Month: May 2017

1 small trick which can drastically increase your saving rate each month

Posted on by Jagoinvestor

Do you want to save more money each month?

Today, I am going to reveal a secret trick that will help you to increase your monthly investments by some margin. This trick is more of a psychological shift in the way you think about money, emergencies and how much should you invest.

However, this is applicable to only those who are already investing some money on a regular basis each month.

Let’s start …

One small trick which can help investors in saving more money each month

You might be thinking that my secret is nothing but making your savings “automatic”. But no, it’s not the case. Making your investments “automatic” is just the first step, but there is something else that will take your savings to the next level.

Let’s get into it!

Here is how most people invest their money

  • They earn a salary
  • They spend money on their regular expenses (Rent, Grocery, Movies, travel)
  • Some money is left at the end of the month
  • and finally, a partial amount out of that is invested

Did you see that last line?

Only a “partial” amount is invested in the leftover savings at the end of the month is invested, not FULL.

Let’s dig deeper into this …

Take a sheet of paper (or open an excel sheet). Write down the total income you get in a month on the left-hand side, and on the right side, mention all kinds of expenses you have. Put Rent, Groceries, Maid expenses, Travelling, Eating out, movies and whatnot.

Now add up all the expenses and find the total expenses and deduct it from the total income you get each month. You will get your Monthly Surplus!. This is the amount you are left over each month and you should ideally invest this whole amount.

Below is a template which you can use for the calculation

How to calculate monthly surplus>

What is your monthly surplus?

Will you start a Recurring deposit for that amount or start an SIP?

I guess the answer is NO.

As an example, if a person is earning Rs 1 lacs per month and their expenses are around Rs 60,000, their monthly surplus is Rs 40,000 per month.

But this person will probably invest only Rs 15,000-20,000 per month on a regular basis. They will keep the rest as “Margin of Safety” amount which they might need, because what if they suddenly need it?

margin of safety

The margin of safety is a simple concept, it’s just an “extra buffer” for “what if things go wrong” kind of situations.

This is called a traditional style of cash flow handling which is a very intuitive and natural way of thinking. We all do it and it feels right!

But there are some problems with this approach

traditional cash flow planning

But there is one big problem

While this traditional method looks very natural, there is one big issue with it. Here it is!

Once your investments are set, you feel a sudden excitement that now your investments are in shape, but because you have left a big margin of safety (the extra buffer), your expenses will automatically expand and eat away your margin of safety.

The mere availability of the buffer money will create various short term demands in your financial life and you will use that buffer each month.

Suddenly you will start ordering various things online (most of the time things which are not required), your eating outs will increase, upgrading your phone will appear within your budget, etc.

Supply creates its own Demand – Economics 101

The availability of money will create the demands in your expenses and almost all the time you will justify them. So from Rs 60,000 expenses, you will see that automatically it’s reaching Rs 80,000.

And after some time you will be used to Rs 80,000 per month expenses.

Just imagine, if the person had started a Rs 30,000 SIP and left just Rs 10,000 as a margin of safety? Can you see that here the person still has a margin of safety and invests 50% more amount each month?

What about Rs 35,000 SIP and just Rs 5,000 as a margin of safety?

Welcome to 10% margin Cash flow Management System

This is the crux of the system.

We all feel that we need to keep a big margin of safety because in our mind things will go wrong. And they will!

There is no doubt that things can go wrong in some months and some unexpected expenses can come up which can really disturb your regular investments and that’s why most of the people leave a big buffer between expenses and investments.

However, let’s deal with reality.

Most of the times these emergencies are not real emergencies and if we didn’t have enough margin of safety, we would have justified them as “not important” expenses!

Also, you should not depend on your monthly cash flows for emergencies and have a separate fund that can be touched in case a real surprise expense comes up. I call this new system as “10% margin Cash flow System”

10% margin Cash flow system

Here is how you design this cash flow system

Step 1: Write down all your expenses and make sure you put realistic numbers, neither less nor very big.

Step 2: Calculate 10% of your expenses and that’s your margin of safety. If your expenses are Rs 40,000 per month, then your margin of safety is Rs 4,000

Step 3: This margin of safety amount is the only extra money you will keep with you each month apart from your expenses, and even this money should be auto invested in a liquid fund, which can be redeemed on a short term notice of 24 hours.

