When planning your future, you wouldn’t want to settle for anything less than the best. You may constantly be looking out for the best opportunities to invest your money so that you can get high returns. There are many investment instruments available in the market that cater to the different investment needs and preferences of the people.
However, most of these instruments come with a certain element of risk, especially the market-linked products like stocks, mutual funds, ULIPs, etc. If the market is going down and the funds are not performing well, there is a risk of losing your capital.
If you are looking for a low-risk option that guarantees assured returns and security to your capital, the guaranteed savings plan would be your best bet. It is a comprehensive financial product as it guarantees returns and allows you to secure the financial future of your loved ones against the uncertainties of life by offering life insurance coverage.
If you are sceptical about investing in a guaranteed savings plan, here are a few reasons that make it an attractive savings proposition for all.
Unlike stocks and other investment products with high returns-risk potential, the returns from guaranteed savings plans are not affected by the market volatility. This means you are entitled to get assured returns.
While savings instruments such as fixed deposits, NSC (National Saving Certificate) and PPF (Public Provident Fund) also provide assured returns, the returns change based on the interest rate. Some of these instruments also have limitations, such as taxes on the returns and a cap on the maximum amount you can invest. However, with a guaranteed savings plan, there are no such limitations.
Flexible payout structure
Over the years, the guaranteed savings plan has evolved significantly; they offer more innovative options and allow customisation options to the investors. Today, many insurance companies allow you to choose the payout structure to suit your financial needs at different stages of life.
While some plans offer a regular income flow at specific predetermined intervals, others make a lump sum payment upon maturity. Based on your long-term and short-term goals, you can choose a plan that pays the benefits at one go upon maturity, or you can go with a plan that provides regular income over a period.
Limited premium period
Today, we live in a world of uncertainties, and investments that demand payment for an extended period may not be everyone’s cup of tea. This is where a guaranteed savings plan makes an attractive savings proposition for all.
These plans come with a limited premium payment tenure. This means you can pay the premium for a short period and reap the full benefits for the entire policy period.
Unlike mutual funds (except ELSS) and stocks, a guaranteed savings plan gives you tax-saving benefits both at the time of premium payment and receiving the maturity benefit. The premium you pay for the policy is eligible for tax deduction up to ₹ 1.5 lakhs in a financial year under Section 80 C of the Indian Income Tax Act. Additionally, the death benefits your family receives are fully tax-exempt.
Thus, with benefits like long-term tax savings, assured returns, and a flexible payout structure, a guaranteed savings plan is an excellent investment option that everyone must have in their portfolio.