All You Need to Know About Savings Plan
Regularly saving a portion of your income is crucial for financial stability and wealth accumulation for various life goals such as children’s education, marriage, etc. Read further to understand all about savings plans and how they can financially safeguard your future while protecting your loved ones in case of unforeseen circumstances.
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The famous quote by Benjamin Franklin, “If you fail to plan, you are planning to fail”, applies to all the areas of life, including finances. Planning is the key to achieving long-term financial goals and other major expenditures due in the future, such as a child’s education, purchasing a house, retirement planning, etc. A savings plan can help you plan for all such life goals to be financially prepared to tackle them all.
What is a Savings Plan?
A savings plan is a financial instrument that offers you life insurance while also giving you maturity benefits to help you address your long-term financial goals. These dual benefits make it a great choice for investors, especially those who are the family’s sole breadwinners.
Benefits of a Savings Plan
- Life Cover: Savings plan is primarily an insurance product and hence committed to providing the nominee with the death benefits as per the policy in case of the insured’s demise.
- Assured Returns: You are provided with assured maturity benefits specified when purchasing the policy if you keep paying all the premiums timely. Hence these plans are completely risk-free.
- Tax Benefits: Since it is an insurance plan, you can claim the deduction under section 80C on premiums paid against the policy. Some of the plans also offer a tax-free maturity benefit under section 10D of the income tax act.
Things to Remember While Choosing a Savings Plan
- Always keep your objective of investment in mind while choosing a plan. You must have an idea of the corpus you would need and after how many years. You can adjust the premium and term accordingly.
- Carefully study and compare the features of available plans. Look for plans that offer flexible options for premium payments, term selection, etc. Many plans also offer flexibility to choose how you wish to receive the maturity benefit, i.e., a lump sum amount or a monthly income. Also, some plans allow you to choose between single and joint life cover. Pick the plan that has options matching your requirements.
- Few policies also offer optional riders such as accidental disability riders, critical illness riders, etc. at a slightly higher cost. You may consider getting these riders as add-ons to enhance your life protection.
You can also check out the HDFC savings plan as it offers some of the best-rated and flexible savings plans.
A Low-Risk Investment With Guaranteed Returns
Being a low-risk investment offering multiple benefits, it is a popular choice among investors who wish to play safe. Also, if you have a high-risk appetite, then it is suggested to invest some portion in safer instruments such as a savings plan to balance the overall risk.