Step 4: Make sure that before you start your actual investments on a monthly basis, you create enough emergency funds which can be 3X of the size of your monthly expense. Any sudden surprise expenses which are outside of your regular expenses list will be taken care of from this emergency fund and not your monthly surplus.

Step 5: Set up your investments in an automatic mode (like SIP in a mutual fund, or a recurring deposit or a combination of both) for all the money left other than regular expenses and 10% MOS (margin of safety)

Here is how it looks like

Taking the same example of Rs 1 lac income, the guy has Rs 60,000 expenses in total. His margin of safety is Rs 6,000. Rest amount left is Rs 34,000

For the first month, he puts this full 34,000 in a liquid fund. If any additional money is left from the 6,000 MOS then he puts that in an emergency fund, else he can spend it. For next 2 months, he puts 68,000 more in a liquid fund and his total liquid fund amount is around Rs 1 lacs +

Now, this guy will set up his SIP of Rs 34,000 per month.

Now imagine what happens in 4th month

In 4th month, here is how it looks like

  • Rs 34,000 SIP is executed and the money gets invested (make sure the SIP date is in the start of the month)
  • Rs 60,000 is the regular expenses
  • If there is any need of extra spending, then Rs 6,000 extra is already there (most of the months should be like this)
  • If for some reason, some surprise expenses come up, you redeem that much money from liquid fund and use it.
  • Repeat!

Can you see how the whole game changes here?

Margin cash flow planning

I hope you got the whole idea of this new model now.

You can always withdraw the money if a real emergency arises

I tried this concept on one of my friends last year. I asked my friend if he will be able to do any SIP?

He said “NO”.

His expenses were almost equal to his income. However, I said that he should start a small Rs 5,000 SIP. He said that he will not be able to because he is not left with any money at the end of the month.

My simple solution was – “Withdraw the money in a month if you really need it”

His SIP ran for the next 12 months

He finally started his SIP with a lot of reluctance and the SIP ran for 12 months straight ! with 1-2 withdrawals in between. However, my friend was proved wrong.

The mere unavailability of money made sure that he had to fit his expenses into this “visible income”.

So don’t worry and dare to start a bigger SIP then you can handle, in the worst case, you can always STOP it, you can always redeem some money back if you need it. But in my experience in most cases, people are able to handle bigger investments each month compared to what they imagine.

Let us know if you liked this article and if you are going to implement this new model of investing?

Do you really think this unconventional way of cash flow management can bring different in your financial life?

13 things every investor should experience at least once in their financial journey

Posted on by Nandish Desai

It has been around 8 years we as a team are working in the personal finance space. We have worked with a few hundred investors one on one and there is a lot we have learned from their sharing and life experiences.

investors experience

We see personal finance as a journey and any journey will always have experiences. In today’s article we have tried to highlight some experiences which every investor should experience at least once, there is no compulsion but there is something to learn from each one of them.

1. Experience a bull run

For the first time in the history of Indian stock market the sensex has crossed 30k mark. The market is currently riding on a high PE (Price per earnings ratio).

Current PE is around 22-23. In such situation existing or those who started investing 3-4+ years back experience a spike in their portfolio. It’s a moment for them to celebrate as they see their wealth growing.

At the same time on the other side new entrants get attracted to the equity market. It is important to experience a bull run because in a bull run you are able to experience the real power of equity as an asset class.

Once you taste the blood (returns) you fall in love with equities. Bull market expands your risk taking ability, you get a sense of winning.

2. Experience bear market

A friend of mine jokingly came and said “ I made a killing in the market bust of 2008. I shot my broker.”

Remember 2008 market crash; the markets came down substantially in a very short span of time.

You can watch below video

Bear market is one of the greatest teachers in the world of investment. It teaches you patience, discipline and many other elements.

There are some very important lessons a bear market teaches an investor. Those who did not apply asset allocation strategy to their portfolio’s there money got wiped out in front of them. People chase returns but it is also important to check the risk on your portfolio. As your portfolio grows your risk also expands.

3. Experience Zero Bank Balance

Imagine having no money in your pocket and having a zero bank balance. It is a time when you hit the bottom and feel resigned and cynical about the world.

I have experienced the same. Some 9-10 years ago there was a time in my life when I had no job or business and was also not in a position to ask money from my parents. I approached a friend and took Rs.5000/- from him.

bankrupt no money in bank

At that time I was in Mumbai I went to Juhu beach, I took a stick and drew one line in the sand. I jumped the line and made a commitment to myself that I will never ever ask money from anyone and will create financial stability.

