FINANCIAL LITERACY

Dr SUNITA VIVEK
INTRODUCTION
 MODULE - I

● MEANING, IMPORTANCE & SCOPE

● PREREQUISITES OF FINANCIAL LITERACY;

● LEVEL OF EDUCATION, NUMERICAL AND

● COMMUNICATION ABILITY
Financial literacy is an important skill to learn to achieve
financial growth and success. The most basic way to start
being financially literate is understanding budgeting, managing
debt, saving and investing. ... Saving can become your
emergency fund or a way to keep your expenses in control.
● Financial literacy is the ability to
manage one's money. The goal of
financial literacy is to help in
understanding financial concepts that
will help them to manage their money
better. It is a life skill that one must
grasp for good financial wellbeing.
● Ability to make better financial
decisions. Effective management of
money and debt. Greater equipped to
reach financial goals. Reduction of
expenses through better regulation.
Earning
"Earning" refers to bringing money home from a job, self-employment, or return on various investments. Most
individuals earn money via employment in the form of a paycheck. The average employee pays between 28-30% of
their gross income in taxes and other deductions before receiving their net income or take-home income. It is
extremely important to understand gross versus net in a paycheck, in addition to understanding the federal, state and
local individual income tax imposed on citizens and residents of the USA.

College students need to fully understand the concept of earning in order to determine their future potential earnings
prior to committing to a specific specialization in their educational goals. It is advisable for all students to take time, ask
questions, and explore career tracks before they declare a desired major of studies. This is not to say that a student
should not pursue his or her passion, this is to get students to make a plan for future earning potential once they
graduate from college. Regardless of what your goals are, education is an investment in your future, so make sure you
are satisfied with your return on this investment.

Saving and Investing

"Saving" and "Investing" deals with the understanding of financial institutions and services available to you.
First of all, you should have a saving and a checking account to manage your own financial transactions. Start
SAVING EARLY and PAY YOURSELF FIRST to help you understand the concept that saved money grows
over time which also leads you to explore long-term investments for retirement planning.
Spending
"Spending" is probably the most important concept because it is a personal reflection of your values, lifestyle,
and your financial behavior. Differentiating between NEEDS and WANTS is the basic concept of controlling
spending. Budgeting is the most powerful and impactful tool you can adopt to control spending to allow for
saving and investing.

Borrowing
"Borrowing" is acquiring debt to create assets. Most students have to borrow student loans to finance their
educational goals, and with a financial plan for repayment, they can turn this investment in their education to
their advantage. Mortgages or loans to buy homes are another form of borrowing or acquiring debt to create
assets. Business loans to create self-employment opportunity or build a business, and real estate investments,
are also good examples of how borrowed money can be turned into assets and wealth accumulation.

Protecting
"Protecting" deals with insurance, ID theft, and retirement planning. The idea is to stay protected at all levels in
your life; on personal, health, and social levels. You will need to understand risk management, insurance
coverage, identity theft protection, fraud, and scams, in order to master self and family financial protection in
life.
SCOPE OF FINANCIAL LITERACY
As one can imagine, the scope of financial literacy is vast. It encompasses
budgetary education (personal or family budget) and learning about
banking tools (everyday banking, savings, insurance), as well as
understanding economic concepts (how the economy operates and is
financed) and public policies.

Financial literacy is the confident understanding of concepts

including saving, investing and debt that leads to an overall sense of
financial well-being and self-trust. It starts by building basic knowledge
of money matters.
 ● PREREQUISITES OF FINANCIAL LITERACY; LEVEL OF EDUCATION, NUMERICAL AND

COMMUNICATION ABILITY
Managing your money is a personal skill that benefits you throughout your life and everyone learns.
With money coming in and going out, with due dates and finance charges and fees attached to invoice
and bill and with the overall responsibility of making the right decisions about mejor purchase ,
investments consistently.

MONEY IN THE BANK: Developing financial understanding starts with opening a bank account.Once
you have a payback, set up direct deposit. This keeps your money secure and saves you from paying
interest to cash advance companies which charge a percentage of your cheque.

BUDGETING: One of the first building block of a successful personal finance plan is the ability to
budget.Although it’s easy to understand, it’s also difficult to do because it requires a hard look in the
mirror and a willingness to see what really stares back at you.

Budgeting requires that you analyze and likely change your spending habits. Instead of your money
controlling you, you control your money. Develop habit to save, avoid financial crisis and maintain
peace of mind.
INVESTING: To become financially literate, an individual must learn about key
component in regards to investing. Some of the components, that should be learned
to ensure favorable investment are interest rate, price level, diversification, risk
mitigation and index.

BORROWING: In most cases almost every individual is required to borrow money at

one point of their life. To ensure borrowing is done effectively and understanding of
interest rate, compound interest,time value of money, payment period and loan
structure is crucial.

