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Tips to buy Guaranteed Savings Plan

dateKnowledge Centre Team dateJanuary 13, 2021 views145 Views
Tips to buy Guaranteed Savings Plan

A guaranteed savings plan is a non-linked, non-participating endowment life insurance plan that helps you provide a lump sum at maturity and create capital by offering a guaranteed sum. Investment plans in India are one of the best financial options as a safety + an investment for a return. A Guaranteed savings plan provides financial security, an opportunity to grow one's money, and appropriate accidental death coverage. These types of investments provide many different pay-out options, such as a guaranteed return. With the luxury of being able to choose from various plans, they serve as retirement planning platforms and wealth creation tools.


1. An amount payable on maturity provided that all premiums paid have been applied

2. Provides life cover for the entire term while you only pay a limited period of premium.

3. Option to choose improved protection for your family - Life insurance protection by paying a lump-sum death benefit. All remaining premiums are not payable and guaranteed maturity benefits are payable (under Guaranteed Savings with Premium Protection Option).

One of the first financial traditions that we have been taught since our early childhood is saving. To be part of every goal we strive for in our lives is the concept of reserving a little today to enjoy a lot tomorrow. Keeping this fact in mind many consider guaranteed saving plans to be some of India's best investment plans.

It is vital to invest in the Guaranteed Savings Plan to achieve your short-term and long-term objectives. You can choose between different schemes and instruments in India. However, thorough market research must be carried out, and some of the tips related to this plan should be understood before you decide regarding a guaranteed savings plan.

Tips that you should remember when you buy a savings plan

When buying the best-guaranteed savings plan, you must remember specific tips.

Your future targets

You need to set long-term and short-term financial goals first and foremost. It gives you a lot of clarity and helps you to choose the right plan to save money. Your objectives will help you decide what plan to purchase. It may seem tired now but pay later. The process will pay.

You have to keep a balance between risk-reward.

You have to invest very carefully while choosing a saving plan and maintain a balance between the risk and the reward associated with it. When selecting a plan, consider your risk appetite.


Your savings plan should be sufficiently liquid to meet your requirements. You must make sure you receive money from the plan in an emergency. Before selecting a plan, consider your liquidity requirement.

Understand the offered tax deduction

Consider the tax advantage offered by the investment product when making a savings investment. A variety of investment products offer a tax advantage, such as life insurance and health insurance. Investing in these products not only reduces your taxes but protects you in the event of a medical emergency.

Look out for the aspect of diversity

You should not restrict your money-saving plan to one investment product. The investment you make will have to be broadened to reduce the risk affiliated with it. Take into account all the investment alternatives that serve your purpose and diversify the investment.

The Plan's Performance

To make specific changes as expected, it is essential to review your portfolio at least once a year. You should not simply forget about the same thing once you invest. Regularly review the portfolio and then take the necessary measures to maximize your profits.

Conditions and Terms

When you buy a plan, this is a very significant thing to remember. Before selecting a guaranteed saving plan, ask all of the necessary questions. As there are different terms and conditions attached to them, savings plans are elaborate. Therefore, purchase a plan only when you are well aware of what it offers. Before you put your money into it, clear away all the doubts about the plan.

Investing requires market research and awareness of various plans. You need to consider your financial objectives to make the right investment decision and then look at the available alternatives for you. Making the right investment will help your wealth grow over some time.

Online Accessibility

The last thing you want to do with your investment is to visit a particular branch or office to purchase a savings plan. Like most necessities, investments must also be available online, and some of the best long-term investment options are available. So, the first thing you need to check for is whether online is available for the guaranteed saving plan and:

1. You can spend, manage, and withdraw cash online.

2. For any clarification and requests, contact the customer service

3. Can find all the relevant plan information, historical performance, online features, and limitations Another online aspect is whether the investment can be automated. If you are paid, you can allow your monthly investments to be auto-debited into the plan to ensure that no installments are missed.

What about the tax-saving?

Another vital tip for a guaranteed savings plan is tax saving since tax liabilities can eat into your return. In your long-term savings plan, the best tax saving status you are seeking is:

  • Investments tax-exempt
  • Tax-free value of maturity

Under section 80C, most investments enjoy a tax deduction, which limits the deduction to Rs. 1.5 lakhs. However, this should not imply that you can only invest up to Rs. 1.5 lakhs in a financial year. A higher amount of investment should be accepted by the investment plan and still provide a similar investment value. Plus, an investment such as life insurers' guaranteed saving plans can still offer an entirely tax-free maturity value.

The Guaranteed Returns check

It would be best if you use the flexibility of equity-linked returns since you invest in a long-term instrument. However, you can look for guaranteed returns if your goal is fundamental and you do not want to take any extra risk with it. For instance, Canara HSBC Oriental Bank of Commerce Life Insurance’s Guaranteed Savings Plan provides the necessary sum you select as the guaranteed return from the plan. Based on the maturity value you wish to achieve, your regular investment amount is decided.

However, with a guaranteed saving plan, this is not the only advantage. The plan also gives you additional return for staying invested over a long period in the manner of annual and loyalty bonuses. Therefore, you get the guarantee of the intended value of maturity and a regular booster.