That day was a turning point in my life, my relationship with money and my career shifted and things started to move in the positive direction. The zero money day taught me a lot.

4. Work with a financial mentor

I always feel if you want to enhance your performance in any area than work with a mentor. It is said that when the student is ready teacher appears. Find someone and become a student of wealth.

Currently in my life I have a fitness mentor, business mentor and a hobby mentor. I surrender to all three of them and they help me in taking my life and business to the next level.

As an investor get a money mentor, someone who will help you to improve your money management skills, someone who will give an honest feedback to you. Do not have a mindset of saving all the time, some investors try to do everything on their own and are not willing to pay for quality advice. Your mindset is your true wealth and see that you invest in right  mentors.

5. Experience and engage with Charity

I recently came to know about someone who visits India every year and does charity of 1 crore. Last year he came and donated money to build an Olympic size skating ring for kids. Hundreds of kids practice on the skating ring every day and creating champions. What a wonderful GIFT he has given to young kids. This is awesome, this is inspiring and creates real fulfillment.

Below is a picture of the actual place.

Charity example

I don’t know the exact thing but there is some magic in doing charity. Charity adds a special dimension to your financial journey, it helps you to break your over attachment to money and teaches you the real meaning of the word “sharing”.

Charity gets you closer to abundance and you are able to free yourself from the trap called “scarcity”

6. Teaching about money to kids

Sunday morning you should do something special for kids to learn about money. Not just for your kids but it can be your society kids. Teaching is powerful; share your experiences about and around money with young kids or teenagers.

Most people do not take out time to teach KIDS about money.

You don’t have to be an expert, it is about sharing your heart with kids or teenagers in the area of money. You can do a small book read session, if you want we will help you in doing such short sessions.

7. Experience inflation

For this you need to leave your wallet, credit cards and mobile at home and carry limited cash with you. Take a Rs. 500 or 1000/- with you and see how much and what you can buy with that amount. Start making list of how many things you can buy.

The game is not about spending the amount it is about utilizing the amount in the best possible way. Trust me it won’t be an easy exercise.

inflation in India

When it comes to investing and inflation, what matters most is not what you make, but what you keep. As an investor you will always be having war with inflation and the only way you can defeat inflation is by learning discipline and simplicity.

Many investors are not in touch with inflation, they talk about it but they are not present to inflation when they get into the shoes of a spender.

8. Building personal finance library

People spend on having a home theatre but very few have a library at home. As an investor it is important to build your personal finance library. You will have some amazing thoughts while reading about money management.

Money management is a skill and you can acquire the same from reading good books. We have written three powerful books on personal finance, you can start with them and slowly add more books to your library.

Always remember your bank balance is directly proportional to your thought balance.

9. Experience the inner wealth and abundance

Go to some meditation retreat and experience meditation. I highly recommend vipassana meditation course to each one of you. Money exits in the outer world but the thoughts about money resides in your inner world. Your outer world around money is mere a reflection of what is going on inside you.

Doing a SIP or buying a real estate or buying GOLD is fine but what about your inner wealth, see that you don’t go bankrupt in your inner world. Creating balance between your inner and outer world is extremely important.

10. Experience debt

I am not saying if you are debt free then create debt. I have worked one on one with many investors who were in a debt trap and I could see their life changing after overcoming debt. Debt puts you on a slow poison and very few investors are able to break free from debt trap.

Debt Trap

When you fall in a debt trap it is not about money, it means you have mastered the art of mismanaging your financial resources. You fall in a debt trap only when you stop respecting money.

I have seen people putting a lot of effort in becoming debt free, I also know some of our clients who not just finished their debt but have created positive net worth for themselves. One of our clients once shared, “Easy ( credit card ) money has made my life tough”

11. Spend time with someone who is financially free

Create network of people who are financially free. Take someone for a coffee or dinner and have an empowering conversation with them. One of person who I admire a lot owns a few thousand crore pharma company, I look for opportunities to spend time with that person.

I have learnt a lot from that person and every time I meet it leaves me with a new insight about my relationship with money.

meaning of financial freedom

The way they view money, life, world and their work is amazing. The one thing to learn from them is their inner stance, financial freedom is an inner stance and not just a place to reach.

12. Experience completion with your parents

I know I am getting into a sensitive zone with this point and we have never dealt with such things on our blog. Your biggest wealth are your parents and nothing else but somewhere we kind of forget about it. Having a loving and caring relationship with your parents is extremely important.

