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Kotak e-Term Plan

Kotak e-Term Plan provides a high level of protection to your loved ones in your absence. Know more

Kotak Guaranteed Savings Plan

Kotak Guaranteed Savings Plan is a savings and protection plan that helps you achieve long-term financial goals and provides an insurance cover against any eventuality. Know more

Kotak E-Invest

Kotak e-Invest plan is a complete Unit-Linked Insurance Plan that can be customized as per your goals and needs. Know more

Kotak Health Shield

Kotak Health Shield Plan helps secure your finances in sudden medical expenses such as Cardiac, Liver, Neuro, and Cancer (all early and significant illness stages/conditions of cancer), along with offering protection for personal accidents - in case of accidental death or disability. Know more

Kotak Lifetime Income Plan

Kotak Lifetime Income Plan gives you the security of your income continuing throughout your life and in your absence throughout your spouse's lifetime! Know more

Why Should You Consider Guaranteed Savings Plan for Long-Term Investment?

 Why Should You Consider Guaranteed Savings Plan for Long-Term Investment?
  • 20th Jun 2022 |
  • 3,228

Retirement planning is one of the most important things that we do as younger versions of ourselves. One retires from work, not life. Our goal is to achieve financial security and stability during our work-life’s peak days of activity. Retirement is about living your life with dignity and having enough monthly income to maintain a smooth lifestyle easily.

Importance of Retirement Planning

Financial independence

Old-aged people often feel like a burden on their families due to financial dependence. Financial independence ensures higher self-worth and better interpersonal relations.

Medical emergencies

Healthcare expenses are non-negotiable, unlike other financial goals. Since inflation in the healthcare sector is growing at an alarming rate, it is crucial to plan for unexpected emergencies.

Better health

Financial stress is responsible for many diseases such as diabetes, heart disease, migraine headaches, anxiety, depression, insomnia, etc. If you have planned your post-retirement life already and secured your finances, it will protect you from stress, hence contributing to better health.

Fulfill your post-retirement goals

With the right retirement plan, you can achieve all your goals, including traveling, children’s higher education, marriage, etc.

Fight inflation

Holding money in a bank account is insufficient to fight inflation today. Therefore, assured return investment plans help you generate significant returns to meet your expenses.

Also, it is suggested to start investing for retirement at a younger age. This is cost-effective and averages out the overall impact of the market volatility.

Savings Plan - Overview

There are many plans in the market for retirement savings; however, the goal of most individuals is to save maximum for their retirement years. Also, since it’s about retirement, dependency on high-risk investments is hardly a choice.

Guaranteed Savings Plans are the best life insurance plans with guaranteed returns for those looking for a retirement policy. In addition, the features of the Guaranteed Savings Plan make it an excellent long-term investment option, alongside making it quite popular among people looking for such investment.

The best Guaranteed savings plans or GSP available in the market can also serve as the best long-term savings tool. Investment in this guaranteed return investment plan can be planned for meeting retirement expenses in addition to the basic pension. You can also plan it to support the cost of higher education or as a personal investment for other futuristic purposes.

Let’s understand what a Guaranteed Savings Plan is and why are GSPs considered good for long-term investment. Let us first understand what GSP is and then maybe move on.

What is Guaranteed Savings Plan?

A Guaranteed Savings Plan or GSP is a non-participating policy that helps individuals achieve their long-term goals by offering an assured return on their savings coupled with a secured insurance cover against uncertainties of life. These plans offer life insurance with guaranteed returns and are traditional. They do not involve the policyholder directly in investment activities like ULIPs.

You are eligible for a lump sum amount or a regular payment as a monthly or annual income over a given time at the time of maturity and other benefits. These are guaranteed payments that the insurer has to pay you.

In addition to this, they serve as tax saver plans. The premiums paid up to ₹1.5 lacs per annum are exempt under Section 80C of the IT Act, 1961.

Hence, the policyholder can avail themselves of the tax benefits as per current income tax laws prevailing in India.

Once the plan matures, the policyholder receives the final amount. The total amount is the sum of all the premiums along with interest. In case of the policyholder’s unfortunate demise, the beneficiary gets the death benefit.

Furthermore, the interest paid here is much higher than the conventional types of life insurance. (Note: The policy should be ongoing and not matured.) The terms and conditions for a savings plan might vary according to the bank or service provider. The minimum age limit is from 0 to 60, while the maximum age ranges from 18 to 75 years.

However, it is important to read all the policy-related documents before opting for life insurance plans with guaranteed returns like the GSP.

Documents required to apply for a Guaranteed Savings Plan

  • Application form
  • Proof of identity
  • Proof of address
  • Salary and occupation proof
  • KYC documents
  • Medical documents are required sometimes to show a detailed medical history.

Why are GSPs Considered Good for Long-Term Investment?

When you talk about Guaranteed Savings Plan, it’s understood that it is an endowment plan with guaranteed returns. Now, why should you consider guaranteed savings plan a good option for long-term investment?

This is the best-guaranteed return plan as the total amount you receive is higher than other types of life insurance.

Total Maturity Benefits = Basic Sum Assured (BSA) + Guaranteed Addition (GA) + loyalty addition (LA)

A very straightforward answer is that the longer you stay invested in GSP, the better returns you get. If you look at the policy terms and guidelines of most of the insurance providers, you get the option to opt for a policy term of 14,15,16, or 20 years, with different premium payment terms. You need to specify the time duration of maturity for the savings plan before signing up.

You can choose to pay the premiums according to your preferences. You can pay a lump sum in a single shot to avoid the hassle or pay the premiums at regular intervals.

Now, if you do the math on all of these policy terms and the time you have invested in GSPs, you will get enough idea of the long-term benefits of GSP compared to a shorter tenure. This makes it one of the best investments for people planning to invest for long-term financial goals like retirement. GSPs help you leap ahead in your financial capabilities and fulfill your future milestones. So choose the best investment plan with guaranteed returns and secure your post-retirement life.

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

T&C

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