Buying Health Insurance in India? Follow this 13 point checklist

Posted on February 23, 2015January 10, 2020 by Jagoinvestor

A lot of changes has happened in health insurance industry over last 5 yrs. The overall health insurance industry to some level is standardized and new regulations are in place. A lot of investors have bought their mediclaim policies many years back when rules were raw and when few things were in favor of insurers, not investors.

Given the changes, I thought, it’s the time to edit the whole article written long back and update all the points. So here you go.

Health Insurance products now have far fewer hidden bombs to surprise you now, For instance

All Health Insurance policies are now mandatorily issued for life-time.
Insurance companies cannot levy claim based loading once the policy is issued.
Insurers need to give a clear 3 months advance notification to existing customers before increasing premiums or terms in a policy.

What’s more, thanks to the competition brought in by specialized health insurance companies, there have been many interesting features added to the otherwise standard mediclaim products.

So now I am putting up 13 points every investor should read before they buy health insurance. These 13 points can act as the guide for someone who wishes to either buy a new health cover or wants to upgrade their health insurance cover. These points are not tips as such, but various dimensions revolving around the health insurance buying decision-making.

Point #1 – Don’t be too late in buying a health insurance policy

I have seen too many customers, especially the well-educated ones, literally trying to find a health insurance product which has all the “dream” features bundled into a single product. They want high cover, less premium, best claim settlement, no loading, OPD cover, extreme fast claim settlement, maternity and high-end benefits.

But sadly, such “dream” products do not exist in real-world. One has to understand that these health insurance products are highly complex and their premium pricing and features are linked to various parameters. You can’t get a product which has everything you wish.

At times, it happens that 8 out of 10 things required by the customer is present in the policy, but 2 out of 10 is not there, and what do customers do? They try to find some other policy which has all 10/10 things covered. This just leads to procrastination. There are millions of investors who are delaying taking health insurance from many years and this is the single biggest mistake one can make.

The risk of “No cover” in the future

The biggest problem with this approach is that, you might be denied a cover later in life, because you might have crossed that age limit, or you might have catched some illness which will not be covered now.

If there is one advice, just one advice, I would give anyone on Health Insurance. It would be this – “Never Delay. Set a deadline, buy that policy and get covered.”

Buying a good enough policy early is 10X better choice than buying “best health insurance policy” after 5 yrs. So the first thing you need to do is, be 100% clear that you are buying a health insurance product NOW. Focus on core big features which really matter, and don’t get too attached to tiny points which either do not match your requirement or are different than what you want.

Point #2 – Assess who do you want to cover and their health status

It is important to finalize the list of people you want to cover. Also, take an account their current health status. Make sure you cover most of your family members for whom you are responsible for. At times, people buy health insurance for self, spouse and kids and ignore parents.

If all are young and healthy, no hospitalization history, no chronic ailment detected, you are going to be spoilt for choice!
If you have members who are above 50 and/or have a medical history/condition then you should be prepared for some pain (more on this later) which will most probably include having certain time bound exclusions in your policy. Or you might have to pay higher premiums.

Point #3 – Assess your lifestyle

The greatest health insurance is taking care of your health. Keep a check on your own lifestyle, as well as your family’s. If you/your family is fit, following a healthy routine or regularly exercising, have healthy food habits, doesn’t smoke, has no history of excessive drinking, you’re in a good place with regards to risks and coverage required. If not, then you have a much higher risk to hedge. This, apart from inflation, needs to be taken into consideration, when deciding the sum insured.

If not, then you have a much higher risk to hedge. This, apart from inflation, needs to be taken into consideration, when deciding the sum insured. But be clear that just having good health or good lifestyle is not an excuse to ignore health insurance policy. Leading a good lifestyle just protects you from illnesses, you still don’t have much control on accidents, or some diseases which can still happen even though you have a good lifestyle.

Point #4 – Individual Covers or Family Floater?

You also need to be clear if you want to buy individual cover for each person, or a family floater policy?

Family Floaters seem to be a no-brainer, as they are very efficient. The idea is that not all family members will be hospitalized in the same year. You get a large cover shared amongst all family members for one of you to claim. The price is lower/efficient than buying individual covers.

But hold on! .

If one of your family members is older than 50, or has health issues, or lifestyle issues as discussed earlier, it would be sensible to look for an individual cover for such a member in addition to the family floater. You shouldn’t have a “high risk” member as part of your family floater, as if he/she has frequent claims, year-after-year, other members could be left without any cover, when they would need it.

