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5 Tips to Buy the Best Savings Plan in India

dateKnowledge Centre Team dateMay 11, 2021 views217 Views
Tips to Buy the Best Savings Plan in India

Safety of capital, guaranteed returns, and regular income, what more can you expect from some of the best long-term investments from life insurance companies. Or can you? Life insurers beat a lot of other traditional investment options when it comes to long-term investments, especially if the task is the preservation of money.

These saving plans from the life insurance companies use the safest long-term fixed income options to grow your money. These plans are the best when it is about a goal that is as important as the future itself. For example, your child’s higher education plans, marriage goal, etc.

How to Buy the Best Savings Plan in India?

Your financial life has three continuously operating parts – income, expenses, and savings. Your present savings and where you park them will decide your financial future. In general, you will have responsibilities and goals which you need to see through every once in a while.

1. Understand Your Needs

Before buying a savings plan, understand your requirements. Answering the why question will help you broadly define what you are looking for and the terms and conditions of the investment. For example, if you are looking to fulfil your child’s higher education goal, you will need to select the following accordingly:

  • Tenure of the investment
  • Lump-sum or systematic regular payments of maturity value
  • Premium paying tenure
  • Goal or premium protection option

Knowing your purpose of investment will help you decide all these features for a perfect saving plan easily.

2. Know your Risk Appetite

Evaluate your risk appetite before investing in a savings plan. You may want to avoid high investment risk for financial goals like a child’s higher education or short-term goals like building a home soon. Your risk capacity for investment is higher under the following two circumstances:

1. You are young, i.e., below 45 or even 50

2. You have ample time to achieve your goal, i.e., 10 years or more

If these conditions are true for your investment goal, you can choose a unit-linked insurance plan or ULIP to boost your growth potential using equity funds.

Otherwise, or when you are not comfortable linking your money with the market, you can invest in guaranteed saving plans. These plans offer a guaranteed return over your investment, completely safe from market movements.

You also have the option of taking a middle path. ULIP plans also give you the option to invest in debt funds. These funds do not offer a guaranteed return. However, they do offer:

  • Safety of capital
  • Steady growth over long-term

So, you can enjoy the safety as well as the market linked yet steady growth of your investment.

3. Check the Liquidity of the Plan

Liquidity is an important factor to consider in a long-term investment. Liquidity allows the investment to support you in case of an emergency. However, too liquid investments may hamper your growth prospects.

So, there has to be a balance of growth and liquidity. Guaranteed saving plans are less liquid. However, after few years of investment, you can borrow from the plan or against the policy’s cash value.

ULIP plans, however, will allow partial withdrawals of accumulated money after the lock-in period of five years.

4. Understand the Policy Term and Features

Policy term is the maximum period for which your savings plan will remain active unless one of the following happens:

  • A death claim is filed and settled on the policy
  • You surrender the policy

If you have chosen the goal protection option under these saving plans, only the life cover stops existing after a death claim. The investment part continues to grow for the full policy tenure.

Other features you need to understand about the savings plans are:

  • Premium payment tenure: Pay all the premiums due within this period. ULIP plans may accept investments even after this period but other saving plans may not.
  • Automatic Portfolio Management: This is a feature of ULIP plans, which helps you manage your portfolio passively if you invest in equity funds.
  • Goal or Premium protection option: This feature allows for the investment part of the plan to continue even after your death. If premiums are due, the insurer pays them on your behalf and your family receives the maturity value as you intended.
  • Accidental disability benefit: Few savings plan will also allow accidental disability benefits, where you can continue the policy without paying further premiums in case of a severe disability. Or, you may receive financial support from the plan.

5. Review & Diversify Your Portfolio

Portfolio diversification is an important step to maintain a healthy portfolio risk-return profile. Also, your risk appetite and profile keep changing as your life progresses. So, you must revisit your portfolio asset allocation once in a while.



Your overall portfolio can follow the ratio given below:

Age High-Risk (Equity) Low-Risk Liquid
Up to 30 70% 10% 20%
30 – 35 60% 20% 20%
35 – 40 50% 30% 20%
40 – 45 45% 40% 15%
45 – 50 40% 45% 15%
50 – 55 30% 55% 15%
55 – 60 20% to 0% 70% - 80% 10% - 20%

Otherwise, you can also follow the automated portfolio management feature of ULIP saving plans. This feature will adjust your portfolio automatically as you age, and your investment nears maturity.

Understand the difference between portfolio management and financial planning.

Why Choose Savings Plans by Canara HSBC Oriental Bank of Commerce Life Insurance?

Canara HSBC Oriental Bank of Commerce Life Insurance is an amalgamation of four large and trusted banks in India. Within a short period, the brand has built a portfolio of saving plans with above-average performance and modern features.

The insurer boasts of the following statistics as of the financial year 2020-21:

  • 20,000+ Branches
  • Rs. 20,586 Crores Assets Under Management as per 31st December 2020
  • 98.12% Individual Death Claims Settled in FY 2019-2020 (Claim settlement ratio)

You can start investing in the company’s best savings plans online. These plans help you keep your money disciplined, which is one of the prerequisites for better growth and long-term wealth. You can automate your savings to go to a savings plan regularly without your intervention. The best saving plans reward you for investing for the long term. The plan providers offer multiple types of bonus and incentive options to earn money for investing in a long-term savings plan. For example, the Guaranteed Savings Plan from Canara HSBC Oriental Bank of Commerce Life Insurance provides loyalty additions and guaranteed annual additions to your investment.

The longer you stay invested the better the growth.

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Frequently Asked Questions

How Savings Plans by Canara 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.

Who should invest in a Savings Plan?

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. Savings plans are also ideal for people who are risk-averse and want to accumulate funds through relatively safer mediums. These plans inculcate financial discipline in policyholders which make them crucial for every portfolio.

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 capital protection is your aim, then traditional insurance plans such as Guaranteed Money Saving Plan should be suitable for you.

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.

Read More
Saving plan 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.

Saving plan for future

The Smart Goals 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.

Saving plan 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.

Where should I invest my money?

You should spread your investments across financial instruments. However, having a suitable savings plan in your portfolio is extremely important. It ensures financial stability and also helps in fulfilling short, medium and long-term monetary goals.

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.

Tax Saving Investment for retired mother

Savings plans are tax-efficient investment instruments. Samridh Bhavishya traditional savings scheme designed to ensure regular income after retirement is the best savings plan for retired mothers.

Should you use a savings plan for retirement planning?

Yes. Retirement planning is one of the most important financial decisions of our lives. Saving plans offer 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.

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 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 appreciation in capital is significant. Even a small amount invested for a long time can give substantial returns due to compounding.

Read More
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. Choose 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.

Read More
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.

Read More
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