TAXATION: Gaining knowledge about different forms of taxation and how they
impact an individual's net income is crucial for obtaining financial literacy.Whether it
will be employment, investment,rental, inheritance or unexpected, each source of
income is taxed differently.

Awareness of different income tax rate permits economic stability and increase
financial performance through income management.
PERSONAL FINANCIAL MANAGEMENT: The most important criteria, personal
financial management includes an entire mix of all the components budgeting,
investing, insurance, and loans and interest.

Financial security is ensured by balancing the mix of financial components above to

solidify and increase investment and savings while reducing borrowing and debt.

A SUCCESSFUL BUDGET PLAN CLEARLY DEFINES:

● How to follow a monthly spending plan.
● Way for lowering your monthly bills.
● How to handle your accrued debt.
● Debts pay - off option like the snowball and avalanche method.
● How to distinguish between short - term, medium and long - term goals.
● A breakdown of family needs.
COMPOUND INTEREST = Compound interest is
avalanche method
the addition of interest to the principal sum of
Mathematically, the most effective way to
a loan or deposit, or in other words, interest on
eliminate debt is to follow the avalanche
interest. It is the result of reinvesting interest,
method, in which you list your debts from
rather than paying it out, so that interest in the
highest to lowest by interest rate. Pay the
next period is then earned on the principal sum minimum balance on each, then dedicate
plus previously accumulated interest. as much extra as you can each month to
FORMULA the one with the highest interest rate.
‍A=final amount
The "snowball method," simply put,
P=initial principal balance means paying off the smallest of all your
R=interest rate loans as quickly as possible. Once that
N=number of times interest applied per time period debt is paid, you take the money you
were putting toward that payment and
T=number of time periods elapsed
roll it onto the next-smallest debt owed.
 NUMERICAL AND COMMUNICATION ABILITY
The regression models indicate that numeracy is a key factor that predicts financial
literacy. Emotional attitude towards numbers (math anxiety) was also predictive of financial
literacy. Arguably, attitude and affinity with numbers may be targeted to enhance financial
literacy.
To start your financial literacy, the first step is to start reading everything about money matters,
including investment, money management and finance. You can start reading with magazines and
newspapers or look for books that teach you financial literacy.You may look for resources online
as well podcast and attend webinars that gives a broad outlook of financial literacy.
USE FINANCIAL MANAGEMENT TOOLS: Next important step to gain financial literacy is to start
using a financial management tool. There are many services available, you can easily connect
them to your checking and saving accounts, credit & debit cards and mortgage to monitor your
spendings by using these tools. You can create your personal and monitor how effectively you are
following it.
ASK FOR ADVICE: Financial advisor can answer your queries regarding handling your money,
investing on higher interest rate, credit cards - debit cards and other your debts. They can
evaluate your specific situations and make recommendations for how to consolidate and manage
your finance to pay off bills & debts.
USE YOUR NETWORK: While there are limited resources to help or elevate your financial
literacy , look for resources within your own network. Chances would be more when you
have a friend, family members or a financial advisor who can offer a guidance or give insight
to help you to improve your knowledge regarding finance.

LEARN TO BUDGET: Budgeting is the key component of financial literacy. Learning to

create and manage a budget allows you to pay down or avoid debts, save money and plan
for your future.

UNDERSTANDING CREDITS: To use credit intelligently you should be knowing and having
a understanding about it. Some important concept you should know about credit included:

● WHY CREDIT IS IMPORTANT.

● WHAT INFORMATION GOES TO YOUR CREDIT SCORE.
● HOW TO IMPROVE YOUR CREDIT SCORE.

Part of understanding credit includes learning how to pay down high - interest credit card
debts.
CREATE AND MANAGE A CHECKING & SAVING A/C: Creating and managing a checking
and saving account is another important step for financial literacy. These accounts will allow you
to keep your money safe and make paying your bills in easier way.. It’s also important to learn to
manage the account to avoid overdraft charges.

UNDERSTAND DEBTS AND LOANS: Learning about debts and loans is another important part
of financial literacy. Not all debts are credited equally, so learning about the different kinds of
debts & loans. The strategies for each and on what you should focus on paying down first
should be on top priority.

INVESTMENT IN RETIREMENT: It’s never too late to plan for your retirement. Use a tax -
advantaged retirement savings plan like - Mutual Fund,CPF,PPF etc. Start investing 15% of your
income each month to ensure to beat inflation. While still leaving enough income to pay for other
expenses like a mortgage as study loan.

