How does a “Householder Insurance Policy” work? Features and benefits !

Posted on February 27, 2019November 16, 2019 by Anuradha Singh

In this article, we will see how you can protect your home structure and belongings from natural and man-made disasters. We are talking about “Home Insurance” Policies.

We all invest our hard-earned money in buying our dream home and our lives revolve around it. Unwanted natural disasters and man-made threats can threaten the security of our home and its belongings and can cause surprise monitory losses.

what is home insurance policy and what are its benefits?

We have all heard about all kinds of insurance policies like term plan, health insurance, car insurance etc, but very few people have knowledge about “Home Insurance Policy” or also called “Householder insurance policy” . Before I explain more on that, let’s see what are some of the real-life threats and real-life incidents where people have lost their homes and belongings

Example #1 – Burglary

As per this times of India report, burglars broke into 4 houses in Ghaziabad on February 27,2019 and took valuables worth Rs 20 Lacs. Among the 4 houses, one of the houses was just 500 m away from the police chowky and burglars took jewelry and cash worth Rs 500000.

Example #2 : Fire

As per this report, on January 4, 2018, Four people died after a fire broke out in Maimoon Building that housed residential complexes in the suburban part of Marol in Mumbai. Besides the four dead, five people were injured in the accident.

Example #3 : Floods

To give you a recent example of a flood disaster which took place in Kerala in August 2018. Around more than 400 people lost their lives and almost everyone lost their homes and belongings.

Example 4 Earthquake :

Nepal Earthquake which happened in April 2015 killed almost 9000 people and injured 22000 people. Total damage of Rs 1000 crores USD (which was 50% of Nepal’s Nominal GDP).

Can you see from the above examples, that these threats are real and it can possible happen to anyone in real life (even though the probabilities are quite small).

What is Householder Insurance Policy?

Householder insurance policies are policies, which protects the home-owners against damage and losses that affect their property and belongings. The exact terms of coverage varies from policy to policy; however, most insurance policies cover perils like hail, thunderstorms, fire, and theft.

Many policies also offer financial assistance if a homeowner must be temporarily displaced because their home has been damaged. Look at this video below which explains it in a crisp way!

What all is covered under these policies?

The insurance for your home can be broadly divided into 2 parts :

Structure Cover – This is for the structure of your home. The compensation under this cover will be paid to repair damages to the structure caused by specified natural and man-made calamities.
Contents Cover – This is for the possessions you have inside your home. If these are damaged or burgled, then the insurance covers the loss you incur for the same. You can take either one of these covers individually or opt for both to make sure you are covered comprehensively.

Here are some of the companies in India, which offers these Householder Insurance Policies. (Please do not consider this as a recommendation list).

HDFC ERGO Home Insurance
ICICI LOMBARD Home Insurance
TATA AIG Home Insurance
IFFCO TOKIO General Insurance Co.Ltd
BAJAJ ALLIANZ Home Insurance

Benefits of these policies

1) Protection against earthquakes, floods.

2) Cover against terrorism.

3) Cover against fire and allied perils.

4) Protection against cyclone, storm, hurricane, etc..

5) All risk jewelry cover.

6) Additional rent for alternate accommodation.

What all is not covered under this policy?

Loss, destruction or damage caused by war, invasion, an act of foreign enemy hostilities or war like operations.
Loss or damage caused by the insured’s and/or insured’s domestic staff direct and/or indirect involvement in the actual or attempted burglary or theft.
Willful destruction of property.
Cash, bullion, paintings, works of art antiques, mobiles and laptops
Electrical/Mechanical breakdown
Cost of the land.
Co-operative societies cannot take long term policy for the entire society building.
Under construction property.

5 Reasons why you should buy a householder insurance policy?

Here are some of the reasons why to buy a home insurance policy.

1. Natural Disaster can strike any-time and anywhere :
  Every year, India loses more than 9.8 billion due to various disasters. Though you can’t control natural disasters, through home insurance you can really protect your house against natural disasters or ” Act of God”, such as cyclone, earthquake and flood.
2. Man-made risks cause a lot of damage :
  Despite the latest safety equipment’s, man-made threats like burglary, riots, terrorism, etc… are still prevalent. While not all insurers cover these losses, you can get extra protection in the form of riders.
3. Lots of valuable items :
  Apart from its structure, this policy will cover the contents of the house such as domestic appliances, furniture, audio & visual appliances etc….
4. You may require relocating to an alternate place :
  Relocating to an alternate house happens in case of a total loss of the property. Till the time your home is being reconstructed, your home insurer will cover your additional rent.
5. Buying the policy for a longer period of time :
  Every year renewing your home insurance policy can become a very tedious task for you since you may be very busy with other responsibilities in life. Many insurers offer longer duration policy for 5 to 10 years straight in one go. It is a cost-effective and hassle-free way of staying insured.