If you don’t have the choice, and are getting a great deal with a family floater policies then go for a very high cover (in the range of 25-30 Lakhs). More on this in the next point for discussion.

Point #5 – Zero down on Sum Insured from Long Term perspective

The biggest mistake one makes when buying Health Insurance, is when one factors today’s costs and decides the insurance coverage, whereas in reality, you are likely to make claims around 25 years from now

Hospitalization costs today would be ranging from Rs. 50000 to Rs. 3 Lakhs. Assuming you are 30 today, at an modest average healthcare inflation of 7.5% for the next 20 years, single hospitalization bills will range (hold your breath!) at around Rs. 13 Lakhs when you are 50 years old.

What’s more, if you live even a mildly unhealthy lifestyle(as discussed earlier), you may have to bump the cover by another 25%, as you are at much higher risk, unless you take things in control and improve your lifestyle immediately. Think in terms of the long run, you may not need this policy right away, but in the future, you will most definitely benefit from having a higher cover.

OK, don’t sweat; we have smart ways on how to get a Rs. 16 Lakhs within your budget. Read on.

Point #6 – Compare Hospital Room Eligibility Capping

Now this is the big one. This single condition could depreciate the value of your health insurance with inflation. Something most agents/insurers won’t like you to know.

Many Health Insurance policies have room rent capping, which means you are eligible to claim expenses only up to a room costing below this capping. In case you opt for a room above this cap, you will have to bear the additional proportionate expenses on your own. Let me give you an example

Lets say, as per your policy you are room rent limit is Rs 4,000 per day . Now if you get hospitalized and you choose a room (for if you are forced to choose) which has room rent of Rs 10,000 . You might think that you will just get 4,000 per day for room rent from insurance company and other charges you will get as per the limit. But thats not true.

In reality, your room rent limit is 40% of the room rent chosen, hence all other expenses will be paid by 40% margin only. Means if your actual bill for ICU has been Rs 20,000 , and even if it’s in the limit, you will still be paid just 40% of 20,000 = Rs 8,000 .

If your doctors bill comes to Rs 50,000 and even if it’s in the limit , still you will be paid only 40% of that, which is Rs 20,000 . So overall you will be at a big loss only because of the room rent capping limit.

I hope you are now clear on the implications of the room chosen at the time of hospitalization.

Also factor in the inflation

One day rent for a Private room averages to around Rs. 4000 per day, today. At an inflation of 7.5% for next 20 years, the room rent would be in the range of Rs. 20000 per day.

Now, if you have a policy with room rent capping of Rs. 5000, and you opt for a private room with rent of Rs. 20000 per day. Insurance company is liable to pay you only 25% of all the costs claimed by you, in spite of your claim being within the sum insured limit.

Given a choice, your preference of health insurance should be in the following order:

Policies with Private Room eligibility.
Policies with No Room Rent capping.
Policies with Room Rent capping.

You must be surprised as to why have I suggested Private room eligibility policies above policies without room rent capping. The reason is simple, in my opinion; policies with no room rent capping have larger chances of being abused. Insurers could bear higher losses due to no control over the extravagance of a few customers. In the long run, it would be consumers who will pay for such extravagance of a few, through higher premiums or revision in the terms of the product, so that the Insurer can contain the overall losses.

As mentioned earlier, the above priority is to be kept in mind, in case you have a choice. In case you don’t (due to health conditions, age etc.) it is important to not give up and hedge your risks to the extent possible, by opting for a sum insured with the highest room rent limit. This way you will be able to contain some part of this ‘auto-depreciating’ cover!

Point #7 – Check for any sublimit/co-pay

There are clauses like sub-limits and co-pay in most of the insurance policies. They put a sub limit on a particular expenses (like 2% of sum assured). Make sure you are very clear about them and are fine with it.

There are few Insurance products that have limits for specified surgeries also. So even if your sum assured is Rs 5 lacs, they might restrict a particular surgery expenses to 50% of your sum assured.

Check with the products you have shortlisted. Also check for words like “limits”, “co-pay” or “deductible” in the policy. These are set deductions in claims. Ensure you have understood, and compared what these mean, before your decision to purchase is made.

