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Importance of Guaranteed Savings Plan during a Pandemic

dateKnowledge Centre Team dateJanuary 12, 2021 views167 Views
Importance of Guaranteed Savings Plan during a Pandemic

Like everyone, you too might be having some important goals that drive you like providing the best education to your children, financial security to your family or getting your children married. But how will they be fulfilled if something happens to you? Who will fulfill them? A Guaranteed savings plan comes to your rescue. In such times of uncertainty, it is essential to secure the future of your loved ones so that these goals get fulfilled even if something happens to you, and your loved ones don't have to suffer. With a guaranteed savings plan, your family's future is secure.

Financial Lessons from the Pandemic

The global health pandemic is one of the biggest crises of the century. This pandemic has shown a mirror to everyone, exposing all the mistakes we were making till now. Around 122 million people in India lost their jobs and around 53% of businesses in the country have been affected severely. Most of the people facing such issues never focused on planning their money well and instead resorted to reckless spending, without thinking about the future.

If they had saved their money through a savings plan and various other policies, they would have been in a much better position now. Some of the lessons this pandemic has taught us about financial planning are:

  • Create a long-term financial plan

    This pandemic has made us realize that nothing is permanent. Our world is full of uncertainties that can severely affect us, and things rarely go according to our plans. Financial crisis can happen to anyone. Hence, long-term financial planning is important. Financial planning, while keeping your long-term goals, will not only build up your wealth but also help you weather future financial crises.

    However, be flexible in your approach. Financial planning is not a once in a lifetime thing; it is a continuous learning curve. Your goals will also keep re-aligning to your financial circumstances. Hence, make sure your current plan is in line with your goals through continuous evaluation. Regular evaluation of your investments will lead to long term benefits and help you mitigate risks

  • Keep aside emergency capital to be used in times of emergencies

    One of the best ways to ensure financial security during hard times is to keep aside emergency capital that can be used in need. Setting aside, emergency capital can not only help you save for a crisis but also aid in achieving your long-term goals. People who have their own business or those who have just entered the job market, should be more focused towards building an emergency fund because they might have to go through a financial crisis anytime. Thus, building their wealth steadily will lead to financial stability.

    One of the crucial factors to keep in mind while building emergency capital is guaranteed pay-out. Canara HSBC Oriental Bank of Commerce Life Insurance Company’s guaranteed savings plan, you can build emergency capital and provide financial protection to your family in any unforeseen circumstances. It also gives an increment in your wealth with guaranteed additional sums added to your policy every year according to the plan chosen by you.

  • Investing in a Guaranteed Savings Plan is essential

    This pandemic has shown us that unfortunate events can affect anyone irrespective of their socio-economic background. Last year, none of us knew that something like this was coming our way, but it came and created an upheaval in our lives.

    Everyone is equally affected. Hence, it's better to stay prepared instead of freaking out in times of trouble. Now we are aware that a savings plan is an essential commodity too and not just a tax saving option.

    Guaranteed savings plan provides full financial security in addition to tax benefits. The capital can be availed as a lump sum payment that ensures that your family's financial needs are met even in an unfortunate event.

What is a Guaranteed Savings Plan?

A Guaranteed savings plan refers to a non-endowment, non-participating life insurance plan. It helps you protect your life goals from casualties through a life insurance cover and creates a corpus by offering a guaranteed lump sum at maturity. These benefits are provided only if all the premiums are paid on time. Discontinuity in premium payments might lead to the cancellation of the savings plan policy.

It also facilitates regular savings and thus, helps you reach your goals faster. Also, it ensures that if something happens to you due to unforeseen circumstances, your family will be financially secure. The objectives you had for your family and loved ones will still be fulfilled without any hindrance.

Features of a Guaranteed Savings Plan

Some of the features of the guaranteed savings plan are:

  • Premium has to be paid for only a limited period even though life cover is provided for the full term.
  • Guaranteed benefits payable on maturity if all due premiums have been paid.
  • Multiple policy term options are available.
  • Complete freedom to choose a payment term that suits you the best.
  • High Premium Booster provided to ensure that you get extra benefits if you make a higher premium commitment.
  • Enhanced Protection provided for the family.
  • Through payment of lump-sum benefits on death, life insurance protection is provided.
  • Not necessary to pay remaining premiums on death and guaranteed benefits are payable on maturity (under Guaranteed Savings with Premium Protection Option).
  • Tax benefits provided under Section 80C and Section 10(10D), as per the Income Tax Act, 1961 as amended from time to time.

Canara HSBC Oriental Bank of Commerce Life Insurance Company’s Guaranteed Savings Plan

Canara HSBC Oriental Bank of Commerce Life Insurance Company provides an excellent guaranteed savings plan to assist you in managing your finances. You can choose the plan that you feel will fulfill all your objectives and help you reach your desired goal in the given time. Each plan comes with different benefits. The benefits provided with every plan are detailed below for your understanding.

Guaranteed Savings Option and Guaranteed Savings with Double Protection Option:

  • Maturity Benefit

    The insured will get a guaranteed sum assured on maturity, guaranteed yearly addition, and guaranteed loyalty on the policy's maturity. The policy will terminate on the payment of these benefits, and no further benefit will be payable.

  • Death Benefit

    If there is an unfortunate death of the life insured during the policy term, given that policy is in force, the benefit will be given to the nominee. The benefits include the sum assured on death and cumulative guaranteed yearly addition as on date of death. An extra amount equal to the ADB sum assured will be paid if you have chosen Guaranteed Savings with Double Protection Option of the Life Assured death occurs due to an accident. After paying these benefits, the policy will terminate, and no further benefit will be payable.

Guaranteed Savings with Premium Protection Option:

  • Maturity Benefit

    The insured will get a guaranteed sum assured on maturity, guaranteed yearly addition, and guaranteed loyalty on the policy's maturity. The policy will terminate on the payment of these benefits, and no further benefit will be payable.

  • Death Benefit

    If there is the unfortunate death of the life assured during the policy term, given that policy is in force, the benefit will be given to the nominee. The benefits include the sum assured on death, remaining future premiums need not be paid, and the policy will be in force for the remaining policy the term, the policy will continue to accrue guaranteed yearly additions. After paying these benefits, the policy will terminate, and no further benefit will be payable.

Some other benefits included with all types of saving plans are:

  • Loan Facility

    After your policy acquires its surrender value, you can also avail of the loan facility in this plan to meet your contingent needs. The minimum amount of loan that can be availed in this plan is Rs 20,000, and the maximum amount is 80% of the overall surrender value at the time of taking the loan. A loan can be availed for in-force policies only.

  • High Premium Booster

    According to the table given below the necessary sum assured available for a given premium will be increased by high premium booster %. if the annualized premium is more than Rs 30,000 (the upper limit of the first premium brand in the table given below). The High Premium Booster % will be applicable as per 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%

This global pandemic is a wake-up call for all of us to seriously consider financial planning so that we don't have to face financial troubles if something like this happens to our family or us. These tough times need to be handled with patience and proper planning. Managing your money well will prepare you to navigate through bad times with ease. You never know what might happen during this pandemic, so it is better to be prepared for everything.

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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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