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Is it a Good Idea to Invest in a Savings Plan that Guarantees Regular Income?

dateKnowledge Centre Team dateMay 11, 2021 views57 Views
Guaranteed Income Plan | Retirement Planning

Each person has a different financial goal, an individual life experience, and a unique outlook towards risk and investments. If you are risk-averse and look forward to a stable, predictable, and sustainable income from your savings plan, guaranteed income policies offered by insurance companies could be the best saving plan for you. Whereas the term “guarantee” looks like a sales gimmick, it is true because guaranteed plans invest in safer instruments such as debts, bonds, and government securities.

6 Reasons to Buy Savings Plan that Guarantees Regular Income

#1 Builds Secondary Income Stream

You work hard each day to earn your monthly income. If your hard-earned money works equally hard in parallel, you will have a secondary source of income. With increasing volatility in the market, having multiple sources of income can help tide over temporary setbacks due to loss of jobs or reduction in the main source of income.

#2 Can be Used for Emergencies

Exigencies and emergencies do not come with advance notification. They are unpredictable both in time and magnitude. For example, if a portion of your house gets damaged due to harsh weather conditions, you may have to quickly fix the problem.

Healthcare costs are exorbitantly expensive, and all medical problems may or may not be covered by your existing health insurance plan. Having a guaranteed income in parallel can be useful on a rainy day. You can also avail of loans, at reasonable rates of interest on these policies to tide over such temporary setbacks in life.

#3 Helps to Build Wealth

Wealth creation requires holistic investment across asset classes. Even if you have Gold, Real Estate, and Stocks, it is prudential to invest in other financial instruments such as insurance policies that offer stable returns in the future.

In some plans such as Invest 4G, which has a Care Option. With that plan variant, even the nominee gets the fund value on maturity despite already receiving the sum assured in case of untimely demise. Check these finer features when you explore maturity benefits.

#4 Leave a Legacy Behind for your Loved Ones

A systematic investment spread over a long tenure will have a multiplier effect due to the power of compounding. You will see wealth grow in the latter years if you stay invested with a long-term horizon in mind. The wealth thus created will not only be sufficient to maintain your lifestyle, manage unforeseen expenses but also help you live a comfortable retired life. Any surplus can also be passed on to your next generation of family members.

The best insurers also waive off future premiums in case of untimely demise. The policy continues and the nominee gets the fund value at the end of the policy period.

#5 Insure your Life

Guaranteed Savings Plan from Canara HSBC Oriental Bank of Commerce Life Insurance is another investment cum insurance plan that supports the family even after the untimely demise of the policyholder.

Guaranteed income plans cater to your security needs after retirement and during the golden age. The best income plans also offer critical illness cover for your post retirement life.

In case of unfortunate, untimely demise or disability, the company not only pays the sum assured but also pays the future premiums and gives away the fund value on maturity.

#6 Increase the Sum Assured Based on Life Stages

Few plans such as Smart Life-Long from Canara HSBC Oriental Bank of Commerce Life Insurance allow you to increase or decrease your life cover as per your objectives and depending on your changing needs. This is possible from the 6th year subject to the sum assured being within the defined lower and upper limits.



A guaranteed income policy is the best saving policy in India and offers several features that help you get the best return on your investment. This makes it the best monthly income plan in India. Rest assured, you can have good peace of mind at work because you know this savings plan is working equally hard to provide for wealth and any unforeseen emergency.

Who Can Invest in a Savings Plan that Guarantees Income?

Income is usually the second phase of your retirement plan. Before you can think of investing in a plan to generate long-term income, you need a large corpus which you can put to the task. Building such corpus takes time and continuous investment.

Although you can legally start investing in these plans once you attain a majority and have an income, the investment benefits should be utilised as per need.

Thus, the best time to invest in a guaranteed income plan as per the plan features will be:

Plan Type Best Time & Mode to Invest
Single Premium Deferred/ Immediate Annuity Plan - Start closer to your retirement age, i.e., after 45
- You can invest in multiple annuities to create a monthly pension
Unit Linked Plans with Flexible Withdrawals - Start investing early, i.e., in your 30s
- Invest aggressively to grow your corpus before retirement
- Near your retirement switch up to 50% of your corpus to liquid funds while the other 50% should stay in debt funds for better yet stable growth
- You can opt for a systematic withdrawal plan to receive income from the plan

The amount to be invested and the type of policy to be chosen can be decided basis your current financial situation and your future needs. Insurance policy advisors can give you expert advice to help you make the right decision.

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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.

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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.

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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.

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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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