Point #8 – Hospital Network is Important Parameter

While you compare the key features discussed above, you should also compare the hospital network of the shortlisted Insurance companies. You must compare these for areas you/your family is likely to be hospitalized. Though such lists are dynamic and can change anytime, it still gives you a good idea of the network that the Insurer has in place, in case you need to use it for a cashless treatment.

Check it out below to see the number of hospital and their names near your house (based on the pin code you provide them)

While a good network of hospitals is something you should definitely look at, but it should not be your primary parameter to judge a health insurance company.

Point #9 – Finally, go through Policy Wordings

Ask your Insurance Broker/Agent to provide you with the policy wordings of the product you have liked. Ensure you go through the Customer Information Sheet yourself. This is a one-pager that summarizes all the key conditions you must be aware off. Every health insurance product needs to file this with the Government (IRDA). Ask questions till you are satisfied.

I would strongly suggest look at the policy document sheet yourself online. Just go to google and search for “<health insurance policy name here> + “brochure pdf” and you will surely get the PDF document online. go through it and read it. below you can see, how I searched for Appolo Munich Optima Plus brochure online

Point #10 – Go for Super-Topup

In order to get the 15-17 Lakhs health insurance cover that would inflation proof you for the next 20-25 years, it is very sensible to buy a Super Topup policy. Recommend, that you go with a Rs. 5 Lakhs base cover with a Super Topup cover of Rs. 15 Lakhs. This can save close to 25-30% of premium vis-a-vis buying a Rs. 20 Lakh base plan.

2 important things here

Ensure there is no room rent limit in your Super Topup policy.
Ensure you buy a Super Topup Health Insurance along with your Base health Insurance policy tenure and they have similarly timed renewal dates.

You can read how super top up works in this article .

Point #11 – What to ignore while buying a policy ?

Now that you know what you must compare and consider, you must also know what to avoid?

Features like Ambulance, Daily Hospital Cash, Domiciliary, and any other benefits that don’t get used often, have a low consequence in the overall scheme of things. Hence, in my opinion, these should be overlooked, so that you focus on the bigger covers.

So focus on the network of hospital, fees for doctor consultation, Room rent Limit, ICU charges, Check if they are paying for medicines or not and these kind of expenses which make the the major part of your overall bill.

Things like Ambulance charges are not more than Rs 2,000 , if you have to pay it from your own pocket, even that its totally fine. Why to choose a policy based on that parameter ? Its always a bonus advantage and nothing else. So learn what to ignore and what to look at.

Point #12 – Ensure you appoint a good advisor

By now, you may have realized Health Insurance is a complex product and a good amount of research has to happen (but do not over do it). It is therefore recommended that you appoint a health insurance expert to help you shortlist products, explain the terms, answer your queries etc.

You even need a post-sales services like claim assistance and helping you out in co-ordinating with the health insurance company if you are stuck. If you find yourself a policy through an Insurance Broker, if required, he/she may also be able to help you through dispute resolutions with Insurers, in the long run, if any.

Let me show you an example of a claim rejection case with Max Bupa (company was right in rejecting the claim) . One of the readers among you had bought a policy through Max Bupa (through some individual agent, not broker) and he bought two different policies for himself and wife . He wanted a maternity cover and the agent told him that its covered in the policy. It was even written in the policy document, but it was clearly written that both husband and wife have to be in a single policy (floater policy) . But agent and client both didnt pay much attention to it.

And after 4 yrs, company rejected the case based on their terms and conditions (the claim itself was not valid) . Below you can see the scanned letter which company had sent to the client. Here company was correct in rejection of claim because client wanted something which was never covered in the policy. However if had paid more attention or had a great advisor on his side, he might have been informed in a better way.

Remember that unlike Life Insurance or many other policies, Health Insurance could have repeated claims through yours or your family’s lifetime. It is therefore important to have someone who can hand-hold you through the tedious paperwork and the otherwise time consuming processes of Insurance companies.

In the cases where you want to cover the family members who are above 50 and/or with pre-existing disease, it makes a lot of sense, to go through an insurance broker who deals in multiple insurance companies. Out of sheer experience, the broker will be able to help you zero down to few Insurance companies who are liberal. This will help you avoid the pain of doing medical tests with Insurance companies where chances of getting a policy are very low.

