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Savings Plan: Usefulness and Importance of Renewal

dateKnowledge Centre Team dateJanuary 18, 2021 views178 Views
Savings Plan: Usefulness and Importance of Renewal

It is exceptionally crucial to save money for contingencies or secure finance for post-retirement in times. Besides, the need to increase the wealth for taking care of self and family is also inevitable. There is one smart way to improve the situation and cater to everyday financial needs. The government, banks, and even financial companies offer various saving plans for encouraging investors to invest their money and receive high returns. You have to check both the pros and cons of your plan before you make the final step of investing your money.

Since saving has been one of the first financial habits, the idea of “saving a little today to enjoy tomorrow” has become a motto. According to many, savings plans are the best investment plans in a country like India. However, if you have already started the journey, then you are at the right place! At the beginning of the financial journey, it isn't easy to figure out if the way you are following is correct or not. Also, there is a good chance that you're not sure whether to continue this journey or not.

If you are one of those who have already invested in a Savings Plan, then congratulations, you have chosen just the right path. In this article, we will talk about how a savings plan can prove beneficial for your family's well-being. We hope by the time you have finished reading this, you will want to renew your active savings policy. But before that, we will briefly discuss a savings plan and how it benefits an investor who is willing to save for the future.

What are Saving Plans?

Saving plans are generally life insurance plans that help an individual accumulate a reasonable sum of money for the future. Saving plans offer individuals an opportunity to accumulate, save, and invest funds to fulfil their future requirements. These plans have been designed in such a manner that it helps policyholders grow a structured and well-organized habit.

It will help you achieve your long-term and short-term financial goals by investing systematically. Also, you will gain the benefit of return in need of the hour. These plans are entirely investor centric. It provides features that help reach the investor's specific financial needs by making investment plans as per the suitability and risk appetite of an individual. Savings plans provide insurance where your family is protected in your absence.

The plan not only offers the benefits of wealth accumulation but also the advantage of insurance coverage. In case of any unfortunate death that will occur within the policy's tenure, the death benefit is given to the beneficiary of the policy.

Savings plans in India are mainly initiated by our Indian government, public sector banks, or the financial institutions. All the savings schemes are backed by our government, making this one of the most beneficial investors' advantages. Due to the government's support in this scheme, catering the scheme to complete security and the safety of the capital after interest is not an issue. Moreover, these plans are low-risk financial instruments; yet they offer a good return.

Types of Savings Plan

You will find lots of saving plans/schemes in India. Many of these schemes are backed by India's Government while RBI and SEBI regulate the others. A number of these plans are exempted from income tax. Here are some of the Savings Schemes provided by Canara HSBC Oriental Bank of Commerce:

Invest 4G Plan

It is a protection and savings centric Unit Linked Insurance Plan. With this plan, you can choose any protection suited for you and save for your life goals. Besides, it adds to your Wealth Boosters, Loyalty Additions, and returns the mortality charges when your policy matures, thus increasing your savings.

Titanium Plus Plan

With this plan, you can invest and protect your money to boost the savings. The plan is flexible so you can modify the investment asset as per the market conditions.

Guaranteed Savings Plan

A guaranteed Savings Plan helps you give assured returns with a lot of benefits. Also, the return is not dependent on the capital market fluctuations.

Smart Lifelong Plan

With this plan, you will get an option for wealth creation and it also provides life coverage that lasts up to 99 years of age.

Smart Life Income Plan

This plan helps you fulfil your loved ones' aspirations, without worrying about the finances. You can enjoy a life cover of 25 years with this plan.

Insure Smart Plan

This plan helps you save money for a particular life goal you have. With this, you have the freedom to pay premiums for five years and enjoy a live cover of ten years.

Future Smart Plan

The plan is a unit-linked child plan that will provide a long term investment opportunity for building a promising future for your child.

Grow Smart Plan

This life insurance plan will provide financial security to you and your spouse throughout your retirement.

Guaranteed Income Plan

This plan offers guaranteed benefits so that you can fulfil your dreams and meaningful life goals at different life stages without any interruption.

Easy Bachat Plan

With this insurance policy, you can save your money in a hassle-free way, thereby giving financial protection to your family at premiums that best suits your budget.

Smart Future Plan

The Smart Future Plan is a unit-linked plan that offers investors long-term investment opportunities to fulfil various family commitments.

  • Jeevan Nivesh Plan

    The Jeevan Nivesh Plan will help you plan and achieve your dreams in life and also meet any unforeseen financial emergency.

  • Money-Back Advantage Plan

    This plan will provide financial protection to your family by providing life cover and milestone oriented payouts. It will be done through guaranteed money back payouts and maturity benefit.

  • Guaranteed Income Advantage Plan

    This plan will look after your long and short term financial goals by offering guaranteed benefits as well as regular income.

    If you've already invested your money by any chance, let us explain the benefits of renewing the plans.

    Benefits of Renewing Saving Plans

    If you already have a savings plan in your belt, you are already in a good position from a financial perspective. Renewing your savings plans would mean more benefits and more money inflow, which means more secure your future.

Why is it advisable to renew your savings plan?

  • Continued security for the family

    Providing financial security to your family is the primary goal of any savings plan. However, if your plan provides a death benefit maturity and you do not renew it, it will lapse. Thus, your family will not receive the guaranteed benefit you paid for all this while. Not renewing your plan will nearly defeat the purpose of a savings plan.

  • Paid-up benefit

    You know about guaranteed savings plans and the benefits provided upon maturity. This is probably the sole reason why you may choose a savings plan in the first place. Now, instead of investing in some other schemes, you can renew your premium plan and continue to enjoy the benefits of the savings plan. Renewing the plan will give you an added benefit from your insurer. Besides, paying the premiums won't be demanding as you already have prior experience.

  • Avoiding extra costs

    When you first buy a savings scheme, the insurance company considers a lot of factors. It includes your age, family situation, medical history, etc. You do not have to go through a long process for opting a savings plan policy renewal. However, you might have to undergo medical tests again.

  • Tax benefits

    According to Section 80C of the Income Tax Act, the premiums an investor pays are tax-deductible. Given another reason why you should renew your guaranteed Savings Plan. Apart from this, the death benefit of the plan is free from tax according to Section 10(10D) of the Income Tax Act.

  • Long-Term Benefits

    Long-term investments can bag you a considerable sum of money. The minimum lock-in period for these plans is five years. It can go up to the age of 60 years. The amount to be received at maturity is high because the interest would be calculated based on the previous interest.

If you are thinking of investing in a guaranteed savings plan, then it's a wise decision to make. Browse through various savings plans offered by Canara HSBC Oriental Bank of Commerce Life Insurance to know which one best suits your financial goals.

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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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