Savings Plan

Monthly Income Plans (MIPs) are investment plans that aim to provide a steady stream of income. These are debt-oriented mutual funds that invest in a mix of stocks and fixed-income instruments to generate regular income. MIPs are appropriate for risk-averse investors who want to preserve their capital but receive higher income than traditional fixed-income investments.

MIPs provide a host of benefits, including the high potential of market-linked returns, professional fund management and a well-diversified portfolio. It’s a flexible investment as there are different types of MIPs you can choose based on your risk appetite and investment horizon, all of which are part of the investment process.

You can choose the growth option to reinvest your gains and build wealth over time. Alternatively, you can choose the dividend option or start a systematic withdrawal plan (SWP) to receive a regular income. 

A Money Back Plans is a life insurance product that combines the benefits of investments and insurance. These plans pay survival benefits, which is a pre-decided percentage of the sum assured to the insured person at predetermined intervals. If the policyholder survives the set policy term, a guaranteed sum called the maturity benefit plus bonuses is paid out by the insurer.

Besides a fixed payout, money back plans also provide traditional life coverage. Upon the policyholder’s death, a death benefit is paid to the beneficiaries of the policy. This amount excludes the survival benefit received by policyholders when they are alive. Thus, policyholders receive both stable and guaranteed returns and keep the future of their loved ones secured. 

Endowment plans are flexible life insurance plans that offer the dual benefits of life coverage and savings. On the one hand, it provides life insurance coverage to secure your loved ones' future in the unfortunate event of your death, allowing them to achieve their life goals. On the other hand, it allows you to save money for various goals such as buying a house, funding children's education, etc.

These plans provide a fixed lump sum as a maturity benefit after the policy matures. Since the maturity sum remains unchanged by market fluctuations, you can customise your plan to fulfil your financial goals. Another benefit of endowment plans is that they provide complete flexibility in choosing the premium frequency, whether monthly, quarter, yearly or a one-time lump sum.

Unit Linked Insurance Plans (ULIPs) are multifaceted financial instruments that combine life insurance and investments. A part of the premium of a ULIP plan goes towards life insurance coverage, while the rest is invested in market-linked securities . A Ulip calculator can help estimate the right premium amount for your goals while securing your loved one's future.

Like other life insurance plans, ULIPs provide death benefits to your loved ones in the case of your unfortunate demise. In addition, these plans invest in equities, debt instruments, or a combination of both. You can choose the funds to invest in and switch funds when your investment strategy changes. ULIPs are best suited for long-term investment goals, as the returns may vary with market fluctuations. 

National Savings Certificate (NSC) is a fixed-income investment with a fixed rate of interest and tenure of five years. It's a low-risk investment offered by the Government of India that you can open at any post office in India. NSCs provide guaranteed returns and provide complete capital protection.

NSCs are easily accessible investments that provide safe and fixed returns. The interest rates are revised by the government every quarter. The interest is compounded annually and reinvested for the first four years, which increases your returns. While they don't provide inflation-beating returns, they offer steady interest income and tax benefits. Moreover, there is no maximum limit on the amount you can invest. 

Public Provident Fund (PPF) is a voluntary social security scheme in India that is an ideal option for long-term retirement savings. PPF offers risk-free and guaranteed returns backed by the Government of India. It has a tenure and lock-in period of 15 years with options for partial withdrawals and loan facilities.

PPF offers multiple benefits, including reasonable returns and a host of tax benefits over similar investments. It’s one of the few triple tax-exempt investments that offer separate tax benefits on contributions, interest income and maturity amount. It’s also a very flexible investment, as you can invest as low as Rs. 500 per year and as high as Rs. 1.5 lakh per year. 

Post Office (PO) Savings Scheme are one of the safest and most reliable savings schemes in the country. The Indian Postal Service offers a fixed 4% per annum interest rate on savings accounts, allowing you to get safe and reliable income. The minimum amount required to open a post office savings account is Rs. 500, making it easy for anyone to start saving money.

