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All You Need To Know About Guaranteed Savings Plan

dateKnowledge Centre Team dateJanuary 12, 2021 views234 Views
All You Need To Know About Guaranteed Savings Plan

When it comes to life, one can never plan enough for all its ups and downs. We often aim to achieve various milestones in our lives. However, such aspirations may require a large amount of money. This may include everything - from marriage to a child's education. If you like to plan and have enough monetary resources in hand for supporting your future needs, you must know about the Guaranteed Savings Plan offered by Canara HSBC Oriental Bank of Commerce Life Insurance.

Planning for the financial needs that may lie ahead helps you stay resilient. Each of us wish that our family should never face any financial hardships in our absence. Through regular savings, you can ensure that you have a safety cushion even when you cannot procure enough funds.

People usually believe that term insurance plans are the to-go options as it helps them save money along with various other benefits. With the flexibility provided by a guaranteed savings plan, you can save money while being assured that you will get returns, no matter what. There is no clause in the savings plan such that if the policyholder outlives the plan, they will not get any benefits. This makes it a much safer and feasible option as compared to other term insurance plans.

What are Guaranteed Savings Plans?

Guaranteed Savings plans are usually non-participating plans that have an endowment assurance at a fixed amount. You will need to pay the premiums for a fixed period. Once the plan matures, you will receive the benefits. With a savings plan, you get an assured sum of all your premiums paid at the end of the plan's term with other additions.

These additions include a fixed rate of interest added each year during the savings plan term. Along with interest, which is fixed at the commencement of the plan, the bank also offers a maturity bonus, which is a fixed amount of lump-sum money added to the final amount at the end of the term.

The savings plan is also covered under the tax benefits criteria, as explained in the Income Tax Act, 1961. Those who opt to set up a savings plan can avail of the tax benefits as per current income tax laws prevailing in the country.

When getting the savings plan, you will need to set a time duration after which the plan will be considered mature. It may vary from 7 to 18 years, as per the preference of the policyholder.

After the plan's maturity, the policyholder or the beneficiary will receive the final amount that will be the sum of all the premiums paid and the rate of interest calculated.

Each bank or service provider has its own set of rules for a savings plan. The minimum age ranges from 0 (zero) to 60, while the maximum age ranges from 18 to 75.

In case of a sudden death, the nominee can get the returns calculated as per the number of premiums paid by the policyholder.

Benefits of Guaranteed Savings Plan

Various benefits are assured with the guaranteed savings plan. These may vary slightly from one insurance provider to another. You can customize and choose the plan that provides the benefits, which address your current and future financial needs. The key features and advantages of a savings plan have been listed below.

  • Premiums

    You can choose to pay premiums over some time or at a single shot. These options are provided to ease the burden on the policyholder. Suppose, you do not want to face the hassle of remembering to pay the premiums at regular intervals. In that case, you can decide to pay the complete sum in a single payment.

  • Policy Term

    Choose the term that suits your needs. If you think that you will need your savings soon, you can select the seven-year term savings plan. For long term savings, you can extend your policy to 10 or more years.

  • Guaranteed Maturity Benefits

    Under the guaranteed savings plan, you are assured of getting benefits upon the maturity of the plan. The advantages will be the same as the assured sum that was decided before the planned commencement. The maturity benefit is applicable and payable upon the policyholder's survival past the end of the term.

  • Death Benefit

    Many banks and service providers also ensure a death benefit clause under their savings plan. The benefit is provided to the beneficiary if the policyholder has a sudden demise. Moreover, the policy should be ongoing or not matured. In such cases, the nominee of the plan receives a sum assured upon death. The sum has a much higher interest rate compared to a traditional life insurance policy.

  • Trial Period

    If a person is not satisfied with any clause or terms and conditions of the savings plan, they can cancel the policy and return the documents within 15 to 30 days of its commencement. If the policyholder returns the documents within the applicable cancellation period, the bank will return its premium without any deductions.

  • Loans

    Under the savings plan, you can also opt to get a loan. Once the policy acquires a surrender value, you may avail the loan facility. The amount of loan available with the savings plan varies from bank to bank and policy sum. In a Guaranteed Savings Plan, the minimum loan value that can be availed is Rs. 20,000 and the maximum is 80% of the prevailing surrender value.

  • Grace Period

    Various banks also provide a grace period of 30 days. The grace period means that the plan's premium can be paid under 30 days for annual, half yearly and quarterly modes policies. During this period, no fine or deductions are made by the bank.

Other Features of a Guaranteed Savings Plan

Along with the benefits listed above, there are other essential features of a savings plan that may make it a perfect option for you to start saving up for future financial needs. These are provided to ensure that the policyholder is not bound under the rules.

