Savings Plan
A savings plan is a reliable financial instrument that helps individuals build wealth gradually while maintaining a sense of financial stability and security. By committing to regular contributions, a savings plan enables long-term financial growth along with life insurance protection. ... It is an ideal choice for those seeking a disciplined approach to savings, offering assured returns and tax benefits. Be it planning for your future, your child's education, or retirement, saving plans serve as a smart tool to achieve your life goals with confidence. Read more
Kotak Assured Savings PlanBestseller
Pay ₹10,000/month for 10 years
Get
₹26,40,213 Lakhsafter 20th year
Death benefit/Life cover upto:
₹26,40,213 Lakhs#
Guaranteed@Returns
Kotak Guaranteed Fortune Builder
Pay ₹1,00,000 year for 10 years
Get(at the end of 11thyear)
₹1,15,236/year for 25 years
Life cover/death benefit:
₹13,20,000$
Plan Option: Income Only
Amit Rajeis 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 Pimplehas 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
What are Savings Plan?
Savings plan are financial solutions that help you set aside money regularly to prepare for future needs while offering life insurance protection. These plans foster disciplined saving habits and offer a combination of security and returns. A savings plan can help you accumulate a huge corpus over time, ensuring you're financially prepared for life goals such as buying a home, funding your child’s education, or planning for retirement.
So when someone asks what is savings plan? The answer is simple, “It is a financial product that blends disciplined investing with life coverage to help individuals meet their long-term objectives.”
Most savings plans come with a maturity benefit that is paid out at the end of the policy term. Some also offer regular income options, giving you greater control and flexibility. In addition to financial growth, saving plans provide insurance coverage, offering peace of mind for you and your family in case of unforeseen circumstances.
Many plans can be customized with add-ons like critical illness coverage or accidental death benefits, making them a well-rounded financial solution. Whether you’re looking for stability, growth, or protection, choosing the best savings plan aligned with your financial goals can help you move forward with confidence.
Invest in a Savings PlanWhy Invest in a Savings Plan?
Investing in a savings plan is a practical step toward achieving long-term financial security and stability. These plans not only help you build a disciplined savings habit but also ensure that you are better prepared for unexpected life events. Be it dealing with medical emergencies, buying a house, or supporting your child’s education, a well-chosen savings plan empowers you to meet these goals without financial strain.
Savings plans are especially valuable for retirement planning, as they help you create a financial cushion for your golden years. By starting early and selecting a plan that suits your financial goals and risk profile, you can gradually build a strong foundation for a worry-free future. A proactive approach of saving today can lead to a secure and fulfilling tomorrow, for you and your loved ones.
Best Savings Plans in India
Choosing the right savings plan is essential for managing your money well. This can help you prepare for emergencies and plan for your future needs. In India, you have many options, from traditional ones like fixed deposits to more modern choices like mutual funds. Here's a simple look at these options:
Fixed Deposits
Fixed Deposits (FDs) are a traditional savings option that offer stable returns at fixed interest rates over a chosen term. They ensure capital protection and are insured by DICGC (Deposit Insurance and Credit Guarantee Corporation) up to ₹5 lakhs, making them one of the safest investment choices.
FDs typically earn higher interest than regular savings accounts and are ideal for conservative or short-term investors. You can invest for durations ranging from 7 days to 10 years, and while premature withdrawals are allowed, a small penalty may apply depending on the financial institution's terms.
Recurring Deposits
Recurring Deposits (RDs) let you invest a fixed amount every month for a specific period, earning interest on your savings. They’re ideal for those who prefer disciplined, gradual saving. RDs offer flexibility in choosing the tenure and deposit amount, making them accessible for different income levels.
Interest rates are fixed and generally higher than savings accounts. This investment suits individuals aiming to build a secure financial cushion over time without risking their capital. Early withdrawals are possible but may attract a nominal penalty depending on the bank’s policy.
Public Provident Fund (PPF)
Public Provident Fund (PPF) is a government-backed savings scheme ideal for long-term financial planning. With a 15-year lock-in, it offers guaranteed, risk-free returns and allows partial withdrawals or loans against the balance.
Contributions up to ₹1.5 lakh annually qualify for tax deductions under Section 80C, and interest earned and maturity proceeds are also tax-free. You can invest as little as ₹500 a year, making it accessible to all income levels. PPF is well-suited for those seeking safe, tax-efficient retirement savings with steady growth.
National Savings Certificate (NSC)
National Savings Certificate (NSC) is a fixed-income investment backed by the Government of India, available at post offices nationwide. With a five-year lock-in period, NSCs offer guaranteed returns and full capital protection, making them a safe option for risk-averse investors.
