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Exploring Difference Between Retirement Plan, Savings Plan and Investment Plan

Updated On Aug 01, 2021

When looking for life insurance policies, people find a varied range of options to choose from. If completely unaware of the various life insurance terms and concepts, most people get confused and end up buying the wrong plan. If you too are facing a similar situation and cannot find the one to choose from between retirement plan, savings plan, and investment plan, read along to know the difference between the three. 

Meaning of Retirement Plan, Savings Plan, and Investment Plan

  • Retirement Plan - A retirement plan gives benefits after retirement.
  • Savings Plan - A savings plan helps in saving & earning assured returns. 
  • Investment Plan - An investment plan provides insurance benefits along with returns. 

Difference Between Retirement Plan, Savings Plan and Investment Plan

The key differences between retirement plans, savings plans and investment plans based on features and benefits are:

  • Coverage - In terms of coverage, a retirement plan provides security up to 100 years and after the death, the payout is given to the family members. While in a savings plan, one gets the assured returns, in an investment plan, one receives the returns from the investment along with insurance benefits. 
  • Benefits Received - A retirement plan gives guaranteed death benefit whereas a savings plan gives assured returns for a fixed premium for a few years. On the contrary, an investment plan helps in generating more wealth from savings.
  • Premium - While a retirement plan requires you to pay annual premiums until retirement, a savings plan requires a fixed premium payment for a few years. In the case of an investment plan, an option to select the premium payment frequency is provided. 
  • Tax Benefits - Premium paid under a retirement plan is exempted from tax up to a maximum of Rs. 1 Lakh. Keep in mind that the withdrawals and payouts are not tax-free. In case of investment plans, one can claim deductions. Moreover, the amount received on policy maturity is fully exempt from tax. 

Now that you are aware of the three insurance policy types and have an understanding of the differences between the three, make sure you go ahead and make an informed selection keeping your as well as your family’s needs in mind. 

Keep in mind that while the retirement plan will keep your family financially secure even if you are not there to support, a savings plan will give you both life insurance and guaranteed returns to strengthen your financial condition. It would be up to you to add riders to enhance the cover and reap more benefits in case of your savings plan. Last but not least, your investment plan will come with the facility of partial withdrawals and the option of choosing to receive maturity benefits in a lump sum form or installments. 

So, what are you waiting for? If still having doubts about your ideal choice, get in touch with one of our InsuranceDekho experts to get your concerns resolved.

You May Also Like to Read: National Pension Scheme (NPS) Quick Guide

What are Retirement Plans? How Do They Work?

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.       


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