When you think of life insurance, what comes to mind? Perhaps you think of planning for your family’s future. Or maybe you imagine a trusted advisor who is always there when you need them. Whatever the case may be, the important thing is that life insurance offers more than just a death benefit; it can also offer living benefits to help get the most out of your coverage.
Life insurance companies have been around for years and focus on providing valuable protection for their policyholders. In addition to this, many also offer a money-back policy—a type of endowment plan that offers guaranteed returns at regular intervals even if the policyholder outlives their plan’s maturity date.
A money-back plan not only helps the policyholder invest their funds but also guarantees that they receive a certain amount back after every few years during their lifetime. If invested correctly, these payouts can provide a significant portion of the sum assured once it matures, along with guaranteed annual bonuses and interest on bonuses that are accrued over time.
What Are Saving Plans?
Saving plans are an essential part of life for many Indians. As the country’s middle class continues to grow, it’s important that you pick the right savings plan to ensure a comfortable future for you and your family.
Money-back policies are a popular choice in India due to their simplicity and ease of use. Although there are some drawbacks associated with these types of plans, they can still be a superior choice when compared with other options available on the market today.
Best Saving Plans in India
1. National Savings Certificate
The National Savings Certificate (NSC) is a popular investment plan offered by the post office. It comes with a number of benefits, including tax deductions and a fixed interest rate at maturity. But before you invest in this plan, there are some key things to know about how it works.
NSCs are available to all Indian residents above the age of 18 (minors can’t invest). There is no maximum limit on investment amounts. There is also no minimum amount you need to start with, as long as your monthly contributions add up to an average of Rs. 500 per month over the term of your account.
2. Senior Citizen Savings Scheme
This plan is available to senior citizens, who are 60 years or older. Investors can open an account with a minimum investment of Rs 1,000 and further investments can be made in multiples of Rs 1,000.
The maximum investment allowed under this scheme is restricted to Rs 15 lakh per individual (this limit applies to the joint account as well). Since it’s a government-backed product, the rate remains fixed throughout the tenure of the deposit.
Interest earned from this instrument is taxable at slab rates. This plan offers dual benefits—a regular flow of income and tax-saving benefits. Although returns from this instrument may not be as high as equity mutual funds, it has low risk in comparison and provides a stable income for retired investors.
3. Pradhan Mantri Jan Dhan Yojana
Pradhan Mantri Jan Dhan Yojana is a national mission to provide banking facilities to the unbanked population of India and promote financial inclusion in the country. As part of this scheme, accounts are opened without any minimum balance requirements. The account holders can also operate the zero balance accounts.
In addition, account holders receive an overdraft facility of Rs. 5000 for Normal Savings Bank Accounts after satisfactory operation of the account for six months and Rs 10,000 for Basic Savings Bank Deposit Accounts (BSBD) on a compulsory auto-debit basis every month from their savings bank accounts towards repayment of overdraft as per loan terms and conditions.
How to Choose the Best Saving Plan in India
1. Online Availability
Online availability is one of the biggest advantages of the online savings plan. With traditional ones, you need to visit the office, both for opening and closing an account. They also require you to make payments in person.
On the contrary, online savings plans are more convenient to use. You don’t have to travel anywhere to manage your account or find out about it from a representative—you can do it all on your PC or phone while sitting at home in your pajamas!
2. Available Returns
With a money-back policy, you are entitled to receive a fixed sum at regular intervals over the course of the policy. This amount is a percentage of what you’ve paid in initial premiums. The frequency of these payments can vary, but they usually occur annually or semi-annually.
Your rate will usually be fixed, meaning that it won’t fluctuate with market conditions, and it will remain constant throughout the life of your policy. Your return is guaranteed, again because your investment is protected by insurance company reserves.
3. Flexible Investment Term
Does the plan give you the flexibility to choose your investment terms? The best money-back plans generally allow you to choose a flexible investment term. This gives you the option of changing the duration of your period as per your needs and extends the maturity period as well.
Does it offer liquidity after a lock-in period? Some plans do not allow customers to break their investments before completing a specific lock-in period, placing them at risk if they need immediate funds. While there are drawbacks with any money-back plan that allows early redemption, it’s still important for investors to have options in case an emergency arises.
With the right knowledge, investing in money-back plans can help you achieve your financial goals. We have provided you with all the information you need to choose a suitable plan for yourself. However, it is also important to remember that patience is paramount.
Your investments will not reap returns overnight and there may be times when your returns might be lower than expected. But, if you keep your goals in mind and invest wisely, you are sure to get good returns on investment on your money-back policy.