The interest is compounded annually and reinvested, boosting overall returns. These investments qualify for tax deductions under Section 80C, and there’s no upper limit on how much you can invest. While it may not beat inflation, NSC ensures steady growth and stable income for medium-term savings goals.
Sukanya Samriddhi Yojana (SSY)
Sukanya Samriddhi Yojana (SSY) is a government-supported savings scheme aimed at securing the future of girl children under the 'Beti Bachao, Beti Padhao' initiative. It allows parents or guardians of girls aged 10 years or younger to invest for goals like education and marriage.
SSY currently offers a high interest rate of 8.2% per annum, compounded annually, with tax benefits under Section 80C. The scheme is also triple tax-exempt, offering deductions on contributions, and tax-free interest and maturity proceeds, making it ideal for long-term, tax-efficient saving.
Employee Provident Fund (EPF)
Employees’ Provident Fund (EPF) is a compulsory savings scheme designed to help salaried individuals build a retirement corpus. Both employer and employee contribute a fixed percentage of the salary each month.
EPF is managed by the Employees’ Provident Fund Organisation (EPFO) and offers tax benefits under Section 80C. It ensures long-term savings with risk-free returns and is transferable between jobs. The funds can be withdrawn at retirement or partially during emergencies like home purchase or medical needs, making it a flexible and secure retirement planning tool.
Mutual Funds
Mutual Funds pool money from several investors to invest in a diversified mix of assets such as stocks, bonds, and other securities. These funds are managed by professional fund managers who aim to maximize returns based on the fund’s objective.
Mutual funds cater to various risk appetites, ranging from conservative debt funds to aggressive equity funds. They offer liquidity, transparency, and potential for long-term capital growth. While returns are not guaranteed, the diversification helps reduce risk, making them suitable for investors looking to grow wealth steadily over time.
Unit-Linked Insurance Plans (ULIPs)
Unit-Linked Insurance Plans (ULIPs) are hybrid financial tools that offer both life insurance and investment opportunities in one plan. A portion of your premium provides life cover, while the remaining is invested in market-linked funds like equity, debt, or balanced options.
ULIP plans allow fund switching based on your risk tolerance and market outlook. Ideal for long-term goals, they offer tax benefits and flexibility in investment strategy. ULIPs are suited for those seeking protection for their loved ones alongside wealth creation through disciplined, market-driven investments.
Monthly Income Plans
Monthly Income Plans (MIPs) are mutual fund schemes designed to provide consistent income while preserving capital. They primarily invest in debt instruments with limited equity exposure to generate better returns than fixed deposits, yet with relatively lower risk. MIPs are ideal for conservative investors seeking regular income with moderate risk.
Monthly saving plans offer flexibility in payout options, investors can opt for dividends, systematic withdrawals, or reinvestment through the growth option. Managed by professionals, MIPs offer diversification, regular income potential, and customization based on financial goals and risk tolerance.
Money Back Plans
Money Back Plans are insurance policies that combine investment growth with life coverage. They offer periodic payouts, which are a fixed portion of the total sum assured, paid to the policyholder at specific intervals during the policy term. At maturity, the insured receives the remaining amount plus any bonuses earned.
Additionally, if the policyholder passes away before maturity, their beneficiaries receive a death benefit separate from the survival payouts. This plan ensures steady returns while providing financial protection to the family.
Endowment Plans
Endowment plans are versatile life insurance policies that combine financial protection with disciplined savings. They offer life cover to safeguard your family’s future, ensuring financial support if you pass away unexpectedly. Simultaneously, these plans help accumulate a lump sum over time, ideal for goals like buying a home or funding education.
The maturity benefit is guaranteed and unaffected by market volatility, providing stability. Additionally, endowment plans offer flexible premium payment options: monthly, quarterly, yearly, or as a lump sum, making it easy to tailor the plan to your budget and needs.
Post Office (PO) Savings Scheme
The Post Office Savings Scheme is one of India’s safest and most trusted saving options, backed by the Central Government’s sovereign guarantee. It offers a fixed interest rate of 4% per annum, providing steady and secure returns.
With a low minimum deposit of just ₹500, it’s accessible for all savers. Ideal for cautious investors, PO savings accounts are perfect for parking surplus funds temporarily or saving towards short-term goals like buying a gadget or planning a vacation, ensuring your money grows with minimal risk.