One of the biggest benefits of a PO savings account is the sovereign guarantee, as they are backed by the Central Government. Postal savings accounts are right for risk-averse investors who are looking to temporarily park their surplus income. They are also great for saving for short-term goals, such as saving for a new phone or a vacation. 

Senior Citizen Savings Scheme (SCSS) is a government-backed retirement benefit program open to any resident Indian above 60 years of age. Senior citizens can invest a lump sum from Rs. 1000 to Rs. 30 lakh for five years in a SCSS account to receive a fixed 8.2% per annum interest on their deposits.

SCSS is a government-backed savings scheme. It has a very simple application process and can be opened at any authorised bank or post office in the country. The account can be transferred from a bank to a post office branch and vice versa, allowing senior citizens to open an account in their locality. The maturity duration can be extended by 3 years at predetermined interest rates. 

Sukanya Samriddhi Yojana (SSY) is a government-backed savings scheme launched under the 'Beti Bachao- Beti Padhao' initiative, aimed at securing the future of girl children in India. It works like a focused child plan, allowing parents or guardians of a girl child aged 10 years or below to systematically save for her future financial goals, such as education or marriage. You can effectively map out the costs for these milestones using child education planner to understand future education costs and child marriage planner to understand future marriage costs of your child.

The scheme offers higher than typical interest rates and tax benefits. It's one of the few investments in India that offers triple tax benefits, which include tax deductions on contributions, tax-free interest and tax-free maturity amount. Currently, it offers an 8.2 per annum interest rate compounded annually. 

Fixed Deposit’s (FD) are among the oldest and most popular investment options due to their safety and accessibility. Fixed deposits provide a fixed rate of interest for a set period and offer higher returns compared to savings accounts and treasury bills. These are ideal investment options for conservative investors and short-term investments.

FDs are one of the safest investments as their returns are insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC) under the Government of India. Fixed Deposit interest rates vary from 2.5% p.a. to 9% p.a., depending on the bank, maturity period and age of the depositor. The term of an FD can vary between 7 days and 10 years. You can liquidate your investment before the term with a minimal premature withdrawal penalty. 

Atal Pension Yojana (APY) is a government-backed social security scheme that provides a steady stream of income to senior citizens. Based on the National Pension Scheme (NPS) framework, APY provides a pension ranging from Rs. 1000 to Rs. 5000 per month to subscribers based on their past contributions. The pension amount is guaranteed by the Central Government, providing predictable income and peace of mind to retirees.

Before October 2022, the scheme was open to all Indian citizens between the ages of 18 and 40 years with a savings account. Only those who have never been taxpayers can join the APY. Subscribers have to pay a certain amount based on their age at the time of joining the APY and their desired pension amount. 

Employees’ Provident Fund (EPF) is a mandatory savings scheme where both the employee and employer make regular contributions. The funds help in securing the employee’s future after retirement. Any salaried employee earning less than Rs. 15,000 must have an EPF account. All organisations with more than 20 employees must register with the Employee Provident Fund Organisation (EPFO) to offer EPF benefits.

EPS is a safe and mandatory retirement benefits scheme that ensures that Indian employees have some savings for their golden years. It's applicable in all Indian states, ensuring employees all over the country get tax-free, risk-free returns. Other benefits of investing in an EPF include its transferability across different jobs and withdrawal flexibility. 

National Pension Scheme (NPS) is a market-linked voluntary contribution scheme that lets you save for retirement. It's an easily accessible, flexible, and low-cost investment that is available to all Indian citizens to secure their futures. All contributions are invested by professional fund managers into market-linked securities as per your chosen plan, which helps to accumulate a retirement corpus.  