UNDERSTAND THE RISK OF IDENTITY THEFT: Identity theft is when someone uses you
personal information without your permission to commit a fraud.It may involve using your
personal identity. The best way to prevent identity theft is to learn how to safeguard your
NEED OF AVAILING FINANCIAL SERVICES FROM BANK AND INSURANCE

Financial services ensure promotion of domestic as well as foreign

trade. The presence of factoring and forfaiting companies ensures
increasing sale of goods in the domestic market and export of goods
in the foreign market. Banking and insurance services further
contribute to step up such promotional activities.

Forfaiting is a type of financing that helps

exporters receive immediate cash by selling their
receivables at a discount through a third party. ·
 Unit - 2
Financial Planning & Budgeting

Meaning,Importance and need for Financial planning,

Personal Budget,Family Budget, Business
Budget,Procedure for Financial Planning and
Preparing Budget, Avenues for Savings from surplus.
What is financial planning and budgeting?

Budgeting looks at what's happening with your financial picture now and helps you
prioritize how you're spending and saving your money on a regular basis. Financial
planning, on the other hand, is a broader look at your entire financial picture over time.

Importance: Seeing the value of reaching a goal is often much easier than
seeing a way to reach that goal. People often resolve to somehow improve
themselves or their lives. But while they are not lacking sincerity,
determination, or effort, they nevertheless fall short for want of a plan, a
map, a picture of why and how to get from here to there.
Budgets are usually created with a specific goal in mind: to cut living
expenses, to increase savings, or to save for a specific purpose such as
education or retirement. While the need to do such things may be
brought into sharper focus by the financial statements, the budget
provides an actual plan for doing so. It is more a document of action
than of reflection.
As an action statement, a budget is meant to be dynamic, a
reconciliation of “facts on the ground” and “castles in the air.” While
financial statements are summaries of historic reality, that is, of all that
has already happened and is “sunk,” budgets reflect the current realities
that define the next choices. A budget should never be merely followed
but should constantly be revised to reflect new information.
How To Make a Personal Budget in 2. Calculate Your Income
6 Easy Steps How much income can you expect each month? If your
income is in the form of a regular paycheck where
1. Gather Your Financial Paperwork taxes are automatically deducted, then using the net
Before you begin, gather up all your financial income (or take-home pay) amount is fine. If you are
statements, including: self-employed or have outside sources of income, such
as child support or Social Security, include these as
Bank statements
Investment accounts
well. Record this total income as a monthly amount.
Recent utility bills
3. Create a List of Monthly Expenses
W-2s and paystubs
1099s Write down a list of all the expenses you expect to have
Credit card bills during a month. This list could include:
Receipts from the last three months
Mortgage or auto loan statements Mortgage payments or rent,Car payments
Insurance,Groceries,
You want to have access to any information about Utilities,Entertainment,Personal care
your income and expenses. One of the keys to the Eating out,Child care
budget-making process is to create a monthly Transportation costs,Travel
average. The more information you can dig up, the Student loans,Savings
better.
4. Determine Fixed and Variable Expenses
6. Make Adjustments to
Fixed expenses are those mandatory expenses that you
pay the same amount for each time. Include items like Expenses
mortgage or rent payments, car payments, set-fee internet If you're in a situation
service, trash pickup, and regular child care. If you pay a
where expenses are higher
standard credit card payment, include that amount and any
other essential spending that tends to stay the same from than income, find areas in
month to month. your variable expenses you
can cut. Look for places
If you plan to save a fixed amount or pay off a certain
amount of debt each month, also include savings and debt you can reduce your
repayment as fixed expenses. spending—like eating out
less—or eliminate a
5. Total Your Monthly Income and Expenses
category—like canceling
If your income is higher than your expenses, you are off to
your gym membership.
a good start. This extra money means you can put funds
towards areas of your budget, such as retirement savings
or paying off debt.
The Budget Process

The budget process is an infinite loop similar to the larger financial planning process. It

involves

● defining goals and gathering data;

● forming expectations and reconciling goals and data;

● creating the budget;

● monitoring actual outcomes and analyzing variances;

● adjusting budget, expectations, or goals;

● redefining goals.
Monthly Income for the month of ----------- Monthly expenses for the month of -----------
Saving

Item Amount Utilities

Cell phone

Grocery

Laundry

Medical

Insurance

Credit card debts

Tuition Fee

Entertainment

Miscellaneous
Business Budget
 Avenues for Savings from surplus.
6 Safe Avenues To Park Your Monthly Savings -
● Senior Citizens Savings Scheme (SCSS)
(Source: freeimages.com) ...
● Recurring Deposit (RD) ...
● Bank Fixed Deposit (FD) ...
● Kisan Vikas Patra (KVP) ...
● Liquid and Ultra Short Term Funds. ...
● Savings Account.
Equity:Equity as an asset class is Mutual Funds:A mutual fund is a professionally managed
gaining traction but it is not everyone’s cup of investment fund that pools money from many investors to purchase
tea. It is probably the most volatile asset securities. They can put their money into one or more kinds of
securities. Mutual Funds can put their money into stocks, debt or both
class with no guaranteed returns. Investment
and even in gold. They can be actively managed or passive funds.
in equity is not just restricted to stock
selection, but timing of entry and exit is very In active funds, the fund manager plays a vital role in choosing script to
important. However, in the longer run, stock
generate return, while passive funds or exchange traded funds (ETFs)
markets can be the best performing asset
invest the money based on the underlying benchmark indices. Equity
class with much superior alpha.
schemes are categorized according to market-capitalization or the
While putting your money into equity, sectors in which they invest.