Point #13 – Review your existing policy and look at options to Port

If you have an existing policy which does meet the above mentioned 12 points, and you are still young and healthy, I would recommend you to look at porting your mediclaim policy to a better company around 2 months before your next renewal.

Unfortunately, if you have already made claims in your existing policy, or have any chronic ailment to declare for any family member, the chances of portability are very dim. I would then recommend you look at upping your cover with the same insurance company, and look for other options (like Super Topup) by which you can hedge the negatives in your existing coverage.

Buy your health insurance company NOW !

I recommend that you at least start looking at various options and take your decision quickly. That’s all folks. If you have any questions, comments, feel free scroll down to post your comments. Happy to help.

Gift to Family members – 3 awesome tips to save income tax legally

Posted on February 12, 2015March 16, 2020 by Jagoinvestor

Most of the people in India try to save income tax by investing the money in their spouse, children and parents name. We are going to explore this topic more deeper and help you understand the exact rules applicable and how you can save more tax legally, by gifting money to your family members.

Majority of people, just transfer the money to their family member account and invest that money, thinking that they will not be paying tax on that amount and it’s a smart way of gifting the money and avoid paying the tax. But that’s not correct. I have already written in detail about what is gift tax and certain exemptions when one don’t have to pay any tax on gifts received.

What most of the people do in real life is that, they just transfer the money to their family member bank account and invest that money in their name, assuming that by default it will help them in saving tax, because they have gifted away that money and because their family member has income below exemption limit, they also don’t have to pay any tax. However, it’s not that simple.

Now, let’s understand the tax implications of various people involved when a gift is given and what is the right way to save tax by gifting money.

Let’s take an example – where husband earns Rs 10 lacs per annum, gifts Rs. 1 lakh out of that to his wife, who is a homemaker. Wife, then invests this Rs 1 lac in a Bank FD at the rate of say 10% interest per annum and earns Rs 10,000 as income.

This transaction has three parts and the tax implications as follows

Tax Implication on GIVER (husband) for the amount gifted
Tax Implication on receiver (Wife) for the amount received
Tax Implication on the income earned, when the gifted money is invested.

Tax Implication on GIVER (husband) for the amount gifted

Let’s first talk about the tax implication for the person giving the gift.

The person, who gives the gift can never claim any income tax deduction or exemption from his/her income. Most of the people confuse the entire gifting implication and assume that the money which they have gifted to somebody will be reduced from their total taxable income and they have to pay tax only on the balance income. But that is not correct.

In the above example, the husband earns Rs 10 lacs per annum and should ideally pay tax on that full amount after deducting any income tax exemption they get from various sections like 80C and others.

How most of the people think?

Now husband can argue that the Rs. 1 lac which was gifted to his wife should be reduced from his total taxable income and he should be paying taxes only on Rs. 9 lacs. But this is simply not allowed!

Because – if this is allowed, then everyone will gift all their salary or business income to wife or parents and no one will pay tax at all, because they don’t have any income now as the entire income is gifted. That does not make any logical sense.

So in the above example, husband has to pay tax on his income of Rs 10 lacs subject to all the benefits as available to him under various sections of the IT act and let’s say that his total tax after all tax deductions (80C) comes to Rs. 75000/- and his post-tax income is Rs. 9.25 lacs. He can gift whatever he wants out of this post-tax income.

Tax Implication on Reciever (Wife) for the amount received

Now let’s take the tax implication for wife, who got the money in our example. Will she pay income tax on this gift received or not?

The answer is NO

Because this is a gift from her husband, who comes under the specified list of relatives who are exempt under the income tax act from gift tax liability. If she had got this 1 lacs from her friend or some random person, who is unrelated to her. In that case, this 1 lac would be considered her income for the year and taxed in her hands, but here she will not pay any tax on this 1 lac.

Below is the list of relations from whom if one gets any gift, they don’t need to pay any tax.

Your spouse
Your brother or sister
Brother or sister of your spouse
Brother or sister of either of your parents
Any of your lineal ascendants or descendants
Any lineal ascendant or descendant of your spouse
Spouse of the persons referred in above points

So the point is that, if one gets a gift from close family members, like spouse, parents, siblings etc, the receiver does not pay any income tax on the money received.

Tax Implication on the income earned, when the gifted money is invested

Now the tricky part comes in.

What happens when the gifted money is invested in products like FD’s or shares? Let’s say that the wife invests this Rs. 1 lacs in a bank FD and earns an interest @10% annually, ie Rs 10,000.

