Over the years, guaranteed savings plans have gained immense popularity among Indian investors. Many people prefer buying a savings plan as it gives them dual advantages of insurance coverage and investment options. With a guaranteed savings plan, you can secure your family’s financial future and grow your money in the long run.
Another important reason many people invest in such plans is that it gives them immense flexibility. You can choose the policy tenure, premium payment mode, payout mode, etc. This makes it a reliable investment tool for retirement planning.
Let us see how a guaranteed savings plan justify your investment needs
The guaranteed savings plan has an affordable premium, making them an ideal choice for all kinds of investors. Also, you get the flexibility to automate the premium payment by linking your investment account to the bank account. Thus, by making a small contribution periodically, you can stay on track to accomplish your long-term goals and, at the same time, offer financial security to your loved ones.
The guaranteed savings plans are one of the most reliable and safe investment options available in the market. Thus, it gives you peace of mind knowing that your capital is secure. Also, your investments in such plans are backed by the insurance company’s financial credibility and reputation. There have never been any instances of the insurance company collapsing, and the investors have lost their money by investing in a guaranteed savings plan.
Apart from offering life insurance protection and guaranteed returns, in the long run, guaranteed savings plans are one of the most tax-efficient financial instruments. Such plans enjoy EEE (exempt-exempt-exempt) tax status. The premium you pay for the policy is eligible for tax deduction under Section 80C of the Indian Income Tax Act. Also, the returns you earn from your investment is entirely tax-free.
The insurance companies in India are backed by leading financial organisations and regulated by the IRDAI (Insurance Regulatory and Development Authority of India). If you face any issues with your investments or the insurance company, you can file a complaint with the IRDAI. The governing body has a grievance redressal and insurance ombudsman facility to help the customers. Hence, you can trust the insurance company to honour all terms and conditions mentioned in the policy documents.
Flexible policy tenure
When you buy a guaranteed savings plan, you have the liberty to choose the policy duration to suit your specific needs and goals. Some insurance companies even allow you to change the policy tenure later; you can select the policy tenure from five to 20 years. The longer the duration, the better your chances of building a sizeable corpus.
One of the primary reasons you must buy a guaranteed savings plan is to get life insurance coverage. The sum assured of such plans are generally high; you get coverage up to 10 times the annual premium you pay.
The coverage amounts and the terms may differ for each policy, and it would be defined in the policy documents. Usually, if the annual premium is ₹1 lakh, you can expect the life cover to be up to ₹10 lakhs. Only term insurance policies may offer higher coverage. However, such policies do not provide any maturity benefits.
Now that you know the various benefits of investing in a guaranteed savings plan, define your goals, choose the right plan, and make the most out of it.