HEALTH INSURANCE AND YOU!

As human beings, we are faced with risks of illnesses, injuries and even death on a daily basis. Although many of us believe that we will never fall prey to any of such risks. However, we need to be open to the idea that medical emergencies such as accidents or other health complications can and do arise anytime. The price of falling ill or having an injury can be quite huge and includes amongst others:

•         Unbudgeted payment of huge medical expenditures in clinics and hospitals

•         Loss of income because we cannot work

•         Emotional problems – we lose our peace of mind

The availability of ways to reduce the losses (productivity, income, peace etc) we may suffer is thus an absolute necessity.

OPTIONS/POSSIBLE CONSEQUENCES.

•         Dip in your savings

Postpone or forgo our other plans and dreams – Houses, cars, holidays, schooling etc

•         Borrow money

Lose your dignity and maybe go into poverty

•         Do nothing

Pray and hope for the best.

It is now almost common practice all over the world to reduce or mitigate these losses through health insurance.

What is Health Insurance? 

Health insurance is a way of paying for some or all of the costs of health care. It protects insured persons from paying high treatment costs in the event of sickness. In most developed and some developing countries, health insurance is used as a means of ensuring that almost all citizens of a nation have access to affordable and quality health services.

How does health insurance work?

A health insurance company elects to collect relatively small sums of money called premium from several individuals. Because not everyone in that particular group falls ill at the same time, the unfortunate few that do fall ill are treated from a well-managed pool of funds. Health insurance thus makes it possible for individuals to enjoy relatively huge amounts of financial and medical benefits for very little capital outlay. Some health insurance companies also undertake to oversee the quality, necessity, appropriateness and accessibility of the medical care that is provided by the health facility. 

Benefits of having health insurance

For the individual, family or group:

•         Availability of funds to pay for health services at anytime

•         Cashless access to large numbers of quality hospitals

•         Good health

•         Job security

•         Peace of mind

For companies

•         Reduced health care expenditure on employees

•         Ability to budget for unforeseen and unpredictable medical expenditures

•         Hedge against the ever rising cost of health services

•         Enhanced staff productivity and satisfaction and

•         Increased return on investment.

WAYS TO TRANSFER MONEY AT LOW COST

In this computer age, transferring money by cash, cheque, bank draft or other traditional means seems going outdated. These methods may appear less popular where there are faster electronic methods for transferring money between accounts, states and countries; that doesn’t mean that they are not still viable options. There are inexpensive options for transferring money. Below are ways to transfer fund at low cost.

·         Your bank: If you are transferring money from one account to another within the same bank, this is something you can easily do at your bank for free. If you are transferring fund from your account to another account in a different financial institution, you will need the account number and the bank you would like to send money to. Overseas money transfers are possible through your bank as well.

·         E-Transfers: Some financial institutions allow you to transfer fund online to another individual, similar to the way you would if you were paying a bill online. The services require the account number and bank routing number. E-transfers are often less expensive than transfers that are done through a bank teller.

·         Western union or MoneyGram: Western union or MoneyGram provide similar services that allow you to transfer fund to different city, state or country. They charge a flat rate for the transfer that is based on the speed of the transfer, the location that you are sending the money to and the amount of money you are sending. If you are doing international transfer, you will also be charged an exchange rate.

·         Cash: It may be considered the ‘old fashioned way’ when it comes to transferring money, this option is practical. Where time is not the most important consideration, simply withdrawing cash and physically bringing it to another bank to deposit into an account is completely free.

·         Cheque: Writing a cheque and depositing it into another account, handing over to another person or sending it by mail to an individual in a different city or state is another affordable choice, especially if the bank offer free cheque system.

·         Bank draft: This method for money transfer is a great choice.  You can purchase draft to be paid to someone else. This method is safe and cheap.

·         E-mail money transfers: This is practice mostly in foreign countries; some financial institutions offer an email fund transfer service. This form of money transfer functions like an electronic cheque. The fund is not physically transferred by email, though the transaction is initiated by email and the recipient is notified by email that the fund are available. You don’t require the recipient’s bank account number, though a security question is generally required to identify recipient before he can collect the money.