NPS has mandatory, defined contributions which you must continue regularly throughout your working life. Upon retirement, you can withdraw a part of the accumulated corpus and use the rest to buy an annuity plan, which provides you with a pension for the rest of your life. NPS also provides additional benefits over other tax-saving investments of up to Rs. 50,000 for voluntary contributions.  

Kisan Vikas Patra (KVP) is a small savings scheme initially launched for farmers by India Post, but it's now available to all Indian citizens. KVP is a low-risk savings scheme that provides a fixed 7.5% p.a. interest rate (current) for a tenure of 2 years and 6 months. The scheme is government-backed and provides guaranteed returns as declared on the KVP certificate.

KVP is a flexible investment where you can open a new account with just Rs. 1000 and in multiple of Rs. 100 thereof. You can open an account at any post office. Moreover, you can use the KVP certificate as collateral to secure a loan.

Assess your financial goals and requirements. Knowing the approximate amount of funds you could need for a big expenditure in future or the funds required to sustain your dependents after you are not around will help you fix an amount that needs to be assured.

Do your research thoroughly. Most insurers detail out their different savings plans on their websites, complete with inclusions and exclusions. Read the fine print about claim settlements and other terms and conditions before you decide on the savings plan you want to buy.

Do a due diligence on the insurer you have shortlisted to evaluate the insurer's financial strength, reputation, service quality, reviews and discounts offered.

Check the eligibility criteria, including the minimum and maximum ages at which you can opt for the policy, income brackets and the various proofs needed to buy a savings plan online.

Submit the online forms, relevant proofs - including that of address, identity, income, and age.

Receive the policy documents over email and relevant notifications over your mobile phone. Keep a record of all your investments in a folder so that you can refer to them easily whenever needed in an emergency.

Savings plans often involve regular premium payments. Assess your monthly income and existing financial commitments to determine a comfortable premium amount. Consistency in premium payment is crucial for reaping the plan's benefits. Savings plans offer flexibility in premium payment frequency (monthly, quarterly, and annually). 

Choose an option that aligns with your cash flow and avoids any potential strain on your finances. Plans often have minimum and maximum premium limitations. Ensure the chosen plan aligns with your budget and allows you to invest an amount that meets your long-term goals.

Many savings plans come bundled with a life cover benefit. This provides financial safety for your loved ones in case of your unfortunate demise. Consider your dependents and financial obligations when determining the required life cover amount. Ideally, the life cover should be sufficient to sustain your family's needs in your absence. 

Savings plans might offer term life cover (providing cover for a specific period) or whole life cover (lasting your entire lifetime). Choose the type that best aligns with your life stage and financial goals.

Research the company's reputation and financial stability. Opt for a well-established and financially sound insurance provider with a proven track record of honouring claims. Evaluate the company's customer service channels and their responsiveness to inquiries. 

A reliable and accessible customer service infrastructure is crucial for a smooth experience. A company with a high claim settlement ratio should always be preferred. This indicates the percentage of claims they approve and pay out to policyholders.

You need to fill up a policy form application. The document provides the company with information about your finances and medical history. Based on your answers, the company will decide on your premium and sum assured.

You must showcase your income documents to prove you have the means to pay your premiums. Typically, you will have to share bank statements, previous Income Tax Returns (ITR) and salary slips with the company.

As part of the KYC process, you will need to provide documents that verify your identity and address. You can choose to submit the following documents:

Goals change with each life stage and hence it is important to understand your short-term and long-term goals and the time that you estimate it would take to achieve them. Set an amount against each goal and then reverse plan to decide how much you need to put into a savings plan that will get you those funds in the future.

Assess the benefits and features of the savings plan you choose to understand if it fits your requirements and risk taking appetite. Know the rider options that come with different plans to be able to choose the one that is right for you. Read the fine print in order to understand the eligibility criteria, various inclusions and exclusions and the documents you will need to buy the plan, so that you can make an informed choice.

Decide your investment horizon in accordance with your long-term goals and financial needs. It will also help to decide whether the cover you have opted for is available to you need it.