Savings plans offer many simple yet strong benefits. They not only help you save money but also protect your family in case something happens to you. Let’s look at the top benefits:
Life Coverage
Most savings plans come with life coverage. This means if the life assured passes away during the term, their family gets the sum assured. This payout can help the family pay for daily expenses and important needs. Life coverage offers financial protection, so the family might stay safe even when the main earner is not around. This benefit adds extra security to your savings.
Meeting Financial Goals
Saving plans can help you achieve significant financial goals. You could save money continually for your child's future education, purchasing a home, or for retirement. Saving small amounts of money over time could amount to a very substantial fund. Saving consistently like this allows you to prepare for future needs without stress. It breaks down big goals into manageable steps to help achieve them.
Save Taxes
Saving plans could help fulfill your tax obligations. Section 80C of the Income Tax Act (only under the old tax regime) offers possible claims of deductions of up to ₹1.5 lakhs in a year, under old tax regime. In other words, the money you put in could provide you with less taxable income. Also, the amount you get at maturity or as a death benefit might be tax-free in many cases. This can make saving more rewarding. Additionally, the amount you receive at maturity—or as a death benefit—may be tax-free under Section 10(10D), provided certain conditions are met.
Financial Discipline
Paying a fixed amount regularly in a savings plan might help build financial discipline. It encourages you to save money on time without fail. This habit can teach you to manage your income better and plan your expenses. Over time, this discipline might make handling money easier and more organized. It helps you develop a strong savings routine for the future.
Financial Flexibility
Many savings plans provide financial flexibility: you may be allowed to choose how much money to pay, and at what frequency (e.g., monthly, yearly etc). For example, some savings plans allow you to make partial withdrawals post the lock-in period, in case of emergencies or even loans against the value of your savings, subject to policy terms and conditions. In many cases, you get to choose between various payout options, depending on your needs. This level of flexibility allows you to tailor the savings plan according to your changing financial circumstances.
Guaranteed* Returns
Certain savings plans offer guaranteed* returns: you are promised a definite amount of money upon maturity, regardless of market fluctuations. Such guaranteed* benefits obviously bring peace of mind when saving, since you can continue to plan your financial future without worrying about fluctuations in the market if the return is guaranteed*.