Introduction
Pay donations, you will get peace!
Pay attention, you will learn more!
Pay your fees, you will get further education!
Pay your premium, you will get continued policy benefits!
All the statements above just guarantee you a benefit that will be paid after you fulfil a condition. Similarly, a guaranteed savings plan is the best way to keep your money safe and future secured. The aim of earning is to attain your current goals as well as look into the long-term objectives in life. A savings insurance plan is the suitable way in which you can get into some disciplinary savings in life. It guarantees you benefits that would otherwise cost you more than what you pay.
With that note, let us look into these,
What is a savings plan?
Why is it good to have a guaranteed savings plan?
There is no rocket science behind what is savings and what is the purpose of having an endowment plan. Let us need further for more insights into a savings plan.
Table of Contents.
A little about the savings plan.
What is a guaranteed savings plan?
Why is it a good idea to invest in a guaranteed savings plan?
Things to consider before buying a guaranteed savings plan.
Conclusion
A little about the savings plan.
A savings plan is also known as an endowment plan that helps an individual gather a pool of funds for future goals. The insurance plan provides the returns when the life insured needs it.
The savings plan has two components one is insurance and the other is savings. The insurance component of the life insurance policy gives death benefit to the nominee when the life insurance passes away. The savings component allows the life insured to accumulate huge funds through disciplinary savings. The long-term accumulation of funds over a period of time gives higher returns when expected.
What is a guaranteed savings plan?
There are different types of savings plans that provide you financial protection to meet your life goals. Under a guaranteed savings plan, you get assured financial security as well as many other benefits associated with it.
- The guaranteed benefits are payable either on the death or on maturity. With the lump sum received under the policy, you can accomplish your life goals.
- Under the guaranteed savings plan, there is a guaranteed addition that boosts your saving corpus.
- Some of the insurance policies allow the life insured to cover their spouses under the same plan.
Let us explore further why it is a good idea to invest in a guaranteed savings plan.
Why is it a good idea to invest in a guaranteed savings plan?
Here are the reasons why it is good to invest in a guaranteed savings plan:
- Guaranteed Maturity Benefit:
The guaranteed maturity benefits are receivable at the time of death or at the end of the policy term. The benefits shall pay you sum assured on maturity or accrued guaranteed additions.
- Guaranteed Yearly Additions:
The savings plan fetches you guaranteed additions that are accrued on a monthly basis. The additions are made provided all the due premiums are paid. The benefit of guaranteed yearly additions is payable when the life insured passes away or the maturity arrives. These guaranteed additions in the savings policy are paid based on the premium you commit to pay, sum assured, premium paid, entry age of the life insured, joint life or individual protection.
- Life Coverage: With the savings plan, the nominee and the dependent in the family are safe. The life coverage under the insurance policy mentions that if anything unfortunate happens with the life insured, the family will be taken care of.
- Provides umpteen flexibility: No other insurance policy provides you this comfort. The savings plan provides you a flexibility to shift from long term goals to short term based on your requirements.
- Loan against the cash value of the savings plan: The savings plan has the feature of gaining a cash value after 2 years. This cash value increases over a period of time. In case of emergency, the life insured can get loans against the policy.
- Tax benefits: If saving money is the only motive, nothing can be better than buying a savings plan. With a savings insurance plan you are able to accumulate funds over the years as well as get the tax deduction. All the premium paid under the insurance policy is eligible for deduction up to a maximum of Rs.1.5 lakhs. The deductions are permissible under Section 80C of Income Tax Act, 1961.
Things to consider before buying a guaranteed savings plan.
Now that you have decided to keep your money growing and safe to battle the hurdles in life, make sure you pick the best insurance plan for yourself.
These are the things you can consider before buying a guaranteed savings plan:
- Start early: Simplest logic to save more in life is that you start early. Do not overthink when to begin and with which plan to start. The sooner you purchase an endowment or money-back plan, the better. These types of schemes encourage long-term savings discipline. This allows your money to develop into a large corpus and provides you with life insurance for a longer period of time.
- See whether the flexible premium payments are allowed: Flexible payment choices are common in endowment or savings plans. For salaried workers, annual premium payments are ideal. Those with irregular income, on the other hand, may benefit from a single-premium or limited-premium payment option.
- Review the returns: Check for the guaranteed returns whether applicable under the policy or not. A guaranteed return is provided through an endowment plan, which is paid out upon death or maturity. Bonuses that are changeable and dependent on the outcome of the investment are included in non-guaranteed returns.
- Assess the scope of bonuses: Know about the amount of bonuses that you can get. These bonuses are declared by the insurance companies majorly when the profits are made. Invest in the savings plan when you can verify that the insurer has declared the bonuses in the past.
Conclusion
A guaranteed savings plan is a protection cover that allows you to fulfil long-term financial goals. It is a non-participating policy that offers cover against all the eventualities and odds in life. When you buy the endowment plan, you are in a way creating a financial back-up for your family members. The guaranteed savings plan is favourable as it allows the life insured to make regular payments in the form of annual or monthly income for a specific time period. If you have a long term goal and feel that otherwise savings will be a challenge for you, then you must buy a savings plan. For more inputs, please read here.
