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Savings Plan: Usefulness and Importance of Renewal

dateKnowledge Centre Team dateJanuary 18, 2021 views178 Views
Savings Plan: Usefulness and Importance of Renewal

It is exceptionally crucial to save money for contingencies or secure finance for post-retirement in times. Besides, the need to increase the wealth for taking care of self and family is also inevitable. There is one smart way to improve the situation and cater to everyday financial needs. The government, banks, and even financial companies offer various saving plans for encouraging investors to invest their money and receive high returns. You have to check both the pros and cons of your plan before you make the final step of investing your money.

Since saving has been one of the first financial habits, the idea of “saving a little today to enjoy tomorrow” has become a motto. According to many, savings plans are the best investment plans in a country like India. However, if you have already started the journey, then you are at the right place! At the beginning of the financial journey, it isn't easy to figure out if the way you are following is correct or not. Also, there is a good chance that you're not sure whether to continue this journey or not.

If you are one of those who have already invested in a Savings Plan, then congratulations, you have chosen just the right path. In this article, we will talk about how a savings plan can prove beneficial for your family's well-being. We hope by the time you have finished reading this, you will want to renew your active savings policy. But before that, we will briefly discuss a savings plan and how it benefits an investor who is willing to save for the future.

What are Saving Plans?

Saving plans are generally life insurance plans that help an individual accumulate a reasonable sum of money for the future. Saving plans offer individuals an opportunity to accumulate, save, and invest funds to fulfil their future requirements. These plans have been designed in such a manner that it helps policyholders grow a structured and well-organized habit.

It will help you achieve your long-term and short-term financial goals by investing systematically. Also, you will gain the benefit of return in need of the hour. These plans are entirely investor centric. It provides features that help reach the investor's specific financial needs by making investment plans as per the suitability and risk appetite of an individual. Savings plans provide insurance where your family is protected in your absence.

The plan not only offers the benefits of wealth accumulation but also the advantage of insurance coverage. In case of any unfortunate death that will occur within the policy's tenure, the death benefit is given to the beneficiary of the policy.

Savings plans in India are mainly initiated by our Indian government, public sector banks, or the financial institutions. All the savings schemes are backed by our government, making this one of the most beneficial investors' advantages. Due to the government's support in this scheme, catering the scheme to complete security and the safety of the capital after interest is not an issue. Moreover, these plans are low-risk financial instruments; yet they offer a good return.

Types of Savings Plan

You will find lots of saving plans/schemes in India. Many of these schemes are backed by India's Government while RBI and SEBI regulate the others. A number of these plans are exempted from income tax. Here are some of the Savings Schemes provided by Canara HSBC Oriental Bank of Commerce:

Invest 4G Plan

It is a protection and savings centric Unit Linked Insurance Plan. With this plan, you can choose any protection suited for you and save for your life goals. Besides, it adds to your Wealth Boosters, Loyalty Additions, and returns the mortality charges when your policy matures, thus increasing your savings.

Titanium Plus Plan

With this plan, you can invest and protect your money to boost the savings. The plan is flexible so you can modify the investment asset as per the market conditions.

Guaranteed Savings Plan

A guaranteed Savings Plan helps you give assured returns with a lot of benefits. Also, the return is not dependent on the capital market fluctuations.

Smart Lifelong Plan

With this plan, you will get an option for wealth creation and it also provides life coverage that lasts up to 99 years of age.

Smart Life Income Plan

This plan helps you fulfil your loved ones' aspirations, without worrying about the finances. You can enjoy a life cover of 25 years with this plan.

Insure Smart Plan

This plan helps you save money for a particular life goal you have. With this, you have the freedom to pay premiums for five years and enjoy a live cover of ten years.

Future Smart Plan

The plan is a unit-linked child plan that will provide a long term investment opportunity for building a promising future for your child.

Grow Smart Plan

This life insurance plan will provide financial security to you and your spouse throughout your retirement.

Guaranteed Income Plan

This plan offers guaranteed benefits so that you can fulfil your dreams and meaningful life goals at different life stages without any interruption.

Easy Bachat Plan

With this insurance policy, you can save your money in a hassle-free way, thereby giving financial protection to your family at premiums that best suits your budget.

Smart Future Plan

The Smart Future Plan is a unit-linked plan that offers investors long-term investment opportunities to fulfil various family commitments.

  • Jeevan Nivesh Plan

    The Jeevan Nivesh Plan will help you plan and achieve your dreams in life and also meet any unforeseen financial emergency.

  • Money-Back Advantage Plan

    This plan will provide financial protection to your family by providing life cover and milestone oriented payouts. It will be done through guaranteed money back payouts and maturity benefit.

  • Guaranteed Income Advantage Plan

    This plan will look after your long and short term financial goals by offering guaranteed benefits as well as regular income.

    If you've already invested your money by any chance, let us explain the benefits of renewing the plans.

    Benefits of Renewing Saving Plans

    If you already have a savings plan in your belt, you are already in a good position from a financial perspective. Renewing your savings plans would mean more benefits and more money inflow, which means more secure your future.

Why is it advisable to renew your savings plan?

  • Continued security for the family

    Providing financial security to your family is the primary goal of any savings plan. However, if your plan provides a death benefit maturity and you do not renew it, it will lapse. Thus, your family will not receive the guaranteed benefit you paid for all this while. Not renewing your plan will nearly defeat the purpose of a savings plan.

  • Paid-up benefit

    You know about guaranteed savings plans and the benefits provided upon maturity. This is probably the sole reason why you may choose a savings plan in the first place. Now, instead of investing in some other schemes, you can renew your premium plan and continue to enjoy the benefits of the savings plan. Renewing the plan will give you an added benefit from your insurer. Besides, paying the premiums won't be demanding as you already have prior experience.

  • Avoiding extra costs

    When you first buy a savings scheme, the insurance company considers a lot of factors. It includes your age, family situation, medical history, etc. You do not have to go through a long process for opting a savings plan policy renewal. However, you might have to undergo medical tests again.

  • Tax benefits

    According to Section 80C of the Income Tax Act, the premiums an investor pays are tax-deductible. Given another reason why you should renew your guaranteed Savings Plan. Apart from this, the death benefit of the plan is free from tax according to Section 10(10D) of the Income Tax Act.

  • Long-Term Benefits

    Long-term investments can bag you a considerable sum of money. The minimum lock-in period for these plans is five years. It can go up to the age of 60 years. The amount to be received at maturity is high because the interest would be calculated based on the previous interest.

If you are thinking of investing in a guaranteed savings plan, then it's a wise decision to make. Browse through various savings plans offered by Canara HSBC Oriental Bank of Commerce Life Insurance to know which one best suits your financial goals.

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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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