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Top 5 Saving Plans in India for Retirement

dateKnowledge Centre Team dateJanuary 27, 2021 views112 Views
Top 5 Saving Plans in India for Retirement

You must be aware of your financial goal before looking for a savings plan to invest your money for securing your life goals. The same scheme does not suit everyone as one might be looking to invest for retirement benefits or maybe for a child's education. You can evaluate the plan based on the common set of parameters to finalize the best plan.

Given is a list of things that can help you choose the perfect plan for your financial goal.

  • Risk appetite: Before investing in any plan, objectively analyze your risk appetite. If you are in the middle of your career and are already endowed with some financial obligations, we advise you not to take excessive risk with your investments. You may choose traditional endowment plans that have money-back guarantee clauses. People who are starting their career and are in their 20s and 30s may try to take higher risk. Younger people can opt for ULIP (unit-linked investment plans) that give market-linked returns but carry substantially higher risk.
  • Investment tenure: Investment tenure is an important aspect to consider before investing. If you save for your retirement, ULIPs, which multiply your savings in the long-term, is a perfect product. While one should consider the investment tenure, the flexibility to change the investment duration should also be considered. Most savings plans provide an option to change the premiums and the investment amount according to the policyholder's convenience.
  • Investment goal: As mentioned earlier, you should not forget the primary reason for the investment. If you aim to save for your retirement then find a savings scheme specifically designed to accumulate a retirement corpus, of your choice.
  • Features: Insurance companies offer a host of additional features, so read the policy document thoroughly and make an informed decision after considering all the features. In most investment plans in India, you are allowed partial withdrawals from savings plans to meet emergency liquidity needs. You can also apply for loans and life insurance with some savings plans. The Guaranteed Saving Plan from Canara HSBC Oriental Bank of Commerce Life Insurance provides life cover for the entire term. At the same time, you have to pay the premiums for a limited period.
  • Charges: When you buy a savings plan, various charges are held over the premium amount. Low charges automatically add up to your investment, so the best savings plans have minimal administrative charges. With the Invest 4G plan, you can get back the mortality charges on the plan's maturity. The policy also offers loyalty additions and wealth boosters, which indirectly lower the savings plan's final cost.
  • Amount of benefit.

    a. Long tenure (20-30 years)

    b. Money is locked in, i.e., it cannot be withdrawn before the expiry of the plan term

    c. The plan will become paid-up if the investor pays the premium for a minimum of three years and after that stopped.

  • Term Insurance

    Term insurance or term life insurance plans provide aid during the breadwinner's hour of crisis/ death.

    Cheap/ easily affordable plan can be bought online, hence reducing the hassle.

    It allows the investor to choose from two death benefits option:

a) In case of the insured's death during the tenure of the plan, the sum assured is paid to the nominee.

b) In case of the insured's death during the tenure of the plan, the sum assured and an additional death benefit is paid to the nominee.

  • The company assigns a personal claims manager's service to help the family during the claim management.

Unit Linked Insurance Plans are insurance plans combined with mutual funds. The premium paid by the insured is held in a corpus which is then invested in stocks and shares of different companies operating in the capital market. The ULIPs thus promise good returns linked to the market and also insurance coverage.

  • The premium is invested in a choice of funds offered by the company. Some basic funds offered are equity funds, debt funds and balanced funds, each representing a different risk criterion.
  • Premiums are locked in for five years after which partial withdrawals are allowed from the fund value.
  • Switching options are available, which enables the policyholder to switch his investment between funds.

Group Insurance plan- Generally, employers pay for the premiums of group insurance plans. The best part about group insurance schemes is that they are not limited to companies and their employees. For the employees:

  • Benefits with Default cover, i.e., having insurance cover.
  • The employer's premiums are generally paid as an incentive for employees, making them a default option for many people.

For the employer:

  • The premiums paid for group insurance policies are eligible for tax exemption under relevant sections.
  • Group insurance plans are cheaper than individual plans for the same number of employees.
  • Providing group insurance cover increases employee retentivity and boosts loyalty for the employer.
  • An added security of group insurance helps employees remain stress-free and focus on the task at hand.

5 Best Saving Plans in India

1) POS- easy Bhima Plus: An individual, non-linked, non-participating, saving cum protection plan offered by Canara HSBC Life Insurance company.

Benefits

  • In case of accidental death, the plan provides a double life cover.
  • The plan also provides a survival benefit. The policyholder gets paid the return of the total premium if they survive by the end of the policy's maturity.
  • The insured get different choices for premium payment and policy terms.
  • The plan comes with tax exemption benefits.
  • However, the policyholder can not avail any loan facility under this plan.

2) Pension4life Plan: Canara HSBC Life Insurance offers a Pension 4Life Plan for you to be independent in your retirement days. The plan is a non-participating general annuity product. The policyholder gets the desired level of annuity instalments in exchange for the purchase price of the policy. It is designed for an individual and is non -linked.

Benefits

  • Immediate/ deferred annuity options
  • Incentives for higher sum assured
  • Maturity benefits don't apply to this plan
  • Loan facility can be availed on the policy
  • There is a loyalty booster option for existing company's customers. The annuity rate gets increased under this.
  • The annuity rate is increased by 2% if the policy has been bought online.
  • If the policyholder is diagnosed with any critical illness, s/he is provided with immediate life annuity with return of purchase price.
  • In case of accidental total or permanent disability, the insured gets immediate life annuity with return of purchase price.

3) Guaranteed Income Advantage Plan: A non-linked individual and non-participating life insurance plan. The plan provides life protection and acts as an investment. The plan can also help you meet your short and long-term goals.

Benefits

a) Pay the premium for the limited-term and get life cover for the entire term.

b) Tax benefits are provided under the plan as per section of the Income Tax Act, 1961.

c) The policyholders get a higher premium booster.

d) Guaranteed benefits are paid on maturity of the policy if the policy premiums are paid on time.

f) The policyholder can cherish the loan facility on the policy.

4) Guaranteed Income Plan: The plan provides its insured with guaranteed money back payouts with life insurance. It is designed as an individual, non-linked and non-participating plan, which acts as insurance cum investment.

Benefits

  • The policyholder gets survival benefit under the plan A guaranteed annual cashback is provided at the end of the last four policy years before the policy maturity.
  • The benefit is provided if all the premiums have been paid under the policy.
  • In case the insured survives tilt the policy term, they get:
  • Guaranteed Sum Assured on Maturity Guaranteed Yearly Additions Guaranteed Loyalty Addition
  • The premiums can be paid on a yearly half-yearly, quarterly and monthly basis
  • The plan also provides the policyholder with a guaranteed single pay advantage option.
  • Loan facility can be availed on the plan after surrender value has been acquired.
  • The plan gets you the tax benefit for the paid premiums as per section 80C of the Income Tax Act 1961.

5) Easy Bachat Plan: As the name suggests, Easy Bachat Plan can help you make hassle-free savings. It is a non-linked and non-participating plan designed for an individual. There are two plans to choose from: an endowment plan or money back plan.

Benefits

  • The insured gets guaranteed benefits paid on the maturity of the policy.
  • The plan provides life cover for the whole term, and you need to pay the premium for a fixed time duration.
  • The insured is free to choose the most suitable premium payment options.
  • Guaranteed additional bonuses are provided at the end of the policy year.
  • The insured can avail of the income tax benefits on the paid premium and death/maturity benefits provided under the plan.

Canara Oriental Bank of Commerce Life Insurance company offers many more investment and saving plans. It is advised to read the documents carefully before investing in any plan and estimating the various risk factors.

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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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