Guaranteed savings plans are non-linked, non-participating endowment life insurance plans. While market-linked products work on a high-risk, high-return investing model, guaranteed savings plans focus on preserving the policyholder’s capital.
Apart from providing dependable financial cover to the policyholder, such plans have numerous benefits that make them a crucial part of any financial portfolio.
Benefits of Guaranteed Savings Plan
Risk-Free Investments
When you are nearing your retirement, you might feel reluctant to invest in equities as they can carry high risks due to market volatility. Instead, you would want to ensure the safety of your retirement corpus along with assured returns.
Thus, a guaranteed savings plan can be the right choice for you as it provides assured returns.
Portfolio Diversification
Whether you like to invest in equities, gold, or any other asset class, it’s never a wise idea to put all your investment in one asset class. So, even if you are an aggressive investor, you should always put a significant portion of your investment in safer options to have the right balance in your portfolio.
Guaranteed savings plans can be a fitting addition to your investment portfolio to make it safer and protect it from sudden market crashes.
Financial Stability
Nobody wants financial uncertainties in their golden years. Guaranteed savings plans allow you to gradually build a retirement corpus by investing over a long period to enjoy financial stability after retirement.
Besides, such plans often act as a safety cushion for your financial portfolio in times of uncertainty.
Insurance Coverage
A guaranteed savings planalso provides life insurance coverage throughout the policy term with guaranteed benefits on the maturity of the plan or the death of the policyholder. Therefore, it is an excellent way to protect the financial future of your dependents.
Optional Riders
You can also increase the level of protection by including some useful optional riders in your plan, such as
- Term Benefit Rider- Provides additional death benefit over and above the original death benefit to the nominee of the life insured.
- Accidental Death Benefit Rider– Provides lumpsum benefits if the person whose life is insured dies in an accident. The benefit will be over and above the original death benefit.
- Permanent Disability Benefit Rider– Additional sum assured to be provided if a permanent disability is caused to the insured in an accident.
Tax Deductions
Guaranteed savings plans are essentially life insurance products. Hence, the premium paid towards such plans is eligible for tax deductions under Section 80C. You can deduct investments made up to ₹ 1,50,000 in such plans from your taxable income in a financial year to reduce your tax liability.
An assured savings plan can help you achieve your dream of a long, comfortable retirement without worrying about finances. Moreover, such plans also relieve you from the anxiety of how the equity markets are performing. So, take your time, research the features and benefits, and consider including aguaranteed savings plan in your portfolio now. It can be one of your best financial decisions ever.
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