Can I buy this policy If I stay in a rented house?

Both the Owner of the house and renter can buy this policy. There is just a basic difference between both. Let’s see what it is?

OWN HOME INSURANCE

RENTED HOME INSURANCE

In this type of insurance, the home owner either insures the structure or contents (belongings of his home) or both.

In this type of insurance the renter insures only his contents or belongings in this rented house.

The structure of the house is insured by the owner of this house

Example of a real-life House holder Policy along with premium break-up

Below images shows the detailed structure of the policy with the premium break-up of one of the known Home Insurance Policy. Details of the cover are as follows :

HDFC ERGO Home Insurance policy structure

HDFC ERGO Home Insurance Policy Premium details

Age of the property not more than 30 years
Type of ownership – Owned
Insurance required for my Flat /independent house
Policy Tenure – 5 yrs.
Risk cover for structure & content
Type of plan – Fixed sum insured
Sum insured for Structure – 50,00,000
Sum insured for declared content + Burglary cover for content – 15,00,000 (detailed description below).
Total premium payable (including 18% GST) for 5 years is Rs 34,825.

Conclusion :

I think you will agree with me, that we have almost no control of these natural & man-made disasters. The best we can do is be alert and prepare ourselves by insuring that we secure our belongings and structure of the homes.

Also, these policies should be preferred more by people who stay in an earthquake or flood sensitive zone and who do not stay in a secured society and vicinity. I understand that the chances of these risks which these policies cover are quite small, but then it’s up to you if you want to get these risks covered or not.

Do you think buying these householder insurance policies makes sense?

Please share if you feel it makes sense to purchase these policies? share in the comments section below!

Don’t keep too much money in your saving bank account – Here are 2 strong reasons !

Posted on February 21, 2019November 4, 2019 by Jagoinvestor

Today I want to talk about a mistake which we are all guilty of at some point of our life – “Keeping too much money in saving bank account”

I can understand how confident and great we feel when we know that we have a big amount in our savings bank account and if required we can just walk to the ATM and get the money within minutes. Nothing can beat that feeling !, however, there are some downsides to it too.

Should you keep too much money in your saving bank account or not?

I want to talk about 2 problems (one small and one big) associated with keeping too much money in your bank account today.

You must be thinking, how can keeping money in my account be a problem? After all, more money into account is a good thing – RIGHT?

Let’s see

Problem #1 (small problem) – Negative Real Return

Let’s talk about the small issue first.

The money in your savings bank account earns a small interest of just 3.5% per year (in most of cases). Inflation is around 7-8% on average and if you consider that, you are actually earning a negative real return (real return = return – taxes – inflation).

So your purchasing power is only diminishing over time. What you can buy in the future is less than what you can buy today!. If the excess amount you keep in your saving account is very small, then you can dismiss what I said because the excess money in a way serves as your emergency fund, but when you keep big amounts, its an issue.

Impact of inflation on returns

Don’t keep too much money in savings accounts

I have seen investors keeping a very large amount in savings accounts for a very long period of time.

We recently saw the data of one of our client, and he was having 90 Lacs in his saving bank account from the last 4 yrs. He had sold his house because he wanted to purchase a new house, but then he did not finalize the new house for a long time and never invested that money for better returns. It just did not hit his mind! (not taking any action is so EASY)

So he earned just 3.5% on that 90 lacs for 4 yrs, which is around 13.2 lacs of interest (without considering taxes). If only he had put that in a liquid mutual fund or a fixed deposit, he would have earned 26.2 lacs as interest (without considering taxes again).

Which means that he said NO, to that potential extra 13 lacs by just leaving that big amount in his saving bank account.

Now in your case, the quantum of potential loss will be only to the extent of the money you have in your account.

A lot of us, don’t keep 90 lacs in saving bank account (do we even have that much networth?), but its not very uncommon, to see large amount like 3 lacs, or 8 lacs lying in saving bank for many months just because the investors does not calculate the potential loss, or is just lethargic of breaking the status quo (I think, this is the real issue)

What you can do to solve this issue?

