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In this policy, the investment risk in the investment portfolio is borne by the policyholder.
Kotak e-Invest
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Ref. No. KLI/22-23/E-BB/492
Know the difference between the two most popular investment schemes in India: Endowment Plan (guaranteed savings plans) vs Fixed Deposits.
Keywords: fd vs endowment plan, endowment plan vs fixed deposit, fixed deposit vs endowment, endowment vs fixed deposit
Everyone is working hard to get the best lifestyle and manage a luxurious living for their family. It is extremely crucial to have sufficient savings so that one can stay financially secure during uncertain times. However, keeping all the money in a savings account is not a wise financial decision. You can deposit your surplus amount in fixed deposits or any other financial instrument. Read the article to understand the difference between the guaranteed savings plan or endowment plan vs fixed deposit.
A guaranteed savings plan refers to the non-participating plans that offer an endowment assurance at a fixed amount. With this plan, the policyholder will have to pay the premiums for a fixed period. However, once the plan matures, policyholders will receive the benefits of the savings plan. The policyholder gets an assured sum of all their premiums paid at the end of the plan’s term with other additions. The additions include a fixed interest rate that is added each year. Along with this, the plan offers a maturity bonus as well at the end of the term. In addition, those who opt for a savings plan can apply for the tax benefits.
Various features of guaranteed saving plans are listed below:
With a guaranteed savings plan, you can choose to pay the premium amount either over some time period or in a single shot. These options are provided to ease the burden on the policyholders.
The policyholder can choose the term that suits their needs.
Under this plan, the policyholder is assured of getting the benefits upon the maturity of the policy. Also, the maturity benefit is payable in case the policyholder survives past the end of the policy term.
Many policy providers offer death benefits as well. The benefit is provided to the beneficiary in case of the sudden demise of the policyholder.
If the policyholder is not satisfied with the clause and terms and conditions of the policy, then they can easily cancel the policy and return the documents within 15 to 30 days of commencement.
If the policyholder wants to revive the policy that was discontinued for not more than three years ago, then the insurance provider will accept your request.
Once the policy acquires a surrender value, you may avail the loan against insurance policy facility. The amount of loan available with the savings plan varies from bank to bank and policy sum.
A fixed deposit is an investment instrument that is offered by banks, and Non-Banking Financial Companies (NBFC), to help their customers save money for future use. With a fixed deposit account, the policyholder can invest a sizable amount of money at a predetermined rate of interest for a fixed period. Banks offer different interest rates for fixed deposits. For this, you can choose a period ranging from a minimum of 7-14 days to a maximum of 10 years. The interest that the policyholder earns on the fixed deposit amount is either paid at maturity or periodically, depending on your choice.
The key features of the fixed deposits are listed below:
The return on fixed deposits is guaranteed and is more secure than any other investment plan.
The interest rate on fixed deposits changes depending upon the term you choose; however it remains constant during the term period.
For fixed deposits, you can choose a tenure ranging from 8 days to 10 years, according to your preference.
The interest earned on fixed deposits depends upon the maturity period. With a higher tenure, you can earn a higher interest.
In case of any emergency needs, you can easily avail loan against your fixed deposits. This saves the policyholder from prematurely ending their policy
Factors |
Endowment Plan (GSP) |
Fixed Deposit |
Tenure |
Ten to thirty years or longer |
One to five years |
Investment |
Min: ₹1000 Max: Limitless |
Depends from plan and plan and generally ranges between ₹2500-₹500 per month |
Returns |
Monthly, quarterly, or annually |
Guaranteed set of pre-determined returns |
Payout |
Collected funds can be invested in monthly or annual instalments, or a lump sum payout of the corpus can be opted for |
Lumpsum payout at the end of tenure |
Tax Benefits |
Premiums upto ₹1.5 lakhs are exempted under Section 80C of the IT Act |
No benefits generally. However, the 5-year tax-saving FD offers benefits under Section 80C of the IT Act |
With the above-mentioned details, you can easily differentiate between FD vs endowment plan and select which one is best for you. Fixed deposits offer a flexible tenure, whereas a savings plan offers various maturity benefits. Therefore, it is advisable to have a mix of investment plans for a good outcome.
Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.
Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors
In this policy, the investment risk in the investment portfolio is borne by the policyholder.
Kotak e-Invest
Features
Ref. No. KLI/22-23/E-BB/521
The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The content has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Further customer is the advised to go through the sales brochure before conducting any sale. Above illustrations are only for understanding, it is not directly or indirectly related to the performance of any product or plans of Kotak Life.
