As we grow up, we begin realising the importance of building a secure financial nest for ourselves. With decent financial backing, we can fulfil our life goals and ensure our loved ones get to live their dreams. However, as we grow through life, our responsibilities keep piling up, and we’re unable to find a suitable way to build for our future. This is where opting for a savings insurance plan can help you.
What is a Savings Insurance Plan?
A savings insurance plan is an insurance investment policy that offers you a wide range of benefits. With the policy, you get insurance coverage and the ability to save money systematically and in a disciplined manner. In a savings plan, your premium amount is split into two parts. The first part is kept for insurance coverage, and the second part is used for wealth building. With a suitable savings plan, you can access various features through investment.
Features of Savings Insurance Plans:
- Age of entry and plan tenure: Savings policies generally have a wide entry age range and a long policy tenure. Savings policies are structured to help policyholders with different risk profiles.
For example, young individuals may opt for a high-risk plan compared to older individuals with a low-risk profile. The mid-to-long tenure attached with the plan helps the policyholders accumulate wealth and profit from it in the long run.
- Insurance cover and riders: Savings policies offer you the dual benefit of insurance coverage and wealth creation. First, you get life insurance with guaranteed returns through the policy. This way, you can protect your loved ones when you’re not around and achieve your financial goals through the same plan.
As the policy is a life insurance plan, you can include riders to enhance the coverage you are liable to get. Along with improving the plan’s coverage, you get the appropriate coverage for specific situations with suitable riders.
- Charges: Guaranteed return plans in India generally come with a wide range of charges. It is important to learn about all the charges associated with the plan while purchasing the policy. It would help if you considered the charges that come with a savings plan when comparing the different plans available for you. The optimal savings plan will have minimal charges, higher liquidity, bonus receipt, etc.
- Investment options: There are different types of guaranteed savings plans available in the market. For instance, if you’re looking to earn market-linked returns through your investment, opting for ULIPs would be a suitable option. However, if you’re a risk-averse investor, you can opt for an endowment plan that invests in low-risk investments like government securities, corporate bonds, etc.
- Tax benefits: A monthly savings plan also offers you a wide range of tax benefits. For example, the premium amount paid for the policy is eligible for tax benefits as per Section 80C of the Income Tax Act. Along with this, the maturity and death benefits obtained through the plan are eligible for tax benefits. Such benefits make the policy an optimal tax-saving investment.
Most insurers also offer additional features with their savings plan. For instance, with the Tata AIA insurance savings plan, you get an optional health rider as protection against the medical expenses of several critical illnesses.
A savings plan comes with several features. With the plan, you get insurance coverage and the flexibility to enhance the coverage with riders. Along with this, you can also choose from a wide range of plans based on your risk profile. The policy also comes with various tax benefits. However, to get the most out of your savings plan, you must compare and research the different plans available for you and select the one that matches your requirements.