Senior Citizen Savings Scheme (SCSS)
The Senior Citizen Savings Scheme (SCSS) is a secure, government-backed retirement savings plan for Indian residents aged 60 and above. It allows senior citizens to invest between ₹1,000 and ₹30 lakh for a five-year term, earning a fixed interest rate of 8.2% per annum.
The scheme features a straightforward application process and can be opened at authorized banks or post offices nationwide. Accounts are transferable between branches, offering convenience. Additionally, the maturity period can be extended by three years at applicable interest rates, enhancing retirement income stability.
Atal Pension Yojana (APY)
Atal Pension Yojana (APY) is a government-supported social security initiative designed to provide a guaranteed monthly pension to senior citizens. Built on the National Pension Scheme (NPS) framework, it offers retirees a fixed pension ranging from ₹1,000 to ₹5,000 based on their contributions during their working years.
The Central Government assures the pension, ensuring stable post-retirement income. Previously open to Indian citizens aged 18 to 40 with savings accounts and non-taxpayers, contributions vary according to the subscriber’s age and targeted pension amount.
National Pension Scheme (NPS)
The National Pension Scheme (NPS) is a flexible, market-linked retirement savings plan available to all Indian citizens. It offers a low-cost way to build a retirement fund through regular contributions managed by professional fund managers across equities, debt, and government securities. Subscribers must contribute consistently during their working years.
At retirement, a portion of the corpus can be withdrawn as a lump sum, while the remainder is used to purchase an annuity, ensuring lifelong pension income. NPS also provides extra tax benefits of up to ₹50,000 on voluntary contributions.
| Savings Plan | Returns / Interest Rate | Lock-in Period | Minimum & Maximum Premium Amount | Tax Benefits |
|---|---|---|---|---|
| Fixed Deposits (FDs) | Fixed interest, higher than savings accounts | 7 days to 10 years | Varies by bank, no fixed minimum | Interest taxable, principal under Section 80C if applicable |
| Recurring Deposits (RDs) | Fixed interest rate, higher than savings accounts | 6 months to 10 years | Monthly installments as per plan | Interest taxable, principal under Section 80C if applicable |
| Public Provident Fund (PPF) | Guaranteed returns, currently ~7.1% p.a. | 15 years | ₹500 to ₹1.5 lakh per year | Triple tax exemption: contribution, interest, maturity |
| National Savings Certificate (NSC) | Fixed interest, compounded annually, revised quarterly | 5 years | No maximum limit | Principal & interest eligible for deduction under Section 80C |
| Sukanya Samriddhi Yojana (SSY) | High interest, currently ~8.2% p.a. | 21 years or till marriage of girl child | Min ₹250, max ₹1.5 lakh per year | Triple tax exemption on deposit, interest, and maturity |
| Employees’ Provident Fund (EPF) | Risk-free, interest ~8.25% p.a. | Until retirement (~58 years) | As % of salary, no fixed limit | Contribution and interest tax-exempt, maturity tax-free |
| Mutual Funds | Market-linked, varies by fund type | No fixed lock-in; exit load may apply | Min ₹500 SIP or lump sum varies | Equity funds: 1-year gains tax-free; Debt: indexation benefits |
| Unit-Linked Insurance Plans (ULIPs) | Market-linked, varies by fund | Typically 5 years | Premium depends on plan | Premium & maturity proceeds eligible under Section 80C |
| Monthly Income Plans (MIPs) | Debt-oriented, steady income, market-linked | No fixed lock-in | Minimum varies | Dividend income taxed as per slab |
| Money Back Plans | Fixed returns + bonuses | Typically 15–20 years | Premium varies | Premium under Section 80C, maturity generally tax-free |
| Endowment Plans | Guaranteed maturity sum | 10–20 years | Flexible premium frequency | Premium under Section 80C, maturity tax-free |
| Post Office Savings Scheme | Fixed 4% p.a. interest | None | Min ₹500 to open | Interest taxable, no deposit tax benefit |
| Senior Citizen Savings Scheme (SCSS) | Fixed 8.2% p.a. interest | 5 years (extendable 3 years) | Min ₹1,000, max ₹30 lakh | Deduction under Section 80C on deposit |
| Atal Pension Yojana (APY) | Guaranteed pension ₹1,000–₹5,000 | Until death or withdrawal | Contribution varies by age/pension amount | Contribution eligible under Section 80C |
| National Pension Scheme (NPS) | Market-linked returns | Till retirement (~60 years) | Min ₹500 per contribution | Up to ₹2 lakh tax deduction under 80C + 80CCD(1B) |
Importance of Buying a Savings Plan
Economies today are witnessing constant fluctuations, and there are always events that people cannot predict. It is for this reason that people have to plan and make the right investments. The importance of a savings plancannot be overstated, as it can be one of the options that offers stability and growth over time.
