Savings Plan

The importance of life insurance has grown manifold in recent times with uncertainties around health, environment and professions. Unforeseen events like accidents, illness or death cannot just rob you of life, but your dependents can be left without an income and continued financial support for meeting emergencies, paying off liabilities or planning future goals.

Savings plans have a built in death benefit which ensures that the beneficiaries of your policy are financially secure even after you are no more. This becomes more crucial if you are the sole breadwinner and the family is dependent on your income. A savings plan will make them financially secure for their regular needs and help them pay off liabilities, even in the event of your untimely demise.

Savings plans help build a disciplined savings habit, thanks to the regular premium that need to be paid, ensuring that you put aside a regular sum at determined intervals. They help you budget your current expenses while ensuring that you have enough saved for the future. Savings plans also offer a fixed amount of maturity when the policy term ends, helping you to plan life goals like the purchase of a dream home. Long term financial goals like a child's education or marriage can also be met with the help of a prudent savings plan. Some plans also offer regular stream of income through the term of the plan, thus helping to supplement your income and helping you to lead a better lifestyle.

During your lifetime, savings plans help you meet your goals effectively, while helping you save taxes at the same time. Since savings plans have flexible features, they allow you to choose the right one depending on your risk appetite and your future financial requirements. Regardless of the life stage you are at, savings plans are an important tool to build your wealth while ensuring financial security for your family.

Every person who has a regular income should invest in savings plans in order to safeguard their dependents' interests and to ensure that future expenses are met without worrying about unforeseen events. Savings plans can be bought at any age and stage of life. They are a sound vehicle for encouraging the saving habit along with building wealth that the policy holders can use to meet long term goals. The insurance cover provided enables the policy holder to lead an active life without worrying about life's uncertainties.

Young persons who have just started earning can invest in savings plans so that they build up a disciplined savings habit and plan for their long term goals - like buying a home or starting a family. The regular amount that needs to be put aside into savings plans makes sure young people budget their expenses accordingly and build a corpus for their future at the same time.

Married persons with children should opt for savings plans as they can protect their family financially in case of death, illness or accident. Even if the breadwinner's income stops for any of these reasons, the benefits that accrue from the savings plans ensure that the family's financial needs will continue to be met. Savings plans also help to plan for long term goals like a child's higher education overseas or a lavish wedding that can eat significantly into the family's savings.

Self-employed and business persons running their own ventures can also opt for savings plans as these offer an umbrella of security for the dependents in case the business income dries up after death. Some savings plans also offer options where a regular stream of income is available to policy holders during the term of the plan.

Those who are in middle age or close to retirement can also go in for savings plans as a means of retirement planning. You can reap the benefits of systematic savings till the time you retire and then avail the maturity benefit and achieve your retirement goals of buying a second home, taking holidays or simply indulging in a new hobby without worrying about the loss of a regular salary.

If you have a home loan or any liability, it makes sense to invest in a savings plan to protect your dependents from being burdened by payments in case of your death. A prudent savings plan will allow you to save regular amounts which will be available to pay off any liabilities even if you are no longer around.

For those who are averse to risk and want to save by investing in safe products, a savings plan that combines traditional life insurance with maturity benefits can be the ideal solution.

Those looking to save tax can also opt for savings plans that offer tax benefits on the premium you invest as well as the sum assured received at the time of maturity, under Section 80C and Section 10(10D) as per prevailing Income Tax Laws.

^{*As per Income Tax Act, 1961. Tax benefits are subject to changes in tax law.}

Benefits of Savings Plans

Savings plans can be advantageous in various ways to different people.

Financial protection- Essentially a life insurance product, savings plans make sure your loved ones do not suffer in case of your untimely demise and the consequent loss of regular income. Their financial needs get protected by the payout received as death benefit of the savings plan.

Financial discipline- Investing in a savings plan ensures that you put away a part of your income regularly into the policy, thus regulating your monthly budget and curtailing unnecessary expenditure. This savings habit can stand you in good stead through life.

Long term planning- Savings Plans help you accumulate wealth over time, by growing your corpus through regular premiums. This helps you plan for life goals in a systematic manner, be it the purchase of assets, funds needed for a child's higher education or an important event like a child's marriage. It can also help to plan systematically for your retirement years, when you cease to receive regular pay.

