Interest on PPF payable on lowest balance between fifth and last day of month

Should I invest in PPF at one go at the beginning of the financial year or deposit money every month?

It is preferable to invest in PPF at one go at the beginning of the financial year. Interest on PPF is payable on the lowest balance between the fifth and the last day of the month. If, by any chance, you fail to deposit before fifth of a month, you will lose interest for that month. A one-time deposit will earn interest for the full year.

Can I, as an individual, go for a Keyman policy?

? Suresh Yadav

A Keyman insurance is a life insurance policy taken by the company covering the mortality risk of the key management persons whose premature death will adversely affect the profitability, stability and business continuity of the company. A predetermined fixed sum is payable under the policy. Business entities go for Keyman insurance to protect their business. An individual not linked to a business, either in owning or manning key positions, cannot be issued Keyman policies.

Some new pension insurance plans have been introduced. Should I wait for some time to get clarity on pension plans?

-Pramod Kumar

All major life insurance players have come out with pension plans. In addition to traditional plans, linked pension plans are also available. Traditional pension plans invest in government securities and bonds. The returns are around 5-7% per annum. Linked pension plans may give higher returns, but have market risk. On maturity of the pension plan,a third of the amount can be commuted, which is tax-free, and the balance can be invested in annuity schemes. The periodic annuity received is taxable in the hands of the recipient if the total income exceeds the threshold limit for income tax, which is R2.5 lakh at present for those above 60 years.

Do I have to pay TDS on maturity proceeds of a life insurance policy? If not, do I have to show money as an income from other sources while filing returns?

? Vikram Sharma

The maturity proceeds are tax-free in the hands of the policy holder if the premium paid does not exceed 10% of the basic sum assured as per Section 10(10D) of the I-T Act. So, you will not be subjected to TDS on maturity proceeds if it confirms to the provisions of income tax. You need not show the amount while filing returns.

Is it advisable to go for Ulips health insurance policy as I am 30 years old and single?

? Animesh Gupta

Some life insurers now provide Ulip health insurance policies where a part of the premium is allocated for investment designed specifically to build a health fund to meet future health-related expenses. The return will depend on the fund options chosen. Health-related expenses can be claimed from the health fund so created. But from risk management point of view, it is advisable to take an indemnity health insurance policy, which will reimburse the expenses incurred for hospitalisation in case of any sickness. Since you are young, the premium will be lower. However, tax benefits under Section 80(D) are available for both the policies.

The writer is founder & chief financial planner of Max Secure Financial Planners

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