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Saving Plan

Savings plans are a type of life insurance plan which helps an individual to save and create a corpus that can be used to fulfill future financial goals. Savings plans are designed in a very different manner as compared to investment plans. Investment plans help an individual to invest in a systematic way to accumulate a fund which can be used to fulfill long-term and short-term financial goals of life.

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A savings plan lets the policyholder complete their financial requirements by investing their money as per their suitability and risk tolerance. Savings plan offers wealth accumulation and insurance coverage. In case of an unforeseen demise of the life assured a death benefit shall be provided to the nominee under this type of insurance plan. Savings plans are low risk investment plans but offer good returns.

A savings plan can be a great way to accumulate wealth to complete financial goals and requirements. By investing in a savings plan an individual can build a corpus fortune and also avail tax benefits.

How Does Savings Plan Work?

Best Savings Plan In India

Below mentioned are some of the top savings plan in India:

Plan

Name

Plan Type

Min. & Max. Entry Age

(in years)

Max. Maturity Age

(in years)

Policy Term

(in years)

Min. Sum Assured

(in Rs.)

PPM*

PPT**

Edelweiss Tokio Life Wealth Plus

ULIP

1 - 55

75

10 - 20

3.60 Lakh

Annually, Semi Annually, Quarterly and Monthly

Regular or Limited Pay

ICICI Pru Signature

ULIP

0 - 60

99

Whole Life

2.10 Lakh

Annually, Semi Annually and Monthly

Regular or Limited Pay

ICICI Pru Future Perfect

Endowment

1 - 58

70

10 - 30

84,000

Annually, Semi Annually and Monthly

Regular or Limited Pay

HDFC Life Sanchay Plus

Endowment

5 - 60

80

6 - 20

3 Lakhs

Annually, Semi Annually, Quarterly and Monthly

Single, Regular or Limited Pay

LIC New Money Back Plan - 25 Years

Money Back

13 - 45

70

20

1 Lakh

Annually, Semi Annually, Quarterly and Monthly

Single, Regular or Limited Pay

Canara HSBC OBC Guaranteed Savings Plan

Endowment

0 - 60

75 years

10 - 20

76,500

Annually, Semi Annually, Quarterly and Monthly

Single, Regular or Limited Pay

Bharti AXA Life Monthly Income Plan Plus

Money Back

0 - 65

80

15 - 30

1.35 Lakh

Annually, Semi Annually, Quarterly and Monthly

Single, Regular or Limited Pay

SBI Life e-Wealth Plan

ULIP

5 - 50

60

10 - 30

20,000

Yearly and Monthly

Regular

Reliance Super Money Back Plan

Money Back

18 - 55

80

10 - 50

1 Lakh

Annually, Semi Annually, Quarterly and Monthly

Single, Regular or Limited Pay

Aegon iMaximize Plan

ULIP

7 - 55

75

15 - 25

1.5 Lakh

Annually, Semi Annually, Quarterly and Monthly

Single, Regular or Limited Pay

Best Government Savings Schemes In India

There are several savings schemes which have been launched by the government and are a great way to create a corpus for the future. Below mentioned are some government savings schemes that one can choose from:

  • National Savings Scheme: Under National Savings Scheme the sum assured is provided to the account holder at the time of maturity. The applicable interest rate under this scheme is compounded every year. The National Savings Scheme allows the account holder to create a corpus and save tax by using this investment option. The interest rate
  • National Savings Certificate: National Savings Certificate is a fixed income generating savings scheme under which an account (individual or joint) can be opened at any post office. The main objective of launching this scheme is to encourage people to mobilise their earning through investing and also encouraging tax saving. Usually under this savings scheme there is no maximum limit on investment and there are two maturity periods which are 5 or 10 years. The National Savings Scheme can also be used as collateral for loans from financial institutions.
  • Public Provident Fund (PPF): Public Provident Fund also known as PPF is a savings scheme launched by the Central Government. This scheme was launched in 1968 with the primary objective of mobilizing small savings in the form of investments which also provides a return on these investments. A Public Provident Fund can also be called a savings cum tax savings investment tool which helps an individual to build a retirement corpus and save on annual taxes. This is a long-term investment option that offers an attractive rate of interest and good returns on the investments.
  • Senior Citizens Savings Scheme: Senior Citizens Savings Schemes (SCSS) is a Post Office savings scheme launched by the government as a retirement benefits programme for senior citizens. Senior citizens residing in India can invest in this scheme and avail regular income along with tax benefits after retirement. Senior Citizen Savings Schemes offer regular income after retirement. This investment option is a good choice for individuals who are above 60 years of age.
  • Sukanya Samriddhi Yojana: Sukanya Samriddhi Yojana was launched by the Indian Ministry of Finance under the Beti Bachao Beti Padhao campaign. This scheme has been launched with a motive to financially secure the future of the girl child in the family. The tenure of Sukanya Samriddhi Yojana account is 21 years from the date of opening the account till the date the girl child gets married after completing the age of 18 years. Investments made towards a SSY account can be utilised to fund girl child’s education or marital expenses.
  • Post Office Savings Scheme: Post Office Savings Scheme is a deposit scheme offered by post offices throughout the country. Under this scheme a post office savings account is opened and provides a fixed rate of interest on the account balance. This scheme is ideal for people with a low risk appetite. A Post Office Savings Scheme account can be opened for a minor as well.
  • Employee Provident Fund (EPF): Employee Provident Fund (EPF) was launched by Employee Provident Fund Organisation wherein the salaried employees are required to make contributions towards the provident fund account. Under this scheme both employer and employee make an equal contribution towards the Employee Provident Fund account. 12% of the salary has to be contributed by the employee and the employer towards the Employee Provident Fund account. The annual rate of interest varies from 8 - 12%. This scheme helps a salaried employee to create a corpus for retirement.
  • National Pension System: National Pension System is a voluntary retirement scheme which allows an individual to contribute towards planned savings and ensure a source of regular income after retirement. The employees are obligated to contribute towards the scheme as premium payments while being employed. This scheme was launched in an attempt to provide adequate retirement income to the citizens of India.
  • Atal Pension Yojana: Atal Pension Yojana is government-backed savings scheme which was launched with the primary objective to provide benefits to the people who are working in the unorganized sector of India. Atal Pension Yojana is open for all bank account holders between the age of 18 - 40 years. Under this scheme, the subscriber shall receive a monthly pension from the age of 6o years.
  • KIsan Vikas Patra: Kisan Vikas Patra savings scheme has been launched by the Indian Postal Department. The scheme was initially launched in 1988 and was discontinued in the year 2011 but due to high demand this scheme was launched in the year 2014. This scheme doubles the investment over a period of 10 years and 4 months. Initially this scheme was launched for farmers as the name suggests but later it was opened for all.

