Mutual Funds

Mutual Fund is a corporate body that pools the savings of a number of investors and invests the same in a variety of different financial instruments, or securities. The income earned through these investments and the capital appreciation realized by the scheme is shared by its unit holders or investors in proportion to the number of units owned by them.

Mutual funds can thus be considered as financial intermediaries in the investment business that collect funds from the public and invest on behalf of the investors. The losses and gains accrue to the investors only. The Investment objectives outlined by a Mutual Fund in its prospectus are binding on the Mutual Fund scheme. The investments objectives specify the class of securities a Mutual Fund can invest in. mutual funds invest in various asset classes like equity, bonds, debentures, and commercial paper and government securities.

An Asset Management Company (AMC) is a highly regulated organization that pools money from investors and invests the same in a portfolio. They charge a small fee for fund management

Net Asset Value of the fund is the cumulative market value of the assets of the fund net of its liabilities. NAV per unit is simply the net value of assets divided by the number of units outstanding.

NAV= Market value of the fund's investments + Receivables + Accrued Income – Liabilities - Accrued Expenses

The performance of a particular scheme of a mutual fund is denoted by Net Asset Value (NAV) and it varies on daily basis. For example, if the market value of securities of a mutual fund scheme is Rs 200 lakhs and the mutual fund has issued 10 lakhs units of Rs. 10 each to the investors, then the NAV per unit of the fund is Rs.20

Equity Funds/ Growth Funds
Diversified funds
Sector funds
Index funds
Tax Saving Funds
Debt / Income Funds
Liquid Funds / Money Market Funds
Gilt Funds
Balanced Funds
Hedge Funds

Upon attaining majority, a minor has to write to the fund, giving his/her specimen signature duly authenticated by his/her banker, as well his/her new bank mandate, PAN details, KYC acknowledgement letter, in order to facilitate the Fund to update its records and permit the erstwhile minor to operate the account in his/her own right.

In case of change of bank request, the investors shall be required to submit the below stated supporting documents to effect the change:

  • Change of Bank Mandate Form
  • Original cancelled cheque of the new bank with the investor name mentioned on the cheque.

If the fund plans to sell a scheme to another fund the asset management company has to take the permission of 75 percent of unit holders or allow them to redeem without any exit load. This does not mean that the investor has nothing to worry about.

You need to find out whether the scheme is going to be managed by a different mutual fund and whether it suits your objective. Also find out the past performance of similar schemes. Note that such a change may have a bearing on the future financial performance of that fund. In case you are not comfortable with the various changes associated with the fund ship out.

In such a case the trustees have to send a notice to the Securities Exchange Board of India (Sebi) explaining the reason for winding up. The notice also has to be published in two national dailies and a vernacular newspaper belonging to the region where the fund is formed.

A popular investment style whereby fund managers identify companies showing promise of above-average earnings through capital appreciation. Stocks are held primarily for price appreciation as opposed to dividend income. Thus the fund managers of the growth stocks are willing to pay a premium to acquire a stock if they feel it has the further growth prospects. Growth investing is an alternative to value investing

This is the investment style espoused by index fund managers who simply invest by benchmarking their portfolio to a common stock market index like the BSE-30 or the SP CNX-50. The fund manager only invests in stocks in the index stocks in exactly the same weightage. The attempt is to simply replicate the benchmark index, as closely as possible and therefore it is called passive investing.

Gilt schemes invest in government bonds, money market securities or some combination of these. They have medium to long-term maturities, typically of over one year and have moderate returns. Since the issuer is the central or state Governments, these funds have reduced risk of default and hence offer better protection of principal.

According to the central governments Equity Linked Saving Schemes (ELSS) guideline, 1992 and the amendment in 1998, these schemes offer tax rebates to the investor under section 88 of the Income tax act, 1961. Under Section 88 of the I.T. Act, 1961, one gets a tax rebate of upto 20% of the amount contributed to ELSS schemes subject to a maximum investment of Rs. 10000/- within the allowable limit under section 88. Also these schemes generally diversify the equity risk by investing in a wider array of stocks across sectors

Net assets are the total value of a fund's cash and securities less its liabilities or obligations. A portfolio could be a mixture of stocks, bonds, money market instruments and cash.

Depending on how many years the investor stays with the fund, some funds may charge different amount of loads to the investors- the longer the investor stays with the fund, lesser the amount of exit load charged to him. This is called the contingent deferred sales charge (CDSC) and contingent deferred sales load (CDSL).

Money laundering is one of the major menaces in any country’s economy. Financial institutions and the government are constantly on the watch for such illegal activities. Mandating KYC formalities for banking or investment transactions is an effective way to prevent this.

The primary objective is to ensure that the deposits/investments are made in the name of a real person and not fictitious one. It also helps to curb black money. Hence, Know Your Customer procedure is something that all mutual fund investors have to adhere to via a KYC Registration Agency (KRA)

Investors need to submit the following documents along with their Know Your Client application form and a passport size photograph.
a. ID Proof:
PAN Card, Driving License, Passport copy, Voter ID, Aadhaar Card or bank photo passbook.
b. Proof of Address:
Recent landline or mobile bill, electricity bill, passport copy, recent demat account statement, latest bank passbook, ration card, Voter ID, rental agreement, Driving License or Aadhaar card.