  • Missed Premiums

    Suppose you discontinue paying premiums after at least 3 years of policy years. In that case, the plan will be considered as paid. The interest rate and the final sum will be calculated as per the paid premiums before their discontinuation.

  • Discontinuation of Policy

    If you need to discontinue the plan, you will get as much as the saving plan's surrender value. The clause will only be applicable if the policy has crossed the 3 years mark.

  • Revival

    If you want to revive a savings plan that you discontinued not more than 3 years ago, then the bank or the insurance provider will accept your request. The terms and conditions of the revived policy may vary from the initial one.

Documents Required for Guaranteed Savings Plan

You have now understood how a guaranteed savings plan works. If you are considering one, you will need to submit the following documents to the bank or insurer. Additional documents may be required or asked for, depending upon the regulations.

  • Application form or Proposal form
  • Medical documents that has a detail of your medical history
  • Address proof
  • Identity proof
  • Occupation and salary proof
  • Other KYC documents

What to Consider When Comparing Various Banks and Insurance Providers for Guaranteed Savings Plan?

Various factors can make saving plans different from the other. While you are doing your research, you should consider these facts to ensure that you select what meets your financial requirement.

  • Minimum age criteria
  • Maximum age criteria
  • Polity term
  • Premium paying term
  • Yearly premium
  • Sum assured
  • Additional benefits along with sum assured such as maturity benefit and guaranteed addition

For anyone who has just joined the taskforce and received their first salary, a savings plan may not sound like a necessity. However, whether you are just an intern or have been part of a company for years now, savings are something that you should not overlook.

These can act as life saviors during the difficult times of life. Consider various savings plans available and choose one that will help you and your family address any financial shock that may come up in the future. You can take the help of a consultant or refer to various comparison websites to select the best one for you.

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Frequently Asked Questions

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 you invest in this savings plan. If capital protection is your aim, then traditional insurance plans such as Guaranteed Money Saving Plan should be suitable for you.

Who should invest in a Savings Plan?

If you are looking for a guaranteed income plan, then saving plans should be on your list of investments that you are planning to make. 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. Saving plans are also ideal for people who are risk-averse and want to accumulate funds through relatively safer mediums. These saving plans inculcate financial discipline in policyholders which make them crucial for every portfolio.

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. Choose an income plan based on your financial circumstances to stay afloat.

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What is the difference between saving and investing?

Saving is the money that you keep aside for emergencies or for buying any big-ticket item. Investing means growing or multiplying the wealth that you have by buying savings plan, or any other assets. Buying a savings plan will help you in achieving your investment goals such as retirement, your child’s higher education or marriage, or for buying a new house.

Which savings plan is best 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. Also, Guaranteed Income4Life is also another savings plan that you can consider for building your retirement corpus as it acts as a guaranteed income plan that will provide you maturity benefits to manage your post-retirement expenses.

Which savings plan is best for long-term goals?

Smart Goals Plan is a savings 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. Canara HSBC Oriental Bank of Commerce Life Insurance offers a wide variety of saving plans that you can invest in as per your risk appetite and investment goal.

Which savings plan is suitable 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. Monthly Income Advantage Plans are also a good option if you are planning to invest in a savings plan for your girl child.

Where should I invest my money?

You should spread your investments across financial instruments. However, having the best savings cum guaranteed income plan in your portfolio is extremely important. Savings plan ensures financial stability and also helps in fulfilling short, medium and long-term monetary goals.

What is a monthly income advantage plan?

A monthly income advantage plan ensures that you lead a stress-free life with your loved ones as it provides a life cover along with giving you guaranteed monthly income. In short, it is a life insurance and income plan that will financially secure commitments made to your loved ones. Canara HSBC Oriental Bank of Commerce Life Insurance Guaranteed Income Advantage Plan is a monthly income advantage plan that provides life cover for the entire term while you pay premium only for a limited period.

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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 in a savings plan. Invest in an income plan as early as possible to build a significant corpus that will later help you in life. Ensure that you buy the best saving plan in India that can be aligned with your investment goals.

Should you use a savings plan for retirement planning?

Yes. Retirement planning is one of the most important financial decisions of our lives. The best saving plan offers 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. Buy a monthly income advantage plan that will generate a steady source of income for you to take care of both long-term and short-term financial goals.

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 an income plan, it always pays well to start early. The earlier you start investing in a savings plan, the better. When you start investing early, the appreciation in capital is significant. Even a small amount invested in the best saving scheme for a long time can give substantial returns due to compounding. Buy the best savings plan as soon as you start earning to achieve all your milestones on time.

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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. Buy 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. Consider investing in a monthly income advantage plan to assist you in fulfilling your financial goals.

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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, which makes them a good investment choice for investors looking for income plans.

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