investors shall opt for strict stop loss to curtail Debt Mutual Funds are more suited for the investors who want steady

the extent of damage. It is advised to have an returns with lower risks. They are less volatile as the corpus is put into

fixed interest generating securities like corporate bonds, government

expert opinion and view before buying stocks.
securities, treasury bills, commercial paper and other money market
To put your hard earned money into direct
instruments. However, debt mutual funds are neither risk free, nor they
equity, one needs to have a demat account. assure returns.
Bonds or Debentures Public Provident Fund (PPF)
Debentures or bonds are long-term investment options with a
The Public Provident Fund is one the popular investment
fixed stream of cash flows depending on the quoted rate of
products, with a longer maturity tenure of 15 years. The impact
interest. They are considered relatively less risky. An amount of
of compounding of tax-free interest is hefty, especially in the
risk involved in debentures or bonds is dependent upon who the
later years. It is a safe investment as the interest earned
issuer is. They include Government securities, savings bonds,
(reviewed every quarter by the government) and the principal
public sector unit bonds etc.
invested is backed by sovereign guarantee.

Bank Fixed Deposits (FDs)

National Pension System (NPS)
FD in banks is considered as one of the safest and traditional
choices of investing in the nation. It is different from deposits in The National Pension System is a long term retirement –

savings accounts. They provide a fixed rate of interest on the focused investment product managed by the Pension Fund
principal amount over a predetermined duration. Bank FD Regulatory and Development Authority (PFRDA). It is a mix of
provides a higher rate of interest than savings accounts. equity, fixed deposits, corporate bonds, liquid funds and
However, The interest rate earned is added to one’s income and government funds,
is taxed as per one’s income slab.
Real Estate Life Insurance
Buying property is one of the most popular investment alternatives in the country. However,
Insurance plans sold as life insurance shall not be
a property for self consumption should never be considered as an investment. Investment
in real estate is not just limited to housing as the segments like office, commercial real considered as investment options as they provide risk

estate, warehousing, student housing, data centers, shared spaces is also gaining traction coverage in case of any mishap. However, many Indians

amongst the investors. consider insurance as an investment. Life insurance is an

Location of the property is the most important factor that affects the price of the property instrument for the security of life. The main objective of
and rental income that is likely to be earned. Investments in real estate deliver returns in
other investment avenues is to earn a return but the
two ways- capital appreciation and rentals. However, unlike other asset classes, real estate
primary objective of life insurance is to secure our
is highly illiquid.
Gold families against unfortunate events.

It is the most traditional form of investment amongst Indians, but possessing gold in the
Summary
form of jewelry has concerns related to safety and high cost in the form of ‘making Investment is made with the objective of wealth creation