UNDERSTANDING DORMANT OR INACTIVE ACCOUNT

Mr. Ojo opened account in XZX bank and operated it for few years before he travelled to United State of America for greener pasture. After many years he came to see his family in Nigeria. He needs to open account for financial transactions. He went to XZX bank. On entering the banking hall, one of the bank staff recognized him and quickly ushered him to Customer service’s table. Mr. Ojo said he used to have an account with the bank before he travelled oversea. It is more than five year now, ‘is it possible for me to operate the account?’ Yes, answered the Bank Officer. Your account has been classified as DORMANT but you can still reactivate it. With this information; Mr. Ojo did all the processing for his account reactivation and he was able to access the account within 24 hours.

With above scenario, Most of us have savings accounts. At times we end up having many bank accounts. It is not easy to keep track of multiple savings accounts, in fact it breeds confusion. Ignoring a bank account for a long period can cost you time, money or both. In this write up I explain the meaning of Inactive and Dormant account, why banks make them dormant and process of reactivating them.

What is Dormant or inactive accounts? These can be described as those accounts that have witnessed no transactions for months or few years. The process of identifying dormant or inactive accounts has been programmed into the computer, which automatically identifies the account and blocks it accordingly.

How can you prevent account from becoming inactive or dormant? Keep using your account before becoming inactive or dormant. Carry out transactions in the account once a while. If the account is no longer useful, best is to close it.

Why does the bank make account inactive or dormant? The banks make account dormant or inactive to safeguard your money from any risk of fraudulent transactions by dubious bank employees. For safety purpose, banks group such accounts into single pool and maintain detail of inactive account in a separate ledger.

Is making account dormant same as freezing it? No. freezing of a bank account means there will be no transaction in the account until further notice. All payment will be stopped even in case of cheques issued earlier by account holder. However, any deposit already in the pipeline can be credited. Regulator or courts have right to order a freeze on bank accounts. You must have a favourable court verdict in order to unfreeze your bank account.

What happen when account becomes inactive or dormant? You can’t perform several operations. In case of inactive account, you cannot request that a cheque book be issued. Once account turns dormant, the number of restrictions increases even further. You can’t do any transaction or make any request on the account again.

What about interest on the bank account? Even after your account turns inactive or dormant, interest is still credited to saving account regularly.

Does bank inform customer on making account dormant? Normally, the bank will inform the customer two or three months prior to account becoming inoperative. If still no action, the bank will declare the account inactive and notify you.

Process of reactivating Dormant or Inactive accounts.

The actual process of reactivation may vary from bank to bank. Below is the normal process of reactivating inactive or dormant account.

§  To reactivate dormant account, the customer concern must identify himself/herself properly and write a letter demanding for reactivation of account. This should be confirmed with bank’s record.

§  Give satisfactory reason for allowing the account to be dormant.

§  The bank customer service officer retrieves the account opening form.

§  The customer completes a fresh set of mandate form; both signature and address.

§  The customer is then allowed to pay into the account after the blocking has been removed.

The bank will debit the customer’s account with the reactivation charge.

REASONS WHY BANKS WON’T HONOUR YOUR CHEQUE

A cheque is a written document instructing a bank to debit your account and pay someone. While writing a cheque is quite simple, cashing a cheque can sometime be a nightmare. This write up provide the following as as some of the reasons why a bank will not honour your cheque.

·         You don’t have means of identification (valid I.D Card); Banks have to protect themselves against cheque fraud. Without proper proof of identity, banks can refuse to honour a cheque writing in your name. Always carry valid means of identification such as driving license, national i.d card, passport or voter’s card, when cashing a cheque.

·         Cheque conversion; Bank will not honour a cheque presented by a wrong person. Ensure that the payee on the cheque is the same person that presents it at the counter or the same as the name on the cheque deposit slip. The payee must be the owner of the account into which the cheque is paid. Where the payee is different from the account owner, a proper endorsement must be obtained.

·         The bank branch can’t handle a large transaction without prior notice. Not all banks can handle large cash transactions without prior notice. Smaller branch of a Bank may not have all the necessary cash to clear a very large cheque. Some branches are so small that they cannot keep cash above their limit.  When you have a cheque for a very large amount, call the Manager of the bank branch you intend to visit in advance. The bank Manager can give you proper advice.