Now who will pay the tax on this interest of Rs 10,000?

Husband or Wife?

I know most of the people will think that its wife, because once she gets the gift, now its her money and she is 100% owner of that money and any income generated from that should also be her own income and she should pay the income tax on that amount. So here in this case, if wife does not have any other income apart from this Rs 10,000 , then her total income for the year will be Rs 10,000 only and as its lower than the exemption limit, so she will not be paying any tax and won’t be required to file any income tax returns.

However in real life, this is not how it works.

In this case, IT department clearly knows that people will gift the money to their spouse who does not have any income, so that the whole income generated become’s tax-free. To combat this, there is something called as Income Clubbing provisions, which adds the income of one person in other income in certain cases, and that will apply in this case.

So in the above example, this interest income of Rs. 10,000 would not go tax-free and will be clubbed with husband’s income and he has to pay tax based as per the applicable tax slab.

So if, husband earned Rs 10 lacs a year, now this Rs 10,000 will be his additional income making his total yearly income as Rs 10.1 lacs.

But Income earned from the income earned is not clubbed

One interesting point to note is that any further income generated from the income is not clubbed further and that will be 100% income of the person who got the gift.

So in above example, when wife gets Rs 1 lacs as gift, and earns Rs 10,000 as the income, that Rs 10,000 will be clubbed with income of husband, but when this Rs 10,000 is further invested into FD again and earns Rs 1,000 income, this time – it will be wife’s income and not husband.

So now, how you can apply this rule in real life? Here is a tip !

Let’s say you have Rs 10 lacs with you. If you invest this money in your name, you will earn Rs 1 lac as income from it and pay tax on it, but next time again when you invest this 1 lac, you will earn Rs 10,000 and then again have to pay tax on it because it will be your own income.

What is the alternative way ?

What you can do here is that, you can invest Rs. 10 Lakhs in your wife’s name and earn an interest of Rs. 1 lac. This Rs. 1,00,000 will be clubbed in your income for the computation of income tax; which was going to happen anyways. however, when your wife further invests this 1

However, when your wife further invests this 1 lac in another FD and earns Rs. 10,000 (assuming 10% interest) as interest on it, this time it will be considered as her income and will not be clubbed with your income. Assuming husband in 30% tax bracket, it’s a saving of Rs 3,000. Might look small, but its one of the ways to save the tax by Rs 3,000 in a legal way.

The image below shows you the rules and how the tax implication will apply in various cases explained above

3 tricks to save more tax legally by investing in family members name?

Now you are clear about the tax implication on person giving the gift, on person who is taking the gift and on the income generated from the investment done by the gifted money.

Now let’s see some things, which an investor can do to legally save tax in a more smart manner by involving their family members and that too in a 100% legal manner.

Trick #1 – Invest the gifting money into tax-exempt or low-tax instruments

Clubbing provisions will not apply when the gifted money is invested in any investment option which are tax exempt by default. Or one can invest in lower tax options.

For example – rather than a normal FD, if the money is invested in shares of a listed company and sold after 1 yr or an ELSS mutual fund, and sold after 3 yrs lock in period, then in that case the profits which attract on 10% tax as equity taxation after recent budget is only 10% without indexation, that too above Rs 1 lac limit

Trick #2 – Invest money in your parents name

You can save taxes by gifting money or by giving loans to your parents or in-laws because clubbing provisions does not apply in these cases. This is because any income generated on the gifted or loaned money to parents is purely parents income and will be taxed in their hands only.

Let’s see an example.

Assume that you have Rs 40 lacs in your hand which you want to invest and your father and mother are both senior citizen and have no income from any source. Now what you can do is, gift Rs 20 lacs to each parent and let it get invested in a bank FD at an interest rate of 10% (just an assumption)

Now both of them will get 2 lacs as the interest income individually and this is their only income in a year and will be below the exemption limit (Rs 3 lacs for senior citizens) . So there won’t be any income tax to be paid by them.

This way you have invested Rs 40 lacs in family name itself with ZERO income tax.

On the other hand if this 40 lacs was invested in FD on a main bread-winner name who is into 30% bracket, he would have paid 30% income tax on 4 lacs of interest, which is Rs 1.2 lacs. This whole 1.2 lacs is saved.