Life Insurance Savings Plans

There are several types of life insurance plans available in the market and some of them are life cum savings plans. These plans provide dual benefits of life insurance and savings by providing you an opportunity to build a corpus to help meet your future financial needs and fulfil your goals. Below mentioned are some life insurance savings plans that you can choose from:

  • Unit Linked Insurance Plans (ULIPs): Unit Linked Insurance plans also known as ULIPs are a type of life insurance policy. These plans are a combination of market linked investment fund options and life insurance. Premiums paid towards ULIPs are partly invested in market linked fund options and remaining for the life insurance cover. The returns under unit linked insurance plans are based on the performance of the chosen market linked fund option. The policyholder has the flexibility to switch between the fund option for better returns according to their risk profile. ULIPs are ideal for people who have high risk tolerance.
  • Endowment Plans: Endowment plans are regular savings plans which also provide life insurance cover to the policyholder. Endowment plans provide guaranteed maturity benefit along with yearly bonuses (if any) which shall be provided at the end of the policy tenure. The benefit of investing in an endowment plan is that the returns are equivalent to fixed deposits. Under the endowment plan a death benefit is provided to the nominee in case of untimely demise of the life assured during the policy tenure. As compared to ULIPs, endowment plans are less risky.
  • Money Back Plans: Money Back plans are also a type of life insurance plan. These plans provide dual benefits which are life cover and retrieval of money at regular intervals throughout the policy tenure. Money back plans are suitable for people who require funds to fulfill their short-term financial needs and goals such as funding a child's education or purchasing a house/car. A percentage of the sum assured is provided to the life assured at regular intervals as survival benefits. In case the life assured survives the entire policy tenure a maturity benefits after deducting the regular payouts shall be provided to the life assured. Under this plan a death benefit regardless of the regular payouts made during the policy tenure shall be provided to the nominee in case of an untimely demise of the life assured.

Factors To Consider While Investing In A Savings Plan

Before you invest your money into a savings plan you must consider a few things which can help you choose the best suitable savings scheme or savings plan for yourself. Below mentioned are factors to consider while investing in a savings plan.

  • Risk Appetite: It is very important to determine your risk appetite before you invest your money in anything. Your age, profession and other personal factors determine your risk appetite. At an older age there is not much scope of investing your retirement fund into high risk savings plans. At an early age you can bear the risk of investing in a high risk savings plan. Unit Linked Insurance Plans are one such high risk investment plan that people can invest in. Unlike ULIPs, endowment and money back plans are low risk savings plans which are best suitable for a person who has low risk and prefers to have guaranteed returns even though both endowment and money back plans generate low returns.
  • Financial Goal: Financial goals of a person play an important role in financial planning. Before investing your money into a savings plan you should know about financial goals which can create a corpus for your retirement or create a corpus to fund your child’s future financial requirements. Your financial goals can help you determine the type of savings plan, tax savings options and amount of savings funds..
  • Features of the Plan: Different plans have different purposes and different features. Hence, it is very important for you to choose a savings plan that will help you achieve your financial goals and help you grow your corpus. Some savings plans offer partial withdrawals and let you grow the remainder for good returns. Some savings options also provide life cover along with an opportunity to grow your corpus like ULIPs, endowment and money back plans. Under endowment and money back plans a bonus is declared by the insurance company based on the insurance company's performance in the market.
  • Investment Time Period: Certain savings plans offer long investment horizons and play a role of tax savings option for a person. ULIPs are a great way to grow your corpus over a period of time. Under ULIPs the investors get the flexibility to increase the investment amount. Endowment plans are also a good choice for investing your money into as under an endowment plan additional bonuses (if any) are declared upon the insurance policy at the end of each policy year on the basis of performance of the insurance company.
  • Cost and Charges of the Plan: It is very important to understand the cost and charges involved in the savings plans you wish to invest your money into. Some savings plans have less charges and provide partial withdrawals.

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