KV Manjunath, Bengaluru
I have a PNB MetLife Met
Smart policy for sum assured
of `15 lakh purchased in
2006. The present fund
value of this scheme is
around `6 lakh. The sales
manager of PNB MetLife
is advising me to take out
say `1 lakh or `2 lakh and
use this money to purchase
PNB MetLife Pure Term
Plan which gives insurance
cover till the age of 99. Is it
advisable to do so?
I’m not aware of your age but
pure term plan premiums are
not high when compared to
investment-based insurance plans.
The premium for a 40-year-old
for `1 crore cover till age 99 will
be `25,000 approximately, so you
may not need to withdraw a large
amount from your Met Smart
Policy. You need to evaluate your
insurance requirements and then
decide if you need additional
cover. A pure term insurance is
nevertheless the best insurance
plan you can take. You can also use
the opportunity to evaluate if your
MetLife Smart plan has performed
well over the last 12 years.
Steven Fernandes
Founder - Proficient Financial Planners
Zeya Alam, Varanasi
A classmate of mine wants
to know if it’s necessary
for an NRI to convert his
savings account from
Resident status if he is
showing his received
interest in the saving
account in his Income tax
return while filing it as NRI?
As per FEMA regulations, if your
residential status changes to NRI,
your savings account will have to be
re-designated as an NRO account.
Continuing to hold a savings
account without converting the
same even after acquiring an NRI
status will be considered illegal.
Interest from an NRO account is
similar to interest from a savings
account and hence taxable. It is to
be offered in the return of income
filed in India.
Archit Gupta
Founder & CEO - ClearTax
`10,000 per annum that’s available
for residents. You would need
to file your returns in India as a
consequence, and if your overall
income from India is below the
taxable limit you can get a refund of
the amount deducted.
Anil Rego,
Founder and CEO - Right Horizons
Anita Kumari, Sahebganj
What is the insurance
available for a person whose
annual income is `3 lakh?
Insurance companies are careful
not to over-insure since it creates
the risk of misuse. It also creates a
potential threat on the life assured
by the nominee/beneficiary. The
quantum of life cover is assessed by
the insurance company based on
the age, income, liabilities, and the
state of health. On an average, the
sum assured can be 10 to 25 times
your earning capacity based on
your age and other factors. Ideally
the insurance you take needs to
be based on the Human Life Value
(HLV) which in simple terms is the
earning capacity of an individual
over one’s work life.
Anil Rego
Founder and CEO - Right Horizons
Ramesh Mathur, Denver, USA
I am a PIO over the age of
60 (but not yet 80) living
in the US as a US citizen. I
had some interest income
generated on a bank
account that I maintain in
India. I have no other income
there. I understand that
senior citizens with income
less than `2.5 lakh in India
do not need to file taxes
there. Does this rule apply
to me? Every quarter the
bank automatically deducts
taxes from my deposit; am
I eligible for getting that
money back?
Banks are required to deduct tax
on interest income for NRIs and
PIOs at the highest tax rate. NRIs
are not eligible for the exemption of
[email protected]
Currently I have `1.2 crore
worth of FCNR FDs earning
an interest of 3%. I want
to invest this in the market
or some other kind of
investment for three or
more years and earn at
least 12% interest/income
annually. Kindly advise me
of any suitable investment
area, and their merits and
demerits. I would also like to
know if it is worth investing
in FD of PMC Cooperative
bank, which is offering
8% interest for 24 months
duration.
As per your time horizon and
return expectations, you should
consider investing in mutual funds.
A good mix of debt and equity MFs
in keeping with your risk profile
should help you get better returns
than the FCNR deposit. The equity
MFs can be large and multicap
funds while the debt investment can
be a combination of ultra-short and
short-term funds. Note that equity
MFs will not give you an annual
return like FDs as returns are not
guaranteed. A time horizon of more
than three years should help you
get decent returns. There could be
times when your equity investment
value will give you negative returns
in the short term; only if you stay
invested for the longer term will
you be suitably rewarded. Interest
earned on FD is taxable, so evaluate
your taxable income and then
decide if you want to invest in FDs.
Steven Fernandes
Founder - Proficient Financial Planners
www.outlookmoney.com May 2018 Outlook Money
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