Guaranteed Savings (Endowment) Plan vs Fixed Deposit (FD)
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What is better - Guaranteed Savings Plan or Fixed Deposit?

 What is better - Guaranteed Savings Plan or Fixed Deposit?
  • 15th Jul 2022 |
  • 2,421

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.

What is a Guaranteed Savings Plan

A guaranteed Saving 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.

Features of a Guaranteed Savings Plan

Various features of guaranteed saving plans are listed below:

Premium

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.

Policy Term

The policyholder can choose the term that suits their needs.

Guaranteed Maturity Benefit

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.

Death Benefit

Many policy providers offer death benefits as well. The benefit is provided to the beneficiary in case of the sudden demise of the policyholder.

Trial Period

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.

Revival

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.

Loans

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.

Guaranteed Savings Plan vs Fixed Deposit

Factors

GSP

FD

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.

Kotak e-Invest

In this policy, the investment risk in the investment portfolio is borne by the policyholder.

Features

  • Return of Mortality Charges*$
  • Enhanced Protection
  • Multiple Plan Options
  • Zero Premium Allocation Charges
  • Tax Savings^

Ref. No. KLI/22-23/E-BB/521

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