As the primary breadwinner, your family’s financial goals and safety are your first concern. You would want to ensure that your family can achieve their goals like a child’s higher education and marriage whether you are there or not.
You have the option of investing in multiple saving plans from life insurers to fulfil both the investment and safety needs of your family. To use these saving plans effectively you need to have the correct information about them.
However, there are many popular myths about life insurance saving plans which may stop you from maximizing your benefits from them. Five of these popular myths are explained below:
Myth #1 Saving Plans do not Provide Sufficient Life Cover
Savings plans are built to allow you a safe mode for achieving your financial goals. So, when you use a savings plan to achieve your financial goal, the plan protects the goal adequately.
For example, you aim to build a corpus of Rs. 40 lakhs for your child’s higher education goal. If you use a savings plan to invest in, it may offer the following:
- Help you accumulate Rs. 40 lakhs with regular contributions
- Keep your corpus safe from market volatility
- Protect your child’s goal from the risk of your early demise
These benefits mean that your child has the assurance of achieving the level of higher education you have planned for her, even when you cannot be there.
Myth #2 Saving Plans are only Tax-Saving Tools
Tax-saving could be a popular reason for investors’ choice. But tax-saving is one of the many benefits life insurance offers and not the primary benefit.
Also, any savings plans meant to only save tax would perhaps not offer you substantial other benefits, such as:
- Life cover
- Guaranteed Bonus additions
- Wealth boosters
- Options to invest in different asset classes
- Automated portfolio management option
You can receive one or more of these benefits depending on the savings plan you choose. For instance, Invest 4G is a unit-linked insurance plan or ULIP which gives you the option of investing in equity and debt funds. At the same time, if you stay invested long enough, the plan will also offer a bonus to boost your portfolio.
As a matter of fact, the best savings plans help you achieve your financial goal and at the same time increase the protective umbrella of life cover for your family.
Myth #3 Saving Plans are Expensive to Invest in
Saving plans, especially online savings plans are almost inexpensive. First, to start investing you don’t have to be earning millions and have a great savings ratio. Even if you are on your first payroll getting about Rs. 20,000 and have a savings ratio of 10%, you can start with a saving plan:
- Guaranteed Savings Plan from Canara HSBC Oriental Bank of Commerce Life Insurance needs only Rs. 1800 a month to start
- Invest 4G ULIP plan, which gives you the option to invest aggressively, starts with only Rs. 2200 a month
As for the expenses within the plan, they are also very low. For example, Invest 4G only applies a Fund Management Charge on your portfolio which is capped at 1.35% of the folio value.
Myth #4 Saving Plans are for Wealthy Investors
This cannot be farther from the truth. Given the fact that most savings plans are safe investments, it makes more sense to use them when your risk appetite is low. This may happen in the following cases:
- Your income and earning potential is low
- You want to preserve your wealth for a specific purpose
In other words, when you have wealth, you will need savings plans to preserve wealth. Whereas, before you are wealthy, you need to use savings plans for building that wealth. Also, as mentioned in another point, you can start investing in a savings plan with just Rs. 1800 p.m.
Myth #5 Saving Plans Offer No or Little Benefits
If nothing else, savings plans will still offer the following two benefits:
1. Added financial protection for your family in case of your early death
2. Safe option to invest in your family’s future goals
The best savings plans in INDIA, however, will offer even more benefits. To name a few, savings plans from Canara HSBC Oriental Bank of Commerce Life Insurance offer goal protection options, multi-asset investment option. Plans like Invest 4G even let you decide on a passive portfolio management strategy if you are an aggressive investor.
The goal protection option is one of the unique benefits of savings plans. This option allows your family and dependents to achieve their goal with full financial support even when you cannot be there.
The insurer invests all the due premiums in the policy in the case of your demise within the premium payment term. Meaning, the investments into your family’s goal continue after your death, and they will receive the maturity value you originally intended.
Thus, the best savings plans in India offer a lot more benefits than simply insurance or investment.
Myths Hold You Back
Myths, or misinformation about investments can restrain your financial wellbeing, and keep your family vulnerable. Thus, it’s better to discover the truth than to believe in hearsay and opinions.
Investments are tools, if you use them right you can achieve much more than your investment goals, and keep your family’s future safe as well.