NEW TAX SAVING INSTRUMENT FORM IDBI
IDBI launches the new tax saving instrument called bondsurance with double tax benefit
What is Bondsurance
Another innovation from the house of IDBI Fortis.
A product that no other life insurance company has in the market today
A product that no other financial instrument company has in the market today
A product that will open the investment market more wider to us
A product that is a blessing in times of such high volatility
This is Bondsurance. A bond that is a “FIVE YEAR PEACE OF MIND”. A bond that is a “TEN YEAR PEACE OF MIND”. A gift for someone you love and that someone could be yourself.
How will it work
Bondsurance will be a series of closed ended product. As you know the interest rate is declining sharply and I expect the following thing for the first series of Bondsurance. The first day sales for us as a channel will be 15th of December 2008 and the last day maybe 31st December 2008. Remember even before 31st December this series can be withdrawn at the end of the day on which the notification of withdrawal is given out by the company.
How do I look at Bondsurance from a premium segment point of view
For premiums upto and including one lac
For premiums above 1 lac
This is meant for new clients. ie those who are not previously covered for any risk by us.
What is the pitch for sales
2) Tax Benefits
In the months from December to March … people are looking for tax solutions. What better product to have than Bondsurance
The different tax payable rates are 10.30 % , 20.60 % , 30.90 % and finally the highest slab of 33.99 %
Bondsurance in one product but with two tax benefits.
First , the Section 80 C benefit
For a person ( Age 8 to 32 or 13 to 32 ) in the highest tax bracket and who contributes and takes benefit of Rs. 1 lac under 80 (C) , the Guaranteed return on a 5 year bondsurance is Rs. 1,34,770 and on a 10 year bondsurance is Rs. 2,03,190.
The net payment to the client after availing tax benefit is Rs. 66,010. So the numbers give us the pitch. Guaranteed to double your money is 5 years and triple it in 10 years.
Second , the Section 10 ( 10 ) D benefit
The maturity money you receive is tax free under sec 10 10 (D). The power of the section is not realized by many. Tax free as it is exempt from income is what the section states. Remember when individuals lock in money with many other financial instruments they are taxed at exit. Individuals may today be in lower tax brackets but they all progress in life and when the instrument is due for exit they may be in the highest tax bracket.
Bondsurance ensures that you enjoy tax relief at entry and tax emption at exit. As I said one product and two powerful tax benefits. Enjoy.
3) Guarantees
Money that you earn has many colours
There is money that you spend
There is money that you save
In the money you save , there is money that that you can risk and there is money that needs to be protected.
In the money you save , there is money that is short term saving and there is money that is saved for longer terms
The market today is volatile and people are looking to save part of their money is longer term savings. They are looking to save part of their money where they don’t need to worry about returns. They are looking to save part of their money where they don’t need to worry about tax at exit.
There are only a few guaranteed products available in market and even there either the guaranteed % is limited or the amount one can save is limited. Bondsurance has Guarantees and the Guarantees are Good and the Guarantees are net of risk cover that is being provided.
4) Your family is protected as you investment earns guaranteed returns
Individuals do invest and they will continue to invest in different financial instruments.
Rs. 1 lac is put in fixed deposit or post office for a period of time. If unfortunately something happens to the individual then what is left for the family is the capital and the interest till that time.
Bondsurance protects the individual as his investment earns guaranteed returns
So the Rs.1 lac that is invested becomes Rs. 2,03,190 after 10 years but any time during the 10 years the family is protected with a shield of Rs. 5 lacs sum assured if anything were to happen to the life assured.
This is Bondsurance peace of mind . Also remember the yield above doesn’t reduce because of the protection provided. The protection is the icing on the cake
5) Liquidity
An individual has invested with us for 5 year and there is an emergency in 2 years time. The individual can withdraw his amount with us and today’s declared indicative special surrender value gets 103 % of his premium back.
So the individual has taken his tax benefits and after 2 years since it is a single premium plan, the 80 C benefit he has taken at entry remains protected.
Bondsurance has good liquidity Liquidity after completion of one policy year. Individuals can exit after one year.
The special surrender values ,as of now, are given in the presentation above.
For liquidity the individual can also pledge Bondsurance as collaterals to banks. It has no surrender value for the first year. So after one year individuals have the option to pledge it and avail loan on it from the bank. We will make an effort to try and workout something with IDBI and / or Federal bank on this and we have one year’s time for the same.