Sunday, April 24, 2011

Insure your Big Day

If you are spending lakhs of rupees on your marriage, secure the event by opting for a suitable insurance package. Here are the things you should consider before picking one.

Given the wide expanse of wilting expense that are the hallmark of an Indian wedding, it's a marvel that most scrape through without major glitches or mishaps. A bigger wonder is that people don't feel the need to insure such high-cost events. If you are spending lakhs on a wedding, it would be prudent to protect yourself against vulnerabilities such as cancellation or damage during the ceremony.

Most companies sell wedding insurance as a part of event insurance. The policy broadly covers personal accident, postponement or cancellation of event, and damage to property at the venue. These policies can be customised as per one's needs. For instance, an ailing relative in the family, who might pose a risk of cancellation or postponement of event, can be covered. If you're phobic about the quality of food and see it as a risk, you can include food poisoning in the insurance. Terror attack is another threat that can now be covered.

Besides these, you can seek insurance against jewellery theft or cancellation in case the bride or groom in unable to make it to the event on time. If the event is cancelled or delayed due to damaged banquet/marriage halls, this too can be insured.

However, cancellation of an event due to dispute between the wedding parties is not available as a cover. There are exceptions, of course. If the groom does not turn up due to unpaid dowry and the ceremony is cancelled, you can be covered for the eventuality. Of course, the insurance company will not pick the tab if you off the wedding due to last-minute jitters. Willful negligence and criminal misconduct are also not covered.

It's important to read the fine print carefully as the terms and conditions vary among different insurance providers. It's equally significant to choose the cover that suits you rather than fall for the sales pitch. So, you can decide to buy insurance only for the main event spanning a day, or have the cover spread across several days and various ceremonies. Consider the various options offered by insurers and pick the one that fits your needs and budget. If a wedding is at your premises and your house is already covered against fire under the householder package, you don't need an extra cover. Also, if you already have jewellery insurance, knock it off from your wedding insurance policy.

When it comes to making a claim, remember that you need to have all the bills in place.Since wedding insurance is a non-standard product, the proofs required to claim vary. For instance, in case your house is robbed, only a copy of an FIR will be required. However, in case of theft of jewellery, you would also need bills along with the copy of an FIR.

Marriage in India is considered a sacred institution. Nobody likes to think that any thing will go wrong. The social milieu becomes a major obstacle while selling wedding insurance. It time to think differently at the time of big event.

Sunday, April 17, 2011

New Education Loan

Now, take a loan to pay school fee. With this new facility, you can avail of loans ranging from Rs 30,000 - Rs 4 lakh from specific banks for classes up to senior secondary.

It's very likely that the fee your parents paid to educate you from kindergarten till graduation is less than the annual fee that you pay for your child's playschool today. In a metro city, a playschool can make you poorer by Rs 35000 - 1 lakh a year, while primary and secondary education in a private school can cost between Rs 50000 and Rs 5 lakh a year.

Paying such high fees could be a problem if you face a financial crisis, but there's no way you can remove your child from school, can you ? Now, you can resolve this dilemma by simply stepping into a bank. Yes, banks have started offering education loans for children's school fees, a phenomenon that took off about a year ago.

Loan Criteria

Earlier, education loans were offered only for professional courses. Now, you can take them to pay the school fees for classes ranging from nursery to senior secondary. The banks that offer this facility include public sector entities, such as Bank of Baroda, Central Bank of India, State Bank of Hyderabad and J&K Bank, others to follow soon. The loan amount varies from Rs 30000 - 1 lakh, but the Bank of Baroda has an upper limit of Rs 4 lakh. Though you don't need an account with these banks to avail such facility, account holders are given preference. Another condition is that the school should be affiliated to ICSE, CBSE or any state education board.

The loan is primarily meant to fund the tuition fee, but it can also be used to pay for other expenses, such as buying a laptop or any apparatus that may be required for projects.  However, in such a case, the equipment will remain in the bank's name as security till the total amount is paid.

Cost of Loan

Another option to tide over the difficult period is taking a personal loan, but this comes with a high rate of interest, which ranges from 14-19% and can go up to 24% in certain situations. On the other hand, an education loan is available at 12-13%. Despite that fact that both are unsecured loans, the one for education is cheaper.

Funding for coaching
Coaching classes, which help students prepare for various entrance exams, have become a vital part of the education system. Now one can approach the banks as they provide loans for coaching taken for professional courses. So, students appearing for entrance exams for civil services, medicine, chartered accountancy, engineering, etc, can opt for this loan. However it comes with certain conditions. A caveat is that you have to appear for the entrance exam of a recognized course, otherwise you will not be eligible for the loan.

Confusion over tax

According to Section 80E of the Income Tax Act, the interest that you pay on an education load is a deductible expense. Earlier, only the loan taken to fund professional course came under this ambit. This has been amended from the assessment year 2010-11 to include vocational courses pursued after passing the senior secondary exam.

However, there is some confusion about the inclusion of coaching classes. Typically, one can't claim tax deduction for coaching fees. However, under Section 80E, it is suggested that a loan taken for the purpose of higher education be available for tax exemption. So, it is possible to claim an exemption on the loan taken for coaching classes. This is in contrast to Section 80C, where tuition fee is specifically mentioned.