Features of Savings Plans
Before you pick a savings plan to safeguard your financial future, let’s look at how they function:
1. Policy Tenure and Entry Age
In most cases, you can purchase a savings policy from a very young age. In fact, you can even purchase a policy for your child from the time they are just 90 days. You can select a policy term as per your personal requirements. Some plans offer only long-term savings, while others have short-term options as well. When it comes to savings and investments, the longer you stay invested, the better it is for you and your finances.
2. Guaranteed Returns
A savings plan provides low-risk investment opportunities. Over time, you can rest assured of steady returns on your investment. These plans provide a good maturity benefit and steady returns, which allows you to make prudent financial choices in the future.
3. Riders and Life Cover
Savings plans offer guaranteed benefits and life cover. When you purchase a plan, you also get life insurance coverage. If you wish to, you can purchase riders that offer enhanced protection. For example, you can purchase an accidental disability rider to ensure you and your family enjoy financial security when you require it most. You can also purchase a rider that provides a payout in case of a critical illness diagnosis during the policy term.
4. Tax Benefits
Since savings plans come with a life insurance component, you can enjoy deduction u/s 80C of Income tax Act, 196113 up to INR 1, 50,000 from your taxable income for the premium amount paid. But that’s not all. The maturity benefit you receive from the plan is also exempt u/s 10(10D) of the Income Tax Act, 196114 from taxation, as is the death benefit that your nominee receives. With this in mind, a savings plan allows you to save for the future, while saving on taxes# today.