Even if parents are having additional source of income, it’s still beneficial to gift the money to them as it would lower the income tax outgo, because of the lower slab rates and applicable exemption limit.

You can apply the same logic and invest in property in parents name and let the income come to them and enjoy the tax-free income subject to exemption limits.

Trick #3 – Invest money on Major Children Name

In the same way, even the money gifted to major children (above 18 yrs) will not be clubbed in your hand. So in case you have children who are 18 years or older who are either studying or earning at a lower tax slab than you, then gifting your surplus money and investing in their name will neither attract gift tax nor clubbing of income will apply.

Income earned out of investments made by your major Children out of the gifts given by you will be taxed in their hands only.

This is really a great thing because if you are going to pay for some upcoming children education goal or marriage goal, then instead of investing the money in your name and funding the goal later, why not just gift the money to the child and invest it in their name itself. When the goal arrives, the money can then be used, but for years there will be no tax liability (or lower tax) and you will save a good amount of income tax.

You may even consider giving interest-free loans to your children as it is lawful and can help you save you more taxes. However when the children are minor then clubbing provision will attract except in cases where the income is earned by the child due to his or her skill or talent.

Plan your Income Tax with help of a CA

There are lots of ways one can save income tax by restructuring their investments in family members name. Generally people do not have much time to plan all this and for years they pay higher income tax and never optimize it. If you really want to work on this. I suggest hire a good CA for his consultancy services. This can be your family CA or some friend if you want or some external person whom you can trust.

Let me know what new ideas are coming to your mind right now after reading this article? What are your views on this? Please share it on comments section.

This article is guest post by Rishabh Parakh, a Chartered Accountant by Profession & Founder Director of Money Plant Consulting, which provides services related to income tax filing, scrutiny cases and various other CA related services with operations in Pune, Mumbai and expanding to other regions.

UAN – All you wanted to know about the new EPF system

Posted on February 5, 2015July 23, 2019 by Jagoinvestor

EPFO has brought some major changes in the way it works and a new system called UAN (Unique Account Number) is in place now. This UAN is a way to simplifying the process of collecting and managing the provident fund money for employees.

Transfer EPF account online

Background – The pain of the old EPF system

Before I start explaining, Let me go back a bit to help you understand a bit of background. Earlier when a person joined a new job for the first time, he got an EPF account opened by the employer where his provident fund money was deposited. For years, this money got accumulated in that EPF account.

Now when this person left his job and joined some other organization, the new employer again assigned him a new EPF account and started depositing his provident fund money in that account.

This way, if a person changed his job 5 times, he had 5 different EPF account numbers and in case he wanted to withdraw his EPF money, he had to apply at 5 different employers or transfer then one by one to his latest EPF account and this called for a big headache

This way, if a person changed his job at 5 different places, he had 5 EPF accounts and now he had to either withdraw money from his EPF accounts one by one, or they have to transfer the old EPF money to new EPF account.

But that was a big pain!.

Transferring your old EPF money to new EPF meant filling up the forms, then EPFO department sent to your old employer to get their signatures and if they denied or didn’t exist at all (if they closed down), then things would fall apart and now you were stuck with no information, no proper status and no idea what you need to do.

Calling EPFO department or emailing them didn’t work most of the times, and a lot of people just let their old EPF account exist and didn’t do anything, because of the sheer amount of uncertainty and ambiguity. This whole system was raw, old and not friendly for the employees at all.

Things have changed now quite a bit after UAN has been introduced and most of the pain points have been addressed. Let me now share some critical points about UAN or Universal Account Number as it’s called.

What is UAN?

In simple words, UAN is a 12 digit single account number which will be linked to your provided fund money. Now you don’t need to worry about different EPF accounts and then transfer them when you join a new job. Now

each employer will just give you a member id, and all those member ids will be linked with the same UAN. Even the employee’s having EPF under private trusts will be assigned the UAN.

This is the new system and will be applicable now for your current and future employment. Any EPF account you had before this, sadly will not be handled in this system. You will have to manually deal with old EPF accounts, for anything new will now be under UAN. The image below clearly shows the situation now and then.

UAN-vs-EPF

3 Steps of obtaining and activating your UAN?

Below there are steps to be followed if you want to get your UAN and activate it.

Step 1 – Get the UAN from your Employer

The first step is to ask your employer for your UAN. EPFO department has already allotted most of the UAN (4.2 crores as the last count) and communicated it with employers. So most probably your employer must have shared your UAN number to you.