Tax benefits- Savings plans are essentially life insurance plans, so they attract the same tax benefits as other insurance plans. As per section 80 C of the Income Tax Act, you can avail exemption of up to Rs 1.5 lakh towards your premium payments every year.

^{*As per Income Tax Act, 1961. Tax benefits are subject to changes in tax law.}

Flexible options- Savings plans realise that there are different goals and priorities for everyone and hence, offer a wide variety of flexible features that can be customised to suit individual needs. You can choose the right terms, payouts and premium payments according to your capital and risk appetite and select the plan that best meets your requirements.

Each individual has different financial needs and risk appetites. You have to consider the following factors before you choose the Savings Plan that is right for you.

Evaluate financial goals

Goals change for every person at different stages in life. Assess your short term and long goals, the time you need to achieve them and the funds required to fulfil them. This will enable you to work out how much you need to start putting away in a Savings Plan to accumulate the funds you desire. The goals can range from funding your children's education to building a house, to building a corpus for the retirement years.

Check features,riders and flexibility

Select features that are affordable for you and can meet your future needs. Make sure your plan can give you the flexibility to access your funds in case of an emergency, and whether you can get a loan against the funds. Check for various riders like accident, disability and illness that help you get additional coverage. With the right coverage and flexible options, one can enjoy protection as well as growth through Savings Plans.

Determine investment horizon

Choosing an investment horizon helps to ensure that the cover you have opted for is available when you need it. It also helps you map your long term goals and financial requirements which helps you choose the right plan accordingly.

Assess risk appetite

Savings Plans offer a variety of choices that cater to all risk appetites. Age and personal factors determine the amount of risk people can take while investing in Savings Plans. People who have a higher risk appetite can choose plans that offer lucrative returns and can choose more aggressive plans, while those who are risk averse can opt for conservative Savings Plans that offer more security but give relatively lower returns.

Review and compare

Do not go for the first savings plan that appeals to you. It is better to review and compare different plans, their features and benefits and then choose one that aligns with your future needs. Ideally, use a savings and income calculator to determine the ideal coverage and premium payable towards the savings plan.

HDFC Life Savings plans are life insurance plans that offer you multiple avenues to save and to grow your money. These online investment plans help in systematic and disciplined investment ensuring that you and your family achieve your financial goals, while staying protected financially at all times.

HDFC Life Savings plans help you make significant savings and grow your wealth with the help of regular investments after taking into account your specific financial situation and future needs. They also provide protection to your family and ensure all expenses are covered even in your absence. These online investment plans offer various features that help meet your specific financial needs with investments made according to your appetite to take risks.

The different savings plans offered by HDFC Life offer Life Insurance Cover which is a sum assured on death, flexibility of premium payment as well as tax benefits. Some plans also offer guaranteed lump sum at maturity.

In addition, the Tax calculator by HDFC Life, a simple and easy to use tool, helps calculate the amount of tax payable by you and allows you to choose the plan that fits your needs best.

A number of crucial factors can impact the premium you pay on the plan you choose.

Age - This is the primary factor that decides the premium you pay, although some savings plans are age agnostic as well. At a younger age, a person is less likely to suffer from an age-related disease and pass away prematurely, hence the premiums are lower. You can lock in a good savings plan at lower premium rates when you opt for a savings plan at a younger age. The insurer increases the premium rates as your age goes up, as the chances of a claim (due to death) also increase.

Policy period and sum assured -There's usually a higher premium if you opt for a longer policy period, since the probability of claims is higher.Choosing a term that terminates with your retirement and a policy amount that is enough to protect your family's financial needs is the wise option.

Medical history – A history of diseases that have tendency to run in the family and your own medical records as well as parameters like height and weight can raise flags about potential illness or obesity, and can impact the amount of premium you pay.

Smoking and drinking habits - Since research indicates that people who smoke are likely to contract more illnesses than those who do not and also have a higher mortality rate, insurance premiums for smokers tend to be higher than for non-smokers. The same goes for excessive drinking habits. It is prudent to disclose your smoking and drinking habits to the insurer before purchasing a plan.

Occupation - Some professions or lines of work carry more risk and hence, insurers might charge a higher premium. It is important to make proper disclosures about your work and income to the insurer before finalising the policy.

Riders - Additional riders like critical illness or accidental death cover can attract an additional premium since you are opting for extra benefits by opting for such riders.