Benefits of a Guaranteed Savings Plan

  • Savings Plan Articles

TABLE OF CONTENTS

There are different kinds of life insurance plans in the insurance market today. Some, like term plans, offer you only a life cover. Others go beyond this and give you a wide range of benefits that can help you achieve your life goals as planned. One such product is a guaranteed savings plan.

As its name indicates, it includes an element of guaranteed savings benefits, making it ideal for conservative investors who want to protect their loved ones, as well as for risk-takers who want to add some stability to their portfolio.

What is a Guaranteed Savings Plan?

A guaranteed savings plan is essentially a type of an insurance plan that offers guaranteed maturity benefits in addition to a life cover. As the policyholder, you receive a lump sum amount on maturity of the plan. This is usually equal to the total amount of premiums paid, along with bonuses and other loyalty additions.

Since this kind of an insurance plan is non-linked and non-participating, the returns are assured and don't depend on the performance of the markets. So, investing in a savings plan allows policyholders to save up for the big goals over the long term by steadily building a corpus with consistem premium payments.

Benefits of Guaranteed Savings Plan

You get to enjoy a plethora of different benefits by investing in a guaranteed savings plan. Here's a brief overview of some of them.

  • Maturity Benefits:

    If you survive until the end of the tenure of the savings plan, you get to receive a guaranteed lump sum maturity benefit. This includes all of the cumulative premium payments that you made till the maturity date, yearly bonuses, and loyalty additions. However, the maturity benefits would only be payable if you've paid all of the premiums on time.

  • Death benefits:

    Since a guaranteed savings plan is, at its core, an insurance plan, you receive a life cover as the primary benefit. And in the case of death during the tenure of the plan, the nominees listed under the plan would receive financial payouts from the insurance provider. This would include the sum assured under the plan and all the yearly bonuses accrued up until the point of death.

  • Loan facility:

    One of the major benefits of a guaranteed savings plan is that it can be used to avail a loan from the insurance provider in times of dire need and emergencies. The amount of loan that you can avail tends to differ based on the kind of plan that you opt for.

    That said, there is a minimum limit and maximum limit to the amount of loan that you can opt for. Generally, the minimum amount of loan that you can avail is restricted to Rs. 20,000, whereas the maximum that you can opt for is capped at 80% of the total surrender value of the plan at the time of taking out the loan.

  • Tax Benefits2:

    By investing in a guaranteed savings plan, you get to save tax as well. Section 80C of the Income Tax Act, 1961 allows you to deduct all of the premiums that you pay towards a life insurance plan in a financial year from your total taxable income for that year. The maximum amount that you can claim in a financial year under this section is Rs. 1.5 lakhs.

    The tax benefits2 don't just stop there though. The maturity benefits that you receive at the end of the plan tenure are also completely exempt from tax under section 10(10D) of the Income Tax Act, 1961. Similarly, section 10(10D) also states that the death benefits that the nominees of a guaranteed savings plan receive are tax-free.

Things to Keep in Mind Before Buying a Guaranteed1Savings Plan

Now, before you go ahead and purchase a savings plan for yourself, there are certain factors that you should consider. Let's take a brief look at what they are.

  • Future goals

    Your future goals play a huge part when it comes to choosing the right kind of guaranteed1 savings plan. For instance, if your goal is to save for your retirement, it is a good idea to choose a plan with a long tenure. On the other hand, if your goal is to fund your child's education, you may have to choose a plan with a tenure that aligns with that goal.

  • Riders

    Riders are basically optional add-ons that you can choose at the time of purchase of an insurance plan. They enhance the benefits offered by the plan for a nominal additional premium.

    Some of the riders that you can opt for include the waiver of premium rider, hospital care rider, critical illness rider, and accidental death benefit rider, among others. That said, keep in mind that opting for more riders than necessary can make the premium quite expensive. Therefore, it is a good idea to choose only the ones that you require.

  • Credentials of the insurance provider

    Considering the fact that you would be investing your hard-earned money, it is crucial to choose the right insurance provider. One of the best ways to determine the trustworthiness of an insurer is to take a good look at their credentials like their solvency ratio and their claim settlement ratio. The solvency ratio indicates how strong the company's cash flow is, while the claim settlement ratio indicates the proportion of claims received that the insurer settles in each year. The higher these two ratios are, the better.

Conclusion

A guaranteed1 savings plan is an exceptional financial product that intelligently combines the elements of savings and insurance. With the right plan in your portfolio, you can not only ensure financial protection for your family, but also be in a position where you can satisfy your long-term goals.

Read next: What if someone has more than one life insurance policy?