If your employer has not yet shared it with you. You can still validate if your UAN has been issued or not. For that, you need to follow the steps below

Go to https://uanmembers.epfoservices.in/check_uan_status.php
Choose your State and Office jurisdiction for EPF
Enter your Establishment Code and EPF account number

Then click on the “Check Status” button and it will show a message saying “UAN is activated” in case it’s already activated by EPFO department. Once you see that message, then check it with your employer. Below screenshot gives you an idea about how to do it.

check UAN allotment status

So like this, you can first verify if your UAN is allocated or not against your EPF. Also, note that UAN is to be allotted to only contributing members whose accounts are active. All the dormant/inactive account is going to get closed.

So if you have 3 EPF account, out of which 2 are old and dormant, please check the status using your current EPF account number which is active.

Step 2 – Activate the UAN

The next step is to activate your UAN. For that, you need to follow the steps below

https://uanmembers.epfoservices.in/uan_reg_form.php
Enter your UAN, mobile number and EPF account details
Get authorization PIN on your mobile
Submit PIN and activate your UAN
Then generate your login/password and registration is complete.

Activate UAN and Authorization PIN

Step 3 – Update your KYC details

After that, you should log in to UAN portal with your username and password and once you enter the portal, you will see many options like for downloading passbook, downloading UAN card, and editing your details. Apart from that, you will see an option to Edit your KYC Details.

UAN KYC update

Following are the documents which can be used for KYC. You need to upload a scanned copy of any one document

National Population Register
AADHAR Card
Permanent Account Number
Bank Account Number
Passport
Driving License
Election Card
Ration Card

Below you can see an example of how it looks when you choose PAN as an option.

KYC update UAN

Special Benefits of UAN

Let us now see some of the benefits of UAN compared to the old EPF system. Some changes in UAN were really required from last many years (even decades). Let’s see them one by one.

Benefit #1- Communication directly between employee and EPFO

The best thing about UAN is that now the communication can happen directly with EPFO and Employee. Earlier the employer was in between employee and EPFO for most of the things, especially for withdrawals and transfer of EPF.

Your employer had to sign the documents from their side, now this will not happen. The employer will now act like a depositor in your account and nothing else.

Benefit #2- UAN will remain same throughout the career

The best part is that Universal account number is going to be same throughout your whole career. Each time you change your job, all you need to do is provide your UAN to your new employer and he will tag the member id they create for you to that same UAN.

Note that your overall career moves will be recorded at one place because your UAN is nothing but a central database of all your employers and your past employment, but this will only be visible to the employee and no one else.

Benefit #3- Sms notifications when your Provident Fund is deposited

Now each month, when your employer deposits your provident fund money, you will directly get an SMS notification informing you about it. This is really great because now you know if your employer is actually depositing the money with EPFO or not.

This will be exactly like you get notifications from your bank when your account is credited with salary. This is especially nice because in past there have been cases where the employer didn’t deposit the EPF money for years and months and employee came to know about it much later and then they had to lose their hard earned money

Benefit #4- Update your KYC at one place

Now you just have one single window where you can update your address, mobile, email and other KYC details in case they change in future. A lot of issues happened in the earlier model where the same person had a different address and contact details with different employers and that created issues while withdrawal and transfers.

Benefit #5- Transfer of your Provident fund money automatically

Now the transfer of EPF is very simple. When you join a new job, you just need to furnish your UAN number to your employer and automatically within 1-2 months, your provident fund money will be transferred. In a way, it just has to get linked to your UAN

Benefit #6- Extremely friendly process for EPF withdrawal or Applying for Loan

This is still in process and can take up more than 6 months to a year, but once it’s complete, then the process for withdrawal and loan will be super fast and simple. You might not be aware that you can withdraw from your EPF for important events in life like marriage, buying a house, or medical emergency subject to some rules and restrictions.

Once UAN system is fully functional, you then just need to fill up a form and provide your fingerprint to a biometric reader and once things are matched, the amount will be transferred to your registered bank account within an hour.

This used to take months and years earlier. I am not sure if in reality, it would be as simple and fast, as they claim – but still, things are bound to get simple and fast.

Conclusion

Make sure your UAN is activated and you have uploaded the KYC document. If you have any other queries regarding UAN, please share it with us and we will try to find out the answer.