A Savings Plan or a Saving Insurance policy is one of the best investment avenues which helps an individual in meeting both short-term and long-term goals. It not only helps the policyholder in saving their money but also creates a corpus to meet future expenses. There are different types of savings insurance plans that one can buy as per their needs and expectations. They are Guaranteed return plans, monthly income plans, regular income plans and money-back plans.
There are several insurance service providers that provide the best saving plan in India. But, before buying life insurance with a saving benefit, it is advised to research well, understand one’s requirements and then buy the plan. Thus, to simplify it, we are hereby listing the ways which will help you in determining the best saving plan for your financial needs.
Determine the Best Savings Plan for Your Financial Needs
The following are the key pointers which will help you in determining the best savings plan for your financial needs:
- Pen down goals and plan for it
A person has to go through different phases of life. The requirements and goals for every phase differ. But, from a financial aspect, it is essential for the person to be ready to meet those goals and fulfil them. Some of the key milestones are children’s education, purchasing a home, marriage expenditures, retirement planning, etc. By noting these expenditures, the person will get proper clarity as to how they can fulfil them. Hence, investing in the best savings plan will help the person in achieving the set targets over a period of time.
- Gain Tax Benefits
There are several savings plans which, in reality, are good tax-saving policies. A savings plan helps the policyholder in getting tax benefits. Under Section 80C and Section 80D of the Income Tax Act, 1961, the premium paid for savings plans is exempted from tax. Under Section 10D of the Income Tax Act, 1961, the death benefit and maturity benefits are also exempted from tax. This will further save additional money.
- Analyse and assess risk and return ratio
Before buying a savings plan, it is important to evaluate the risk profile and one’s financial appetite to handle unexpected monetary turbulences. Generally, investors invest their money in aggressive savings policies with the objective of getting higher returns. However, they should be alert as such policies have high risks too. Hence, the person should have a balance between the returns and the risks associated with a life insurance savings plan. Moreover, age also plays a vital role. People who are in their 20s have minimum liabilities in comparison to the ones in their elderly age bracket. Hence, one should invest accordingly.
- A balanced investment portfolio
The person should analyse and evaluate their savings policy from an investment perspective. The plan should be such that it encompasses the right assortment of options across liquid and fixed assets. This will help the investor in meeting unforeseen circumstances. For example: If your savings plan is investing in fixed assets, then it will not yield higher returns. But, if the savings policy is investing in liquid assets such as equity, then it will yield higher returns.
Thus, one should buy a combination of liquid and fixed assets which promise a better return, especially in volatile situations.
How Can One Save Money?
Simply start recording your expenses. Even though it may seem tedious initially, you must get on board with this practice as soon as possible. This is only to make your priorities clear to you. You also need to carve out a budget for these savings as well. We tend to utilise any extra funds that we may have. However, as soon as you have stable savings plan to invest in (whichever payment period you have chosen), it is easy for you to stay on this track because it will become a habit for you as well.
A savings plan can prove to be a boon for you and your family members if it is planned well. But, before that, one should adhere to the points mentioned above and then invest their money carefully in the best savings plan in India.