Building a Safety Net
Life is very unpredictable, and things like medical emergencies, job loss, or any disaster can keep your finances in disarray. By investing in a savings plan, creates a cushion to cover you and members of your family whenever there is a crisis. Such policies will help you with funds available when the need arises so that you will not risk your financial health anytime you are facing an unexpected challenge.
Encouraging Disciplined Saving Habits
The most important advantage of a savings plan is to instill discipline and consistency in your saving habits. Committing yourself to regular, dedicated contributions toward your plan actually imbibes a sense of financial responsibility. The habit of setting aside a predetermined fund each month not only helps you achieve your short-term goals and long-term plans.
Capitalizing on Compound Interest
Compound interest is a process whereby you get interest on interest in addition to the principal amount, reinvested and compounded over time. In case you put your money in a savings plan as early as possible, money grows long, and returns will accumulate exponentially over a long period. This is referred to as compounding which can significantly augment your wealth and help realize your financial goals well before time.
Achieving Financial Goals
Whether it is to buy a house, fund his or her education, or some other plans for retirement, every individual has definite financial goals he or she wishes to achieve. A savings plan acts as an organized strategy to accomplish goals. One can set aside money at regular intervals and then invest and thereby capitalize on the investment-growth potential on his or her way towards achieving that goal in the desired time frame.
Tax Benefits and Flexibility
Many savings plans offer attractive tax benefits that can help you optimize your tax liability. Contributions made towards certain types of savings plans are eligible for tax deductions, providing you with valuable and great savings. Additionally, some plans also offer flexibility in terms of withdrawal options and the ability to customize your investment strategy, allowing you to align your financial planning with your unique needs and circumstances.
How to Choose the Right Savings Plan?
Saving money is important forfinancial planning, helping individuals achieve their short-term and long-term goals. The best savings plan in India are the ones that match your requirements. However, choosing the best savings scheme can be difficult since numerous options are available. To make an ideal decision, it is essential to consider various factors, including the important things to remember when investing in a savings plan, and align them with your financial plans.
Define Your Financial Goals
Start by identifying what you’re saving for. Are you planning for a short-term goal, like a vacation or buying a car, or a long-term goal, such as retirement or a child’s education? Each goal may require a different type of savings plan with varying time commitments and returns.
Identify Your Savings Goals
Start by clearly defining what you are saving for. Is it for a short-term need like funding a vacation, or a long-term goal such as securing your retirement? Understanding the purpose of your savings will help you choose a plan that offers the right balance of risk and return.
Evaluate Your Financial Health
Take a thorough look at your financial situation—your income, debts, and other obligations. This will help you determine how much you can afford to save regularly without compromising on your current lifestyle.
Consider Your Risk Appetite
Assess how much risk you are willing to take. If you prefer safety and predictability, you might lean towards traditional fixed deposits or guaranteed return plans. If you are comfortable with market fluctuations and are looking for higher returns, you might consider equity-linked savings plans or mutual funds.
Look for Flexibility and Benefits
Choose a savings plan that offers flexibility in terms of payment options, withdrawals, and changes in investment choices. Additionally, consider the benefits each plan offers, like tax advantages, loan facilities against the plan, and bonuses.
Compare Plans Thoroughly
Before making a decision, compare different plans based on their features, benefits, flexibility, costs, and past performance. This can often be done through online comparison tools, or you might want to consult with a financial advisor for a more detailed analysis.
Tax Considerations
Understanding the tax implications of a savings plan can have a big impact on your returns. Look for plans that offer tax benefits under Section 80C or tax-free maturity benefits under Section 10(10D), depending on your goals and income level.
- Example: If you’re in a high tax bracket, a savings plan with tax-deductible premiums and tax-exempt maturity benefits, can help reduce your overall tax liability and maximize savings.
Regularly Review and Adjust
After you have picked your savings plan according to your financial goals, you then need to regularly review and adjust your saving strategy. This is very important as both your financial situation and personal goals may change overtime. You should periodically check the performance of your savings plan while also taking a look at your rest tolerance at the same time. This will help you make any necessary changes to keep you secured over time. For instance, imagine you originally selected a savings plan when your objective was to save money for a house. Three years later, upon getting a promotion, your objective changes to saving for your children's education. By reviewing your plan, you can increase your monthly premiums or opt for a high-return strategy to ensure that your money grows faster and aligns better with your new financial goals.
