A savings plan is a variant of a life insurance investment policy that provides several possibilities to save your money for a better future and allows you to grow your funds in a completely disciplined and systematic manner.
Through long-term investments in a savings plan, you can easily make sure that you’re prepared enough to meet the daily financial needs of your family for the future. It also allows you to fulfill your own financial goals like starting a business.
Savings plans include several amazing features and are also considered to be one of the most prominent tax-saving investments in the market.
With that said, let us take a look at some of the best long-term benefits of a savings plan, followed by a rundown of the most promising savings plans in India.
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Broader Entry Age and Flexible Tenure
Savings plans offer you a very broad entry age bracket, in addition to a flexible tenure for investments. As per your current risk appetite, you can tailor the savings plan to suit your needs and minimize the risk of loss.
If you’re in your 20s or 30s, you can take higher risk in exchange for greater returns through savings schemes like Unit Linked Insurance Plans. On the other hand, if you’re rather a conservative investor, you can opt for money-back or endowment plans instead.
Furthermore, as savings plans usually offer mid-to-long-term policy tenure, you can easily accumulate a large corpus of funds before your policy ends. This will surely help you build a financial cushion for your family in the long run.
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Dual Benefits of Life Cover and Savings
A lot of savings plans such as ULIP plans provide combined benefits of returns from market-linked investments and coverage from life insurance. This makes them a highly preferred option for long-term monetary savings in India.
Moreover, there are also several additional riders that you can choose as per your preference to enhance the coverage of your policy to a great extent. It also allows you to cover your spouse in the same policy with the benefits of your preferred riders.
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Long-Term Tax Benefits
The best savings plan is the one that also acts as great tax saving investments, along with an investment plan. Through a savings plan, you can save taxes on the premiums that you pay towards your insurance cover and savings for up to a maximum limit of Rs. 1 Lakh.
This is as per the laws of section 80C under the Income Tax Act of India, 1961. It provides both death benefits and maturity benefits of the savings plan without any kind of taxes, as per section 10D of the Income Tax Act. That’s why they’re also considered great tax saving tools for the long term.
Now that you have a brief understanding of the long-term benefits of a savings plan, let us take you through some of the best savings plans available for you to choose from in India.
Best Savings Plans in India
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Direct Equity
As you may already know, the stock market requires a keen learning curve that might not be a cup of tea for everyone. Keeping in mind that the stock market provides no guarantee of returns, only adds to its difficulty for you to find the right stock as well as time your entry and exit.
The best thing about direct equity investment plans is that they’re known to provide returns higher than the inflation rate as compared to various other savings plans available in the market. It even allows you to diversify your portfolio for additional safety.
If you want to invest in direct equity, you need to open a Demat account through your nearest bank or brokerage firm. There are also some other forms like 3-in-1 accounts that offer additional benefits over regular accounts.
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Canara HSBC Oriental Bank of Commerce – Invest 4G Plan
Canara HSBC OBC is a unit-linked insurance plan that provides you the benefits of both life insurance and savings. It features an unparalleled match of portfolio management options along with various flexibilities to provide you complete access to its efficiency.
This plan can be customized to align with your savings and insurance requirements. It also allows you to choose from different payment modes such as payment for limited years, only once, or the entire policy term.
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Debt Mutual Funds
Investors who want to gain steady returns through their investment can gain various benefits with the help of debt mutual funds. These are not only less risky than equity funds, but also allow you to invest your capital in fixed-interest generating securities.
These may include securities like commercial papers, treasury bills, corporate bonds, government securities, and a lot more types of money-making instruments. It is suggested to study the risks associated prior to investmenting.
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Bank Fixed Deposit
Bank fixed deposits are considered a lot safer than mutual funds and equity investments which make it a preferred investment choice for the majority of Indians. It works under the norms and guidelines of the Deposit Insurance and Credit Guarantee Corporation.
This ensures that each depositor is also insured up to a maximum limit of Rs. 5 Lakh. It took effect on February 4, 2020, and applies to both the principal and interest amount. You can choose from several interest payment options such as monthly, yearly, half-yearly, quarterly, and cumulative.
All the interest that you earn through bank FD will be added to your income and will be taxed as per your earnings slab. Therefore, for a long-term and secure saving, you can choose bank fixed deposits.
The Takeaway
With a good savings plan, you can make the most out of your financial investment and grow your money for a better future. These investment instruments not only act as a good savings option but also act as great tax-saving investments. Therefore, make sure you check out the plans available above.
