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Want to Give A Perfect Start To 2021? Consider These 4 Savings Plans

dateKnowledge Centre Team dateDecember 05, 2020 views87 Views
Want to Give A Perfect Start To 2021? Consider These 4 Savings Plans

This gives a chance to your home-grown “family” experts to hold court more effectively. Towards the end of the year one topic of conversation definitely veers towards tax, savings and insurance. Many points of view emerge, and you might get lost in the various options being discussed.

One reason contributing to the confusion is that many know their favourite option very well and not as much the others. So, if you follow the financial advices of your friends and family your portfolio will be more suitable to cater their needs rather than yours.

Thus, make sure to identify and acknowledge your financial needs before selecting the investments. Here are four best options for you to consider based on your financial goals.

These four options can cater to either multiple goals or very specific goals for you:

1. Guaranteed Savings Plans

Guaranteed savings plans are, as the name suggests, plans with guaranteed maturity values. You can estimate the maturity value of the plan right at the beginning of your investment. These saving plans are best option for long-term but very important goals, where you need a specific sum of money.

Since life insurers provide guaranteed savings plans, you can expect the plan to have following features and benefits as well:

  • Life insurance cover
  • Tax benefits under section 80C and 10(10D)

Apart from these benefits, the best guaranteed savings plans also offer the guarantee of achieving your goal. For example, Guaranteed savings plan from Canara HSBC OBC life insurance has the goal protection option. This option allows your family to:

  • Receive the life cover sum assured immediate upon your untimely demise
  • Receive the intended maturity value from the plan as if you were always there with them

Goal protection option ensures that your investment continues even after your demise, and your family receives the maturity value you intended. This savings plan can be your best option for saving towards marriage and higher education goals of your children.

2. Unit Linked Insurance Plans (ULIPs)

ULIPs are one of the most flexible and useful investment options of modern times. If you are the kind of person who is always setting aggressive goals and goes all in to reach the gaols, this option may just be the right one. You have the freedom to choose whether you want to invest in equity or debt or balanced liquid funds.

You also have the option of managing your asset allocation yourself or choose an automatic strategy to work for you. If you want to achieve large long-term financial goals, automation is the best way forward. Automated strategies will keep your portfolio safe from sentimental errors we as humans are often prone to.

Apart from the investment strategies and automation, the best ULIP plans such as Invest 4G from Canara HSBC Oriental Bank of Commerce Life Insurance also offer the following:

  • Goal protection option, where investment continues even after your early demise
  • Bonus additions for long-term investors

The best advantage of ULIP investment is that you get the tax benefit regardless of which asset you are investing. Also, going forward, all your partial withdrawals are tax-free after the lock-in period of five years. So, you can also think of using ULIPs as your post retirement income option.

3. New or National Pension Scheme (NPS)

National Pension Scheme (NPS) is a government-sponsored pension scheme. Though initially launched for government employees only, now it is open to all Indian citizens between the age of 18 and 60.

If you want a perfect retirement savings solution NPS is second only to a ULIP plan in investments and tops the tax benefit scale. If you use NPS Tier-1 account for your retirement savings you have the following benefits:

  • You can redirect your employer’s retirement contributions to NPS
  • Full portability means your NPS account number is with you for lifetime, regardless of how many times you change the employer or employment
  • Claim additional tax deduction of up to Rs. 50,000 under section 80CCD (1B)
  • Enjoy automatic portfolio management based on your age (highest equity allocation of 50% which gradually reduces to 0% at retirement)

There are two main categories in the NPS: Tier I and Tier II. Everyone who joins the NPS comes under Tier I and Tier II has different options. Many options available from banks and financial institutions for NPS accounts for retirement and additional tax savings.

Even if you do not need the tax benefits you can still enjoy growth of your investment with Tier-2 accounts.

4. A Whole Life Term Plan

A whole life term plan is a term insurance policy that can continue to cover your life up to 99 years of age. Whole life term plan is one of the best long-term plans to offer financial estate to your next generation. This plan allows you to automatically convert your normal term insurance cover into an estate if you survive beyond 60.

While you have the option of paying premiums throughout the entire life, you can opt for premiums to be paid only till retirement, i.e., 60 years of age. Your life cover, however, will continue till you are 99 years old or your natural death.

This option has all the tax benefits available to a term life plan under section 80C and 10(10D).

The above four options can cater to – your long-term life goals, wealth accumulation goal retirement goal and estate transfer goal. All four option allow you to invest as per your risk appetite and fund needs in future.

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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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