The Systematic Investment Plan (SIP) is a simple and time honoured investment strategy for accumulation of wealth in a disciplined mannerover long term period. The plan aims at a better future for its investorsas an SIP investor gets good rate of returns compared to a one time.
SIP allows the investor to buy units on a given date every month with fixed decided amount,more number ofunits can be bought in a declining market and less number of units ina rising market.
SIP ensures averaging of rupee cost as consistent investment ensuresthat average cost per unit fits in the lower range of average marketprice.

SIP allow one to invest small amount of money periodically (quarterly, monthly, weekly) into selected Mutual Fund. After fulfilling KYC requirement, one can start investing from minimum of Rupees 500/- per month via online or offline transaction.

Below are three simple steps to start SIP Online
Keep the necessary documents ready such as PAN Card, Address proof, a cheque book and a passport size photograph.
With these documents, get your KYC done which is one-time process and you can eligible to invest in multiple Mutual funds.
Once, the KYC is successfully done, you need to visit the website, register once , fill the basic details and your SIP is started successfully.
Link of MP financials SIP Investment.

Health Insurance

Health insurance will protect you and your family against any financial contingency arising due to an unforeseen medical emergency.

The amount paid to avail the covers in the policy is called premium.

Any condition, ailment or injury or related condition(s), for which you had signs or symptoms and/or were diagnosed and/or received medical advice/treatment within 48 months prior to the first policy with the insurance company is called a pre-existing disease.

Health Insurance portability will allow the Policy Holder, protection against discontinuity and loss of coverage against pre-existing diseases consequent to his/ her decision to shift to another insurer at the time of renewal.

In the event that your policy is rejected, you can definitely avail of premium reimbursements within 7 working days. However, companies will not be able to reimburse your medical check-up expenses.

Most of the health insurance companies have an extensive network of hospitals with which it works with offer of cashless and reimbursement facilities for your treatment. However, there are some hospitals that are delisted by any companies, and then insurance company will not cover any medical expenses for treatment taken at these hospitals. The updated list of delisted hospitals are available on company website also.

Alternately you could also contact our 24x7 customer care no. 1800 2666 for surety if your chosen hospital is covered by insurance company.

You should renew your policy prior to expiry date of your policy. The insurance company may give you a grace period of 30 days after expiry date of the policy, within which you can renew the policy without making a fresh application. During this period, you will not be covered for any ailments or accidents but the same policy can be continued. However, it is best that you pay your renewal premium while your policy is still in force so that you can enjoy uninterrupted coverage.

You will be given a period of 15 days from the date of receipt of policy to review its terms and conditions. If you disagree with any of the terms or conditions of the policy, you can cancel the policy by giving us a written notice or by calling on customer care or by emailing from your email ID registered with company. Free look cancellation request form is also available on our website. If you cancel your policy within this free look period, the full premium will be refunded to you. Premium refund will be done through NEFT mode only.

Co-Payment is a cost-sharing requirement under a health insurance Policy that provides that the policyholder/ insured will bear a specified percentage of the admissible claim amount. A co-payment does not reduce the Sum Insured.

In a floater option, a single policy under one Sum Insured covers all in the family.  For e.g., 2 adults, 2 adults and 1 child, 1 adult and 2 children, 2 adults and 3 children, 1 adult and 2 children, 1 adult and 1 child. The Sum Insured can be used by anyone in the family or all covered in the policy multiple times till the time the limit is exhausted.

Individual plan has to be separate for every individual.

Floater covers all in family (max 2 Adults and 3 Children) and provides one sum insured to all, hence, there is saving of premium

The premium you pay for yourself, your spouse, your dependent children and dependent parents, up to the limit of Rs. 25,000 (Rs. 30,000 for those aged 60 years or more), excluding service tax and education cess, is eligible for deduction under section 80D. This deduction is eligible under the prevailing tax laws, which are subject to change as per change in tax laws.

Mandatory covers come inbuilt in the plan and you do not have the option to exclude them from the plan. Optional covers come as add-ons in the plan and you have the option to include them in the plan.

No, the claim amount you receive under your health policy is not subject to tax.

The amount paid back by the insurer for the expenses incurred by the insured is called reimbursement.

Yes. For example, if you have a cover of ` 10,000 for maternity and incur an expense of`15,000 then you will have to pay 5,000 by yourself.

All the expenses including room rent, pre/post hospitalisation, etc. related to treatment are capped up to the amount mentioned in the sub limit bracket.

To avail a cashless settlement of your claim, you should be admitted in a network hospital. A company has a list of such hospitals and you need to find out whether the hospital in the company’s network is your preferred choice of hospital and/or located in your area.

This is a one of the most important health insurance questions to be considered because medical emergencies may arise anywhere. Usually, health plans cover treatments anywhere in India but you should make sure of this clause. Find out whether the claim settlement in your policy has any geographical limitations or not. There are some medical insurance plans that offer international coverage too.

In an emergency situation, you might be admitted in a non-network hospital and knowing the claim protocol at that time is imperative. Always remember that treatment in a non-network hospital would be on a reimbursement basis only where you would have to shoulder the medical bills and then get them reimbursed from your insurer. So find out the reimbursement process, the documents required in this case, and the deadline for informing the insurance company, etc. for this situation.

This is one of the most common health insurance queries, and knowing the answer from the get-go makes the claims process much smoother. Essentially the company asks for the identity proof of the members covered, the health card, the hospital bills, etc. at the time of a claim. A pre-authorization form is required in case of cashless claims which are to be submitted to the TPA. Other documents might also be required and you should have the knowledge of the required documents so that you can get your claim processed smoothly.