Why Should You Buy a Life Insurance cum Savings Plan?

Planning your finances means being ready for life’s uncertainties. While saving money is important, saving with a purpose makes all the difference. A life insurance cum savings plan gives you a smart way to do both. It gives you peace of mind and helps your money grow simultaneously. Whether you are planning for a child’s education or your own retirement, this plan keeps you on the right track.

Let’s understand why you must invest in a life insurance cum savings plan.

Why Invest in Life Insurance cum Savings Plans?

Investing in a savings plan is taking a step ahead in securing your family’s future. It improves your savings habit and also adds value to your saved amount. However, before buying a savings plan, you must know the features it provides to make a better decision.

Similar is the case with life insurance plans. Investing in one gives you an opportunity to stay covered and offer your loved ones financial security. Now, when you get a plan with a combination of features from both plans, it offers the best of both worlds.

What are the Features of Life Insurance Cum Savings Plans?

Here are the top features of a savings cum insurance plan that you need to know before you look to buy the plan.

• Guaranteed Maturity
• Death Benefit
• The flexibility of premium payment
• The flexibility of policy and premium payment term
• Premium protection or goal safety
• Tax-savings
• Additional riders or insurance covers
• Borrow against the policy

Guaranteed Maturity Benefit

Guaranteed maturity benefits are an important feature of savings plans. That is you are assured to receive a certain amount at the policy maturity. Knowing that you will receive a guaranteed maturity benefit gives you a sense of financial security.

Since you know you will be getting a return, you can focus on just completing your part which is paying the premiums on time. The maturity benefit in the savings plan depends upon the following:

Type of Savings Plan

ULIP saving plans add bonus units to your portfolio, and the final value will depend on the fund's performance. While offering market investment benefits, they offer life insurance coverage as well.

Similarly, there are other types of life insurance plans that come with market-linked savings components.

Also Read - Best Saving Plan in India

• Tenure of Premium Payment: You may receive a higher bonus for the 15-year premium payment term than the 10-year term.
• Tenure of Investment (policy life): A policy running uninterrupted for 20 years will receive more benefits than a policy running for 15 years.
• Timely Premium Payment: This is important to keep your policy in force and avoid discounting of the bonus additions.
• Life Cover or Death Benefit: Apart from the maturity benefit, the savings plan also provides life coverage. This life cover is provided for the entire term despite paying a premium for a limited term.

Flexibility of Premium Payment & Policy Terms

A savings plan gives you full flexibility in terms of

• Premium Payment Methods: You can choose your policy term and frequency of payment as per your needs in a savings plan. You can pay your premium monthly, quarterly, or even annually.
  For example, if you are a salaried individual, you can plan out your premium monthly. If you have a business or don’t have a regular income you can try the quarterly payment method. Also, you can choose between regular pay as well as limited pay modes.
  
• Choose a Suitable Policy Term: A savings plan term is not fixed. It can be short-term, medium-term, or even long-term, like the way you want it to be. You can choose the term that best matches your goals and vision.
  
• Multiple Investment Options: You have the option to invest your money in any one or more funds in the ULIP. Also, you can switch between funds within the plan without incurring any charges or taxes.
  
• Premium Protection: This is one of the most important features of a life insurance plan. You invest in them to achieve long-term goals like your child’s higher education or marriage.
  Additionally, premium protection steps in as coverage component. If you choose this option, then your premium will continue to be paid by the insurance company in case of your untimely demise. It is done so that the policy remains intact and the intended purpose of the plan is served.
  For example, you have taken a 15-year policy for which you have to pay a premium for 10 years. Now, in case of the policyholder’s untimely demise during the 5th year of the policy, the policy would continue to be in effect if you have chosen the premium protection option. Your premiums and life cover will be covered by the company.
  
• Tax Benefits: A savings plan essentially with a life insurance plan component, comes with it certain tax benefits.
  You can avail of tax benefits under section 80C of the Income Tax Act 1961. The maximum amount that can be availed is ₹1.5 lakh. That is, your investment amount can be deducted from your taxable income.
  Tax benefits can be availed even at the time of receiving the death or maturity benefit under section 10(10)D as well.
  
• Option to Add Riders: Riders are the additional benefits that get attached to the basic plan. You take riders to get additional features in a policy. Many types of savings plans involve riders. Riders are of many types, each adding specific value, though increasing the premium as well.
  For example, the Accidental Death rider, if chosen, provides you with an extra amount over the death benefit in case of death due to an accident. Others include critical illness rider, premium waiver, etc.
  
• Borrow Against the Policy: Life insurance cum savings plans offer liquidity when you need it most. Once your policy acquires a certain value, you can borrow money against it. This means you do not have to break your savings or take out high-interest loans. The policy continues to grow while also acting as a financial cushion. This option gives you access to funds for emergencies or planned needs without losing your long-term benefits.

Conclusion

Choosing a life insurance cum savings plan helps you grow your money while protecting your family’s future. Whether you are planning for education, retirement, or financial stability, this plan fits every stage of life. 

At Canara HSBC Life Insurance, our plans come with strong claim settlement support, goal protection benefits, and flexible features that meet your changing needs. You can also use our online calculators to understand returns and plan better. Your journey to secure savings begins with a single step.