Senior Citizen Saving Scheme (SCSS) – How it works and brief review

The investment product which I will be talking about in this article will meet all your requirement as a senior citizen.

It is called as “Senior Citizen Saving Scheme”. It is one of the safest investment products because it is sponsored by the Government of India.

Senior Citizen Saving Scheme

What is SCSS?

Senior Citizen Savings Scheme (SCSS) is a government-sponsored savings instrument for individuals above the age of 60. It is one of the safest saving instrument for senior citizens, because it is a government-owned product and there is no risk of the capital loss. The purpose of this scheme is to provide a steady and secure source of income to senior citizens for their post-retirement phase.

The basic requirement a senior citizen will want from his/her investment is two basic things – safety and regular income. The Senior Citizen Savings Scheme (SCSS) meets these two requirements, and you get the tax benefit under section 80C on the amount invested.

Individuals can apply for this scheme from Post Offices, Public and Private Banks. The current rate of interest this scheme is offering is 7.4% (it changes from time to time). Both the spouses can open a single account and joint accounts with each other. Multiple withdrawals from an account will not be permitted.

Features of SCSS –

a) Interest Rates are revised Quarterly –

The interest rate under this scheme is revised every quarter (3 months) which goes to 4 times in a year. The interest rates are determined depending on the economic conditions such as inflation etc.

Past 2 yrs interest rate of this scheme (201 and 2019) –

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2018 – 2019 (Q1) 8.3%
2018 – 2019 (Q2) 8.3%
2018 – 2019 (Q3) 8.7%
2018 – 2019 (Q4) 8.7%
2019 – 2020 (Q1) 8.7%
2019 – 2020 (Q2) 8.6%
2019 – 2020 (Q3) 8.6%
2019 – 2020 (Q4) 8.6%
2020 – 2021 (Q1) 7.4%


b) Minimum and Maximum Deposit Allowed under this Scheme –

The minimum contribution a senior citizen can make in this scheme is Rs. 1,000 and a maximum deposit of Rs. 15 Lakh can be made.

For example, if Mr Sharma receives Rs 13 Lakh as a retirement benefit, then he can invest up to that amount in the scheme. This clause applies irrespective of whether the account is held individually or jointly. However, one can only open a joint account with his/her spouse.

But, if an individual holds multiple accounts under this scheme, then the total amount deposited in all such accounts shall not exceed the maximum limit of Rs 15 Lacs.

c) Tenure of this Scheme –

The maturity period for the SCSS scheme is 5 years. However, it can be extended for another 3 years, effectively bringing up the total period to 8 years. In order to extend the tenure by 3 yrs, the individual will have to submit Form B after duly filling it. An extension in the tenure will be allowed only once. Once the extension is approved, the interest rates will be the applicable quarterly basis.

For instance, Ms Sita has deposited Rs. 7 Lakh under SCSS in April 2014, when the interest rate offered was 9.3%. However, when she extended this scheme in April 2020, the interest rate she was eligible to earn stood at 8.4%.

d) Premature Withdrawal and Closure –

An individual can withdraw prematurely from their account under this Scheme only after one year of opening the account. However, for any reason, if an individual closes their account before the completion of 2 years, 1.5% of the deposited amount will be deducted as penalty.

Premature closure of the account is allowed with some penalty. If the account is closed after the first year and before the end of the second year, an amount equal to 1.5 per cent of the deposit shall be deducted as penalty. If the account is closed on or after the second year, an amount equal to 1 per cent of the deposit shall be deducted.

For instance, if Mr Shah deposits Rs. 5 Lakh in Senior Citizen Savings Scheme on 1st March 2018 and closes it on 6th February 2020, he will have to bear a penalty of Rs. 7500. But, if the investor is deceased before the maturity of their account, no penalty will be charged.

e) Mode of Investment –

The mode of investment under this scheme will be either cash or cheque. If the investment amount is below Rs 1 Lac then the amount can be invested through cash. But if the investment amount exceeds Rs 1 lacs then the investment can be done only through cheque.

f) Capital is Secure –

As you all know that this scheme is purely governed by the Government of India that is why the capital invested is fully secured under any circumstances.

g) Interest Payout –

As we know that Interest is calculated on a quarterly basis, the interest will be credited to the account every quarter, on 1 April, 1 July, 1 October, and 1 January. If the interest payable every quarter is not claimed by an account holder, such interest shall not earn additional interest.

h) Nomination Facility –

On the time of opening the account, the senior citizens can also attach nominee to this account so that if something happens to the senior citizen then his/her money will go to the nominee.

Taxation of SCSS –

Investments made under SCSS are eligible for tax deduction under section 80C of the Income Tax Act, 1961. According to the current rules, if your interest earnings from SCSS are more than Rs 50,000 in one fiscal year, you are liable to pay TDS (Tax Deducted at Source) for the interest earned.

Eligibility Criteria of SCSS –

a) An individual who is a citizen of India can open this account in an individual capacity or jointly with a spouse.

b) Non-residential Indians (NRIs) or a Person of Indian Origin (PIOs) cannot invest in this scheme. Also, Hindu Undivided Family (HUFs) do not qualify for this scheme.

c) As this is a senior citizen savings scheme, so any resident of India aged 60 years or above is eligible to open an account under this scheme. However, there are few exceptions to the age bar:

  • Retirees in the age group of 55-60 years who have opted for Voluntary Retirement Scheme (VRS) or Superannuation are eligible to avail the scheme if they apply for the same within one month of gaining their retirement perks.
  • Retired defence personnel can avail this scheme irrespective of their age, provided they fulfil all other conditions.

d) Nomination under this scheme can be done only in favour of resident Indians.

Documents required for opening the SCSS Account –

a) Proof of ID and address (any one of the following) –

  • Aadhaar card
  • Passport
  • Driving licence issued by Regional Transport Authority
  • Voter ID card
  • Job card issued by MNREGA signed by State Government officer

Note – The above document has to be self-attested.

b) Additional documentation if the investor is less than 60 years –

  • Certificate from the employer indicating the details of retirement on superannuation or otherwise, retirement benefits, employment held and period of such employment with the employer
  • Proof of date of disbursal of retirement benefits (the date of opening of an account under this Scheme should be within one month of the date of receipt of the retirement benefits)

c) In addition to the above documents, PAN card is mandatory.

How to Open an Account under the Senior Citizen Savings Scheme?

An SCSS account can be opened with a post office or any of the private or public banks in India. The procedure for both is similar, and is mentioned below  –

Step #1 – Visit your nearest bank branch or Post office branch

Step #2 – Submit the Duly filled up Form A

Step #3 – Submit the original and photocopies of all the necessary documents mentioned above, broadly address and identity proof.