You may acquire 1000 crore but if your relationship with parents is incomplete you will never experience fulfillment. If you are right now alive and reading this article it means your parents did their job very well. Do not expect anything more from them.

Write a thank you letter to them, do not try to change them or find any faults in your parent’s personality. Even if they are not alive try to have a completion with them, completion is an inner process where there is peace and joy. I am very sure when you start to run behind money your relationship with your parents will experience a rough patch.

13. Experience power of compounding

Start a small SIP and stick to it for 10+ years.

This SIP is not to achieve any goal but it is for you to experience power of compounding.

You can also document your experience and pass it on to your next generation. Power of compounding is magical and as an investor it is important to experience it. You can have anything in life by adding the power of compounding to your actions.

Start your SIP in Mutual funds with Jagoinvestor Help

Conclusion

Your financial journey should not be about chasing returns and only making profits. See that you fill your financial journey with rich experiences and see experiences as your teacher.

During the journey nothing is happening to you ( so stop taking things personally), in fact everything is happening for you and so cherish every bit of your financial journey and continue to make a difference.

Do share in the comment section if you could relate to the experiences we have listed, you are free to share some other life changing lessons that life must have taught you. Feel free to share the articles that we write on jagoinvestor and if you want you can get in touch with us and we can jointly create the content.

Should you really take Legal Opinion while buying a home loan funded property?

Posted on by Jagoinvestor

Are you looking to buy a home which is already funded by a home loan and someone else is paying the EMI?

Does it make sense to rely only on the bank for verification process or should you take the second legal opinion? Most customers have this query when they are buying a property and availing a home loan.

Legal opinion on 2nd property

They are well aware that the FIs (financial institutions) have a panel of lawyers that do this day in and day out but still want to satisfy themselves by getting an opinion from that one ‘recommended’ lawyer that their uncle knows.While it is a harsh truth that no property can be legally proofed to a 100%, there are a couple of things which need to be considered while deciding to take a second legal opinion.

Let us consider two kinds of properties – one where there is a large apartment complex and second where it is an individual plot or a small apartment complex.

Case #1 : Large Apartment complex

When a corporate real estate developer intends to purchase a large parcel of land and develop it, they know they are going to invest a huge amount of time and money.

Large apartments in India

They already have the experience to pick up the right projects. They also have a tried and tested lawyer or legal department to check details and guide them through all the steps till they reach the point of selling apartment units.

It’s at this ‘late stage’ that the bank receives the set of papers and the em-paneled lawyer comes in and usually it is a matter of checking off the title, EC’s (encumbrance certificate) and other revenue records.

Such developers also have the financial might to settle any disputes that can be a legal hassle.In the unlikely event that there is a problem in the title / parent documents, then the owners can join together to fight against the developer or any other party.

Division of costs and burden

The financial costs can also be distributed, reducing the burden. However, this is likely to be an unwieldy and argumentative coalition so this is not a major advantage. To sum it up, these kinds of properties developed by a reputed builder are ‘less risky’.

In any case, it is a good idea for all buyers to keep a copy of documents pertaining to legal such as the legal opinion, copies of all documents including sanction plan and other statutory documents as far as the land on which the project has come up is concerned.

Case #2 : Individual House on a plot

Coming to the other classification of property – individual house / plot or small apartment complexes, it is worth taking a second opinion. The first and basic reason is that it is good to have a legal opinion in place.

Bunglow in India

The FI treats its legal opinion as confidential and does not share it with the customer. So, if the customer wishes to understand the intricacies of the property and also have a document to refer to at a later date, this is necessary. Even if the property is to be sold, the potential buyer would have more confidence considering that the legal clearance had been taken earlier.

However, one has to consider the cost of the opinion. It could be prohibitive considering there are payments to be made including the FIs processing fees, insurance premium and stamp duty of 0.25% to the government for availing the loan.

Hire a lawyer to do title search

The next best option is to commission a lawyer to conduct a title search on the property and give a clear report. This is different from what the FI em-paneled lawyer does (which is a title clearance report, checking the EC (encumbrance certificate) and an additional check of the approved building plans).

A title search report essentially consists of going to the sub registrar’s office and verifying the revenue records, ensuring there aren’t any open encumbrances or claims by any party. Usually, this is done for a period of 30 years. This will be an additional and strong check for a clear title to the property.

