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What is a savings plan?

What is a savings plan?
  • 11th Jul 2022 |
  • 2,457

There are a number of financial policies that can be opted for to ensure a secure and stable financial future. However, there are people who have a low-risk appetite and prefer opting for the safest option available in the market when it comes to investing. Investing in financial products is not rocket science if you have acquired detailed information about the product that you are planning to invest in. Savings plans are among the most popular financial products when it comes to investment. Even when you keep your money in the bank, you keep it in a savings account that yields you some interest on your deposit. In this article, we will discuss the definition, usage, and all the essential factors related to a savings plan. So, if you are looking for an accurate answer to what is a savings plan, we have got you covered.

What is a Savings Plan?

In simple terms, savings plans are a type of financial tool designed in a manner to inculcate a disciplined savings etiquette while delivering a decent return. This also ensures that while learning to invest in a disciplined way, you inch towards your financial goal. As savings plans are primarily a life insurance product, they also provide financial security for your family in case of an unfortunate event.

Best Features of a Savings Plan

Savings plans come with multiple features. However, there are certain key features that you must look for in a savings plan before investing in them. Let’s have a look at the best features of savings:

Maturity benefits

Most savings plans come with assured maturity benefits linked to them. This adds value to your savings and helps you in achieving your short-term and long-term goals. Also, if you opt for the best savings plans available in the market, then you might also get added benefits like complimentary additions and bonuses. These additions contribute towards the maturity amount and help you in reaching your financial goal faster.

Flexibility of paying premiums

The payment of premiums in a savings plan can be made on a monthly, quarterly, half-yearly, and yearly basis. Policyholders of a savings plan get flexibility to choose the frequency of premium payment as per their convenience.

Stable and regular return

When an individual opts for a savings plan, they can be assured of receiving a stable return that will compound over time. The best part is that the returns on the savings plan are risk-free and regular. This means that you don’t have to worry about losing any money that has been promised to you while opting for the policy as per the guidelines. The only condition is that you have to pay your premiums on time and in a disciplined manner.

Life insurance cover

Savings plans come with life insurance. This is a vital financial asset as it ensures the financial safety of your loved ones in case of your unfortunate demise. So, while having the most secured form of investment at your disposal, you are getting an added benefit of life insurance.

Top Benefits of Opting for a Savings Plan

While savings plans are simple insurance plans that are focused on security and stable returns, they also offer certain vital benefits. Let’s have a look at them:

Protection

A savings plan, as mentioned above, comes with life insurance. Thus, it provides financial protection to your loved ones till the policy lasts. Your dependents get a lumpsum payout amount in the case of an unforeseen event.

Retirement savings

Savings plans are a great way to build a financial corpus and accumulate retirement funds. They are the safest option and the best long-term investment option that you can opt for. Even with small monthly savings, you can accumulate a good retirement fund for yourself in the longer term.

Tax benefits

Savings plans are entitled to tax deduction under Section 80C of the Income Tax Act. Additionally, the best savings plan will also offer tax-free maturity proceeds. However, this is subject to Section 10 (10D) of the Income Tax Act.

The Best Savings Plans In India

The finance and insurance market in India is heavily crowded, and you will get multiple options as per your financial goal. However, not all options are excellent choices for everyone. Some options possess high-risk factors, while many others offer prolonged growth. Here are the best savings plans of 2022 that you must check before investing:

1. Guaranteed Savings Plan

2. National Savings Certificate

3. Recurring Deposit

4. Public Provident Fund (PPF)

5. Senior Citizen Savings Scheme

6. Atal Pension Yojana

7. Sukanya Samriddhi Yojana

Conclusion

While you may be investing in other financial products, it is important to consider investing in a savings plan too. They are stable, reliable, and keep you prepared for any eventualities without worrying about any kind of loss.

Kotak e-Term Plan

Features

  • Nominal Cost
  • Multiple Plan Options
  • Flexible Payout Options
  • Critical Illness Rider
  • Tax Savings
  • Long term Coverage

Ref. No. KLI/22-23/E-BB/492

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