charges’. However, buying gold coins or biscuits is still an option but gold ETF could be and all above mentioned instruments fulfil their
ranked as a more viable one. Investment in gold papers via ETFs is more safe and cost objectives, in accordance to the risk associated with it. An
effective.
investor must understand the his risk appetite, time
Despite being a liquid asset class, many novice investors are cheated with ‘duplicate’ or
horizon and tax treatment on different investment
‘mixed’ jewelry, if purchased without proper knowledge or from a dubious jeweler.
avenues to make a judicious and sagacious investment
 UNIT - 3 - BANKING SERVICES PRODUCTS
What are the 5 most important banking services?
Types of BANKS
The 5 most important banking services are checking and
savings accounts, loan and mortgage services, Banks are divided into several
wealth management, providing Credit and Debit sorts. The following are the
Cards, Overdraft services. different types of banks in India:
Services of Banks ● Central Bank.
● Advancements of loans. ● Cooperative Banks.
● Cheque payments. ● Commercial Banks.
● Discounting on bills of exchange.
●
● Regional Rural Banks (RRB)
Collecting and paying the credit instruments.
● Guarantee by banks. ● Local Area Banks (LAB)
● Consultancy. ● Specialized Banks.
● Credit cards.
● Small Finance Banks.
● Funds remittance.
● Payments Banks.
 Services of Banks ● Collecting and paying the credit
● Advances are issued by banks to address instruments.Top 3 Types of
Credit
short-term financial needs; they are repaid Instruments | Banks
within one year. Loans are the source of
long-term financing. Both are subject to ● 1. Promissory Note: A promissory note is a
interest and can be repaid in a flat sum, in
instalments, or on-demand. document in which a person promises to pay
● A cheque is a document you can issue to your another a specified sum at a certain date. The
bank, directing it to pay the specified sum
mentioned in digits as well as words to the payee, i.e., the person to receive the amount,
person whose name is borne on the cheque.
can sign at the back of the note, and the note
● Discounting of a bill of exchange is a method of
short-term financing provided by banks. The becomes negotiable. It can act as a medium of
bank purchases a trade bill from the payee
exchange provided those who accept it, have
before the maturity date and pays the bill
amount after deducting service charges from it. confidence in the maker or the endorser.
At the maturity of the bill, the bank recovers the
said money from the drawee.
 ● Guarantee by banks.A bank guarantee is when a
2. Bill of Exchange (or Hundi):A bill of lending institution promises to cover a loss if a
exchange is an order given by a seller of the borrower defaults on a loan. The guarantee lets a
goods to the buyer to pay a certain sum of company buy what it otherwise could not, helping
money for value received by himself or a third business growth and promoting entrepreneurial
person named therein or his order, after a
activity.
specified period of time, usually varying from ● Consultancy.:Consulting is defined as the practise
three to six months. Before the bill can be used of providing a third party with expertise on a matter
as a credit instrument, it requires to be accepted in exchange for a fee. The service may involve
by the drawee. either advisory or implementation services. For the
consultant, taking an independent and unbiased
3. Cheque: A cheque by far the most important stance on an issue is central to his/her role.
● A credit card is a thin rectangular piece of plastic or
credit instrument is a written order by a person
metal issued by a bank or financial services company
on a bank to pay on demand a certain sum of
that allows cardholders to borrow funds with which to
money either to himself or to his order or to his pay for goods and services with merchants that accept
bearer. It is a credit instrument so long as it is cards for payment. Credit cards impose the condition
not presented for encashment. It rests on the that cardholders pay back the borrowed money, plus
confidence of the payee both in the person who any applicable interest, as well as any additional
draws it and in the bank on which it is drawn. agreed-upon charges, either in full by the billing date
or over time.
● Remittance refers to the process of
transferring or sending money from one ● Commercial Banks:it is a financial
party to the other. The term remittance is institution whose purpose is to accept
typically used to denote the transfer of funds deposits from people and provide loans
and other facilities. Commercial banks
overseas. Essentially, remittance helps you
provide basic services of banking to their
ensure the financial security of your family in
customers and small to medium-sized
one country while you are based in another.
● Regional Rural Banks (RRB):are
● Central Bank:Central banks play a crucial role in
government owned scheduled
ensuring economic and financial stability. They
commercial banks of India that operate
conduct monetary policy to achieve low and
at regional level in different states of
stable inflation. In the wake of the global financial
India.
crisis, central banks have expanded their toolkits to
deal with risks to financial stability and to manage ● Local Area Banks (LAB):(LAB) as
volatile exchange rates. banks set up by the Government of India
● Cooperative Banks:A co-operative bank is a solely to enable the local institutions to
small-sized, financial entity, where its members pool and mobilize rural savings and
are the owners and customers of the Bank. They ensure that these savings are made
are regulated by the Reserve Bank . available for investment concerning
needs.
● Specialized Banks: There are some banks, which cater to the
requirements and provide overall support for setting up business in
specific areas of activity. EXIM Bank, SIDBI and NABARD are examples
of such banks. They engage themselves in some specific area or activity
and thus, are called specialised banks.
● Small Finance Banks:Banks which provide basic banking
activities like taking deposits, lending to unorganized entities, micro and
small industries, small and marginal farmers, and other underserved
sections are known as small finance banks. With the aim of creating
financial inclusion, it was created by the Reserve Bank of India.
● Payments Banks:A payments bank is like any other bank, but
operating on a smaller scale without involving any credit risk. In
simple words, it can carry out most banking operations but can't advance
loans or issue credit cards.
 Unit - 4
POST OFFICE FINANCIAL SERVICES

Post Office Interest Rates 2022

Scheme Interest Rate (% p.a) Tenure Best for
Post Office Savings Account 4.00 NA Small savings

5-Year Post Office Recurring

Deposit Account (RD 5.80 Five years Small savings

https://scripbox.com/saving-schemes/post-office-savings/
 UNIT - 5
PROTECTION AND INVESTMENT RELATED FINANCIAL SERVICES
INSURANCE SERVICES: Insurance is a contract, represented by a policy, in which an individual or entity
receives financial protection or reimbursement against losses from an insurance company. The company pools
clients' risks to make payments more affordable for the insured.