The simple approach you can take is, that apart from 4-6 months of your monthly expenses, you can park rest of the money at least in short term debt mutual funds (earns around 8% per annum, with better taxation than a FD) and deploy the rest amount as per your financial goals in other avenues and let it go out of your bank account and your sight.

The 6 months’ worth of emergency fund can be broken into 2 parts, where you can keep one part in saving account and other parts into a liquid fund (earns 6.5-7% and available in 24 hours notice). This is a far better arrangement compared to just leaving all the money in saving bank account.

Problem #2 (Big problem) – That excess money gets SPENT unconsciously

I don’t see many people talking about this 2nd point often and its related to behavioral finance. This is a very big topic, which deserves a whole book, but I will try to cover it quickly here.

Money is like water, it finds its own direction, if you don’t give it one!

Our mind works in a very different manner when we have money lying in front of us. Supply creates its own demand is one of the principles of economics and very much applicable to money. If you have money in a savings account, you can be sure that your mind will come up with every possible reason to spend it.

So if money is lying around in your saving bank account, which can be easily accessed then,

Your TV will look old enough to you and your mind would like to upgrade it for a bigger one
That Amazon Cart will automatically have those unwanted items which you really don’t need (but you feel you need it)
You will feel that you can easily afford to give a bigger and fancier gift when you are invited to a marriage
Those swiggy / uber eats orders will never stop
The next vacation will feel within the reach somehow
The eating out will often happen

In short, your spendings will increase sub-consciously

The human mind is very interesting. You always feel that you are in control of your spendings, but research on this topic has shown that we humans are our own enemy. It’s extremely tough to be in control and think rationally about spending’s especially when you have the excess supply of money.

Your environment and which kind of situation you are in, mostly decides how you will behave and think, not rationally! (you need to exercise right? Did you wake up in the morning and go for the jog if that’s the rational thing to do?)

Let money go out of your bank account automatically each month

The beautiful thing about a recurring deposit or SIP is that it takes away a part of your money out of your sight and makes it tough for you to access it. It creates wealth for you because your manual intervention is not involved in it. You are not taking manual decision each month if you want to save it or not. I don’t claim that manual investing is superior or not, but it looks great on paper, but not in reality.

If you are struggling to save each month, I think 90% of the reason is that you might be trying to do it manually, thinking – “I will save something for sure if I am left with it at the end of the month” . Trust me it will not happen.

Pay yourself first equation

We have had clients, who tell us that they are surprised after 2-3 yrs when they accumulate so much wealth, which happened only because they started a SIP and nothing else changed in their life. It’s a structure that automatically helped them in their wealth creation. Its the battle half won when you want to create long term wealth for meeting your financial goals.

Paytm, Amazon Pay and Cashbacks!

Have you observed that the money you add in your paytm wallet, Amazon Pay or similar wallets gets spent without guilt and so fast. The moment you add it in Paytm or other wallets, you look at that money in a very different way. It’s now “available” for spending (that’s called mental accounting). Well, this is a topic in itself, but I wanted to just make a point that when money is not visible, you think about it totally differently.

Listen to the below podcast to learn more about behavioral finance (its an audio uploaded on youtube) which I did along with Siddhartha K Garg.

You become a bit careless with money and don’t think too much when you have Rs 2,34,965 in your bank account compared to say when you have Rs 12,500.

What you can do to solve this issue?

Here are a few things you can do.

Start your SIP / Recurring deposit 2-3 days after your salary date for your financial goals.
Keep minimal amount in your saving bank account (unless is needed in next few days).
Open a Liquid mutual fund folio, just to transfer the extra cash, and whenever you need it, you can redeem it and get the money in 24 hours
Don’t keep more than 6 months of expenses in your liquid mutual fund.
Try to use cash, if possible and add only small amounts in online wallets.
Artificially create the “Low account balance” especially, when your spouse or you yourself are a shopaholic
Do your financial goals planning and be aware of the future targets to achieve, it will help to know if you are lagging behind in reaching your financial goals
Try to forcefully lock your money in financial products just to win over your ‘lack of self-control’

These were two common problems with having too much money in saving bank account or by any other means. It’s always a great thing to let money get locked somewhere (only that part which is not needed for long term).

What are your views about his topic? Do you agree with what I said?

ICICI “The ONE” Savings Account features and a quick review !

Posted on February 14, 2019November 16, 2019 by Anuradha Singh

ICICI Bank has come up with a “The ONE Savings Account” which is going to benefit the high income/network investors who are looking for better and premium features.