Step #4 – Submit the age proof with all the above documents.

List of few public sector banks which offers to open SCSS Account to their senior citizen customers –

You can click on the below banks to see the form of SCSS.

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  • State Bank of India
  • Bank of Baroda
  • ICICI Bank
  • Bank of Maharashtra
  • Bank of India
  • Canara Bank
  • Syndicate Bank
  • Punjab National Bank
  • Allahabad Bank
  • United Bank of India



Conclusion –

So this was all that I wanted to share about Senior Citizen Saving Scheme. If I have missed out on any point then you can highlight in the comment section.

How much “Gold” can you hold without any income proof?

Most of the Indians are obsessed with gold. But are you aware of the restriction on how much gold can you hold even the worth of gold does not match your income status?

In this article I will exactly touch base on that.

How much gold can indians hold without any income proof?

How much gold can you have without receipts?

Have you ever wondered what will happen if govt starts raiding all households in India and demands the proof of how you bought all that gold you have?

Often we do not keep a track of receipts and proof of how we paid for that gold bought very long ago. In that case, how much gold can you hold without any proof, even if it does not match your income status?

As per Central Board of Direct Taxes (CBDT), this limit is different for a married woman, unmarried women and a man. This might sound strange, but here is the limit

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A Married woman 500 gms
Unmarried woman 250 gms
A Man 100 gms


What type of proofs is required in case of any enquiry?

These above limits include both the inherited and the self-bought gold jewelry. In case of inherited gold also, you need to have the receipts in the name of original owner.

In case you are holding very high amount of gold, just make sure that you have all the valid tax receipts and invoices saved at your end.

The WILL can also act as proof of inheritance, in case the gold you inherited is mentioned in the WILL. Alternatively, one can also submit a family settlement deed, will, or a gift deed stating the transfer of such commodity to you.

On contrary, if there is no such document available, then the officer will analyze your family’s social status, customs, and traditions to come to a conclusion on whether your statement is valid or not and whether to confiscate the amount of gold you are holding or not.

Do let us know what you think about this limit in the comments section.

Register for Cafemutual Confluence 2020

I would like to share with you about an online FREE event which is coming up tomorrow by Cafemutual. It will be a wonderful event with a great line up of industry experts who will be talking about variety of topics.

Do register for the event and benefit from it



Corona Rakshak Policy – Get paid when you catch Covid-19

Health Insurance companies have recently launched one more corona specific health insurance policy called as Corona Rakshak Policy” as per the IRDAI guidelines.

This is a benefit based health insurance plan which pays you a lump sum amount when you are diagnosed of covid-19 and are hospitalized for continuous 72 hrs.

Corona Rakshak Policy review

Features of Corona Rakshak Policy

  1. This policy can be purchased only on an individual basis.
  2. Sum Insured options in this policy range between Rs 50,000 to Rs 2,50,000.
  3. There is no pre-medical screening necessary for this policy.
  4. This policy has a waiting period of 15 days.
  5. Adults aged between 18 yrs. to 65 yrs. can take this policy.
  6. Tax benefit on premium paid u/s 80D of Income Tax Act,1960.
  7. The policy cannot be renewed nor it has a free look period.
  8. Its a single premium policy and the tenure have 3 options of 3.5 months (105 days), 6.5 months ( 195 days), and 9.5 months (285 days).

Benefits under this Policy

If the insured person is diagnosed with COVID +ve and is hospitalized of minimum 72 hours then the corona rakshak policy will pay the full 100% sum assured to the policyholder. Note that it’s not going to settle your bills, but make a single payment no matter what are your expenses.

To get the claim, you have to give the diagnosis report of Covid-19 from an authorized govt center and the proof of hospitalization for at least 72 hrs.

Where can I purchase this Policy from?

While IRDAI has directed all companies to launch this plan, in reality its quite complicated to find out where to buy this plan. It was reported on social media from many investors that they are not able to get the online links to buy. But few also shared that they were able to buy it from the offline agents.

So right now it’s a bit complicated to buy this plan.

Ideally following insurance companies should come up with their online links for this policy, as soon as possible.

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  • Acko General Insurance Ltd.
  • Aditya Birla Health Insurance Co. Ltd.
  • Bajaj Allianz General Insurance Co Ltd
  • Bharti AXA General Insurance Co. Ltd.
  • Cholamandalam MS General Insurance Co. Ltd.
  • Edelweiss General Insurance Co. Ltd.
  • Future Generali India Insurance Co. Ltd.
  • Go Digit General Insurance Ltd
  • HDFC ERGO General Insurance Co.Ltd.
  • HDFC ERGO Health Insurance Limited
  • ICICI Lombard General Insurance Company Ltd
  • IFFCO TOKIO General Insurance Co. Ltd.
  • Kotak Mahindra General Insurance Co. Ltd.
  • Liberty General Insurance Ltd.
  • Magma HDI General Insurance Co. Ltd.
  • Manipal Cigna Health Insurance Company Limited
  • Max Bupa Health Insurance Co. Ltd
  • Navi General Insurance Ltd.
  • National Insurance Co. Ltd.
  • Raheja QBE General Insurance Co. Ltd.
  • Universal Sompo General Insurance Co. Ltd.
  • Reliance General Insurance Co.Ltd
  • Religare Health Insurance Co. Ltd
  • Royal Sundaram General Insurance Co. Ltd.
  • SBI General Insurance Co. Ltd.
  • Star Health & Allied Insurance Co.Ltd.
  • Tata AIG General Insurance Co. Ltd.
  • The New India Assurance Co. Ltd
  • Oriental Insurance Co. Ltd.
  • United India Insurance Co. Ltd.


Premium For Corona Rakshak Policy

Here is the indicative premium chart we managed to find online.. but note that these are still indicate premiums and you will get the real numbers while you purchase the policy.

a) IFFCO TOKIO General Insurance Co. Ltd –

Corona Rakshak Policy premium detaiIs of IFFCO TOKIO General Insurance

b) Star Health & Allied Insurance Co.Ltd. –

The below image shows the premium details of the “Corona Rakshak Policy” with all 3 tenures of the policy.

Star Health & Allied Insurance Co.Ltd., premium details of corona rakshak policy

Exclusion under this policy

  • If there are any diagnostic expenses made which are not related to COVID, then those expenses will not be covered in this policy.
  • If a person is tested COVID +ve before the start of the policy, then this person cannot file a claim to the company.
  • If a person is getting testing done related to COVID in diagnostic centers that are not authorized by the government then the expenses incurred will not be covered under this policy.
  • If the insured person travels to any country placed under travel restriction by the government of India the insured person will not get the benefit under this policy if the insured person tests +ve for COVID-19.