Insurance policies are used to hedge against the risk of financial losses, both big and small, that may result from
damage to the insured or her property, or from liability for damage or injury caused to a third party.

How Insurance Works

There is a multitude of different types of insurance policies available, and virtually any individual or business
can find an insurance company willing to insure them—for a price. The most common types of personal
insurance policies are auto, health, homeowners, and life. Most individuals in the United States have at least
one of these types of insurance, and car insurance is required by law.

Businesses require special types of insurance policies that insure against specific types of risks
faced by a particular business. For example, a fast-food restaurant needs a policy that covers
damage or injury that occurs as a result of cooking with a deep fryer. An auto dealer is not subject
to this type of risk but does require coverage for damage or injury that could occur during test
drives.
 Insurance Policy Components

Premium Policy Limit Special

A policy's premium is its price, typically
The policy limit is the maximum amount an Considerations
expressed as a monthly cost. The premium is insurer will pay under a policy for a covered
determined by the insurer based on your or With regard to
loss. Maximums may be set per period (e.g.,
your business's risk profile, which may annual or policy term), per loss or injury, or
health insurance, people
include creditworthiness. over the life of the policy, also known as the who have chronic health
lifetime maximum. issues or need regular
For example, if you own several medical attention should
expensive automobiles and have a look for policies with lower
history of reckless driving, you will deductibles.
likely pay more for an auto policy than Deductible
someone with a single mid-range The deductible is a specific Though the annual
sedan and a perfect driving record. premium is higher than a
amount the policyholder must
However, different insurers may comparable policy with a
pay out-of-pocket before the
charge different premiums for similar higher deductible, less
insurer pays a claim. Deductibles expensive access to
policies. So finding the price that is
right for you requires some legwork serve as deterrents to large medical care throughout
volumes of small and the year may be worth the
insignificant claims. trade-off.
 The types of insurance

Life insurance Policies: Life Insurance. Term Life Insurance , Endowment Policies,Pension policy,

As the name suggests, life insurance is insurance on your life. You buy life insurance to make sure your

dependents are financially secured in the event of your untimely demise. Life insurance is particularly important if

you are the sole breadwinner for your family or if your family is heavily reliant on your income. Under life

insurance, the policyholder’s family is financially compensated in case the policyholder expires during the term of

the policy.

Health insurance:Health insurance is bought to cover medical costs for expensive treatments.

Different types of health insurance policies cover an array of diseases and ailments. You can buy a

generic health insurance policy as well as policies for specific diseases. The premium paid towards a

health insurance policy usually covers treatment, hospitalization and medication costs.
Term Life Insurance: Term insurance is pure protection life insurance policy. It provides
coverage for a defined period in exchange for a specified premium amount. In case of an unfortunate
event during this time-frame, the insurer provides a guaranteed# payout.

What is difference between life insurance and term insurance?

The most common difference between term insurance and traditional life insurance plan is that a term insurance plan only
provides a death benefit in case of demise of the insured within the term period, whereas a life insurance policy offers both
death and maturity benefit to the insured.

Endowment Policy: An endowment policy is essentially a life insurance policy which, apart from covering
the life of the insured, helps the policyholder save regularly over a specific period of time so that he/she is able to
get a lump sum amount on the policy maturity in case he/she survives the policy term.

What is endowment policy example?

A life insurance provider might offer you an endowment policy, which is a sort of investment. You put money in
each month for a specified amount of time, and it is invested. The policy will pay you a lump sum at the
conclusion of the term, which is normally between 10 and twenty-five years.

What are the benefits of endowment policy?

Endowment plans provide both insurance and investment benefits. The plan's primary benefit would be that the
sum guaranteed, less any unpaid premiums, will be paid in the case of the policyholder's demise, and if the
Pension policy:What do you mean by pension policy?
A pension plan is the retirement amount, which an individual gets from their insurance companies on a. There
are various types of such plans available in the country offered by various companies. ... The sum you gain is
can be termed as either the annuity or pension.
What is a pension plan and how does it work?

A pension plan is an employee benefit that commits the employer to make regular contributions to a pool
of money that is set aside in order to fund payments made to eligible employees after they retire.

What is an example of a pension?