Let us understand the features and benefits of this account.

complete details about ICIC the ONE savings account

Minimum Balance and Eligibility requirement

Any salaried or self-employed individual can apply for these accounts as per eligibility criteria. It’s not applicable for companies, Hindu Undivided Family or any other corporate body.

There are two variants to this account called Magnum and Titanium. Below are the balance requirement and more details.

Benefits of this account –

There are a various lifestyle, financial and banking benefits of this account. They are as follows –

Zomato gold subscription of 1 year
Big basket discounts
Amazon prime subscription of 1 year and many more. Below are the complete details of the benefits of this account.

these are the benefits of ICICI the ONE savings account

Conclusion

Note that you need to keep a high account base in your saving bank account to be eligible for these benefits, so in a way you are also loosing on the interest part which you could have potentially earned. So keep that in mind, and then take the decision if you want to go for this or not!

5 simple steps to check EPF balance through UMANG platform

Posted on February 5, 2019November 16, 2019 by Jagoinvestor

After the launch of the BHIM and TEZ app, the government of India has now launched a new multi-channel platform which is known as Umang App. This move has been taken by the GOI to unite all the government services and schemes in one place and make it more convenient for all the citizens to take the benefit of these services.

umang app download from google play or app store

What is UMANG APP?

Umang (Unified Mobile Application for New-age Governance) is an all-in-one mobile app that has 1200 services including state and central government. It is a multi-channel platform that is absolutely free for everyone. This app will reduce your efforts of going to the regional government offices. It will also save you precious time and energy.

How to register for the Umang app?

Downloading and registering for the Umang app is as easy as downloading other apps from the Google Play Store and the iPhone app store. It can be completed with a few simple steps. Let me tell you how?

Download the Umang app from your mobiles Play store

Select preferred language and click on terms and conditions

Click on register (if you don’t have login id and password) and proceed by entering your mobile number (make sure that you have this number in front of you because you will receive an OTP)

Enter that OTP and proceed to set MPIN.

Now enter all the other details like your name and all and click on submit.

Once you save all the data then you get confirmation at your registered mobile number .It also says if you have not updated your details then you can give missed call at this number- “1800-11-5246.”

That’s it. With these simple steps, you will be registered with the Umang app. If you enter your Aadhaar number, it may use your Aadhaar number for E-KYC purpose and your data linked with your Aadhaar will be automatically linked with the Umang profile. You don’t need to provide any other details for the registration process.

Watch this video to know about all the features of Umang app :

Many of our investors, when we ask them about their accumulated balance in their Provident fund account or pension fund, they don’t have any idea about the same. So for all those investors, Umang app is very useful to get to know the balance of all their investments in EPF/PPF, or other government schemes, on just a few clicks. So, in this article, we have focused on how to check EPF balance. By following the same process you can get to know about other government schemes balance.

What is EPFO?

EPFO (Employee Provident Fund Organization) assists the Central Board in administering a compulsory contributory Provident Fund Scheme, a Pension Scheme and an Insurance Scheme for the workforce engaged in the organized sector in India.

How to check EPF balance and view passbook on the Umang app?

Step#1 – Open the Umang app and click on to EPFO :

Once you click on the Umang app and click EFPO. After you click EFPO the below window opens. Then click on to employee-centric services to know your EPF balance.

Step#2 – Click on to view passbook :

After clicking on to employee-centric services, below window appears. Now click on to view passbook and wait.

Step#3 – Login :

After you click on to view passbook now you will have to log in. For login, you need UAN (Universal Account Number) allotted by the EPFO to every employee that contributes to PF. You can ask your employer for your UAN number. Once you enter UAN number, you will have to click on get OTP. You will receive OTP on your registered mobile number. Put the OTP and log in.

Please note – If you leave your current job and move to another job then your UAN number will not change. This UAN number will be with you forever.

Step#4 – Again click on to view passbook :

After you log in the below window appears. You will have to click on view passbook and

Step#5 – Details of your EPF balance :

After you click on to view passbook the below window will appear which will show you the entire EPF balance created during your employment with various employers. You can open each of the links that are mentioned employee wise to see complete details of the deposit made towards PF.

