Should You Consider a Guaranteed Savings Plan Over Monthly Schemes? Know Here
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Kotak Assured Savings Plan

Should one prefer a guaranteed savings plan over monthly income schemes?

A Guaranteed Savings Plan provides guaranteed returns with minimal risk and yields high returns and tax benefits. Know why you should prefer a guaranteed savings plan over monthly schemes.

  • Dec 05, 2022
  • 2,555 Views

One hustles and toils their entire life to achieve their financial objectives. It goes without saying that it is crucial to invest your hard-earned money in a manner that maintains it secure. A savings strategy can speed up the completion of your long-term objectives, whether you are preparing for your post-retirement lifestyle or the marriage of your children. While there are many ways to save money and boost the value of your investments on the financial market, including monthly savings plans, life insurance, savings plans, etc. You can also receive the assurance of fixed and guaranteed returns with a guaranteed savings plan.

The premium amount, tenure, death benefits, lump sum payout vs monthly pension alternatives, returns, terms and conditions of the plan, etc., should all be considered before making a purchase.

What is a Guaranteed Savings Plan?

A guaranteed savings plan is a traditional non-participating policy that guarantees a return on your savings. By paying the premium on time, you are promised returns that will enable you to achieve your long-term objectives upon plan maturity.

How is the Guaranteed Savings Plan better than a Monthly Income Scheme?

The conservative, low-risk investors who seek a consistent income stream typically favor monthly income schemes, which are programs in which you invest a set amount regularly. It offers liquidity and offers a set monthly return. Some of the most popular monthly savings plans include Fixed Deposits, Post Office Monthly Income Plans, Corporate Deposits, and Senior Citizen Saving Plans.

However, the monthly income programs typically do not provide a set income. Therefore, GSP will be ideal if you want to make long-term investments to help you achieve your objectives, like retirement. The following advantages of GSP also make it an excellent option for long-term plans:

Guaranteed Maturity Benefits

You receive the guaranteed maturity benefit as stated when the plan matures. Depending on your needs and objectives, you can acquire the same using different techniques like a lump sum payout or a monthly payment. The beneficiary will get the promised returns in the tragic event of the policyholder’s passing.

Feasibility

Depending on your goals and finances, you can determine the length of your plan and its coverage. Compared to traditional life insurance, the premium paid is reasonable and provides better returns. The basic sum assured, the guaranteed addition, and the loyalty addition makes up the entire maturity benefits. The experts advise investing in GSP for a more extended period of time to maximize rewards.

Tax benefits

For premiums paid up to ₹150,000, you are eligible for a tax exemption under section 80C of the Income Tax Act of 1961.

Flexibility

You can select a plan based on your financial situation and personal preferences. For instance, if you are saving for retirement, you might choose longer-term insurance; if you are saving for your child’s education, you might choose a shorter-term policy. You can receive the guaranteed amount in a single sum after the term or in monthly instalments. Depending on your interests, you can decide between a lump sum and a monthly income. The lump sum is paid once, whereas the monthly payment is delivered to you for the rest of your life, allowing you to spend it however you see fit.

On the other hand, a monthly pension payment is a regular payment schedule that ensures the policyholder will receive monthly money for the rest of their lives to cover their basic necessities. If you need clarification on whether a lump sum payout or monthly income is a better alternative, define your objectives and choose your financial strategy.

Conclusion

Monthly pensions assist you in maintaining a respectable standard of living, whereas a lump sum payment gives you flexibility and discretion in how you spend the money. If you want assured returns for your future ambitions, a Guaranteed Savings Plan from a trustworthy insurance provider is the best option. It has low risk, produces high returns, has tax advantages, and gives investors a variety of payout possibilities. These plans also give you the option of a limited premium payment period and guaranteed maturity benefits to achieve your financial goals.

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Features

  • Increasing Life Cover*
  • Guaranteed^ Maturity Benefits
  • Enhanced Protection Through Riders
  • Tax Benefits
  • Dual Benefits: Guaranteed^Maturity + Death benefits

Ref. No. KLI/22-23/E-BB/999

T&C

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Features

  • Enhanced Protection Through Riders
  • Life Cover
  • Tax Savings
  • Multiple Premium Payment Terms
  • Guaranteed @ Loyalty Addion
  • Accrued Guaranteed @ Additions

Ref. No. KLI/22-23/E-BB/490

T&C

- A Consumer Education Initiative series by Kotak Life

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