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Are Saving Plans a Good Investment Choice for you?

dateKnowledge Centre Team dateMay 11, 2021 views57 Views
Saving Plans as an Investment | Best Saving Plans in India

The definition of Saving has evolved over the years from “putting aside” some money to “investing” the money so that it works hard and grows over time. The objective of saving has also changed because the fast-growing, increasingly educated Indian society is more aspirational than ever. It is natural to dream of a periodic vacation, offer the best possible education to children and lead a comfortable life before and after retirement.

When you have a family, you will also think of ensuring a steady income or some sizeable contingency fund to take care of your family if you are not around.

Saving Plans as an Investment Avenue

There are several investment options available across asset classes such as Gold, Real Estate, Fixed Deposits, Bonds, and so on. It is tempting to stay invested in one of them or all of them basis current market trends. However, the best savings plans, and the best saving schemes focus on financial goals and invest in assets that can match to achieve these goals.

Some of these objectives could be:

Liquidity

  • Are withdrawals (turning to cash) possible in case of emergency?
  • Does the value of asset changes very quickly and frequently (volatile)?

Movable and immovable assets such as Gold and Real Estate are highly illiquid and volatile. Selling off physical gold could be challenging, and real estate sale depends on buyer availability, market dynamics, etc.

While equity stocks could be easily turned to cash but suffer from frequent and significant changes in their value.

Taxation

You may want to look at options that offer you tax benefits when you invest or withdraw the amount.

  • Deduction of the invested amount
  • Exemption on withdrawals
  • Long-Term Capital Gains (LTCG) on maturity value or withdrawals

Learn what is long-term capital gain and how it works in India.

More tax-efficient investments will save your wealth from erosion due to taxes.

Risk-Return Category

Before you start parking your hard-earned money into an investment, you should know whether the risk is worth taking. For example,

  • How long can you stay invested? or How far is your goal?
  • Short-term or less than 3 years investments should avoid equity exposure
  • Long-term investment which are 5 years or longer must allocate to equity for a higher inflation-adjusted growth
  • What are your options to manage your investment risk in market-linked investments?

Financial Support for Family

You are expected to have a large term insurance cover to protect your family from the consequences of your untimely demise. However, you also have a few very important financial goals to meet on the way. While the term insurance will take care of the survival costs of the family, you can use separate life insurance plans to protect the goals. These plans will:

  • Help you build the corpus for the goal
  • Protect the goal from your untimely demise
  • Do it all free of taxes

Therefore, it is important to make the right investment choice and then stay invested for the defined term.

For example, Canara HSBC Oriental Bank of Commerce Life Insurance offers different insurance policies that provide life cover, guaranteed income stream, and guaranteed additions to Sum Assured. If you are exploring the best saving policy in India, you must consider these three insurances cum investment offerings:

1. Guaranteed Income4Life

Guaranteed Income4Life is a perfect investment plan if you are looking for an income stream to match a future expense. For example, if your child will turn 18 in 10 years from now and you want to pay his/her fees for a 5 Year integrated MTech program.

  • You can opt for Guaranteed Income Plan with a 10-year policy term
  • You will invest each year for the first 5 years
  • After the fifth instalment, the policy will continue without premiums for another 5 years
  • Starting the end of the 10th policy year your child will receive intended payments from the policy for the next 5 years.
  • You can also opt to receive the future regular income pay-outs as a lump sum calculated as the current value of the amount.

Protect Your Goal from the Unforeseen

The policy also offers some valuable additional features under the premium protection option. Premium protection will financially secure the goal in case of your death or disability within the policy tenure. Among other things:

  • The future premiums are waived off in case of untimely demise or permanent disability.
  • In case of untimely demise, the family will receive the sum assured immediately
  • The child will receive the fund value at the time of maturity-either in regular income streams or as a lump sum

2. Guaranteed Savings Plan

This plan is the best gift you can give to a new-born as a parent. You can start investing in the Guaranteed Savings Plan for a new-born meaning, you can start saving for the child’s future, literally from DAY 1.

If you opt for a 20-year policy term with a 10-year premium paying term for your new-born and invest Rs.1 lakh each year for 10 years, the policy can give you a lump sum return of approximately Rs.28 lakhs at the end of 20 years. (That is assuming you are 30 years of age at the beginning of the policy.)

This includes the guaranteed Sum Assured and guaranteed yearly/loyalty additions.

Saving Plan

Read what is sum assured in a savings plan.

3. Invest 4G ULIP

Expenses can neither be predicted nor estimated. For example, if a portion of your house gets damaged due to harsh weather conditions, you may have to quickly fix the problem. In another scenario, medical emergencies may cost money that is beyond the scope and limit of your current Mediclaim insurance. Having a guaranteed income in parallel can be useful on a rainy day.

However, if you are looking for wealth creation, Invest 4G ULIP is ideal, because:

  • You can invest in high growth equity funds that can give you better returns in the long run
  • Manage your equity-debt portfolio automatically without even looking at the plan
  • Withdraw from your corpus partially after the five-year lock-in period
  • Receive bonus units for long-term investment and a high premium amount
  • Protect the goal from your untimely demise
  • Automatically move all your equity fund to the low-risk debt fund in the last 4 years of the policy
  • Systematically withdraw your money from the policy in the final years of the policy

The right investment plans can help you create wealth, tide over temporary emergencies, and also lead a comfortable life. It is imperative that you think, explore, compare, and then stay invested in the right insurance policy that will give you great returns and above all, peace of mind!