The definition of a pension is a regular payment made by an employer or the government, typically to provide
retirees with income. Monthly payments your employer makes to you after you retire are an example of
your pension. A sum of money paid regularly as a retirement benefit or by way of patronage.
Property Insurance: Property insurance provides financial reimbursement to the owner or renter of a
structure and its contents in case there is damage or theft—and to a person other than the owner or renter if
that person is injured on the property.
Examples of property insurance include homeowners, renters, and flood insurance policies. These policies
can provide coverage for damages caused by fire, flooding, theft, weather, and other risks.
property insurance policies offered by general insurance company
Fire Insurance
The most popular property insurance is the standard fire insurance policy. The fire insurance policy offers protection
against any unforeseen loss or damage to/destruction of property due to fire or other perils covered under the policy.
The different types of property that could be covered under a fire insurance policy are dwellings, offices, shops,
hospitals, places of worship etc and their contents; industrial/manufacturing risks and contents such as machinery,
plants, equipment and accessories; goods including raw material, material in process, semi-finished goods, finished
goods, packing materials etc in factories, godowns and in the open; utilities located outside industrial/manufacturing
risks; storage risks outside the compound of industrial risks; tank farms/gas holders located outside the compound of
industrial risks etc.
Burglary Insurance
A Burglary Insurance policy may be offered for a business enterprise or for a house. The policy covers property
contained in the premises including stocks/goods owned or held in trust if specifically covered. It also covers cash,
valuables, securities kept in a locked safe or cash box in locked steel cupboard if you specifically request for it.
Marine Cargo Insurance
Marine Cargo Insurance covers transits by Water, Air, Road or Rail, Registered Post Parcel, Courier or a combination
of two or more of these.
Who can take a Marine Cargo Insurance Policy?
Buyers, Sellers, Import/Export merchants, Buying Agents, Contractors and Banks etc.
Marine Cargo Policies cover the interest in the cargo and also extend to cover the interests of any third party who has
acquired interest upon transfer of ownership, as determined by the Terms of Sale.
ULIP: A ULIP is both an insurance policy and an investment. The policy specifies a death benefit - the
amount the nominee will be paid if the policyholder passes away during the term of the ULIP. In addition,
if the policy holder survives the term of the ULIP, he/she can also get the maturity value of the ULIP.

he full form of ULIP is Unit Linked Insurance Plan. A ULIP is an insurance plan that offers the dual benefit of
investment to fulfil your long-term goals, and a life cover to financially protect your family in case of an unfortunate
event.

What are the advantages of ULIP?

ULIPs offer an advantage in terms of being flexible and customisable. ULIPs provide the flexibility of
premium payment. You have the option to move your money between equity and debt funds. ULIPs allow
you to withdraw a part of your money whenever you need it.

Long-term gains of above ₹1 lakh will be taxable at 10%, while short-term gains on the high-
premium ULIPs will be taxed at a flat rate of 15%.
POST OFFICE lIFE INSURANCE SCHEME:
PLI The available Postal Life Insurance policy types are Endowment Assurance Plan, Anticipated Endowment
Assurance Plan, Whole Life Assurance Plan and Convertible Whole Life Assurance Plan.
● Whole Life Assurance (Suraksha) ...
● Convertible Whole Life Assurance (Suvidha) ...
● Endowment Assurance (Santosh) ...
● Joint Life Assurance (Yugal Suraksha) ...
● Anticipated Endowment Assurance (Sumangal) ...
● Children Policy (Bal Jeevan Bima)
Process of Using PLI Maturity Calculator

1. Input the Sum Assured amount.

2. Input the year of purchase of the policy.
3. Input the current age of the customer.
4. Input the maturity age of the customer.
5. Once the customer clicks on the “Calculate” button, the results will be displayed on the screen.
Rural ​Postal Life Insurance​( RPLI)

Rural Postal Life Insurance (RPLI) was introduced in 24.03.1995 for rural people of India. The Malhotra
Committee had observed in 1993 that only 22% of the insurable population in this country had been insured; life
insurance funds accounted for only 10% of the gross household savings. The Government accepted the
recommendations of Malhotra Committee and allowed Postal Life Insurance to extend its coverage to the rural
areas to transact life insurance business, mainly because of the vast network of Post Offices in the rural areas and
low cost of operations. The prime objective of the scheme is to provide insurance cover to the rural public in
general and to benefit weaker sections and women workers of rural areas in particular and also to spread
insurance awareness among the rural population

HOUSING LOAN PROVIDING INSTITUTIONS

HDFC Housing Finance

HDFC Housing Finance offers different types of home loan products such as plot loan, rural housing loan, home

improvement loan, and home extension loan among others. The interest rates for home loan starts from 8.55%. The home

