The peace of mind of having ample savings for the future is an unbeatable feeling. The guarantee of a better tomorrow and the availability of the right resources to fulfil your financial goals is the main reason the scope of investment and availability of diverse financial tools are increasing in the country.
One way to invest for a better tomorrow is with a savings plan. It is a life insurance plan that combines life-cover benefits with guaranteed returns.
You can customise and create the best savings plan that suits your requirements, as many insurers provide you with this flexibility to lead a better life tomorrow.
In this blog, we will discuss the key features of a savings plan to help you make an informed decision.
Key Features of Savings Plan
For a secure and seamless future and to achieve long-term goals like children’s education, loan repayments, purchasing a car or house, etc., you require prior planning and the right investments.
A savings plan is, therefore, a financial backup for fulfilling the financial goals, even if the policyholder dies. Here are some of the top features of a savings plan:
Guaranteed Returns
Unlike other investment tools, with a savings plan, you receive guaranteed returns regardless of market volatility, inflation, or other external factors. This ensures there is no loss of capital on your investment, safeguarding your future and providing a safety blanket to meet your financial requirements in the long run.
Tax Benefits
All the premiums paid for a savings plan are eligible for tax deductions or exemptions up to a certain limit. Section 80C under the Income Tax Act deducts all premiums from the overall taxable income. This decreases your tax liabilities and increases your savings further.
Rider Benefits
Given that a savings plan is a life insurance plan, it gives you the opportunity to customise your plan as per requirement using the available rider options offered by the insurer. Add-ons like accidental death cover, critical illness cover, loan repayment cover, etc., can all be added to your base savings plan to increase the cover offered.
This increases the financial security available for your family members in case of the policyholder’s death.
Flexibility of Premium Payout
The flexibility of investing as per capacity makes a savings plan a great option. You can choose between monthly, quarterly, and annual payments based on your liquidity and avail the same benefits.
Retirement Income
Even if you do not plan to spend the savings for financial requirements in the future, you can still enjoy the benefits of life cover and guaranteed returns for the second innings of life.
The money received after the maturity of the savings plan can be used as a retirement fund to replace the income stream, allowing you to be independent with your finances.
Checklist to Choose a Savings Plan
- The first aspect is to assess your goals before deciding which saving plan to invest in. This is necessary as it will give you an estimate of your financial expenses in the future.
- Always look at the risk versus return ratio to understand the benefits offered by a savings plan. This is important because if the risk factor is high and the returns are not great, it might not be an ideal financial investment opportunity.
- Choose a savings plan with enough flexibility and customisation options to meet your requirements. This is crucial as this allows you more freedom and better liquidity in the long run.
- Lastly, ensure you review the terms and conditions and understand all underlying guidelines before deciding. This is necessary to always be updated about the plan before investment.
Summing Up
No matter what your life stage is, setting financial goals and investing in the right financial tools is necessary. Always consider the key features of a savings plan and make the right decision by understanding the various terms and conditions.
Choose an insurer that offers flexibility, rider benefits, risks involved and returns guaranteed to know the best option. With a savings plan, you will diversify your financial portfolio and enjoy a stress-free life.
