Category Archives: Finance

Importance of Term Life Insurance and its Working

Importance of Term Life Insurance and its Working

In India we have different Insurance Policies. When compared to other foreign developed countries what we have is very less but still they are very useful for us. These types will depend on the objectives and our requirement. Life Insurance is purely safe and secured. Investment is will help in financial planning also. Different Types of Insurance Policies that are available in India and its objectives are also provided below for reference.

This is basic type of insurance which there will not any kind of special objective. Profit corner is very less in this type of insurance. Term insurance has a guaranteed death benefit but no cash value as the premiums will increase at pre-determined intervals such as 1 year or 5 years or 10 years or 20 years depending on their capacity and availability. Premiums will be cheaper when compared to other types of provident funds. Depending on our premium we have to pay once in a month or once in three months and risk involved is also very less for this type of insurance. Term insurance is specially designed to help people in purchasing the protection they need when they cannot afford to purchase all permanent insurance. It will also help when they only need coverage for a specific period of time.

Term insurance will work depending on the type of policy we are holding. A renewable term life insurance policy is usually available in one to five increments. It can be renewed without the insured having to undergo a medical examination and no need to provide other evidence of good health each year. Level term policy is available which is to provide a fixed amount of coverage with premiums that remain stable over a certain period of time like five to ten year increments.

 

A Detailed Layout on Tax Free Savings Accounts

TFSA- A Short Overview

Wondering what exactly a tax free Savings account is? Well it’s pretty easy and simple to understand. It is a savings account that can be opened by a Canadian who is at least 18 years old. At present the contribution limit is capped at $5,000 per year. The better part is that the principal amount is entirely tax free. The principal amount is indexed to inflation but you can be certain that it will not decrease below that. Besides you will also see an increase in the limit each year. Therefore you can trust on its security aspects and invest in it.

The advantages of TFSA at a Glance

There are numerous benefits of TFSA’s. Here’s presenting a short list of its advantages:

  1. The withdrawals that you make from his account are not taxable, so you will not have to worry about losing money each time you withdraw.
  2. The withdrawals that you make are not going to affect your OAS and CPP entitlement.
  3. The earnings are also not taxable.
  4. They are pretty flexible as well.

Owing to the strained financial condition of the world, individuals do not find it quite promising to invest in mutual funds and other such things. These undoubtedly a far more scope of earning god but the risk factor also looms large. This is something that you should focus on.

Detailed and point wise discussion on the advantages of TFSA

  • Those who are looking to convert their RRSP to a RIF account can also go for a TFA account from RIF. With the help of this you will be able to consolidate your retirement plans and boost the flexibility of your income and secondly you will also be able to reap the advantages of an income rollover.
  • There are no liabilities on income earned and in the TFSA account. What’s more is one can easily invest the money in equity funds mutual funds, real estate and other and the interest that they earn thereon will also not be rendered as taxable. So make sure that the
  • Thirdly there is no tax liability on income earned within the TFSA account. You are free to invest the money in mutual funds, equity, and real estate. The interest, dividend, and capital gains earned on these investments will not be taxable. So you can make the most of it by investing and reaping the utmost benefits.
  • This is an extremely beneficial plan for those who have retired. They can utilize the amount of $5000 and can also transfer the extra amount to an RIP or RRSP account.

These are some of the great benefits that can be reaped by opting for a Tax Free Savings Account. It will also help you to manage your finances well in the backdrop of such an adverse financial condition.

How to control your finances without depending on cash advances every month

If you depend on cash advances on monthly basis, you might feel that it is going to end your financial worries. However, the biggest question is, can it really prove to minimize your burgeoning worries in the long run?

Well certainly not, as if you are used to the practice then you have to face lots of unforeseen problems which can make your finances hollow to the core for sure. Since, the whole exercise which superficially seems to be a luxury for you is even worse than being in debt.

The functioning of cash advance services

Mostly, the cash advance companies work on the basis that they are going to receive their loan back on the borrower’s payday. Either the paycheck is taken by the lending company till it is cashed or the borrowed money is paid by the borrower. Now, the importance of loosing check in such fashion creates hell lot of problems as in order to cover for his paycheck shortage, the borrower again borrows money. Hence, it creates a continuous hollow situation for him. Since the borrower inevitably becomes the victim of high interest rates as he is levied endless charges along with penalties and fees. It leads to more of debt for sure.

