Very often, people tend to live carelessly in the moment, while ignoring their future financial needs. However, those who wilfully protect their future selves with smart decision making in the present, are much more likely to have a nest egg kept for unforeseen events. One of the best ways to safeguard your future would be to invest in tax savings schemes. These plans also help you to inculcate the habit of savings money on a monthly basis.
Meaning of Savings Plan
A savings plan is a kind of life insurance investment plan that allows you to save money while simultaneously investing and multiplying it in a systematic and disciplined manner. According to studies, to provide a fair return to clients, monthly income savings plans invest 80-90 percent of the money in debt instruments and 10-20 percent of the assets in equity securities. Meticulously-planned investments can help fulfil your family’s future financial needs and goals. Here are few advantages of savings plans that one should be aware of:
A monthly income savings plan protects your dependents (family members) as it gives you a guaranteed tax-free sum after the premium payment term. The premium amount is determined by the amount of monthly income you wish to receive. Your family will be financially secure and able to enjoy a higher monthly income even if something unforeseen happens to you.
Better Pay-out option
Apart from providing financial protection, a savings plan also provides you with regular dividends. These traditional insurance plans can help you assess your future needs, identify when a cash infusion would be most useful, and offer staggered pay-outs so that you get your money when you need it most. You can choose to have your payments sent to you in monthly, annual, or recurring instalments.
Provides Sum Assured At all Circumstances
In India, a dual-purpose insurance savings plan is available, whereas a pure protection plan is a specialised life insurance product. You not only get life insurance, but you also get guaranteed returns according to the policy’s terms and conditions when the policy matures.
Whether you’ve just started working or are nearing retirement, you can still add to your savings. By dividing a small payment at regular intervals, you can turn a monthly money savings plan into a formidable retirement savings engine. Tax saving schemes can build up a significant amount of money over the course of 30 years, which can be used to support a pension during your retirement.
Benefits of Income Tax Savings
Savings schemes that are beneficial to the individual must also be tax-efficient. Section 80c of the Indian Income Tax Act, 1961 allows you to deduct the premium you pay for most life insurance tax saving schemes from your taxable income up to a limit of Rs. 1 lakh. Savings plan maturity and death benefits are also qualified for tax exemption under section 10D of the Indian Income Tax Act, 1961, making them the most tax-efficient option.
From a modest bonus to a terminal bonus, a guaranteed savings plan could provide you with a variety of additional benefits.
Optional Policy Loan
Once your tax saving schemes reach the specified amount, you can take a loan against it. Interest rates on policy loans are lower when compared to other types of loans. If you require funds immediately, a policy loan may be able to assist you in making essential arrangements.
Most monthly income plan investors are retirees, homemakers, and those preparing to retire. These plans are ideal for people who want to put their money in the bank and get a regular pay-check. This why it is an excellent strategy to achieve financial stability and security. You can choose a monthly income savings plan or scheme based on your family’s requirements and life goals. Take a look at different policies and make an informed decision based on the terms and features of the policy.