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5 Myths about Saving Plans

dateKnowledge Centre Team dateApril 29, 2021 views91 Views
5 Myths about Saving Plans

As the primary breadwinner, your family’s financial goals and safety are your first concern. You would want to ensure that your family can achieve their goals like a child’s higher education and marriage whether you are there or not.

You have the option of investing in multiple saving plans from life insurers to fulfil both the investment and safety needs of your family. To use these saving plans effectively you need to have the correct information about them.

However, there are many popular myths about life insurance saving plans which may stop you from maximizing your benefits from them. Five of these popular myths are explained below:

Myth #1 Saving Plans do not Provide Sufficient Life Cover

Savings plans are built to allow you a safe mode for achieving your financial goals. So, when you use a savings plan to achieve your financial goal, the plan protects the goal adequately.

For example, you aim to build a corpus of Rs. 40 lakhs for your child’s higher education goal. If you use a savings plan to invest in, it may offer the following:

  • Help you accumulate Rs. 40 lakhs with regular contributions
  • Keep your corpus safe from market volatility
  • Protect your child’s goal from the risk of your early demise

These benefits mean that your child has the assurance of achieving the level of higher education you have planned for her, even when you cannot be there.

Myth #2 Saving Plans are only Tax-Saving Tools

Tax-saving could be a popular reason for investors’ choice. But tax-saving is one of the many benefits life insurance offers and not the primary benefit.

Also, any savings plans meant to only save tax would perhaps not offer you substantial other benefits, such as:

  • Life cover
  • Guaranteed Bonus additions
  • Wealth boosters
  • Options to invest in different asset classes
  • Automated portfolio management option

You can receive one or more of these benefits depending on the savings plan you choose. For instance, Invest 4G is a unit-linked insurance plan or ULIP which gives you the option of investing in equity and debt funds. At the same time, if you stay invested long enough, the plan will also offer a bonus to boost your portfolio.

As a matter of fact, the best savings plans help you achieve your financial goal and at the same time increase the protective umbrella of life cover for your family.

Myth #3 Saving Plans are Expensive to Invest in

Saving plans, especially online savings plans are almost inexpensive. First, to start investing you don’t have to be earning millions and have a great savings ratio. Even if you are on your first payroll getting about Rs. 20,000 and have a savings ratio of 10%, you can start with a saving plan:

  • Guaranteed Savings Plan from Canara HSBC Oriental Bank of Commerce Life Insurance needs only Rs. 1800 a month to start
  • Invest 4G ULIP plan, which gives you the option to invest aggressively, starts with only Rs. 2200 a month

As for the expenses within the plan, they are also very low. For example, Invest 4G only applies a Fund Management Charge on your portfolio which is capped at 1.35% of the folio value.

Myth #4 Saving Plans are for Wealthy Investors

This cannot be farther from the truth. Given the fact that most savings plans are safe investments, it makes more sense to use them when your risk appetite is low. This may happen in the following cases:

  • Your income and earning potential is low
  • You want to preserve your wealth for a specific purpose

In other words, when you have wealth, you will need savings plans to preserve wealth. Whereas, before you are wealthy, you need to use savings plans for building that wealth. Also, as mentioned in another point, you can start investing in a savings plan with just Rs. 1800 p.m.

Myth #5 Saving Plans Offer No or Little Benefits

If nothing else, savings plans will still offer the following two benefits:

1. Added financial protection for your family in case of your early death

2. Safe option to invest in your family’s future goals

The best savings plans in INDIA, however, will offer even more benefits. To name a few, savings plans from Canara HSBC Oriental Bank of Commerce Life Insurance offer goal protection options, multi-asset investment option. Plans like Invest 4G even let you decide on a passive portfolio management strategy if you are an aggressive investor.

Invest4G

The goal protection option is one of the unique benefits of savings plans. This option allows your family and dependents to achieve their goal with full financial support even when you cannot be there.

The insurer invests all the due premiums in the policy in the case of your demise within the premium payment term. Meaning, the investments into your family’s goal continue after your death, and they will receive the maturity value you originally intended.

Thus, the best savings plans in India offer a lot more benefits than simply insurance or investment.

Myths Hold You Back

Myths, or misinformation about investments can restrain your financial wellbeing, and keep your family vulnerable. Thus, it’s better to discover the truth than to believe in hearsay and opinions.

Investments are tools, if you use them right you can achieve much more than your investment goals, and keep your family’s future safe as well.

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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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