and indicates account changes whenever there is a redemption, additional investment or dividend declaration. Here's a look at some of the important details in the mutual fund statement, which should be checked regularly by investors.

Investor's personal details: The name, address and phone number of the investor and joint investors (if any) are mentioned in this section. Ensure that all these details are correct and updated, and if there is any discrepancy, it should be communicated to the broker or fund house.

Adviser name: This indicates the source through which you have invested. If you have done so through an agent, the latter's name and code will appear on the statement. However, if you have invested directly, these parts should be blank on your account statement.

Bank details: Make sure your bank's name and your account number are accurately mentioned to avoid problems while redeeming units. If you want to change your bank mandate, fill out the slip at the bottom of your account statement and submit it to your fund house or agent.

Folio and account numbers: Most mutual funds offer one folio number and several account numbers in the same folio for all investments under the same unitholder combination. This makes tracking all your investments with same fund easier. Make sure you keep tabs on the different account numbers within a single folio.

Current cost and value: The cost indicates the amount you invested in a scheme while the current value is the latest market value of your investments as on the date the statement is generated.

PAN details: You must give the correct Permanent Account Number (PAN), irrespective of the amount invested. Check your PAN details mentioned in the account statement and ensure there are no discrepancies.

Transaction summary: This section details the type of transactions you have opted for, such as purchase, systematic investment plan (SIP) and systematic withdrawal plan (SWP). Transactions like dividend payout or reinvestment are also mentioned along with percentage or rupees per unit at which the dividend is reinvested or paid.

Transaction slip: At the bottom of the account statement, there is a transaction-cum-service request slip, which can be used for buying additional units, redeeming and switching units between schemes. The transaction slip can also be used if an investor wants to notify any changes in his/her correspondence address and bank details.

The back of the account statement is also worth a careful look. It contains important notes relating to investor services, KYC norms, additional purchase, switch, and the like. A little due diligence and careful monitoring by you can ensure the safety of your investment.