1 Provided all due premiums are paid
2 Tax benefits are subject to changes in tax laws. Kindly consult your financial advisor for more details.
ABSLI DigiShield Plan (UIN 109N108V08) is a non-linked non-participating individual pure risk premium life insurance plan; upon Policyholder's selection of Plan Option 9 (Level Cover with Survival Benefit) and Plan Option 10 (Return of Premium [ROP]) this product shall be a non-linked non-participating individual life savings insurance plan.
ADV/4/22-23/56

Author

Trending Articles

Popular Articles
View All

Savings Products

ABSLI Assured Income Plus

Invest for a short term, get guaranteed returns for a long term. UIN 109N127V05

  • Guaranteed3 returns on your investment
  • Long term regular income
  • Tax Benefits1

ABSLI Savings Plan

Get life cover and build a substantial corpus to ensure a secure financial future for your loved ones. UIN: 109N088V02

  • Additional Sum Assured on accidental death
  • Bonuses2 to boost your savings
  • Guaranteed3 Additions

ABSLI Vision LifeIncome Plan

Get life cover till the age of 100 as well as an assured income to achieve your financial goals UIN: 109N079V05

  • Get flexibility to receive payouts
  • Life cover till age 100 years
  • Minimum entry age is 30 days

ABSLI Guaranteed Milestone Plan

Guarantee your family’s happiness with life insurance and a savings corpus that fulfils their needs. UIN: 109N106V10

  • Fully guaranteed benefits3
  • Guaranteed3 Additions to boost your corpus
  • Sum Assured of 15 times the annual premium

ABSLI SecurePlus Plan

Secure your finances with life insurance cover and the advantage of a second income stream UIN:109N102V05

  • Flexibility in selecting annual premium
  • Flexibility to choose the Income Benefits
  • Inbuilt Accidental Death Benefit

ABSLI Vision MoneyBack Plus Plan

Pay-outs at regular intervals, coupled with life protection, help you to achieve your life goals. UIN: 109N093V04

  • Financial protection of your family
  • Regular payouts
  • Tax Benefits1

ABSLI Vision LifeSecure Plan

Ensure long-term financial security for your family with this savings-focused life insurance plan. UIN: 109N087V04

  • Life Cover till age 100 years
  • Maturity benefit at the end of policy term
  • Regular bonuses2

ABSLI Monthly Income Plan

Enjoy the twin benefits of adequate life cover and a tax-free monthly income till maturity. UIN: 109N122V02

  • Bonuses2 to augment your savings
  • Choice of Level and Increasing Income Benefit Options
  • Monthly income benefit

ABSLI Income Assured Plan

This plan offers life insurance cover and an assured monthly income for you and your family. UIN: 109N089V06

  • Assured monthly income
  • Life cover
  • Tax Benefit1

ABSLI Vision Endowment Plus Plan

This plan pays out regular bonuses and offers return of premium at maturity. UIN: 109N092V04

  • Accrued regular bonuses2
  • Choice of 2 death benefit options
  • Minimum entry age is 30 days

ABSLI Jeevan Bachat Plan

Get triple advantage of life cover, guaranteed returns and tax benefits. UIN: 109N107V03

  • Guaranteed3 benefits on death or maturity
  • Inbuilt accidental death benefit
  • No medical tests

ABSLI Assured FlexiSavings Plan

Unlock the flexibility to withdraw and lock in guaranteed returns along with a life cover. UIN 109N126V03

  • Guaranteed3 returns on your investment
  • Flexibility of unlimited withdrawals
  • Tax Benefits1

ABSLI Vision LifeIncome Plus Plan

Get guaranteed regular income, cash-in-hand even while paying premiums PLUS life cover up to a maximum of age 100 UIN: 109N131V01

  • *Guaranteed regular income for a period you choose
  • Option to get cash-in-hand even while paying premiums
  • Life cover up to a maximum of age 100

ABSLI Assured Savings Plan

Get life insurance cover and savings benefits to safeguard your family members incase of financial crisis (UIN: 109N134V03)

  • Guaranteed3 benefits on death or maturity
  • Loyalty Additions that boost your maturity corpus year on year
  • Multiple policy & premium payment term options

Need help in buying life insurance?

+91
I agree to the Terms of Usage and Privacy Policy and authorize Aditya Birla Sun Life Insurance Company Limited and its associates to call/SMS/Email/WhatsApp me.

Thank you for your details. We will reach out to you shortly.

1800-270-7000 or reach out to us on this number.

Thank you for your details. Currently we are facing issue in our system.

1800-270-7000 or reach out to us on this number.