Should you take up this policy?

If you are too scared about the expenses which might occur if you get covid+, then you can surely go ahead and take up this policy as the premiums are not very big amount and anyone can manage it.

However do note that this policy will only pay if the hospitalization is there for 72+ hrs. You know that most of the people who are getting corona do not require hospitalization, which means that the chances you getting corona along with hospitalization is quite low.

Also this is going to only give you Rs 2.5 lacs, however the expenses can be quite high if you get hospitalized for a 15-20 days in a good hospital. So treat this policy as just a small support system and not the replacement of the health insurance policy in itself.


This was all that I wanted to share in this article. Let me if you have any queries in the comments section.

Corona Kavach Policy – Get insured and save high medical bills

The ongoing COVID-19 pandemic has caused a lot of fear and anxiety in our lives because there are no vaccines or any cure available for this illness. If anyone gets COVID +ve there are chances that there may be huge medical bills running into lakhs of Rupees.

In case you don’t have big health insurance, you can go for a special policy called “Corona Kavach Policy” which got introduced recently in the market.

IRDAI has come up with a standard COVID focused basic health insurance policy known as “Corona Kavach Policy”, which I will be reviewing in this article.

Corona Kavach Policy review in detail

Features of Corona Kavach Policy

  • This policy is available on an individual as well as a family floater basis.
  • The minimum and maximum sum assured offered by the policy are Rs. 50,000 to Rs. 5,00,000.
  • A person aged between 18 yr to 65 yrs can purchase this policy.
  • This policy can be purchased for self, spouse, parents, parents-in-law, and dependent children up to 25 yrs of age.
  • 2 types of cover -Base Cover on Indemnity Basis which covers COVID Hospitalization cover and Optional Cover on Benefit Basis which covers Hospital Daily Cash.
  • This policy has a waiting period of 15 days from the purchase of the policy.
  • The tenure of the policy is 3 ½ months, 6 ½ months, 9 ½ months including waiting period.
  • Premium Payment Mode is Single.
  • Tax Exemption on the premium paid u/s 80D.

What all is covered under this policy?

a) Hospitalization Cover –

If a person has tested COVID +ve in a government authorized diagnostic center then the medical expenses and expenses incurred on treatment of any comorbidity along with the treatment for COVID up to the Sum Insured will be covered under this policy provided the insured is hospitalized for more than 24 hrs in the hospital.

Let us see what all comes under hospitalization cover –

  1. Room Rent, Nursing Expenses, ICU, and ICCU charges will be covered.
  2. Surgeon, Anesthetist, Medical Practitioner, Consultants, Specialist Fees whether paid directly to the treating doctor/surgeon or to the hospital will be covered under the policy
  3. Expenses on anesthesia, blood, oxygen, operation theatre charges, surgical appliances, ventilator charges, medicines and drugs, costs towards diagnostics, diagnostic imaging modalities, PPE Kit, gloves, mask, etc.. will be covered under this policy.
  4. Ambulance charges up to Rs 2000 will be covered under this policy per insurer only if the ambulance has been availed in relation to COVID Hospitalization. This also includes the cost of the transportation of the Insured Person from one hospital to another hospital as prescribed by a medical practitioner.

b) Home Care Treatment Expenses –

If a person is tested COVID +ve in a government authorized diagnostic center and is getting treatment at home which normal course would require care and treatment at a hospital but is actually taken at home maximum up to 14 days per incident, then home care treatment expenses will be covered provided under the following circumstances –

  • If the medical practitioner has advised the insured person to undergo treatment at home with a continuous active line of treatment with is being monitored by a medical practitioner for each day through the duration of the home care treatment.
  • The insured or the family member should maintain a daily monitoring chart which includes records of treatment administered and duly signed by the treating doctor.
  • Cashless or reimbursement facility shall be offered under homecare expenses subject to claim settlement policy disclosed.

The expenses made related to the treatment of COVID will be covered under this policy. They are as follows –

  1. Diagnostic tests underwent at home or at the diagnostics centers.
  2. Medicines prescribed in writing
  3. Consultation charges of medical practitioners
  4. Nursing charges related to medical staff
  5. Medical procedures limited to parenteral administration of medicines
  6. Cost of a Pulse oximeter, Oxygen cylinder, and Nebulizer

c) Pre and Post Hospitalization Medical Expenses –

Pre-Hospitalization medical expenses of 15 days prior to admission into the hospital and Post-Hospitalization expenses of 30 days after getting discharged from the hospital will be covered under this policy.

d) Hospital Daily Cash –

Hospital Daily Cash benefit comes under an additional cover if the insured has opted for Optional Cover on Benefit Basis. Under this benefit, the insured will get 0.5% of the sum insured per day up to a maximum of 15 days.

From where can I purchase this policy?

This health insurance policy can be purchased from 30 General and Health Insurance Companies. The list of these companies is as follows –

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  • Acko General Insurance Ltd.
  • Aditya Birla Health Insurance Co. Ltd.
  • Bajaj Allianz General Insurance Co Ltd
  • Bharti AXA General Insurance Co. Ltd.
  • Cholamandalam MS General Insurance Co. Ltd.
  • Edelweiss General Insurance Co. Ltd.
  • Future Generali India Insurance Co. Ltd.
  • Go Digit General Insurance Ltd
  • HDFC ERGO General Insurance Co.Ltd.
  • HDFC ERGO Health Insurance Limited
  • ICICI Lombard General Insurance Company Ltd
  • IFFCO TOKIO General Insurance Co. Ltd.
  • Kotak Mahindra General Insurance Co. Ltd.
  • Liberty General Insurance Ltd.
  • Magma HDI General Insurance Co. Ltd.
  • ManipalCigna Health Insurance Company Limited
  • Max Bupa Health Insurance Co. Ltd
  • Navi General Insurance Ltd.
  • National Insurance Co. Ltd.
  • Raheja QBE General Insurance Co. Ltd.
  • Universal Sompo General Insurance Co. Ltd.
  • Reliance General Insurance Co.Ltd
  • Religare Health Insurance Co. Ltd
  • Royal Sundaram General Insurance Co. Ltd.
  • SBI General Insurance Co. Ltd.
  • Star Health & Allied Insurance Co.Ltd.
  • Tata AIG General Insurance Co. Ltd.
  • The New India Assurance Co. Ltd
  • Oriental Insurance Co. Ltd.
  • United India Insurance Co. Ltd.


