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Importance of Guaranteed Savings Plan during a Pandemic

dateKnowledge Centre Team dateJanuary 12, 2021 views167 Views
Importance of Guaranteed Savings Plan during a Pandemic

Like everyone, you too might be having some important goals that drive you like providing the best education to your children, financial security to your family or getting your children married. But how will they be fulfilled if something happens to you? Who will fulfill them? A Guaranteed savings plan comes to your rescue. In such times of uncertainty, it is essential to secure the future of your loved ones so that these goals get fulfilled even if something happens to you, and your loved ones don't have to suffer. With a guaranteed savings plan, your family's future is secure.

Financial Lessons from the Pandemic

The global health pandemic is one of the biggest crises of the century. This pandemic has shown a mirror to everyone, exposing all the mistakes we were making till now. Around 122 million people in India lost their jobs and around 53% of businesses in the country have been affected severely. Most of the people facing such issues never focused on planning their money well and instead resorted to reckless spending, without thinking about the future.

If they had saved their money through a savings plan and various other policies, they would have been in a much better position now. Some of the lessons this pandemic has taught us about financial planning are:

  • Create a long-term financial plan

    This pandemic has made us realize that nothing is permanent. Our world is full of uncertainties that can severely affect us, and things rarely go according to our plans. Financial crisis can happen to anyone. Hence, long-term financial planning is important. Financial planning, while keeping your long-term goals, will not only build up your wealth but also help you weather future financial crises.

    However, be flexible in your approach. Financial planning is not a once in a lifetime thing; it is a continuous learning curve. Your goals will also keep re-aligning to your financial circumstances. Hence, make sure your current plan is in line with your goals through continuous evaluation. Regular evaluation of your investments will lead to long term benefits and help you mitigate risks

  • Keep aside emergency capital to be used in times of emergencies

    One of the best ways to ensure financial security during hard times is to keep aside emergency capital that can be used in need. Setting aside, emergency capital can not only help you save for a crisis but also aid in achieving your long-term goals. People who have their own business or those who have just entered the job market, should be more focused towards building an emergency fund because they might have to go through a financial crisis anytime. Thus, building their wealth steadily will lead to financial stability.

    One of the crucial factors to keep in mind while building emergency capital is guaranteed pay-out. Canara HSBC Oriental Bank of Commerce Life Insurance Company’s guaranteed savings plan, you can build emergency capital and provide financial protection to your family in any unforeseen circumstances. It also gives an increment in your wealth with guaranteed additional sums added to your policy every year according to the plan chosen by you.

  • Investing in a Guaranteed Savings Plan is essential

    This pandemic has shown us that unfortunate events can affect anyone irrespective of their socio-economic background. Last year, none of us knew that something like this was coming our way, but it came and created an upheaval in our lives.

    Everyone is equally affected. Hence, it's better to stay prepared instead of freaking out in times of trouble. Now we are aware that a savings plan is an essential commodity too and not just a tax saving option.

    Guaranteed savings plan provides full financial security in addition to tax benefits. The capital can be availed as a lump sum payment that ensures that your family's financial needs are met even in an unfortunate event.

What is a Guaranteed Savings Plan?

A Guaranteed savings plan refers to a non-endowment, non-participating life insurance plan. It helps you protect your life goals from casualties through a life insurance cover and creates a corpus by offering a guaranteed lump sum at maturity. These benefits are provided only if all the premiums are paid on time. Discontinuity in premium payments might lead to the cancellation of the savings plan policy.

It also facilitates regular savings and thus, helps you reach your goals faster. Also, it ensures that if something happens to you due to unforeseen circumstances, your family will be financially secure. The objectives you had for your family and loved ones will still be fulfilled without any hindrance.

Features of a Guaranteed Savings Plan

Some of the features of the guaranteed savings plan are:

  • Premium has to be paid for only a limited period even though life cover is provided for the full term.
  • Guaranteed benefits payable on maturity if all due premiums have been paid.
  • Multiple policy term options are available.
  • Complete freedom to choose a payment term that suits you the best.
  • High Premium Booster provided to ensure that you get extra benefits if you make a higher premium commitment.
  • Enhanced Protection provided for the family.
  • Through payment of lump-sum benefits on death, life insurance protection is provided.
  • Not necessary to pay remaining premiums on death and guaranteed benefits are payable on maturity (under Guaranteed Savings with Premium Protection Option).
  • Tax benefits provided under Section 80C and Section 10(10D), as per the Income Tax Act, 1961 as amended from time to time.
Canara HSBC Oriental Bank of Commerce Life Insurance Company’s Guaranteed Savings Plan

Canara HSBC Oriental Bank of Commerce Life Insurance Company provides an excellent guaranteed savings plan to assist you in managing your finances. You can choose the plan that you feel will fulfill all your objectives and help you reach your desired goal in the given time. Each plan comes with different benefits. The benefits provided with every plan are detailed below for your understanding.

Guaranteed Savings Option and Guaranteed Savings with Double Protection Option:
  • Maturity Benefit

    The insured will get a guaranteed sum assured on maturity, guaranteed yearly addition, and guaranteed loyalty on the policy's maturity. The policy will terminate on the payment of these benefits, and no further benefit will be payable.

  • Death Benefit

    If there is an unfortunate death of the life insured during the policy term, given that policy is in force, the benefit will be given to the nominee. The benefits include the sum assured on death and cumulative guaranteed yearly addition as on date of death. An extra amount equal to the ADB sum assured will be paid if you have chosen Guaranteed Savings with Double Protection Option of the Life Assured death occurs due to an accident. After paying these benefits, the policy will terminate, and no further benefit will be payable.

Guaranteed Savings with Premium Protection Option:
  • Maturity Benefit

    The insured will get a guaranteed sum assured on maturity, guaranteed yearly addition, and guaranteed loyalty on the policy's maturity. The policy will terminate on the payment of these benefits, and no further benefit will be payable.

  • Death Benefit

    If there is the unfortunate death of the life assured during the policy term, given that policy is in force, the benefit will be given to the nominee. The benefits include the sum assured on death, remaining future premiums need not be paid, and the policy will be in force for the remaining policy the term, the policy will continue to accrue guaranteed yearly additions. After paying these benefits, the policy will terminate, and no further benefit will be payable.

Some other benefits included with all types of saving plans are:
  • Loan Facility

    After your policy acquires its surrender value, you can also avail of the loan facility in this plan to meet your contingent needs. The minimum amount of loan that can be availed in this plan is Rs 20,000, and the maximum amount is 80% of the overall surrender value at the time of taking the loan. A loan can be availed for in-force policies only.

  • High Premium Booster

    According to the table given below the necessary sum assured available for a given premium will be increased by high premium booster %. if the annualized premium is more than Rs 30,000 (the upper limit of the first premium brand in the table given below). The High Premium Booster % will be applicable as per the table below:

Annualized Premium (in Rs.) High Premium Booster (as % of Basic Sum Assured)
20,000 to less than 30,000 Nil
30,000 to less than 40,000 4%
40,000 to less than 50,000 7%
50,000 to less than 75,000 8%
75,000 to less than 1,00,000 10%
Greater than or equal to 1,00,000 11%

This global pandemic is a wake-up call for all of us to seriously consider financial planning so that we don't have to face financial troubles if something like this happens to our family or us. These tough times need to be handled with patience and proper planning. Managing your money well will prepare you to navigate through bad times with ease. You never know what might happen during this pandemic, so it is better to be prepared for everything.

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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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