Protection for the objective of your financial

If you want to use this investment for an important financial objective, such as the higher education of a child, the marriage of a daughter, you need more than just a guarantee of return. For the objective achievement, you will need the warranty. If you are alive and investing, almost any fixed-income investment can help you attain your financial goal.

But for the life goals of children, you do not want to take any chances. Life insurers' guaranteed saving plans have the option of providing your financial goal with safety. If you opt for this benefit, the insurer will pay the due premiums on the plan in the event of your untimely demise. Immediately after death, your family will receive the base sum guaranteed as the death benefit. However, with the insurer making all the remaining investments, the policy will continue as before. Your nominee will receive the policy's maturity value upon the original maturity. Therefore, meeting the goal that it was originally intended to achieve.

Investment Terms Flexible

Investment terms, regardless of your revenue frequency, make the plan useful for you. You should also be able to invest in one objective for a short period and then move to another. There are therefore two types of flexibility for investing that you are looking for:

  • Mode of investment: monthly, quarterly, or yearly
  • Investment period: Can you invest in a 20-year investment plan for five years and hold on for another 15?

Fortunately, all of these characteristics and more are provided by the plan. The objective protection option makes the policy attractive for investing in children’s life goals, where you cannot afford to compromise.


• Loan Facility

If any contingent need arises, you may avail the plan’s faculty loan facility once the policy acquires an Accumulated Surrender Value. The applicant can get at least Rs. 20,000 and up to 80 per cent of the surrender value when availing the loan. The loan is available for one specific type of policy only. The Company undertakes a review interest rate for Financial loans on the 31st of December every year with any changes resulting from the review becoming effective from the 1st of April of the following year. The applicable loan interest rate for the financial year 2018-19 is 8.60 per cent per annum.

• High Premium Booster

If the annualized premium is more than '30.000, the necessary sum available for a given premium is increased by a high premium booster percentage in the following table (the upper limit of the first premium brand in 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%

Under the Income Tax Act, 1961, as amended from time to time, the Tax Benefit for you can be entitled to tax benefits under sections 80C and 10(10D).

As mentioned above are the necessary steps and procedures on how and why to purchase a guaranteed savings plan. Start your plan now.

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Frequently Asked Questions (FAQs) for Term Insurance

This being a term plan doesn't offer any payout after maturity or expiration date.

Each insurance company has its own term insurance premium calculator. If you want to check out the premium quote, go for the iSelect Star term plan calculator. It gives a premium amount based on your age, gender, habits, education, and annual income.

You can purchase an iSelect Star term plan anytime between 18 to 70 years of age.

It depends on your needs. For example, if you want to cover a child's education or wedding expenses, you have to include them in your coverage. Your premium will be calculated accordingly.

If your key purpose is to give your Family financial protection, go for the term insurance plan. And if you want some savings, in the end, go for a traditional life insurance plan.

Go for at least 12 times cover than your annual income. Or you can go as far as 20 times coverage as per your needs.

The right time is when you don't have anything to keep your Family safe from financial storms, and they rely on you for financial needs.

If you are unable to make the payment or suffering from a terminal illness, a term plan pays a part of the sum insured to treat your disease.

Term insurance riders are attachment or endorsements made, while taking the term insurance policy, as a supplementary coverage to policyholders. Apart from the core death benefit, term insurance riders offer below-given additional benefits:

  • Accidental Death Rider When a person suffers from a terminal illness, his/her family ends up spending a significant amount in treatment and medical expenses. Accelerated death rider pays a part of the sum insured in advance to cover such costs and save the family from running out of cash.
  • Accidental Disability Rider If the policyholder can't pay the premium because of an accident or permanent disability, a sudden disability this pays the premium on behalf of the policyholder till completion of policy term or for a defined duration.
  • Critical Illness Rider If the insured person gets a heart attack, cancer, or any other critical illness, this rider pays a lump sum on valid diagnosis.
  • Premium Waiver Rider If the policyholder is unable to make payments due to income loss or disability, a premium waiver rider waives off all future premium payments. And the term policy remains active until the expiration date.
  • Income Rider: The rider ensures that your family receives regular income + sum insured in case of unfortunate demise of life insured.

Anyone can go for life insurance as it offers some savings after the maturity date, but it doesn't cover the protection of your family . The best term insurance plan is solely designed for taking care of loved ones if something happens to you. Term plans act as a shield between your family and sudden financial fall. They make sure that your family lives a healthy life even after you. With a little amount paid per year, you can be worry-free from the family's financial conditions.

Questions that you need to ask while buying Term Insurance?

  1. 1. Amount of premium you have to pay based on your age, habits, education, and monthly income
  2. 2. The total number of benefits covered in the term plan. Do they include benefits that you care about the most?
  3. 3. How to save money on tax if you pay for the term plan?
  4. 4. Do they offer regular income options?
  5. 5. Can you change the coverage and premium in the future?
  6. 6. Does the claim consider valid if death occurs outside India?
  7. 7. Which kind of death is not covered by insurance?
  8. 8. Can NRIs take term insurance? If yes, what are the conditions?
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