When planning for the future, many people turn to life insurance policies to provide for their loved ones in the event of an unexpected tragedy. But what if you could get more out of your life insurance policy than just financial security? In this article, we’ll delve into what a savings plan in insurance is and what the best savings plan can offer.
Life Insurance vs. Savings Plan
Before diving into savings plans, let’s briefly discuss the difference between life insurance and savings plans. Life insurance policies provide financial protection to your beneficiaries during your death. In exchange for regular premium payments, your insurance company will pay a death benefit to your beneficiaries upon your passing.
Whereas saving insurance plans are a combination of life insurance policies and savings as they offer financial protection to the family of the policyholder in case of their sudden demise and also put some of the premia into savings accounts. Over the period, this savings account will also act as a financial umbrella, which will grow along with interest and help your family live with proper financial safety and security.
Types of Savings Plans
There are various saving schemes or plans provided by the insurance company, each with its own advantages and disadvantages drawbacks such as:
- Endowment Plans: These plans offer both life insurance and savings components. And in addition at the end of this policy term, the policyholder will receive a lump sum amount, which can be used for various purposes.
- Money Back Plans: Money-back plans provide regular payouts to policyholders throughout the policy term. These payouts are a percentage of the sum assured and can be used to cover expenses or invest in other opportunities.
- ULIPs: Unit Linked Insurance Plans (ULIPs) are savings insurance plans that invest in equity and debt markets. The returns from these investments are then used to provide policyholders with financial security.
Savings Plan Benefits
When choosing a saving plan for your future, it better looks at various options and benefits available. For instance, the Tata AIA savings plan has some features, like loyalty additions to boost savings over time, that may make it a good choice for those looking for a long-term savings plan. Further, with a savings plan, the policyholder can customise their plans according to their specific needs and requirements and choose flexible premium payment options.
There are several benefits of saving plans which make them a popular choice for those looking to secure their financial future.
- Dual Benefit: The top benefit that a savings plan offers is life insurance coverage and savings of premium amount both in a single. It gives policyholder families higher financial security in comparison to other plans.
- Tax Benefits: The policyholders can leverage the benefit of a tax deduction on premium payments made towards a savings plan under Section 80C of the Income Tax Act. In addition, the maturity benefit given to the beneficiaries is also tax-free under Section 10(10D) of the Income Tax Act.
- Flexibility: With Savings plans, you’ll get the option of flexibility as they offer the option of choosing the policy term length to the frequency of premium payments, which makes it easy to find a plan that fits policyholders’ unique financial goals and needs.
No doubt, saving plans help you leverage the benefits of saving and life insurance, which makes it an attractive and affordable choice for the policyholder. Savings are also the secondary source of income that boosts your wealth and secures your family’s future from future uncertainties. So start finding the best savings plan to secure your financial future by researching and working with a trusted financial advisor today.