·         Stale Cheque. The life span of a cheque is six month from the date it is drawn. If you wait too long to cash a cheque and it is over six months old, a bank can refuse to pay it. Some banks may decide to pay it anyway as a favour to long-time customers, but it is at the discretion of the bank.

·         Crossing a cheque. When two transverse lines are drawn across the face of a cheque with or without the word & co. the cheque has been ‘crossed’. For any crossed cheque to be paid across the counter it must be opened by counter signature across the traverse lines. A bank can dishonor your cheque if it is crossed.

·         Drawer attention requires. A cheque issued to a third party may not be paid by bank if the amount in words and figures are not correct and the same. If the cheque is not sign by drawer or if there is any alteration.

·         Other reasons are; cheque not dated, cheque not properly drawn and if there is notice of drawer’s bankruptcy or liquidation.

FINANCIAL PLANINIG, ANOTHER WAY TO MANAGE YOUR EXPENSES

Money is difficult to earn but it can also speedily disappear if expenses are not managed wisely.

For people who are living independently for the first time, the responsibility of paying for their utilities aside their personal expenses can be burdensome if not managed appropriately.

Professional say the effect of inadequate financial planning may not be felt immediately, but later when there is no steady source of income. They note that understanding how to manage finance will not only help people out personally, but can be of benefit when it comes to business success as well.

A proper financial understanding, according to expert, also helps in setting goal as well as creating fundamental skills in planning and decision making.

Learn financial management.

Every business owner must have at click of mouse, his company’s key financial data such as value of receivable, current inventory level, monthly revenue, monthly profitability, business net asset and balance sheet among others. He says if you are a business owner and you cannot provide these data about your company in minutes, then you have some work to do. ‘Even if you decide to employ an Accountant or Outsource the finance function, it is still essential for business owner to have fair knowledge of finance.’

Stick to your budget

Expert says budgeting is a means of balancing expenses with income. To make it work, they advise that a realistic budget should be developed. According to them, budgeting can be best achieved by tracking how well it is being adhered to each month, which means a continuous tracking of your monthly expenses, coupled with your day- to-day spending.

As part of an effort to adhere strictly to the budget, they advise that people should think in term of their overall accomplishment rather than something that will give them temporary satisfaction.

Control impulsive spending

Impulsive spending according to experts is an act of spending money on items that were not in the original budget. Experts say people who are in the habit of overspending on items or making late payment for the items bought, frequently borrow money from friends and buy things they don’t really need.

Financial advisors also say stress often leads to impulsive spending. Therefore, they recommend ways of reducing stress as a remedy to impulsive spending.

Have an emergency fund.

A specific amount should be set aside for emergency situations because it is when unforeseen expenses or emergencies arise that people tend to spend out of their budget. This can be inform of budget out of  the monthly paycheck for deposit into a savings account, ideally at least 10 percent of each month wages, including extra money earned.

The advantages of doing this is to prevent the necessity of going into debit, it provide peace of mind and freedom of choice.

Explore insurance policies.

Insurance is an important tool for protecting against financial hardships, and the premium paid maybe one of the top household expenses. Interested parties should seek a provider to be sure  they have the appropriate level of protection- that way they will prevent exorbitant payment for coverage. Insurance policies include life and non life insurance. The details of these policies will be discussed in my subsequent posts.

Have a retirement plan.

Having a solid retirement plan, can erase worries and fear related to old age, and keep people in control of their life and their finances. They say it is an act of preparing now in order to enjoy later.

The retirement plan should include social security, medical insurance, pension scheme and good life style choice.

WHY YOU NEED FIXED DEPOSIT

In my last write up, I made comparison between Fixed Deposit and Treasury bills. Though I am yet to receive any comment or question on the post but today I want to explain further why you need fixed deposit account.

