Starting your investment journey early attracts multiple benefits and promises you and your loved ones a secure future. Many financial tools today encourage us to save money for future expenses. A savings plan is one such financial tool that offers increased savings and guaranteed financial security with life cover.
Saving plans are essentially a category of life insurance plans. They allow savings, accumulation of funds, and investment opportunities as a combined perk to an individual. Most insurance companies offer a list of saving plans to fit different requirements. To choose the best savings plan, you need to assess your financial goals to make a better decision.
Let us learn some of the top benefits of savings plans for you below.
What is a Savings Plan?
Before we jump to the benefits of saving plans, let us quickly understand what a savings plan is and its offerings.
A savings plan is an insurance plan that safeguards your future by allowing savings for future expenditures and the benefit of life cover to the policyholder. This life cover further protects the policyholder’s family members in case of an unfortunate incident.
Thus, they are insurance plans with a guarantee of returns and protection for the policyholder while assuring the availability of a safety blanket for your family members.
Top Benefits of Saving Plans
- Diversification of Financial Portfolio
A good financial portfolio includes multiple investments ranging from cash, real estate, equity, etc. Investing in a savings plan adds another asset to your portfolio, which comes with a lower risk factor.
With a savings plan, you benefit from tax deductions and wealth creation, bringing more stability to your current portfolio, as it guarantees returns.
- Financial Protection
In a savings plan, you are putting away money as savings into an account for future use. These savings can help fulfil your future goals and purchases as it increases your liquidity capacity as per requirement. Moreover, given the uncertainties of life, having a backup for expenses is always a good idea.
- Life Cover
One key benefit of a savings plan is the financial protection it promises for your family members or loved ones during your absence. This is part of the life cover it offers.
It, therefore, gives you the assurance of supporting your family financially by giving them a lump sum claim amount to take care of any liabilities, debts, and other expenses.
- Tax Perks
Most of the life insurance plans come with their own set of tax benefits. For the savings plan, the premium paid is eligible for a tax deduction of up to ₹1.5 lakhs per annum, according to Section 80C of the Income Tax Act, 1961. This decreases your taxable income and helps you save more money.
Along with the monetary benefits and life cover, a savings plan also encourages you to get into the discipline of managing your money better. Oftentimes, putting away money available for use is difficult or impossible.
However, with the savings plan, you are committed to saving money no matter what, and this helps save more for future goals.
Today, with the increasing limitations around employment opportunities or unforeseen circumstances in life, having a confirmed source of money is crucial.
With a savings plan, you get peace of mind, life cover to protect your family members, and a guaranteed financial backup for a better future. Therefore, investing in a savings plan is important to achieve your financial goals efficiently.