Buying life insurance is one of the best ways to secure your family’s financial future even when you are not around. And while you secure their future, you must not ignore the importance of investment and savings for your future goals like building a retirement corpus, buying a home, etc. This will help you enjoy the second-innings of your life without facing any financial shortfall, and you can live the life you always wanted for yourself.
When you talk about investment and savings, you may invariably think of traditional options like bank fixed deposits or savings accounts. However, these instruments provide limited returns, and with inflation snowballing, the corpus you build may be insufficient. This is where a guaranteed savings plan comes as an effective solution.
As the name suggests, a guaranteed savings plan allows you to build a corpus for the future and provides valuable returns with a compounding effect while securing your family with life insurance protection.
Let us look at the benefits of buying a guaranteed savings plan.
Flexible premium payment option
Like other insurance policies, a guaranteed savings plan gives you the flexibility to choose the premium payment mode. You can premium in two ways. You can either pay the premium in a lump sum or for a limited period.
For example, if you don’t want to go through the hassles of paying a regular premium and remembering the due dates, you can choose the lump sum payment mode.
Guaranteed maturity benefits
The primary objective of investing in a guaranteed savings plan is to let your savings grow over time and get valuable returns. As per the guaranteed savings plan guidelines, you can be assured of getting guaranteed returns upon policy maturity. The insurance company will pay the amount, which will be equal to the amount stated in the contract when you start the investment. However, this is applicable only if you survive the policy term. If not, your nominee will receive the death benefit and the accrued interest.
Avail of a loan
A financial emergency can occur anytime, and you may need access to quick cash to meet specific expenses. Investment in a guaranteed savings plan can be helpful in such a situation. You can avail of a loan against the surrender value of the policy.
The maximum amount you can borrow may differ from one insurance company to another. Generally, the maximum value permitted is 80% of the surrender value of your plan. You can use the amount for different purposes like paying medical bills, home renovation, down payment for a new house, etc.
A guaranteed savings plan is an excellent tax-saving instrument. You can enjoy a yearly tax benefit on the premium you pay up to ₹1.5 lakhs in a financial year under Section 80C of the Indian Income Tax Act. If you choose the one-time premium payment mode, you can get the benefit only in the same year of premium payment.
Investing in a guaranteed savings plan is a great way to secure your family’s future and accomplish your long-term goals. But make you understand the terms and conditions before making the final investment decision.