loan schemes are available for salaries and self-employed resident Indians in the range of 18-65 years.
 1. LIC Housing Finance Limited
LIC Housing Finance offers home loans at attractive interest rates for Indian residents, Non-Resident Indians (NRIs), and pensioners. You can avail loan
for purchase, construction, extension, house repair, plot purchase, and top up loan. LIC Housing Finance offers benefits such as flexible repayment
periods, quick loan processing, zero processing fee, zero pre-closure charges, and no partial pre-payment charges.
2. Indiabulls Housing Finance Limited
Indiabulls Housing offers instant home loan approvals at competitive interest rates for a tenure of up to 30 years. It offers benefits such as zero pre-
payment charges, flexible tenure options, and zero pre-closure, among others. The interest rate ranges from 8.80% to 12.00% p.a. The processing fee is
0.50% to 1% of the loan amount.
3. L&T Housing Finance LimitedL&T Housing Finance offers home loan at attractive interest rates for construction, house improvement, and house extension.
The loan repayment tenure is up to 20 years and the amount ranges from Rs.3 lakh to Rs.10 crore. You can avail home loans up to 90% the property value.
L&T Housing Finance offers benefits such as quick and transparent loan processing, instant online loan approval, attractive interest rates, minimal
documentation, multiple repayment options, and zero pre-payment charges.
4. PNB Housing Finance Limited
PNB Housing Finance offers home loan at competitive interest rate for resident Indians as well as non-resident Indians. It offers home loans under different
schemes that are aimed at government employees, general public, and others.
5. IIFL Housing Finance Limited
IIFL Housing Finance Limited offers home loans with attractive interest rates that start at 8.45% p.a. onwards. The maximum repayment tenure is 20 years.
Any Indian citizen between the age of 18 and 75, both self-employed and salaried, as well as Non-Resident Indians (NRIs) are eligible for the home loan. The
company provides a wide range of home loan products such as balance transfer, home improvement, etc. There is also a special loan product, Swaraj Home
Loan, for those individuals without formal income documents.
PRADHAN MANTRI AWAS YOJANA RURAL AND ARBAN
Pradhan Mantri Awas Yojana – Urban (PMAY-U), a flagship Mission of Government of India being implemented by Ministry of Housing and
Urban Affairs (MoHUA), was launched on 25th June 2015. The Mission addresses urban housing shortage among the EWS/LIG and MIG
categories including the slum dwellers by ensuring a pucca house to all eligible urban households by the year 2022, when Nation completes 75
years of its Independence.

The PMAY scheme is not limited to just the bigger cities and towns. Villages, slums and other rural areas also come
under the purview of this credit-linked subsidy scheme.

Pradhan Mantri Awas Yojana (Urban) Mission launched on 25th June 2015 which intends to provide housing for all in urban areas by year
2022. The Mission provides Central Assistance to the implementing agencies through States/Union Territories (UTs) and Central Nodal
Agencies (CNAs) for providing houses to all eligible families/ beneficiaries against the validated demand for houses for about 1.12 cr. As per
PMAY(U) guidelines, the size of a house for Economically Weaker Section (EWS) could be upto 30 sq. mt. carpet area, however States/UTs
have the flexibility to enhance the size of houses in consultation and approval of the Ministry.
In continuation to this Government’s efforts towards empowerment of women from EWS and LIG unlike earlier schemes, PMAY (U) has made
a mandatory provision for the female head of the family to be the owner or co-owner of the house under this Mission. Verticals of PMAY
(Urban) A basket of options is adopted to ensure inclusion of a greater number of people depending on their income, finance and availability of
land through following four options.
Pradhan Mantri Awas Yojana rural areas:

The Pradhan Mantri Awas Yojana- Gramin (PMAY-G) has been devised in line with Government's commitment to
provide 'Housing for All' by 2022 in the rural areas. The scheme aims at providing a pucca house with basic amenities
to all houseless householder living in kutcha and dilapidated houses by 2022.
1. Public housing programme in the country started with the rehabilitation of refugees immediately after independence and since then, it has
been a major focus area of the Government as an instrument of poverty alleviation. Rural housing programme,as an independent programme ,
started with Indira Awaas Yojana (IAY) in January 1996. Although IAY addressed the housing needs in the rural areas, certain gaps were
identified during the concurrent evaluations and the performance Audit by Comptroller and Auditor General (CAG) of India in 2014. These
gaps, i.e. non assessment of housing The shortage, lack of transparency in selection of beneficiaries, low the quality of the house and lack of
technical supervision, lack convergence, loans not availed by beneficiaries and weak the mechanism for monitoring was limiting the impact
and outcomes of the programme.

2. To address these gaps in the rural housing program and in view of Government’s commitment to providing “Housing for All’’ by the scheme
2022, the of has IAY has been re-structured into Pradhan Mantri Awaas Yojana –Gramin (PMAY-G) w.e.f. 1st April 2016.

3. The cost of unit assistance is to be shared between Central and State Government in the ratio 60:40 in plain areas and 90:10 for North
Eastern and the Himalayan States. From the annual budgetary grant for PMAY-G,90% of funds is to be released to States/UTs for the
construction of new house under PMAY-G This would also include 4%allcation towards Administrative expenses .5%of the budgetary grant is
to be retained at the central Level as reserve found for special Projects. The annual allocation to the states is to be based on the Annual Action
Plan (AAP) approved by the Empowered Committee and the found to States /UTs is to be released in tow equal installments.