India is a land of diversified culture and traditions. However, no matter from which part of the country you are, there is a common thread in our DNA. We all are programmed to save money for the future. Though we are not given financial education in school, every child, at some level, knows the importance of planting a tree today and enjoying the benefits in the future. The saving options may have changed over generations, but at the core, you need a savings option that secures the future of your loved ones.
What Are Savings Plans?
You save to achieve your short and long-term goals. Savings plans are life insurance plans that give you an option to create a huge corpus over time to meet your future needs. The savings plans are created to help you get into the savings habit.
These plans are designed to reward you for your commitment to saving regularly and for a long time. In addition, they also offer insurance coverage which gives you security in life.
Three Popular Savings Plans by Canara HSBC Oriental Bank of Commerce Life Insurance
The top three savings plans offered by Canara HSBC Oriental Bank of Commerce Life Insurance are:
|Invest 4G ULIP Plan||Guaranteed Savings Plan||Guaranteed Income4Life|
|A Unit-Linked Insurance Plan to help your money work harder.||A savings plan that offers you guaranteed benefits on maturity.||The plan offers you guaranteed benefits and regular income.|
|Comes with equity and debt portfolio investment options.||You can choose your investment and growth horizon.||Is best for generating a reliable regular income post-retirement.|
|You can choose the type of funds you want to invest in, depending on your risk profile.||Returns are not dependent on the capital markets.||You can receive the regular income for 10 years or lifelong depending on the investment options you picked.|
Five Features of Savings Plan by Canara HSBC Oriental Bank of Commerce Life Insurance
These three savings plans from Canara HSBC Oriental Bank of Commerce Life Insurance, have a range of features you can use. These features allow you the necessary investment flexibility you need to meet your financial goals.
Here are five hidden features of the above three saving plans that you should know:
1. Goal Protection
Your goal is to protect your family financially under all circumstances. The goal of savings plans is the protection of your goals. If you pay your premiums on time, you receive a lump sum value on maturity that helps you complete your goals.
But, in case of your early demise, the investment in the goal may remain incomplete, affecting your family’s chance of meeting the goal. However, these three saving plans can help your family meet these goals even after an incomplete investment.
Assuming you started investing Rs. 2 lakh a year in your child’s higher education goal. You will invest for the next 15 years and your goal is to build a corpus of Rs. 45 lakhs at the end of this tenure. However, unfortunately, you pass away in the fifth policy year, after investing only Rs. 5 lakhs in the plan.
The investment is far from sufficient to grow to Rs. 45 lakhs in the next 10 years. But, if you opted for a goal protection option within the plan, upon your death, the plan would pay the life cover sum assured to your family, i.e., they will receive Rs. 20 lakhs immediately.
Also, the plan will invest all the remaining premiums on your behalf, until normal maturity. Thus, giving your family the intended maturity value.
2. Tax-Free Maturity Value
One important aspect to evaluate while doing any investing is taxation. If the income you earn from your investment is taxable, the taxes will eat a part of your returns on maturity. The savings plan is a long term plan, and you receive a decent size corpus on maturity.
In these savings plans, you don’t have to pay any tax on the maturity amount. You get to use the whole amount received for your goals.
The payment received from a life insurance plan is exempt from tax under section 10(10D) if the investments follow a simple rule:
“Annual premium investment in any policy year does not exceed 10% of the life cover sum assured in the policy”
So far as your investments into the saving plans follow this rule, your maturity value remains tax-free.
3. Limited Investment Period
With age, your responsibilities and so your expenses increase. To meet the multiple responsibilities, you would want to continue investing in the new goal every few years. The limited investment period option allows you to free up your investment from one goal and focus on another after a short period of investment.
For example, you can choose to invest for only five years towards your goal of purchasing a house. After that, you will redirect your savings to other goals, while your home buying corpus continues to grow.
The cost of your child's education will increase, and there will be other mandatory expenses that are unavoidable. One of the best features of Invest4G, Guaranteed Saving Plan, and Guaranteed Income 4 Life is that these plans let you choose your policy term.
So, you have the flexibility to decide for how many years you want to pay your premiums and will not be tied up until maturity.
4. Lifetime Plan
You can use any of these plans for lifetime coverage and even plan to leave a legacy for your family after your natural demise. The Invest 4G and Guaranteed Income4Life savings plans have the option for coverage till the age of 99. Here’s how lifetime coverage will work for you in the two plans:
a. While the ULIP plan can continue to grow your invested corpus, you can:
- Stop paying the premium once there is an adequate corpus
- Start withdrawing systematically to create a post-retirement pension
- Continue investing in the plan to build a large corpus for family legacy to the next generation
b. Guaranteed Income4Life plan continues to provide regular income to you until your natural demise. If you held the plan jointly with your spouse, your spouse would continue to receive the income after your death.
5. Loan Against Policy
You invest in savings plans for your long-term goals, mostly. However, you may require funds to meet your short-term needs. These saving plans acquire cash value which increases over time. While you will receive the maturity value at the time of maturity, what can you do if you need the money a few years before that?
For such situations, you can borrow money at a low rate of interest against the policy and fulfil your need. The policy will continue in the meanwhile, and you can either repay the entire loan before maturity or the amount is deducted from the maturity value with interest.
Thus, the savings plans from Canara HSBC Oriental Bank of Commerce Life Insurance can help you look after multiple financial needs. All you need to do is to know your savings plan well and use the right features.