Beware health insurer with no IRDA licence
If an agent comes to your doorstep trying to sell a certain health insurance policy by Aetna Healthcare Networks, it is in your interest to send him packing. Reason: the company is not a licensed entity and so your money is at stake.
The Insurance Regulatory and Development Authority (Irda) has issued a notification, saying a company called Aetna Healthcare Networks (India), claiming to be a unit of US-based health insurance company Aetna Inc., has not been given any licence or certificate of registration. In India, it is illegal to sell insurance without having a licence from Irda.
The notification says: “The issuance of such health insurance plans without obtaining the mandatory licence or certificate of registration from Irda in terms of provisions of the Insurance Act, 1938 and the IRDA Act, 1999, amounts to a violation of the said statutes for which appropriate action, civil or criminal under the Insurance Act and the Irda Act may be taken up by Irda against such company.”
The company did not reply to Mint’s attempts to get in touch on phone.
The trouble is even if you have a policy from this company, you are not covered for health insurance and your premium may not get refunded.
If you have already bought a policy from Aetna, you can report to the insurance regulator at www.irdaindia.org.
— Deepti Bhaskaran
ELSSs and FMPs share limelight at year-end
As the the fiscal 2010 draws to an end, there are two mutual fund products that share the spotlight.
The first is equity-linked saving schemes that come with a three-year lock-in period and offer you tax deduction benefits under section 80C of the Income-tax Act. The second is fixed maturity plans (FMPs) that work like fixed deposits, but without the guarantee and if you invest at this time of the year, you get a double indexation benefit. About half a dozen double-indexation FMPs are currently open for subscription.
How do they work? A double- indexation FMP is a closed-end fund that matures in a little over a year, but covers two year-ends. For instance, a 14-month FMP launched in March 2010 will cover two year-ends, March 2010 as well as March 2011.
The indexation benefit allows you to inflate your cost price to account for inflation. Double indexation means you can inflate your cost price twice. Since double indexation FMPs cover two accounting years, the idea is to inflate the cost, at least on paper, to such an extent that it becomes more than the maturity value. Consequently, your gains look like loss (though only on paper) and, as a result, you escape paying any taxes on it.
For instance, if you invest Rs10,000 in a 14-month FMP that yields a return of 7% during the end of March 2010 and redeem it in April 2011, you will get back Rs10,816.67.
However, on account of double indexation, your cost will go up to around Rs11,449; and you incur a loss, albeit only on paper, and do not pay tax.
After FMPs lost their lustre in 2009, following a Securities and Exchange Board of India (Sebi) ruling in early 2009 banning them from giving indicative yields and to mandatorily list on the stock exchanges, fund houses saw little benefit in launching them.
A low interest rate regime was another reason why we saw few FMPs in the market. However, as an investment option, FMPs are still alive for investors who are aware of the benefits and are able to make their own investment decision.
— Kayezad E. Adajania