Financial protection is a must for every individual and your savings plan alone cannot bear the brunt of unexpected life situations. Being financially stable at every stage of life offers peace of mind and lets us focus on other important aspects of life. That is why we believe life insurance plans must be part of your savings plan.
Four Ways Insurance Plans Offer to Create a Better Savings Plan
1. Regular Savings
You need to pay the premiums regularly without fail at regular intervals, and you need to keep aside a certain amount each month to pay the premium. It helps you stay committed to your savings plan.
2. High Coverage and Low Premium
Life insurance plans are affordable and the coverage sum easily supplants for lost income.
3. Disability Support
If during the term of life insurance, the policyholder meets an unfortunate situation that leads to aggregate or lasting disability, the insurance supplier will pay the leftover premium payments.
4. Comfortable Retirement
Life insurance plans offer the policyholder's family adequate coverage in unfortunate events (such as the policyholder's death.) It provided financial security for the beneficiary.
Three Types of Life Insurance Cum Savings Plan
1. Endowment Plans
Endowment plans are a mix of life insurance and savings. It is the best choice for policyholders who want to save regularly over a period. The policyholder receives a lump-sum amount at maturity if they survive the policy term.
In case of any mishap during the policy term, the beneficiaries receive the entire sum assured by the policy. There are two types of endowment plans offered:
a) With-profit and participating plans
If the insurance company earns a profit in a financial year, the profit is distributed in the form of a bonus to the with-profit participating policies, eligible to earn a bonus.
b) Without profits or non-participating plans
Without profits policy, do not earn a bonus. The bonus is not added to non-participating endowment plans even if the company declares a bonus.
Learn more about endowment plans.
2. Money-back Plans
In this plan, money-back plans are a mix of insurance and savings, just like the Endowment plans. However, the insurance company pays the sum assured at periodic intervals rather than a lump-sum amount at the end of the policy term.
The balance sum assured is paid once the insured survives the policy term. In case of a mishap, the entire sum assured is paid irrespective of the pay-outs already made during the policy term.
However, the sum assured is given at periodic intervals only if the policyholder has not missed any payment.
Learn if money back plans are beneficial.
3. Unit-linked Insurance Plans
Life insurance plans from Canara HSBC Life Insurance allow you to modify the sum assured during the policy term.
Most of the plans are flexible and provide the option to opt between linear increasing and decreasing sum assured while simultaneously selecting a premium payment schedule. The plans also allow premium payments on a monthly, quarterly, half-yearly or annual basis.
ULIPs can help raise more money. Unit Linked Insurance Plans are of three types:
a. Single/regular premium plans: Flexibility to choose to pay a lump-sum amount as a premium for ULIP or to invest small amounts at regular intervals. One-time premium payment plans are single premium plans, and multiple premium payment policies are known as regular premium plans.
b. Guarantee/non-guaranteed plans: ULIPs offer guaranteed benefits to attract investors with lower risk appetites and non-guaranteed plans that do not offer assured benefits but provide various fund options according to the market conditions.
c. Life stage-based/non-life stage-based plans: Life stage-based ULIPs modify the investment portfolio according to the life stage of the insured to ensure that the asset allocation reflects the age and risk profile of the investor.
Invest 4G plan is a ULIP that can be customized as per the goals and changing needs of the policyholder. This plan by Canara HSBC Life Insurance offers 8 different funds and four portfolio management systems.
1. Assured Loyalty Additions
According to the policy, every 5 years, the policyholder can avail fund value related to loyalty additions. The loyalty additions are added in equal portions as the value of total units in the ULIP fund.
2. Limited Premium Pay
Other than loyalty additions, Invest 4G plan offers wealth boosters based on the premium payment term. This plan provides the flexibility of choosing to pay the entire policy term/ limited years or only once.
3. Guaranteed Regular Income
It offers three cover options to complement the different life stages of the policyholder. The plans are flexible to opt between linear increasing and decreasing sum assured along with premium payment options.
4. Tax Benefits
Under the Invest 4G plan, the policyholder may be entitled to tax benefits under Section 80C and Section 10(10D), as per the Income Tax Act, 1961.
It also includes tax benefit on the premium paid towards a ULIP, tax savings on the withdrawals/ maturity benefit/ death benefit received by the beneficiary upon the policyholder's death/ a partial withdrawal during the plan's term.