Savings Plan: Usefulness and Importance of Renewal

It is exceptionally crucial to save money for contingencies or secure finance for post-retirement in times. Besides, the need to increase the wealth for taking care of self and family is also inevitable. There is one smart way to improve the situation and cater to everyday financial needs. The government, banks, and even financial companies offer various saving plans for encouraging investors to invest their money and receive high returns. You have to check both the pros and cons of your plan before you make the final step of investing your money.

Since saving has been one of the first financial habits, the idea of “saving a little today to enjoy tomorrow” has become a motto. According to many, savings plans are the best investment plans in a country like India. However, if you have already started the journey, then you are at the right place! At the beginning of the financial journey, it isn't easy to figure out if the way you are following is correct or not. Also, there is a good chance that you're not sure whether to continue this journey or not.

If you are one of those who have already invested in a Savings Plan, then congratulations, you have chosen just the right path. In this article, we will talk about how a savings plan can prove beneficial for your family's well-being. We hope by the time you have finished reading this, you will want to renew your active savings policy. But before that, we will briefly discuss a savings plan and how it benefits an investor who is willing to save for the future.

What are Saving Plans?

Saving plans are generally life insurance plans that help an individual accumulate a reasonable sum of money for the future. Saving plans offer individuals an opportunity to accumulate, save, and invest funds to fulfil their future requirements. These plans have been designed in such a manner that it helps policyholders grow a structured and well-organized habit.

It will help you achieve your long-term and short-term financial goals by investing systematically. Also, you will gain the benefit of return in need of the hour. These plans are entirely investor centric. It provides features that help reach the investor's specific financial needs by making investment plans as per the suitability and risk appetite of an individual. Savings plans provide insurance where your family is protected in your absence.

The plan not only offers the benefits of wealth accumulation but also the advantage of insurance coverage. In case of any unfortunate death that will occur within the policy's tenure, the death benefit is given to the beneficiary of the policy.

Savings plans in India are mainly initiated by our Indian government, public sector banks, or the financial institutions. All the savings schemes are backed by our government, making this one of the most beneficial investors' advantages. Due to the government's support in this scheme, catering the scheme to complete security and the safety of the capital after interest is not an issue. Moreover, these plans are low-risk financial instruments; yet they offer a good return.

Benefits of Renewing Saving Plans

If you already have a savings plan in your belt, you are already in a good position from a financial perspective. Renewing your savings plans would mean more benefits and more money inflow, which means more secure your future.

Why is it advisable to renew your Savings Plan?
 

• Continued security for the family: Providing financial security to your family is the primary goal of any savings plan. However, if your plan provides a death benefit maturity and you do not renew it, it will lapse. Thus, your family will not receive the guaranteed benefit you paid for all this while. Not renewing your plan will nearly defeat the purpose of a savings plan.
• Paid-up benefit: You know about guaranteed savings plans and the benefits provided upon maturity. This is probably the sole reason why you may choose a savings plan in the first place. Now, instead of investing in some other schemes, you can renew your premium plan and continue to enjoy the benefits of the savings plan. Renewing the plan will give you an added benefit from your insurer. Besides, paying the premiums won't be demanding as you already have prior experience.
• Avoiding extra costs: When you first buy a savings scheme, the insurance company considers a lot of factors. It includes your age, family situation, medical history, etc. You do not have to go through a long process for opting a savings plan policy renewal. However, you might have to undergo medical tests again.
• Tax benefits: According to Section 80C of the Income Tax Act, the premiums an investor pays are tax-deductible. Given another reason why you should renew your guaranteed Savings Plan. Apart from this, the death benefit of the plan is free from tax according to Section 10(10D) of the Income Tax Act.
• Long-Term Benefits: Long-term investments can bag you a considerable sum of money. The minimum lock-in period for these plans is five years. It can go up to the age of 60 years. The amount to be received at maturity is high because the interest would be calculated based on the previous interest.

If you are thinking of investing in a guaranteed savings plan, then it's a wise decision to make. Browse through various savings plans offered by Canara HSBC Life Insurance to know which one best suits your financial goals.