What is a Saving Plan?
Saving plans are a type of life insurance plan that allows people to save and accumulate funds over some time and help fulfill their future needs. Such plans are designed in a way that policyholders can inculcate a disciplined saving habit and earn substantial returns.
Why Do You Need a Saving Plan?
Saving plans enable you to secure your and your family's financial future by providing financial freedom. It provides financial security so that you can take calculated risks. It might be more difficult to pursue your passions such as starting a new venture, buying a house, etc. if you don't have any savings.
Benefits of Saving Plan
A savings plan is preferred as the most appropriate choice for people who enjoy multiple savings and future-oriented opportunities. Some benefits of investing in a saving plan.
- Flexible And Customizable Options: Every person is unique, as are their life goals and priorities. Savings plans take into account these variations in saving goals and provide a range of customizable features that can be tailored to meet the distinctive requirements of each person.
- Save Taxes: Savings policies, offer the same tax advantages as most insurance plans. Section 80C of the Income Tax Act, in particular, allows a deduction of up to Rs 1.5 lakh from your premium payments.
- Financial Protection and Regular Payouts: Saving plans provide much-needed financial protection to your loved ones in the event of your unexpected death.
- Achieve Your Goals Successfully: Some saving plans are explicitly designed to help people and families achieve their most significant life goals. For example, a structured saving plan will assist you in saving money and achieving high educational goals for your children.
The Right Way of Choosing the Best Saving Scheme?
Amongst the many, saving plans are surely one of the best investment plans in India as they are available in a wide range of schemes and variants. However, it's essential to first figure out your goals and investment preferences before determining the best saving scheme for your needs.
Make a list of your short- and long-term goals that will be aided by your investment in selecting the best saving plan.
Include important considerations including the unique features of the best saving scheme, versatility, and extra incentives.
If you are still not sure, consider these essential factors while investing in the best saving plan for yourself and your family-
- Profile and Risk Capacity: Determine your risk tolerance, to identify and select the best saving plan. Personal preferences and age are the two most important factors in determining how much risk an individual can tolerate.
- Investment Tenure: An important consideration when determining the right saving strategy is the time duration that you plan to save your money. There are a variety of savings plans available that offer investors long-term to medium-term investment options as well as tax-saving investment options.
- Long-Term Objectives: You must be clear about your intent for investing. If you know why you need to save up and have a clear goal in mind, you can explore plans that will help you fulfill this target. Besides, you will also enjoy significant tax benefits for the same, if wherever applicable.
- Adaptable Savings Plan: You must choose a versatile investment strategy to achieve all of your long-term objectives. So that you'll be able to meet any unexpected short-term needs.
- Costs of Various Savings Plans: Perhaps the most significant consideration you need to make when choosing a savings plan is its cost. When choosing the ideal savings plan, you must have a thorough understanding of the charges and rates involved. Before you decide to buy a specific type of savings plan, carefully understand the terms and conditions, your requirements, and affordability to make an informed decision. After all, what will be the use of investing in a plan, if you cannot continue paying for it in the long run?
- Identify Your Goals: Define your short-term and long-term financial goals. Are you saving for a down payment on a house in five years, or a comfortable retirement in 20 years? Clarity on your objectives is crucial.
- Consider Your Risk Tolerance: Are you comfortable with market fluctuations, or do you prefer guaranteed returns? Understanding your risk appetite helps narrow down your options.
- Investment Tenure: How long do you plan to invest? Are you looking for a short-term savings solution or a long-term wealth builder? Matching your investment horizon to the plan's tenure is essential.
- Plan Features: Compare features like guaranteed bonuses, loyalty additions, and rider options. Choose a plan that offers benefits aligned with your needs and goals.
- Flexibility and Liquidity: Assess the plan's flexibility in terms of premium payment modes and withdrawal options. Unexpected situations may arise, so having some liquidity is crucial.
- Cost Comparison: Don't just focus on returns; compare the total cost of ownership, including premium charges, fund management fees, and surrender charges. Choose a plan that offers good value for your money.
- Reputed Company: Invest in a plan from a financially stable and trustworthy company with a proven track record. Do your research and choose a company known for its customer service and ethical practices.
The Way Forward
It's never too early to start a saving plan and set yourself on a path to achieve important life objectives. A saving plan is the most preferred choice for all age groups, as it helps you in achieving your life goals easily. But remember to review and assess your needs and objectives, before deciding on a savings strategy.