You will find a lot of articles out there detailing the list of documents one needs to check before purchasing a property. Many of the common issues are also listed. These are definitely worth perusing and acting upon. It is important to remember that purchasing a property is not the only important aspect, having peaceful possession of it is equally important.

This is a guest article by Pravin Mathew from Bangalore, who is a reader of this website. Incase you have any questions, we will be happy to answer it in comments section.

Have you linked your Aadhaar with PAN? If not PAN may be blocked soon…

Posted on by Jagoinvestor

Government has decided to make it compulsory for every individual to link their Aadhaar Card with PAN card by 31st July, 2017. This is part of the digital India campaign and an attempt to digitalize everything.

Why it is mandatory to link Aadhaar with PAN?

There is a great chance that there are a lot of fake PAN cards in India, because it can be easily applied online with fake identities and anyone with a little luck can get a duplicate PAN card. Hence in order to identify those fake PAN cards, govt wants to link Aadhaar card with PAN.

Why to link Aadhaar card with PAN

Because each person will have only one Aadhaar card, they will only be able to link it with a single PAN. Rest other PAN cards will be of no use after this process. This is an important move and is necessary for an orderly society and also to keep pace with the technology.

Importance of linking Aadhaar with PAN

PAN card and aadhaar card are the unique identification cards which can be used for verifying a person’s income and address respectively. Let’s have a quick view why this linking is important.

link PAN with Aadhaar

Some reasons behind linking aadhaar with PAN in details are as below:

  • Fraud PAN cards– Because of this linking a person can use only one PAN card wherever it is necessary which is linked with his aadhaar card. Though he has any fraud/duplicate PAN card, it will be of no use.
  • Tax Evasion – with the help of this, government will be able to track on the taxable transactions of an individual or an entity.
  • Tracing money launders- Aadhaar card is a full-proof identification of an individual and it cannot be duplicated easily so that linking of aadhaar with PAN can also be useful for tracing money launders.
  • There are fewer chances to have a duplicate aadhaar card as it is a more secured source of identification. Because Aadhaar card is the only identity proof which has all the possible information including Bio-metric. So it is little bit difficult to have a fake aadhaar card as compared to PAN Card and voter ID.
  • Curb corruption: This is also useful to curb corruption to a significant level as the record of each transaction will be verified by the government.
  • ITR-V: While paying tax, now you don’t need to send your ITR-V acknowledgement if your Aadhaar card is linked with your PAN Card.

Also, the government wants to get every individual identified by their Name, Address and also their income. A lot of PAN cards were very old, and many people have changed their address, contact details etc which were given to govt at the time of applying for the PAN card decades earlier. With this linking, all the data will also get updated.

What is the process to link aadhaar card with PAN?

If you are unable to link your aadhaar card with PAN, no need to worry. Here are the steps to link your aadhaar card with PAN.

  • Visit the page of Income tax e-filling portal & register if you are not registered with it. If you have your registration already then just login.
  • Login with the details i.e. registration ID, Password or date of birth.
  • Your PAN no. will be your registration ID
  • once you login you will immediately get a pop-up to link your aadhaar with PAN
  • If you don’t get a pop message then check the blue bar above and click on “Profile setting” and then on “Link aadhaar” in the list.

Aadhaar linking with PAN card

  • Or you can also see the option “Link Aadhaar” on the left side of the site when you open it without logging in. Simply click on it.

 

how to link aadhaar with PAN card

 

  • The details like your name, gender and date of birth will be given there already as per the registration. Just check that the details available there are same as on your aadhaar Card.
  • If the details match with aadhaar card then fill your aadhaar card number and captcha code and click on “Link Aadhaar”.
  • Once you submit you will get a pop-up that your aadhaar has been linked with your PAN successfully.

What happens in case of name mismatch between Aadhaar and PAN?

UPDATE: Now you can link your aadhaar card with PAN without changing your name as the option “Name on Aadhaar” has given there.

procedure of linking Aadhaar with PAN card

Now it’s suggested that you first decide what is the exact name you want to keep for future, in case you have different names on various documents.

If your aadhaar card has the name which you want to keep, then you should change your name in PAN. However if your PAN has the desired name, then change it in Aadhaar card.

Now, for those who want to change their name in aadhaar card, they can follow this process or watch the video below.

And if you want to change your name in PAN, follow this link

We really feel that one should have the proper name in Aadhaar card, because it’s going to be the universal documents in future.

