It is always worth having an insurance policy that safeguards you and your family’s financial condition and lends a helping hand when difficult times strike. One of the most important features of certain life insurance plans is the savings component. Unlike the traditional savings, a savings plan, also known as an endowment plan, is a life insurance product, designed to boost your savings corpus while ensuring financial protection. Thus, when you understand the importance of a savings plan, it also helps you select the best endowment policy for yourself and your loved ones.
What Does a Savings Plan Do?
As opposed to the traditional means of saving money, a savings plan is a type of life insurance plan that enables an individual to receive the protection of an insurance cover, invest and also save funds for future expenses. Hence, you are not only protected under a savings plan but can also build a savings corpus for a later date and event while also benefiting from the habit of saving during the tenure of the policy. But apart from that, it is essential to look into a few important reasons why you should have a savings plan.
Five Reasons to Have a Savings Plan
- Saves your Taxes:
Under Section 80C of the Income Tax Act, 1961, the premiums paid under your life insurance policy are eligible for tax benefits, just like any other insurance plan. Since the savings plan is a life insurance product, an exemption of up to Rs. 1.5 lakhs on the premiums paid can be availed for the same.
- Helps you meet your goals:
When you opt for a savings plan, they are meant to serve your long-term financial goals. Be it funding further education or the wedding of your children, or your retirement plans, a savings plan is an efficient way to achieve your medium to long-term financial goals.
- Inculcates financial discipline:
It makes a difference when you start saving your money instead of just understanding its importance in your life. With a savings plan, you can be sure that the premiums paid regularly towards the policy give you a reason to make savings a part of your financial planning, thus helping you build a beneficial corpus for the future.
- Financial cover:
A savings plan not only protects you and your family during the tenure of the policy and in your absence, as a life insurance policy would, but also ensures that the regular payouts at the end of the policy will cover your financial goals as well.
- Savings plans are flexible:
Savings plans can be customised to meet the needs of people with varying financial needs and goals. Saving purposes can differ with one’s preference, and so, you can choose from endowment life insurance options or regular payouts or whatever best suits your needs. Or you could go for life insurance with money-back plans that will financially aid you once the policy matures.
What to remember while choosing a savings plan?
While there is no dearth of insurance providers who offer flexible savings plans, it is essential to remember a couple of important things before you buy a savings plan:
- A savings plan like an endowment life insurance policy or a money-back plan is an ideal pick for risk-averse investors and policyholders since the tenure of a savings plan allows for the accumulation of a considerable corpus.
- If you would like to enhance your savings plan, then you can choose from the riders available that can help your savings plan offer 360-degree protection.
A savings plan can be a real blessing when your annual income does not suffice for your long-term goals. From fostering a steady habit of saving for the future through an insurance plan to protecting yourself and your family, a savings plan can be an ideal solution to fulfilling your financial needs without compromising on your regular expenses.