 Not too many bank customers have a fixed deposit account. As a matter of fact many people only heard of the fixed deposit account when they were in secondary school. Study have shown that over 75 percent of bank customers operate savings and current accounts, while only about 25 percent do fixed deposit. This implies that so many bank customers are missing out on the benefits of fixed deposit accounts. This is because a fixed deposit account is more of an investment than just running a bank account.

To start with, a fixed deposit account is a financial instrument where an investor gives a certain sum of money to a bank or financial institution and the entity pays interest for the duration of the deposit. A fixed deposit account is an account in which the money is deposited in the beginning of the period and interest is accrued on it, credited and redeemed after the completion of the said period.

It is similar to a savings account. It is a very simple account in which the account holder needs to only invest money one time and get returns for what the account has been opened for. The rate of interest paid varies depending on the amount and tenure. Investors, especially conservative investors, prefer to open fixed deposit accounts as it is a safe investment option and it can be opened easily and quickly.

Encourage savings habit

Fixed deposit accounts require you to keep an amount for a certain period to accumulate the agree interest amount. This encourages a savings habit by an individual, as he will not be tempted to spend the money and find a way to manage his finance more efficiently.

Higher rate of return

The interest rates offers on fixed deposits are higher than that on savings accounts. It is also a safe form of investment where returns are guaranteed.

Guaranteed returns

Unlike investment in stock market or commodity market, fixed deposit are not risky investments as they do not depend on fluctuating market rates. Investors can rest assured that their investments are safe and they will be getting back a guaranteed amount at the end of the investment.

It can be withdrawn easily.

The amount that invested in a fixed deposit account can be withdrawn at any time for small penalty. The investor may have a financial emergency to meet like marriages, illness or when his business is in a loss. The penalty is less than that of selling stocks or real estate as the asset cannot be sold easily because of its high value and if you are in a distressed situation, you will sell it for a much lower rate. Whereas, fixed deposit can be withdrawn at any time and all you lose is a certain interest income.

Flexible in nature

Fixed deposit accounts can be taking for a tenure of one month, three months, six months , one year, two years or even ten years based on your requirement and for whatever amount that you can invest. Fixed deposits can be invested for tenure of your choice. If you have planned for a big event in five years, then you can have a fixed deposit kept for five years to meet your financial needs. You can have various fixed deposits accounts to save for different goals. Some banks provide flexible fixed deposit schemes.

Flexible interest rate pay-outs

Interest rate can be paid at different interval depending on the term you choose.

Disadvantages of fixed deposit accounts

·         Inflation rate of a country may affect return on fixed deposit account. As the price of products are increasing in the market, the inflation rate is also increasing, which does not support the increase in higher interest rates.

·         In most countries, the taxation on fixed account is done as normal taxation and no other benefits are allowed.

·         The benefit of diversification is not available as all the money is invested in one account only, ruling out opportunity to invest in stock market or other instruments.

                                                                                                  

GETTING PERSONAL LOAN FROM YOUR BANK.

You may want to start a home business, or you may want to borrow for a vacation, or you may have some other use for the money. Whatever the reason is, getting a personal loan can give you the money you need. A personal loan, usually unsecured, can provide you with a little extra cash to help you meet your goals.

Actually securing that personal loan can be a bit difficult though. Many people find the process scary, and they don’t know where to begin.

Here are few ways on how to get our personal loan approved.

·         Before you start your loan process, make sure you understand how personal loans work. There are two main type of personal loans; secured and unsecured. A secured loan will usually give you lower interest rates, but you have to put something up as collateral for the loan, which means that if you don’t pay back the loan, they take your collateral. Unsecured loan, don’t require any collateral, but will have higher interest rates.

·         Loan can only be taking on current account except on special consideration by the bank.

·         The other basic thing to know about personal loan is what you will need to get one. The information you will need will vary depending on which technique you use to get loan.

·         You will also need your employment information like your work history and pay slip to verify your income. You will need to provide other source of income.

·         Depending on the loan type and loan amount, the lender may ask for other information and documents.

·         The interest rate on a personal loan at a bank that value you as a customer is usually quite low compare to the alternatives.

·         You must be operating your account for the period not less than six months, depending on your bank’s policy.

·         Your total account turnover within a stated period will determine the amount of money you are qualified to obtain as loan.