Although, you are completely prepared to pay the money on the date when you are going to get the paycheck but unfortunately if you met with a disaster which hinders your plans to the core. Hence, you have no option but to take another check which is going to further make you deep in debt beyond your control.

Hence, you need to adhere to the following steps which will ease you from the unforeseen and difficult times

Do not be extravagant

Do not spend money unnecessarily. Along with that, keep a check over your spending power. Since, it work wonders for you towards having an effective control over your finances.

Be sure to look for various options prior to cornering down to one

While purchasing commodities, you need to look for the best option where besides getting the best product, look for the reasonable priced option. It will save a lot of your hard earned money from going down the drain. According to a saying, “money saved is money earned”. Hence, it is going to help you towards saving yourself from various unforeseen problems. Therefore, you do not have to pay high rates of interest on cash advances.

Importance of strengthening finance

Money poses the biggest ever necessity as its importance cannot be ruled out in any way. Therefore, save as much as you can, since you are able to lead a life of dignity, respect and jubilation. Even the research has authenticated that families who have saved lots of money, eventually turn out to be the happiest lot. Therefore, make your way towards enjoying to the fullest by strengthening your finances like never before. In this way, you are able to control your finances without depending on cash advances every month. So, what are you waiting for?

Australians Can Still Live out of Interest on Their Savings, Experts Say

While many have praised Australia’s central bank for repeatedly cutting the official cash rate, in increments of .25 basis points each time, there is also a downside to their interventionist policy. The country’s official cash rate now stands at the 3 points after having been repeatedly shaved off, down to the lowest level since September 2009, or the apex of the global financial crisis, and there is talk of it going even lower. Of course, banks have been following the lead of the RBA and driving down their interest rates, albeit not all of them have implemented the cuts in full and many have done so reluctantly. But the policy toward interest rates applies across the board, both on loans, as well as on savings products. And the effects of lowering savings interest rates directly affect those who have already reached that stage in their lives during which they were planning to live out of that interest (as well as those who are soon going to).

Australian retirees have been living out of interest on savings accounts for decades now – basically ever since the implementation of the country’s three pillar pension system, which mandates businesses to allot a part of their earnings to the superannuation accounts of their staff. In turn, pensioners would save up in private funds, collect the accumulated interest, and proceed to invest it, thus supplementing their income. Nowadays, however, most investment funds are offering staggeringly low interest rates, which, at no more than 2 per cent per annum, stand below the country’s inflation rate of 2.2 per cent. Even the biggest industry superannuation fund in Australia is now only generating interest worth 2.6 to 2.8 per cent of the account balance.

Our research at Bankwest has revealed that this does not spell an end for savers and savings accounts, but simply a scenario in which cashing in on one’s savings takes more effort and time than before. Bankwest, for instance, offers a TeleNet Savings product, which comes with a 4.8 per cent variable interest rate. Of course, variable interest savings products fall into the relatively high risk category, but the actual surprise is that even low risk savings products, such as term deposits, can turn out to be much more efficient than cash fund investment options.

The problem with cash fund interest rates, says one economist with a major securities fund, is that the actual profit they generate is around 1.5 to 2 per cent. That’s because 3 per cent goes toward covering bill expenses and a further 1.5 per cent is the account management fee. Basic cash investment funds are clearly no longer doing what they were meant to do for the general consumer, yet term deposits such as those offered by Bankwest are rising in popularity and quickly moving toward replacing other, less profitable savings options. Not all banks are offering such products at the moment, but those that do accompany them with a sizeable 4 per cent interest rate – and the experts forecast that we’ll soon be seeing more of them offered by banks throughout the country.

The above-mentioned analyst, for instance, recommends that pensioners who plan to live out of the cash they collect from interest on their savings open not one, but several term deposit accounts. By taking advantage of interest roll-overs every three, six, and twelve months, they can enjoy more flexibility than with just one account. Another major advantage is that term deposits are virtually risk-free for people who know a time will come when they will have to rely solely on savings. They are both secure, as well as profitable – and while not all term deposits were created equal, shopping around online, in search of the best option available is not that much of a hassle, when it comes to financial security.