There are various insurance plans available in the market to cater to different needs and requirements. Saving plans which are also known as endowment plans are a popular form of insurance policies which are sought by people who look for risk free investment options.
The key benefits of a savings plan are;
- Regular savings: With a saving plan, you are expected to set aside a pre-determined amount to pay your premium at a stipulated time interval. This helps you save regularly for your goals.
- Guaranteed returns: Unlike other investment options, a savings plan provides guaranteed returns. It is not subject to market risks and so you are stress-free.
- Tax Benefits: The plan offers Tax benefits under section 80 C of the Income Tax Act.
- Loan: You can also obtain a loan against the policy in case of an emergency.
- Bonus: Savings plan provides the policy holder with guaranteed loyalty additions also known as bonus depending on the sum assured and the policy tenure.
- Life cover: Savings plan or an endowment plan also provides a life cover. However, the life cover provided by an endowment plan is not as high as it would be provided in a term plan. That is because the objective or the need for choosing an endowment plan is savings and not protection.
Unlike in the case of stock or mutual fund dividend, which is payable immediately after it is declared, in a savings plan the bonus accumulates and is paid when the policy matures. The amount continues to accumulate every year for the entire policy term.