Financial Gifting Options for your Loved Ones – News18

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Here’s the list of some of the best financial gifts you can purchase for your loved ones.

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The ideas of a shopper often fizzle out when he/she is looking to buy a gift for a friend whose interests seem to clash with all traditional gift ideas out there. If you are someone who has a hard-to-shop-for relative or friend, you can consider investing in a financial gift this holiday season.

Agreed that your friend will not be able to flaunt the financial gift on social media, but such gifts will have a longer lasting and more significant impact than anything else you buy. Listed below are some of the best financial gifts you can purchase that are sure to keep on giving for years to come:

  • Term insurance cover – A term insurance plan protects the insured from disabilities or death for the entire duration of the policy tenure. You can get a high level of coverage for a low premium through term insurance. Most of the leading life insurance companies today offer term insurance policies online that you can purchase effortlessly. For instance, the Online Term Plan from Bajaj Allianz offers a death benefit of up to Rs.1 crore for a premium of Rs.5,167 per annum. It should be noted that this premium and sum assured are for the base variant of the plan.

The policyholder can also benefit from flexible premium payment options. Premiums can be paid at monthly, quarterly, half-yearly, or annual frequencies. Additionally, the policyholder can choose to avail payouts from the insurance policy in the form of monthly installments or a lump sum amount.
You should know that term insurance is the most basic form of life insurance cover and it is beneficial to the cost-conscious investor.

  • Mutual fund – Your friend may not be looking to invest in mutual funds anytime soon. Nevertheless, you can start investing in a Systematic Investment Plan (SIP) on their behalf to kickstart their investment journey. Who knows, this might be the head start they need to get into the saving and investment habit and secure their financial future.

You should look to invest in a diversified equity fund as it provides healthy returns in the long term. It is possible to invest in a SIP online from your office or home. You can make use of a Systematic Investment Plan (SIP) Calculator to check the returns from your SIP investments in a fund till date. This facility is available at several financial websites.

  • Health cover – You can buy a health insurance policy to safeguard the life of your loved one. If he/she is looking to start a family in the near future, you can also include a top-up plan that offers maternity benefits. A good health insurance policy you can purchase is the Easy Health Individual plan from Apollo Munich. For an individual in the age group of 18 to 34 years, the base policy offers a sum insured of Rs.4 lakh at a gross premium (including tax) of Rs.9,123. The policy term for this insurance plan is 1 year. You can choose extended cover with additional benefits such as critical illness cover, if needed.

One of the most basic forms of health insurance that you can choose to buy for your friend is a mediclaim policy. The premium you pay towards a mediclaim policy is eligible for tax benefits under Section 80D of the Income Tax Act as well.

  • Paper gold – If you have decided to not gift physical gold, you can look to invest in paper gold on behalf of your loved one. Paper gold includes vehicles such as sovereign gold bonds and gold exchange traded funds that are very convenient investment options. Paper gold does not include jewellery making charges like physical gold. Plus, the investor can also seamlessly exit the mechanism in a transparent manner. The savings will be credited directly to the bank account of the investor, hence negating the hassles of cash handling. Gold Exchange Traded Funds (ETFs) will enable you to track the actual price of gold and benefit from upward movement as well.

Things to keep in mind

When making a financial investment for another person, there are certain regulatory hurdles that you should know. Some insurance companies refuse to accept applications from people who do not have an insurable interest in the person being insured. Mutual fund houses also do not accept third-party payments.

So you will have to speak to the person you are gifting the financial product and convince them of your idea. He/she will have to fill up the relevant forms and KYC documentation and submit it as necessary. Medical tests may also be needed, based on the type of product you are purchasing. No doubt that this would rob them of the surprise element in the gift, but rest assured that this unconventional gifting option will provide them long-term benefits to compensate for that little loss.

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