UPDATE: New Feature by IT department

Besides this, there is also a new option on the e-filling site from where you can link you Aadhaar card with you PAN card without changing your name.

Only date of birth, Name and Gender on both the documents should match, however we feel that as a long term solutions it’s a good idea to have the same name on both the documents.

What to do if I don’t have one of the documents (Either PAN or Aadhaar)

Now a days, almost all the people at least in urban areas have both aadhaar and PAN, very rarely it happens that someone does not have both the documents. However incase one of the documents is missing, here is what you should do ..

For those who do not have PAN

If you don’t have PAN card, then this rule is not applicable to you right now. You don’t need to take any action at the moment.

When you apply for PAN in future, at that time you can give your Aadhaar details as the address proof while applying for PAN offline or you can choose an option called digital e-kyc and e-sign, where you will be asked for aadhaar number and it will be automatically linked to your PAN. Below is a snapshot of the e-KYC looks like.

link aadhaar card while applying for new PAN

What do you if you don’t have Aadhaar?

If you don’t have Aadhaar card then you should apply for it soon, because anyways it’s going to be the universal mandatory documents very soon and every PAN has to be anyways linked with aadhaar. You can apply for aadhaar card by online or by visiting its office and providing you essential documents.

How to Check whether your PAN card is linked with Aadhaar card or not?

For some people their PAN might be already linked with Aadhaar card. To check this you just have to visit the official page of e-filling and click on the login button on the right corner of the site. Fill your PAN number and captcha code and click on OK.

If your card is already linked then it will show “Your Aadhaar is already linked with PAN” and if your card is not linked then it will show “User ID does not exist”.

Below is the demo of this process

Is it safe to link your PAN details with Aadhaar?

Recently there was a news that M. S. Dhoni’s Aadhaar details were leaked somehow, which shows that aadhaar details are not 100% secured. If this can happen to a big celebrity, this can happen to anyone.

Many people are wondering if it’s safe to link their Aadhaar with their PAN?

  • Will their bank details be exposed ?
  • Will there be any fraud involved?
  • Will others get access to their income tax data ?
  • Will others get access to my personal data like Mobile number, Email and Bio-metric details?

But, you don’t need to worry!

The solution to problem is here. There is no need to worry about the security of your PAN after linking with Aadhaar. UIDAI has introduced safety features of aadhaar Card.

Now there is a facility of “Lock” and “Unlock” of aadhaar details.

If you “Lock” your aadhaar details, all your data will be freezed and the access to any third party will be blocked. All you will need to do is, verify the OTP which is sent to you when you apply for this “Lock” feature online. If you want to get details about all the safety features, you can download this PDF.

What will happen if your Aadhaar card is not linked with PAN card?

  • As per this amendment if a person do not link his aadhaar with PAN card then there is possibility that he could lose his access to the PAN card after December 31,2017 as per Hindustan Times.
  • You will be unable to file IT returns and pay the dues or claim the IT returns.
  • It’s been also said that the use of PAN cards may stop in upcoming days as Aadhaar card will be the unique Identity proof. So if you don’t link it now you have to link it with your PAN in future in any ways.
  • Because your PAN card will be blocked, and for higher value transactions PAN is mandatory, you will not be able to do many high value transactions online as the bank will keep asking for PAN

UPDATE:   What if I have both the documents but don’t have any Income Tax Returns?

If you don’t file any Income Tax Return then this rule is not for you. It will not affect either you link your Aadhaar card with PAN or not.

But if you have both the documents, we suggest to link the documents.

UPDATE:   What if I’m an NRI and have only PAN card?

NRI’s can also apply for the Aadhaar card. The procedure and documents required for NRI and Foreigners are same as Indian residential’s. Only thing is they have to be physically present at any of the Aadhaar card center in India.

But it is not mandatory for NRI’s till date because as per Indian Government Aadhaar is an unique identity for the person who is living on Indian soil. Read this PDF by UIDAI.

How can I apply for Aadhaar if I’m out of India?

If you are not in India currently and wanted to apply for Aadhar crad then the procedure is almost same. But you should have an introducer who can introduce you by providing his/her own Aadhaar card.

The verification of your identity will then become the responsibility of the introducer.

So, what are you waiting for ?

You should quickly complete this whole process as it’s just a 5-10 min work. Not completing this can impact you in negative way, so do not wait for the last minute.

Also you should spread this news among your friends and help others to complete this important step in their financial life.