Premium for Corona Kavach Policy

Livemint Research has done a detailed study of Premium for various companies. Check out the premium table below.

premium details of corona kavach policy

Exclusion under this policy –

  • If there are any diagnostic expenses made which are not related to COVID, then that expenses will not be covered in this policy.
  • If a person is tested COVID +ve before the start of the policy, then this person cannot file a claim to the company.
  • Expenses incurred in daycare treatment and OPD treatment will be excluded from this policy.
  • If a COVID +ve person is getting treatment outside India, then the expenses incurred in the treatment will not be covered under this policy.
  • If any expenses incurred on un-proven treatment, procedures, or supplies related to COVID which lacks medical documentation to support its effectiveness will not be covered in this policy.
  • If a person is getting testing done related to COVID in diagnostic centers that are not authorized by the government then the expenses incurred will not be covered under this policy.
  • Expenses made on dietary supplements and substances which are purchased without prescription will not be covered under this policy.

A short video review of Corona Kavach Policy –

All features mentioned in this policy are referred from IRDAI notification.

Conclusion –

So this was all that I wanted to share in this article if you have any queries you can put it in the comments section.

54 EC Capital Tax Bonds – How to save your tax after selling house?

When you sell any capital asset like a house, gold, bonds or debt mutual funds over a long period, you generally make a PROFIT, which is called as Capital gains. This is treated differently from “interest income” which you get from fixed deposits and these capital gains are taxed at 20%.

In case of selling house, these amounts can be quite big and if you reinvest these capital gains, you will not have to pay any taxes.

However at times, an investor may not want to invest in another house and also not willing to pay taxes.

54 EC bonds can help you in saving the capital gains tax.

54 ec bonds for saving capital gains tax

What are 54 EC Bonds?

54EC bonds (capital gains bonds) are the best investment option through which an investor can save long-term capital gain taxes.

54EC bonds are specifically meant for investors earning long-term capital gains and would like tax exemption on these gains. The tax deduction is available under section 54EC of the Income Tax Act. However, 54EC bonds can only save long term capital gains taxes, and not short term capital gains taxes. Check out our Capital Gains Tax Calculator

The maximum limit for investing in 54EC bonds is Rs. 50 Lacs.

As we said above, an individual can invest in these bonds after receiving capital gains from selling a property, sale of land, or building (residential or commercial).

If you want to save your capital gains, you will have to make your investments in 54 EC bonds within 6 months from the date of sale of the property or before filing your income tax returns.

Features & Benefits of 54 EC Bonds

  • As 54EC bonds are generally AAA rated and hence it is the safest and secure bond as it is backed by the Government of India.
  • Interest earned on these 54EC bonds is taxable in nature. So while you don’t pay any tax on the lump sum you got after selling the house or another property, the interest earned from these bonds are taxable.
  • No TDS is deducted on interest from 54EC bonds and wealth tax is exempted.
  • 54EC bonds come with a lock-in period of 5 years and are non-transferable in nature.
  • The minimum investment an investor can make in 54EC bonds is 1 bond amounting to Rs. 10,000 and the maximum investment in 54EC bonds is 500 bonds amounting to Rs 50 lakhs in a financial year.
  • The interest these bonds offer is at 5.75% which is payable annually. This is not very high interest, and if you pay taxes on these, the final post tax returns will be much lower.
  • These bonds can be held in Demat Form and Physical Form as well.

Eligible Bonds under section 54 EC –

So when we say 54 EC bonds, it’s not exactly a product in itself. There are actually 4 types of bonds which come under the definition of 54 EC bonds. They are as follows –

Let us see the comparison between REC and NHAI as these are the most popular options to invest.

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  • Interest Earned
5.75% 5.75%
  • Rating of the Bond
  • Minimum Investment Required
Rs. 10,000 Rs.10,000
  • Maximum Investment Required
Rs.50 Lakhs in Financial Year Rs.50 Lakhs in Financial Year
  • Tenure of the Bonds
5 yrs 5 yrs
  • Mode of Interest Payment
Annually Annually


What if you don’t invest in 54 EC bonds?

If you don’t want to invest in these 54 EC bonds and rather want to invest in other financial products like a fixed deposit, debt mutual fund or equity mutual funds – then remember that first you will have to pay the tax, and then you can invest only remaining amount which may fetch higher return compared to 54 EC bonds returns.

However a quick calculation shows that you are better off investing in EC bonds, if you are not looking forward to invest in equity mutual funds and are ready to take risk. In general it’s usually a good idea to put money in 54 EC bonds and over 5 yrs, you will have decent amount of money.

Only if you are ready to take high risk, and are not looking for lock in, then you can put this money in equity mutual funds. Below is a comparison between all 4 options we talked about

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What? 54 EC bonds Fixed Deposit Debt Mutual Funds Equity Mutual Funds
Capital Gains Amount 50,00,000 50,00,000 50,00,000 50,00,000
Tax to be Paid before investing NIL 1000000 1000000 1000000
Amount Remaining for Investment 5000000 4000000 4000000 4000000
Return 5.75% 7% 8.50% 11%
Taxes on Investment 30.00% 30% Approx. 6% (assuming 4% inflation in CII index and 20% capital gains tax) 10% capital gains tax without indexation
Post Tax Returns 4.03% 4.90% 7.99% 9.90%
Final Maturity Amount (Post Tax) 6090579 5080862 5874591 6412811
Notes This is Assured This is Assured This is not 100% assured, but the final returns you will get will be close to assumption most probably This is surely dependent on the equity returns, which can be very volatile, so the final result can be much less, or much higher than the assumption


Note that the only option which has some chances of beating the 54 EC bonds returns is equity, but you have to remember that this is not an option for everyone. Only one who can take right decisions about equity and is ready to take higher risk / high reward path should get into it.

Otherwise, overall investing in 54 EC bonds looks like the best option, but it will come with strict lock in.

So, this was all that I wanted to share in this article. Let me know your queries in the comment section.

e-Nomination facility in EPF accounts – Update your Nominee online?

Almost all the salaried employees have an EPF account. For many years and sometimes for decades, the money gets added to this EPF account and we all feel great about it.

However, we do not pay attention to a small thing which can lead to a big problem. And that is not having the right nominee in the EPF (and all the other products)

If you do not have any nominee name mentioned in EPF or if you have a wrong person name in EPF, it’s going to be a big mess while claiming the money in future in case something happens to you. Your family will have run from post to pillars to claim back the money.

e-nomination facility to update nominee details in EPF accounts totally online

A lot of people have made nominations in their EPF long back when they were unmarried and mostly put their parents name into it. However later they get married and have kids and many a times even parents are not there now.

In such a case, it’s critical and high time that you update your nominations in EPF.

