what do saving plans do not cover

What Do Saving Plans Not Cover?

Learn which exclusions apply to your savings plan and how to stay covered.

Written by : Knowledge Centre Team

2025-09-07

1036 Views

10 minutes read

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Uncertainties are inevitable in life. From sudden medical emergencies and job losses to long-term financial goals like children’s education or retirement, the future can throw unexpected challenges your way. However, you can stay prepared to face them with a savings plan. A savings plan is a life insurance policy that prepares you to meet unexpected future events, whether they concern you or your loved ones.

Key Takeaways

  • Savings plan combine protection and investment, but do come with defined limits.
  • Regular premium payments encourage financial discipline, helping you build a future-ready corpus for goals like education, housing, or retirement.
  • If the policyholder dies due to suicide (especially within the initial policy term) or illegal activities, the claim may be rejected.
  • Providing incorrect health or lifestyle details while buying the plan can nullify your coverage later during a claim.
  • If the policy lapses due to missed premiums or reaches maturity, coverage ceases, claims made after this period won't be entertained.

Need for Having a Savings Plan

Proper financial planning is the key to fulfilling your dreams and aspirations. Access to the large corpus in the future by dint of systematic saving and investment done at the time. Today's need to live a good and happy life has outgrown, and stashing money under the bed won't meet the needs. A savings plan is the need of the hour because:

  • Develop a Habit of Regular Saving: A savings plan encourages disciplined financial habits through regular premium payments, helping you systematically build a financial corpus over time.
  • Enjoy Bonus Benefits on Long-Term Investments: Most savings plans offer bonuses from the insurance provider as a reward for staying invested over the long term, adding extra value to your fund.
  • Avail Tax Benefits Under Section 80C: Premiums paid towards a savings plan are eligible for tax deductions under Section 80C of the Income Tax Act, 1961, reducing your taxable income legally.
  • Access Loans Against Your Policy: Savings plans allow you to borrow against the accumulated fund value, offering liquidity during financial emergencies without breaking your investment.
  • Get Life Cover Along with Savings: Though not as high as term insurance, the life cover included in savings plans adds an extra layer of financial protection for your loved ones.
  • Be Prepared for Unforeseen Expenses: Unexpected events like medical emergencies, accidents, or disasters can dent your finances. A savings plan helps cushion these shocks without derailing your financial goals.
  • Capitalise on Future Opportunities: With a robust savings plan, you’ll have the funds to seize unexpected but profitable opportunities like new business ventures or investment deals.

Also Read- Benefits of Saving Plans In India

  • Enjoy Extra Financial Security: In the rare event of a bank failure, your funds are still relatively secure. Many savings plans also include interest-bearing options, increasing your capital over time.
  • Let Your Money Work for You: A high-interest savings plan allows your money to grow passively, earning you additional income without active effort.
  • Build an Emergency Fund: Savings plans are a reliable source of emergency funding, providing quick access to money during unforeseen events like natural disasters or sudden income loss.
  • Support Your Retirement Planning: A savings plan can enhance your retirement income, ensuring financial independence and peace of mind in your golden years.
  • Fulfil Housing and Education Goals: From buying your dream home to funding your child’s higher education, savings plans help you meet important life goals without financial stress.

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What Savings Plans Typically Cover?

Saving plans are a kind of life insurance plan that provides financial protection to the family in cases like sudden death or the permanent disability of the family's central earning member. Along with the standard coverage, which varies from plan to plan, you can further enhance the protection with the help of riders such as:

  • Accidental Death Benefit Rider: If the insured happens to die in an accident, the nominee gets this financial benefit along with the sum assured.
  • Accidental Total and Permanent Disability Rider: The insured gets financial assistance if they cannot earn due to a disability mentioned in the policy.

Also Read - Short term vs Long term Disability Insurance

  • Critical Illness Rider: Major critical ailments like cancer, heart attack are covered under this rider.
  • Hospital Cash Rider: In case of any hospitalisation, a fixed amount is paid to meet non-medical items' expenses.
  • Waiver of Premium Rider: The company waives the remaining premium payment on the insured's sudden demise or total permanent disability if the insured has this rider.

What Savings Plans Do Not Cover?

While savings plans are versatile, they do not cover everything. Knowing the exclusions will help prevent claim rejections and disappointment.

  1. Death Due to Criminal Activity: Claims are denied if the policyholder dies while engaging in criminal or unlawful acts (e.g., during a robbery).
  2. Self-Inflicted Injuries or Suicide: Policies usually exclude death or disability resulting from intentional self-harm or suicide (within the initial policy years).
  3. High-Risk Adventure Sports: Activities like skydiving, rock climbing, or scuba diving are considered high-risk and often not covered under standard policies.
  4. Man-Made Disasters or Negligence: Claims may be denied for losses resulting from riots, war, or damage due to negligence.
  5. HIV/AIDS and STDs: Many insurers exclude coverage for death or illness caused by HIV or sexually transmitted diseases.
  6. Fraud or Misrepresentation: If false information is found during the contestability period (typically the first 2 years), the insurer may reduce or deny claims.
  7. Expired Policy Term: Once the policy matures or expires, coverage ceases unless it's a renewable or whole-life plan.

Advantages of a Savings Account

A savings account is your future financial helper and a solution to most of the problems related to money that are inevitable for making low money. Here are some advantages of a savings account that might resolve all your doubts and confusions about investing in it:

  • Low Entry Barrier: There's often no minimum balance required to open a savings account. You are often free to deposit any amount of money as you like.
  • Automatic Saving Plan: An automatic savings plan automatically transfers a small portion of your paycheck into your savings account when you get paid.
  • Joint Accounts: You and your partner can build a shared financial future by saving together through a joint savings account.
  • Easy Access: You can easily access your money in savings accounts through ATM cards, mobile apps, online banking, and at multiple bank branches opened by the bank.
  • Earn Interest: Financial institutions pay interest on your savings account balance, and many accounts offer compound interest. Make your money to earn more money.
  • Free to Open: Almost all savings accounts are free to open; they cost zero rupees and don't even have a monthly fee.
  • No Lock-in Period: You have the flexibility to switch savings accounts anytime, without being tied down by a fixed tenure or penalties.

Disadvantages of a Savings Account

It is essential to learn the disadvantages of savings accounts for better consultation and a convenient policy operation.

  • No Fixed Rates: One major key disadvantage is that savings account interest rates are variable. It means that the financial institutions can set and change interest rates as per their wish.
  • Undeniable Temptation to Spend: Saving accounts are accessible anytime. While it's nice to have the freedom and generate that urge to spend money, if you're tempted to dip into your savings, then a time deposit can be the solution.
  • Six-Withdrawal Limit: Savings accounts are limited to six withdrawals per month. If you withdraw more than six times, a penalty fee will be charged per transaction. However, it varies from bank to bank.

Conclusion

A better close-up of what a savings plan does and does not cover may explain how the whole process is done. It’s important to be aware of the terms and conditions, when and how the benefits can be claimed, and the responsibilities of the policyholder and beneficiary. This knowledge helps you avoid confusion, delays, and false claims during stressful times.

If you're looking for a trusted option, Canara HSBC Life Insurance offers a range of savings plans tailored to help you meet your financial goals while securing your loved ones’ future. With added benefits like life cover, tax savings, and flexible payout options, our plans can support you through every stage of life. Choose wisely, stay informed, and let your savings work for you.

Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.

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