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Frequently Asked Questions

How Savings Plans by Canara Help You?

Every person has a unique reason to save and invest. With ULIP savings schemes, the company caters to people seeking wealth creation through capital appreciation. Contrarily, the traditional plans can help you save for important life goals without worrying about the fluctuation in fund value. All major savings plan offers partial withdrawal facility that can help you take care of unplanned contingencies. With savings plans from Canara HSBC Oriental Bank of Commerce Life Insurance, you get adequate flexibility while investing and receiving the savings benefits.

Who should invest in a Savings Plan?

Savings plan require you to invest a pre-decided amount on a regular basis. People with a regular stream of income who require a lump-sum amount after a period should opt for a savings plan. Working professionals, self-employed people and businessmen should consider a savings plan to meet their long-term financial obligations. Savings plans are also ideal for people who are risk-averse and want to accumulate funds through relatively safer mediums. These plans inculcate financial discipline in policyholders which make them crucial for every portfolio.

What is saving plan?

A savings plan is likely to be different for everyone depending on the financial goal, risk profile, returns, and investment horizon. If you are young and want to save for your retirement, ULIPs like Invest 4G or Titanium Plus plan would be the best option. You are likely to create a large corpus by your retirement through market-linked returns. If capital protection is your aim, then traditional insurance plans such as Guaranteed Money Saving Plan should be suitable for you.

How much money should you put in savings each month?

The amount that should be invested in a savings plan each month depends on the income, existing financial obligations and the long-term financial goal. If you have a steady income, you should save at least 20% of your monthly income. It is not necessary to invest your entire money into a savings scheme as investments should be diversified. Ideally, you should aim to have a financial buffer of over 10 times of your annual income.

Read More
Saving plan for retirement

The Invest 4G plan with its multiple investment options and various portfolio management strategies for capital protection is an ideal saving plan for retirement.

Saving plan for future

The Smart Goals plan with its unique features such as modification of the sum assured partial withdrawal and fund switch can help you plan for your long-term financial goals.

Saving plan for girl child

The Future Smart unit-linked plan from Canara HSBC Oriental Bank of Commerce Life Insurance is the ideal savings plan for the girl child.

Where should I invest my money?

You should spread your investments across financial instruments. However, having a suitable savings plan in your portfolio is extremely important. It ensures financial stability and also helps in fulfilling short, medium and long-term monetary goals.

What is a good age to start saving money?

When you plan to invest in a financial product, it always pays well to start early. The earlier you start saving and investing, the better. When you start investing early, the capital gets adequate time multiply. Even a small amount invested for a long time can give substantial returns due to compounding.

Tax Saving Investment for retired mother

Savings plans are tax-efficient investment instruments. Samridh Bhavishya traditional savings scheme designed to ensure regular income after retirement is the best savings plan for retired mothers.

Should you use a savings plan for retirement planning?

Yes. Retirement planning is one of the most important financial decisions of our lives. Saving plans offer a host of features that may help you build your retirement corpus. Some of the saving plans like Guaranteed Income4Life offer guaranteed returns at policy maturity. Such returns can act as a regular income stream even after your retirement to help you stay financially stable.

Are saving plans beneficial for managing unexpected expenses?

Yes. Best saving plans in India offer partial withdrawal system that can be utilized during your rainy days. Being financially prepared to tackle such odds will help you manage any unforeseen expenses in a smooth manner.

How to save tax by using savings plan?

Saving plans are known for helping us achieve our financial goals. Best saving plans allow you to grow your wealth while providing life cover. Saving and investment plans are also beneficial for tax planning. Premiums of savings cum protection plans come with tax benefit under Section 80C of the Income Tax Act. Moreover, proceeds received upon the death of the policyholder or upon the maturity of the policy are tax free under Section 10 10(D).

What is the right age to start saving money?

When you plan to invest in a financial product, it always pays well to start early. The earlier you start saving and investing, the better. When you start investing early, the appreciation in capital is significant. Even a small amount invested for a long time can give substantial returns due to compounding.

Read More
How a savings plan can help in building your child’s education fund?

Saving plans help in building wealth over time against the investments that you make. Choose the best savings plan to build an education fund for your child. The best saving plan for kids offered by Canara HSBC Oriental Bank of Commerce Life Insurance eases the stress of planning your child's future by providing a lump-sum payout on the investment.

Read More
How Savings Plans by Canara HSBC Oriental Bank of Commerce Life Insurance can help you?

Every person has a unique reason to save and invest. With ULIP savings schemes, the company caters to people seeking wealth creation through capital appreciation. Contrarily, the traditional plans can help you save for important life goals without worrying about the fluctuation in fund value. All major savings plan offers partial withdrawal facility that can help you take care of unplanned contingencies. With savings plans from Canara HSBC Oriental Bank of Commerce Life Insurance, you get adequate flexibility while investing and receiving the savings benefits.

Read More
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