The great part is that now it can be done ONLINE.

e-Nomination facility in EPF

Last year, EPFO came up with e-nomination facility in the EPF accounts. Now this e-Nomination facility can be availed by you, if you have your mobile number linked with an active UAN and the adhaar verification is also complete. This makes sure that the whole process is secure and no frauds are there!

Let’s see how you can update nominee online in your EPF account.

Step #1 – Login to EPFO site with your UAN number

The first step is to go to EPFO website where you can enter your UAN number and password. The UAN website has changed quite a lot of times, so you might have to find out what is the exact website url, but at this moment this is the web link

This is how the window will look


Step #2 – Go to “Profile” and click on “Edit Nomination”

Then you need to go to “profile” section and click on “Edit Nominations”

Click on Profile and then click on Edit Nomination

Step #3 – Nomination Screen will Appear

On the next page, go to nomination form and you will see the screen as shown below. You will see some of the following fields which will get auto-populated from the database and these can’t be edited.

  • UAN
  • Member ID
  • Establishment ID
  • Name
  • Date of Birth
  • Father/ Spouse Name
  • Relationship
  • Date of Joining
  • Gender
  • Marital Status

The two things which you can edit are

  • Permanent Address
  • Present Address

If the present address is the same as a permanent address, a copy of the permanent address into the present address is to be enabled. These details can be updated by clicking the “UPDATE” button.

update address

Step #4 – Enter nominee details and other family members data

This is the next page and the main one. Here you can update your nominee’s names and other details, along with the names of family members who will be eligible to get any kind of pension after you.

If you have given any names in past, these names will already appear there. You can update/change those if you wish to. Check the screenshots below

You can edit or even delete any family member details

You can nominate family members from the details mentioned about family

Important points

  • For the capture of Nomination details, against each nominee, one KYC detail is to be provided by the member.
  • The total share for all PF / EDLI Nominees should add to 100%.
  • Entry into Pension Nominee Details is allowed to be filled only in case member does not have any family.

Step #5 – Generate PDF

  • After you update all details, the next screen will appear where you can put a check-mark on “Nomination declaration” and click on “Generate PDF” button.
  • After checking the generated PDF, click on “Submit to Employer for Approval” button. Now the online nomination form is submitted in the system to the employer for his approval or rejection.
  • You will have to take a printout of the PDF file generated and submit it to the employer after signing it.

Generate pdf, submit to the employer and wait back and see if he approve or rejects it

Change of Mobile, Email id and KYC information

Apart from the nomination details, you can also change details like your mobile number, your email id and other KYC details.

I hope this information was useful for you, just don’t read this article, but also act and update your nominee name in EPF account using this e-nomination facility

This was all that I wanted to share in this article. I hope I have made the process easy for you guys. Kindly post your queries in the comments section and also update us if you did the process?

What is SIM Swap Fraud & How to prevent it?

The telecom and financial services have drastically changed over the last 15-20 yrs. and this means that you can do lots of things over your phone now. You don’t need to go to bank for everything. Now your mobile itself is a bank and it will let you transfer money to anyone and transact with just a click of the button.

While this is wonderful news, it’s also a bad news because various kind of cyber frauds have started happening from last few years. Today I am going to share about one such fraud called as “SIM Swap Fraud”

I also requested one of person I know personally who actually lost money because of this fraud, and I requested him to jot down what exactly happened and steps they took after the fraud happened.

What is SIM Swap Fraud?

SIM swap fraud is a very sophisticated type of cyber fraud, where the attacker first blocks your sim card, and then gets a duplicate sim issued and gets access to all OTP/SMS which are required to make the transactions. This also means that they put a request to your mobile company with forged documents or online and if you have not secured your data/documents – it’s not very tough to get it done.

On top of it, if you do not act fast or take things lightly – the chances of fraud getting successful is very high.

People have lost amounts ranging from few Lacs to few crores. Just have a look at the below screenshot

The sim swap frauds are also known as SIM splitting, SIM jacking, SIM hijacking, or port-out scamming in different countries.

A real life case of an NRI who lost money from his bank account

So a few weeks back, one of the NRI readers of this blog mailed me asking for help on a fraud which happened in his bank account and he lost money.

Luckily the amount was just in thousands. I looked at his email and soon realized that this is a case of SIM SWAP fraud. While he has not got the money till now, I asked him to share the entire incident with all of us so that we can learn from this incident.

Please go through his experience which I got by email.

Hello Manish,

Greetings and appreciate your thoughtfulness to create awareness to this fraud,

So the story goes this way

My wife has a savings account in ICICI and me being NRI she travels to visit me for more than 5 months in a year as such I had linked my Sisters Phone number for net banking and all was going well. as local numbers don’t work in the country I live.

Recently my sister was having issues with idea sim card and she had registered a complaint with idea, and she was told a customer care will coordinate with her. then there was the lockdown and curfew and banks shops etc all closed.

One day a person called her and said he was from idea customer care and she needs to upgrade her sim from 3G to 4G and to do that she needs to text him a code and a sim card no a 20 digit number, due to lockdown since idea center is closed this is her option, which she did, she got a call back saying it will take about 4 hours for this upgrade and she may not get coverage until then.

my email was linked to that ICICI account and I got an email that there was a failed attempt to access my online account.

I replied to ICICI customer care and there was no reply. ( Got reply after two days, Standard written email do not share otp, password etc with any one and if suspicious report to ICIC customer care)

But I was able to log into net banking and did not find anything suspicious.

The next day I was off and was not online to check emails for full day in the evening I saw 8 emails from ICICI auto emails, password changed, new beneficiary added, OTP sent to Registered mobile, amount transferred to beneficiary account. balance in my account is now zero.

Now it’s a Saturday bank is closed, Lockdown cannot go out, customer care lines are busy and on hold for 25 min, and finally when she got on line with customer care they said she is not calling from registered mobile and they cannot help us.

The damage was done. The hacker took control of the sim and was getting OTP and had reseted the password using registered phone number.

The complaints we made

Sister went to idea and narrated the incident and idea said this normally does not happen this way and only authorized person in idea can do the sim swap and said they will investigate it

Wife went to police to complain, they are clueless on this matter and were more interested on knowing the fraud for their personal reason and challenging wife stating what she was telling can never happen and they never heard of such case and there must me something else which has happened and not sim swap. but when my wife raised her tone they took the complaint and said they will forward it to cyber branch.

Till date no positive lead.

Wife went to bank to complain, they saw the log and found the transaction is done through correct channel and there is no fraud, Password changed by registered mobile, otp sent to registered mobile and all things done legally without breach..