List of other services available on UMANG APP:

Central Services :

AICTE ( All India Council for Technical Education)
Aadhaar Card
Bharat Bill Pay
Bharat Gas (BPCL)
Buyer Seller – mKisan (Sell product to Better Price)
CBSE (Central Board of Secondary Education)
CHILDLINE 1098 (Night and Day)
CISF (Ministry of Home Affairs, Govt.of India)
CPGRAMS (Centralized Public Grievance Redress and Monitoring System (My Grievance)
Crop Insurance (Department of Agriculture, Cooperation and Farmers Welfare)
CRPF (Central Reserve Police Force)
DAY – NULM (Deendayal Upadhyay Antyodaya Yojana National Urban livelihood Mission)
Digi Sevak (Digital India Volunteer Management System)
Directorate of Marketing & Inspection (Department of Agriculture, Cooperation and Farmers welfare)
e-RaktKosh (A Centralised Blood Bank Management System)
eMigrate (Ministry of External Welfare)
ePashuhaat (GPMS Transportal)
ePathshala (National Council of Educational Research and Training)
EPFO (Employees’ Provident Fund Organisation)
eRahi Sukhad Yatra (National Highways Authority of India)
ESIC – Chinta Se Mukti (Employees’ State Insurance Corporation)
Extensions Reforms Monitoring System (Ministry of Agriculture and Farmer Welfare)
Farm Mechanisation (Ministry of Agriculture and farmer Welfare)
Goods & Service Tax Network ( Ministry of Finance)
HP GAS
INDANE GAS (Indian Oil Corporation Limited)
Kendriya Vidyalaya Sangathan
Khoya Paya (Citizen’s Corner of Track Child)
Kisan Suvidha (Ministry of Agriculture and Farmer Welfare)
MADAD (Ministry of External Affairs, Government of India)
Ministry of Petroleum & Natural Gas
My Pan (Income Tax Department )
National Consumer Helpline (Department of Consumer Affairs)
National Scholarship Portal (Ministry of Electronics and Information Technology, Government of India)
NDL India (National Digital Library of India)
NPS (Retired Life ka Sahara, NPS hamara)
ORS (Online Registration System – Patient’s Portal for e-Hospital)
Parivahan Sewa – Sarathi (Ministry of Road Transport & Highways)
Parivahan Sewa – Vahan
Passport Seva
Pay Income Tax
Pensioner’s Portal (Department of Pension and Pensioner’s Welfare)
Pharma Sahi Daam (National Pharmaceutical Pricing Authority)
Pradhan Mantri Awas Yojana – Urban
Pradhan Mantri Kaushal Vikas Yojana (PMKVY)
Soil Health Card (Department of Agriculture, Cooperation & Farmers Welfare)
Swayam Prabha (Free DTH Channels for Education)
TRAI (Telecom Regulatory Authority of India)

State Services :

AKPS (Annapurna Krishi Prasaar Seva – Agro Advisory Service)
Chhattisgarh e-District (Citizen Services on Mobile)
District administration Department (ASSAM)
e-Dhara Land Records (Government of Gujarat)
e-District Chandigarh (Chandigarh administration)
e-District Manipur (Government of Manipur)
e-District Mizoram (Governance in Mizoram)
e-District Nagaland (Government of Nagaland)
e-District Uttarakhand
e-Mitra Rajasthan (Government of Rajasthan)
Election Department (ASSAM)
eSampark Chandigarh (Government of Chandigarh)
General Administration Department (ASSAM)
m4agriNEI (Agro Advisory Service)
MP BSE (Madhya Pradesh Board of Secondary Education)
MP e-Nagar Palika (Directorate of Urban Administration and Development)
MP MSME (Department of Micro, Small and Medium Enterprises)
MP RCMS (Revenue Case Management System)
MP Transport ( Department of Transport)
Municipal Administration GOA
NDMC (New Delhi Municipal Council)
OJAS (Online Job Application System)
PHED Haryana (Public Health Engineering Department)
Political Department (ASSAM)
Revenue Department (Tamil Nadu)
Revenue Department (Himachal Pradesh)
Revenue & Disaster Management (Badalta Haryana – Badhta Haryana)
Revenue Department ASSAM
Revenue Department GUJARAT
Revenue Department – Delhi (eDistrict Delhi)
SARAL (Transforming Citizen service delivery in Haryana)
SSRD KYRC (Special Secretary Revenue Department – Government of Gujarat)
The welfare of Plain Tribes & Backward Classes Department (ASSAM)

As you now know that, with just a few clicks you can know your EPF balance. I have checked mine, what are you waiting for go and check yours. If u still have any doubt or query please ask in the comment section.