In case you have any questions, I will be happy to answer them in comments section

Travel Insurance in trains in India by IRCTC has became mandatory

Posted on by Jagoinvestor

In next 7 min, you will read how you can secure your family with just Rs 1. I am going to teach you that. IRCTC has made it compulsory for every train traveler to take a Personal Accident Insurance Policy which has been applied from September 2016.

Railway minister Mr. Suresh Prabhakar Prabhu had announced in his speech that from the month of September 2016, railways will provide an optional travel insurance of Rs.10 Lakh to the passengers while booking tickets from its website, which can be opted by paying an extra 92 paisa.

UPDATE: Now while booking for train ticket you will see the prize “Rs.0 per person” in the option of insurance. So there is a possibility that the insurance amount have been added with the ticket fare.

insurance cover for train accident in India by IRCTC

Travel insurance policy by IRCTC is now mandatory

Earlier this accidental insurance policy was optional but now IRCTC i.e. Indian Railway and Catering Tourism Corporation Ltd. has decided to make it mandatory for the safety purpose of the passengers. Now if you book your tickets, you will not get an option to choose if you want the insurance or not. It has recently become mandatory as it was hinted some time back as per this article.

You can see the snapshot below

Choosing the insurance policy while booking IRCTC ticket

This policy is just like a travel insurance policy where a train traveler or passenger who books a train ticket from IRCTC’s website will get the insurance up to Rs.10 Lakh by paying an amount of less than Rs.1 extra while confirming the ticket. This amount will be provided to the family/nominee/heir of the person if he/she gets injured or dies in train accident.

3 companies which provide IRCTC policy

IRCTC has a tie up with 3 insurance companies which are providing this policy. These insurers are Shriram General, Royal Sundaram and ICICI Lombard. We recently tested it to see which company is providing the insurance and we got a message with Royal Sundaram. It might be different in your case.

3 companies which issue irctc travel insurance

Initially this scheme was introduced on a trial basis, but now it’s compulsory. The passengers having confirmed tickets, RAC (Reserved Against Cancellation) or are on waiting list can have benefit if this insurance.

This facility is not available for the sub-urban trains. Only Indians can get this policy. Children and Foreigners are not eligible for this policy. The insurance will be valid in cases like train accident, riots, terrorist attacks, shoot-out or arson in train, on platform or on the route to its destination.

What is covered under IRCTC Travel Insurance policy

Unlike common belief, the travel insurance with IRCTC goes beyond cover on death and provides various other benefits like disability insurance in various conditions.

Below are the details

  • 10 lacs for death
  • 10 lacs for permanent disability
  • 7.5 lacs for partial disability
  • Upto 2 lacs for hospital expenses
  • Upto 1 lacs for transportation of mortal events

Who can claim compensation of accidental insurance policy by IRCTC?

If the deceased is married then his wife, son or daughter can claim for the compensation. The daughter or son should not be minor if they are claiming. If the deceased is not married then his or her parents can apply for compensation. In other case, if the deceased has nominated someone else like other relative or any friend then he/she can also claim for the compensation.

In short we can say that the person whose name and details have been filled in the application by the deceased while booking the ticket can claim the compensation. The only thing is that he/she should have ID proof.

As per rules, within 4 months the insurance claim has to be filed from the date of insured event. All the terms & conditions, benefits and exceptions of this policy are mentioned in this pdf, download it and read it in detail.

Please watch the video below to learn about this topic ..

How to apply for the compensation of IRCTC accident insurance policy?

The nominee or the claimant can apply for the compensation to the nearby office of the insurer company which the deceased had selected at the time of booking ticket. You has to visit the insurance office and fill the compensation form and attach all the documents essential for the claim.

Why this Policy is Important?

In last 6 years around 800 train accident cases were registered in India in which near about 600-620 people died and 1850 were injured. More than 15000 people are killed in railway accidents per year as per some reports

Just imagine, you could have been one of those. What financial impact it can have on your family?

But many people just ignore the travel insurance thinking that it can never happen to them, as if they are GOD. Anyways the irctc insurance charge is just Rs. 92 paisa, which is nothing compared to the benefits it provides.

train accident insurance policy by IRCTC in India

Disability in case of train accidents

For an ordinary person, if such accidental case happens then it will be too much difficult to arrange money for hospitalization. And the cost of this policy i.e. 92 paisa is negligible as compared to the total train fair and the compensation.

The big reason to worry is many times these accidental victims die just because they couldn’t get proper medical treatment or even immediate help also.