However as there was a police complain they traced the beneficiary account and put a freeze and lien on that account (In case he deposits money that money will be directly transferred to my account).

We changed the mobile number and now my wife gave her new local number, and they said not to use the account for some time till the investigation is over.

that night wife get a call from ICICI customer care saying we have registered your complain and your money will be transferred to your account tomorrow.

Wife goes to ICIC and meets manager she say no this case is not solved and normally it takes more than 15days for this and this call is not from us.

Wonder how the hacker got this number which was just given to ICICI, also though ICICI said they deleted the old phone number and registered the new phone number my sister is still getting messages when we complain to ICICI they say it cannot be and when shown proof via screen shots said we will forward to our IT dept.

So till date this is the final summary

Idea mobile operator claims no responsibility of damage done to bank account but their responsibility is to give control of the sim card back to my sister in 24 hours and they did it

Bank does not take any responsibility as the transaction was done by the registered mobile number

Police claims it was out carelessness to give the 20 digit number to the hacker and they can do nothing

I Learnt a very good lesson and will be more careful in these matters.


From the real life incident of the above, I can see that it’s a bit of everything. Some bad luck, some carelessness, some ignorance and a lot of smart work by fraudster. These sim swap frauds are not easy to achieve as there are lots of things which needs to happen.

Let us now look at exactly what are the steps which are involved into Sim swap fraud.

4 Steps of Sim Swap Fraud – How it can happen to you?

Let’s understand how exactly a sim swap fraud happens through 4 steps process

Step 1 – Fraudster steals your important data

In this first step, the fraudster gets your personal information like your PAN number, Bank account number, phone number, your net banking password, and any other details which are essential for an online transaction. These things can be acquired using various methods like Email/Phone/SMS frauds or by hacking into your personal devices .

Sometimes there can be data theft by getting access to your documents which might be lying with someone (imagine you give your laptop for repair and some file has all the data or imagine you leave your bank statement at a Xerox shop)

Step 2 – Placing a request for SIM Swap with your SIM company

The next step is quite important and the main step, where the fraudster places the request for sim swap with your sim company by posing a fake identity and giving all relevant documents or through online mode.

Here the person may also call you to inform you about you posing as the sim company representative and tells you a lie that your sim will be active in some time as there is an upgrade going on or something like that.

You will generally get a sms or email from sim company telling you that your sim swap request will be complete soon.

DONT IGNORE THIS SMS at any cost. This is exactly where a customer mind presence is required and you have to act fast. A lot of people who do not understand how thing work online fall prey to it. Imagine if your 70 yr old father gets this kind of sms, he might not understand exactly what it is!

Step 3 – Doing the transaction

Once the sim swap request is processed, the game is almost over because the fraudster now has all the login details and the main thing – THE NEW PHONE NUMBER which is linked to the net banking/card.

Now all they have to do is add a beneficiary and complete the transaction

Step 4 – The fraud happens

And finally, the OTP comes to the new phone number and the transaction is complete. This is the point, where you loose the money and getting it back it quite tough. I strongly suggest that you read these 21 tips you should follow to secure your banking transactions

Some Safety Tips which can prevent you from such Frauds –

  • If your network is lost for a very long time like more than 20-30 min, be alert and enquire about it from your mobile operator
  • If you ever get a sms/email alerting you that your sim swap request is received, make sure you contact your bank immediately and report this incident. If possible login to your net banking and change your passwords the same moment
  • Never share your the 20 digits mentioned on the back of sim card to anyone ever on call. This 20 digits are required for a successful sim swap
  • Don’t entertain anyone asking for any kind of OTP or your accounts details
  • Register for Alerts (SMS and Email) so that whenever there is any activity on your bank account you will receive an alert.
  • Always check your bank statements and online banking transaction history regularly to help identify any issues or irregularities.
  • Have strong passwords in your phone and computers. Don’t keep simple passwords which can be guessed by others
  • If there is any cyber fraud, immediately inform the cyber cell or the best thing is to file a FIR in local police station.
  • Don’t root your phone, if you are not a tech expert.
  • Don’t install unverified apps on your mobile or laptop. A lot of these programs can read your computer or phone data
  • Don’t leave your important documents Xerox here and there. At times we feel, nothing will happen – but bad things happen!

Do watch this video on preventing sim swap fraud!

Don’t be over confident that it can’t happen to you

Whenever we come to hear about these types of frauds any kind of fraud, the first thought as an investor comes to our mind is that no matter what happens, I will not fall prey to any such frauds.

This is nothing but overconfidence. Be alert and always pay attention to small signals which might be pointing to this kind of frauds, especially when you keep too much money in your bank account.

How to claim refund from IEPF? (Unclaimed dividends, stocks)

Have you ever thought what happens to all those unclaimed dividends, shares or any money which was lost in scams or frauds?

It might also happen that your grandparents or parents have made some investments and you are not aware about it? How to find it out and claim it back?

The answer is IEPF, which is Investor Education Protection Fund Authority (IEPF) by the Ministry of Corporate Affairs, Government of India. This is a body setup by govt, where all these unclaimed money gets transferred and investors can claim them back by following a procedure.

IEPF recovery of money from peerless group
Recently IEPF authority recovered back Rs 1,514 Crores from Peerless finance which had done a fraud in past where lots of investors lost their hard earned money.

What exactly gets transferred to IEPF?

Something which is unclaimed for a period of 7 yrs., goes into IEPF, example are ..

  • Unclaimed shares lying in demat accounts from years
  • The application moneys received by companies for allotment of any securities and due for refund
  • Matured debentures with companies
  • Matured bank deposits
  • Unpaid dividends by companies
  • Interest accrued on above things
  • Any investors money which is recovered from fraudulent companies

In case the dividend for any year is claimed or received by the shareholder during the last seven consecutive years, the shares will not be transferred to Investor Education and Protection Fund.
The below chart shows the unclaimed or unpaid money (in lakhs) transferred to IEPF (from 2001 to 2018) –

Unclaimed money transferred to IEPF every year.

How to search for unclaimed and unpaid amounts?

In order to get a refund, the first step it to find out that there is any unclaimed amount for yourself/parents/grandparents etc. There is a facility provided by IEPF where an investor can find out the amounts which they are liable to get back.

The investor can search for their unclaimed and unpaid amount by filling in certain details such as investor name, father or husband name, folio number etc. by Clicking on this link.

The below-attached image shows how the investor can search for the unclaimed and unpaid amount.

investor can search for unclaimed and unpaid amount of IEPF government portal

Note that it’s a bit complicated and cumbersome to do the search. Please be patient and try all kind of combinations.

Tip : I suggest you putting all possible combinations of your name, your father/mother or grandparents’ name. A lot of times, our parents/grandparents invest in shares or have some deposits which we are not even aware about. This is how we can dig deeper and find out!

Process of getting Refund from IEPF?

Here I am writing keeping in mind refund for shares, but the process is pretty much same for other things as well.

  1. Go to IEPF Website and fill in IEPF Form 5 and use the option form upload. You will be redirected to Ministry of Corporate Affair (MCA) for form Upload.
  2. Login using your ID and Password (if existing or else register yourself by clicking on register and entering the required details).
  3. After login, click on normal upload.
  4. Click on Browse and attach the form. Click on Submit.
  5. SRN will be generated and you will ask for a payment option (Pay Now or Pay later).
  6. Though Fee will be zero but click on Pay now option only to generate the acknowledgement.
  7. After clicking on Pay Now, you have to click on Finish when the zero-fee page will be shown. The acknowledgement will be generated.

What is the procedure after applying for Refund?

The investor has to send the attachments prescribed below to Nodal Officer (IEPF) of the company at its registered office in an envelope marked “claim for a refund from IEPF Authority” for initiating the verification for a claim.

a) Print out of duly filled and uploaded claim form IEPF-5; with claimant signature and if joint holders are involved than the Form should be signed by all the joint holders.

b) Copy of acknowledgement generated after uploading the claim Form IEPF-5

c) Indemnity Bond (original) with claimant signature (As per format given in Annexure-II) to be executed :

  • On a non-judicial Stamp Paper of the value as prescribed under the Stamp Act (According to state) if the amount of the claim is Rs 10, 000 or more. Please ensure to enter date, place and Signature of claimant and witness.
  • On a plain paper if the amount claimed does not exceed Rs.10,000.
  • In case of a refund of shares, on a non-judicial Stamp Paper of the value as prescribed under the Stamp Act.

d) Advance Stamped receipt (original) with the signature of the claimant and two witnesses. (Format is given at Annexure I)

e) In case of a refund of matured deposit or debenture, or bonds, or where shares (in physical form) are claimed original certificate thereto

f) Copy of Aadhaar Card of the claimant and if joint holders are there, Copy of Aadhar card of all the joint holders

g) Proof of entitlement (certificate of share/Interest warrant/dividend warrant, Application No. etc.)

h) Original Cancelled Cheque leaf (it must bear the name of the claimant and the cheque leaf must be of the same account of which details are given in the Form IEPF-5).

i) Self-attested copy of Passport, OCI and PIO card in case of foreigners and NRI

j) Self-attested copy of PAN Card (mandatory in case of a claim for shares)

k) Self-attested Client Master List of De-mat A/c of the claimant

l) In case any Joint holder is deceased, Copy of Death certificate to be attached.

m) Other optional documents, (if any)

The company shall, within fifteen days from the date of receipt of the claim, send a verification report to the Authority in the format specified by the Authority along with all the documents submitted by the claimant. The Nodal officer may approve or reject the Form and enclosures submitted, subject to verification.

How will I get my money or shares from the IEPF Authority?

For a monetary refund, IEPF initiates e-payment as per the rules. If shares are reclaimed, the shares will be credited to the claimant’s Demat account by the Investor Education and Protection Fund.

I hope you understood how you can benefit from IEPF and claim back your money if there is any. Do let me know your queries!

What happens when stock gets delisted from stock market?

Today, we will see what exactly happens when a stock is delisted from stock market? What happens to the shareholders and how they get the money back for their shares?

To understand de-listing, first let’s understand meaning of “Listing”

So when a private company wants to be become a public limited company and offer its share to open public for buying and selling, then it has to get it registered with stock market and make its shares open to public and that is called as “listing”. Once a stock lists on the stock market, it then has to follow up various processes and comply with many rules and regulations.

De-Listing of Companies from Stock Exchange

Meaning of Delisting

When a company wants to de-register its stocks from stock exchange and no longer wants to let public buy and sell its shares, then it’s called delisting process. In most of the cases, the stock holders will get back the value of their shares on the price which is determined at the time of delisting.

There are two kind of delisting

Voluntary delisting

Voluntary delisting, as the name suggests happens when the company takes the decision of delisting themselves. It happens mainly because company does not see any benefit in keeping its shares on stock exchange and wants more control. In this case, the buyback price offered to the shareholders is more price than the prevailing stock price. Common reasons behind voluntary delisting are

  • Merger with another company
  • Looking for more control and simplification within company

Involuntary delisting

  • Involuntary delisting happens not out of choice, but when the situation forces for the delisting. When this happens, mostly the shareholders don’t get the good price, because anyways the stock prices must be at lowest levels. Some of the common reasons for involuntary delisting are
  • Violations of Regulations
  • Failure to meet the minimum financial expectations
  • Company is bankrupt or ceases its 0perations
  • No longer meets the listing requirement on stock exchange

How the investor gets their money back once the de-listing happens?

In case of Voluntary delisting

Understand that if its voluntary delisting, then it’s happening because the company wants it to happen. In this case, there is enough time for shareholders to get back their money and it’s mostly the transaction between the promoter and shareholders. In this case, you can expect to sell your shares back to promoters at premium price.

There is around 1 yr. of time for shareholders to get back their money and it happens through a process called as “Reverse book building” process

In case of Involuntary delisting

When involuntary delisting happens, it’s a case of violation of norms/regulations most of the times and it sends a negative shock among stock holders. Most of the times, the stock is already quoting at a lower price. In this case, whatever price is offered by company, it’s suggested to take it and close the matter.

In any kind of listing, it’s not suggested to wait for future listing of the company because you have no idea when it will happen again. It might never happen. Also it gets very tough to find a buyer off the market and get a good deal.

Recent delisting case of Vedanta Ltd

Let’s talk a bit about the recent case of Vedanta Ltd delisting news. Recently, Vedanta Ltd has decided to delist from stock exchanges because of “Corporate simplification”. They feel it will enhance operational and financial flexibility in a capital intensive business.

It was a case of Voluntary Delisting, and hence there is enough time for delisting process and shareholders don’t have to panic at all. The company has decided to buy out the minority and non-promoters shares back from public. They have proposed an “indicative offer price” of Rs 87.5 a share which is around 10% more than the closing market price last of 79.6.

Now the next set of process will follow, but you don’t need to get into details. The point is that the delisting will happen and shareholders will get a good exit.

Here is a small list of few companies which got delisted in the last 10 year from BSE

  1. Maharaja Shree Umaid Mills Ltd on Feb 2, 2015
  2. Shantivijay Jewels Ltd on Jan 20, 2015
  3. Novopan Industries Ltd on Nov 10, 2014
  4. Vishnu Sugar Mills Ltd on Jun 30, 2014
  5. English Indian Clay Ltd on Jun 4, 2014
  6. Rhodia Speciality Chemical India Ltd on May 28, 2014
  7. Reliance Media Works Ltd on May 6, 2014
  8. Reliance Broadcast Network Ltd on March 28, 2014
  9. Gujarat Organics Ltd on Jan 9, 2014
  10. Chettinad Cement Corporation Ltd on July 8, 2013

Hope you all have understood the various aspect of delisting of a company from the stock exchange. If you all have any questions, you can put across in the comment section and I will get back to you on your queries asap.

Surrender v/s Paid-up – which is better option for your old insurance policies?

Do you want to get rid of your old money back insurance plans, but are confused if you should “surrender” or make it “paid up”?

Today I will explain which one is the best option amongst the two.

Surrender vs Paid-up option in Insurance policies

All those assured insurance plans which your parents made you buy from your friendly neighbourhood uncle is nothing less than a high premium low return policies with not more than 1-5% CAGR return.

These policies don’t provide enough life insurance cover neither they create enough wealth for you for your long term goals like children education, child marriage or retirement and on top of that, these policies have pathetic returns value if you want to close them before maturity and take back your money.

Mainly there are two ways to discontinue these insurance policies which are –

  1. Paid-up Policy
  2. Surrender Policy

What is “paid up” option?

Under this option, if a policy holder does not close the policy, but stops paying any further premium. However, note that this option is generally applicable only after one has paid for at least 3 yrs. (however, check your policy wordings for exact years)

The amount which you will receive at maturity will be reduced, in proportion to the premiums paid. This sum assured is called the paid up value. It is calculated using the following formula:

Paid up value = Original sum assured x (No. of premiums paid / No. of premiums payable)

Example – A traditional insurance policy with sum assured of Rs. 10 Lakhs for 20 years with a premium of Rs. 30,000 p.a. paid for 8 years. Let’s find out what will be its paid up value if one wants to stop paying further premiums.

Paid up value = 10,00,000 * 8/20 = 4,00,000

At a high level, the numbers don’t look back. You will get 4 lacs, but you paid just 2.8 lacs overall, however, remember that you will get this 4 lacs after so many years and you will lose the purchasing power because of inflation.

You can simply say that real worth of Rs. 4 lac received after 12 years is Rs. 1,58,000 today, taking inflation at 8%.

Therefore, if you are choosing policy paid up option, keep in mind that converting the policy into a paid-up policy will lock your money for the remaining term of the policy and also, actual worth of the amount, which you will receive in later years will be very less if the maturity of the policy is very far from now.

What is “surrender policy” option?

Under this option, you close the policy completely and take back your money. The money you get will be some percentage of your premiums paid minus the first year premium. And this percentage increases depending on how many years the policy premium has been paid.

A policy generally acquires any surrender value only after 3 yrs of premium payment, which means that if you choose to surrender your insurance policy before 3 yrs, you lose all your money and don’t get back anything.

Note that the surrender value starts with 30% and goes up depending on the number of years you have paid the premium.

Following is an indicative table which shows the surrender value as a percentage of premiums paid

[su_table responsive=”yes” alternate=”no”]

Time of Surrender % of premium paid – first year premium
After 3 years 30% of premium paid
After 5 years up to 8 years 50% of premium paid
After 8 years 65% of premium paid
Last 2 years to policy maturity 90% of premium paid


This percentage can change from company to company and depends on factors such as the type of policy. Every policy brochure mentions details about surrender value but, it is not compulsory that all the companies mention this percentage which is also called the surrender value factor in their brochures.

Example of surrender policy

Mr Pratik has bought a traditional insurance plan of 20 years with a sum assured of 6 Lakhs premium amount is Rs. 20,000 per year. After paying the premium of 6 years, he wants to surrender the policy.

Surrender Value = 50% of (premium paid – first year premium)

= 50% of (120000 – 20000)

= 50% of 1,00,000

= Rs. 50,000

You can see that he will just get Rs 40,000 from surrendering the policy even if he paid Rs 1,20,000

flow chart for surrender vs paid up insurance policy


When to choose “Surrender” and “Paid up” option?

Surrendering a policy is suggested when

  • You are not able to pay the premiums
  • You need money for some reason
  • When remaining number of years in policy is more than 8-10 yrs

This option is suggested because you still have many years left and you can pay the same premium amount in a better product which will do wealth creation for you.

Making a policy paid up is suggested when

  • You don’t need money but don’t want to pay further premiums
  • When you don’t want to pay premiums, but still want the policy to run
  • When your policy maturity is very near (2-4 yrs)

Making a policy paid up is generally not suggested, but a lot of times, investors are not able to take the pain of getting the reduced amount from their policy and feel like “they will get something in future”, however considering “time value of money“, it’s not a great option.

How to deal with the emotional part “I am facing so much loss”?

In both the options, there will be a loss for sure. Money back insurance plans are designed to give low yields and penalize you if you quit in between.

I think dealing with closure of insurance policies is more of a psychological battle You know you have got a wrong product and its bad for your future, but people can’t deal with the fact that they are facing so much of loss – “I paid 8 lacs, and I will get back only 4 lacs, I will lose 4 lacs”

Note that if you consider TIME VALUE, things will be easier to decide.

If your friend borrows Rs 100 from you and returns you Rs 110 after 10 yrs, you are not in profit, you are actually in LOSS. Because you could have created Rs 250 with an alternate investment and now you just have Rs 110, that’s Rs 140 loss.

Just looking at it from absolute numbers point does not make sense.

For example, imagine a sum assured of Rs 10 lacs with a yearly premium of approx. Rs 53000 per year. Now if a person has already paid 5 premiums and wants to surrender the policy, they will just get back around Rs 85000 (assuming 40% of 4 premiums, as one premium is deducted). The immediate loss of mind is for Rs 1.8 lacs (paid 2.65 lacs and getting back 85,000)

This is a tough situation for the mind and very tough to handle. A person feels why to take a loss when one is not recovering the amount paid also and just continues the policy till the end. The person will get back anything between 15-18 lacs, depending on the bonus amount declared.

This translates to only 5.69% and this the best case (it will get better if you die early after taking the policy, but I am sure you would not like it)

Now if the same person reinvests the same 85,000 along with Rs 53,000 premiums yearly into some equity-based products like equity mutual funds or index funds, even if assume a modest 12% returns which have happened in past, the wealth one will have will be 24.5 lacs and the IRR will be approx. 7.4% of the whole scenario. This second option also gives you better liquidity and exit option whenever you wish to get money.