Zindagi Gulzar Hai – Life is a Garden!
It’s filled with the fruits of the past, the blossoming buds of tomorrow. However, it is also filled with the thorns of uncertainties and eventualities. Most of us, in the worries of the uncertain, forget to enjoy our lives.
Edelweiss Tokio Life Insurance offers a solution in the form of Savings and Investment Plans. These plans offer protection – to life as well as money – so that you can rest assured and pause to smell the flowers!
Savings Plans or Saving and Investment Plans in India are financial products that provide the opportunity to create wealth for the future. Every individual has dreams and goals that go beyond the bare necessities of life. To fulfil these, one often needs savings that have been accumulated over a period of time. Savings and investment plans help you to save your income in a systematic manner to fulfil various goals.
A savings plan is an insurance plan that combines a savings and a life cover under a single plan. The premium payments are divided into two where one portion is used to build a savings corpus, while the other portion is used for providing life cover to the policyholder and their family. People choose savings plans because they offer guaranteed returns as a death benefit or on maturity.
An investment plan is a Unit-Linked Insurance Plan or ULIP that combines the benefits of investments and a life cover under a single plan. A part of the premiums paid towards the plan is invested in market-linked investment instruments, while the other part is used to provide life cover to the policyholder and their family. Though ULIPs are moderate to high-risk plans, they are mainly chosen for their potential for offering higher returns.
Savings and Investment Plans offer a sum assured as life cover which is applicable for the entire policy period.
The winning feature of Savings and Investment Plans is that, contrary to pure insurance plans, these plans offer extensive returns on the invested premium.
The policyholder receives maturity/survival payouts if they survive the entire policy term.
With Savings and Investment Plans, the insurance company takes care of the investment aspect. Where the money is invested, the proportion of invested funds, etc. is all determined by the insurer. The policyholder can choose to self-manage he funds, but they can also choose to leave it to the expertise of the insurance provider.
You can get loans against your policy or apply for partial withdrawals for a quick and hassle-free influx of money during emergencies.
Some Savings Plans, such as regular income or monthly income plans, offer a regular payout to supplement your primary income and boost your earnings
Edelweiss Tokio Life ULIPs allow you to switch funds unlimited times, at zero costs, to match your financial needs and life stage.
Many Savings Plans offer a range of payouts during the course of the policy term to reward long-term investors. With ULIPs, these additions are in the form of additional or survival units.
You can buy additional units in most ULIPs or invest additional money with Savings Plans with extra payment over your base premium.
The monthly amount for investment are affordable to make Savings and Investment Plans accessible for all income groups.
Women and non-smokers can avail of discounts on the premiums paid.
The premiums paid, and the maturity benefits, bonuses and death benefits paid are eligible for tax benefits as per the prevailing tax norms.
Whether you wish to send your child abroad for higher education or go for a European holiday in the next 5 years, all your financial goals require you to invest in advance.
Your income is limited while your needs are many. Apart from your basic and immediate needs that you may spend a considerable amount of your income on, you have long term needs that need planning in advance.
It is recommended that before using up your income for monthly consumption, you save for future expenditure first. This often poses a problem as your immediate needs could seem never-ending. That’s why you need to think of wealth building rather than just savings. Investment plans help you utilize your savings and grow them over time for future needs and goals.
It is important to have a robust monetary fund to meet emergency or future financial needs. To accumulate this fund, it is essential to save or invest a part of one’s income. With a savings plan, one can ensure guaranteed returns at the end of the plan’s tenure to fulfil their financial goals and ensure a steady flow of income, while an investment plan can offer high returns that can help an individual grow their wealth and also fulfil their financial requirements.
Additionally, having the benefit of a life cover also makes a savings and investment plan ideal for protecting one’s family against financial burdens.
These are some of the main benefits that a savings and investment plans can offer:
As the name suggests, a guaranteed returns plan gives you assured returns on completion of the maturity period. This assurance and predictability of cash flows make your long-term financial plans easier to manage and execute. You can even opt for monthly savings plans for regular income. You can feel secure to have funds when you need them.
What are the benefits of buying a guaranteed¹ return plan?
An endowment plan is a type of life insurance policy which gives you the dual benefit of a life cover and future savings. It enables systematic savings and over a period of time which would help you in getting a lump sum amount on surviving the policy term.
An endowment policy most often gives you guaranteed returns and hence is good for those who do not wish to take higher investment risks. The policyholder gets his/her sum assured on a fixed date in future as per the policy terms and conditions. However, in case of sudden death of the policyholder, the insurance company will pay the sum assured (plus the bonus, if any) to the nominee of the policy. Besides, it is also useful to secure yourself or your family post-retirement or to meet various financial needs such as funding for children's education and/or marriage or buying a house.
Why should you buy an Endowment Policy?
A unit linked insurance plan (ULIP) is a life insurance plan with an additional feature of investing your money in the market for future financial goals. This means that you get the dual benefit of protecting your family as well as securing your own future.
A ULIP also provides tax benefits as the premium or amount invested into the ULIP is exempted from tax under Section 80C. The amount received on maturity of this investment plan, is also tax exempted under Section 10(10D) of the Income Tax Act, 1961 subject to certain conditions.
If the total annual premiums paid for ULIP investments are below ₹2.5 lakhs in a given financial year, the maturity benefits earned are completely exempted from taxation under Section 10(10D). However, if the total annual premium exceeds ₹2.5 lakhs, then the maturity benefits will be treated as Long Term Capital Gains (LTCG) and taxed accordingly. This taxation is applicable for policies bought on or after 1st February 2021.
For all policies purchased before 1st February 2021, the maturity benefits are exempted from taxation.
Why should you buy an ULIP Plan?
Though there is no perfect time to invest in a savings and investment plan, it is recommended that one should start at an early age. When you begin earning an income, investing in a savings and investment plan enables you save or invest over a long period of time that will, in turn, help you increase your financial corpus.
Below are the following ways in which buying a savings and investment plan early can help you.
1. Power of compounding :
“Compound interest is the 8th wonder of the world. He who understands it, earns it; he who doesn’t, pays it.”
What he meant was that if you invest smartly for a long term, you reap the benefits of compounding.
Power of compounding simply means investing your money in order to grow it further. Your wealth accumulation depends upon how long you stay invested.
2. Risk Appetite
The younger you are the lesser responsibilities or liabilities you have. Historically, it has been recorded that equities perform better than other assets even though they do come with a fair bit of risk. Investors can switch from one particular fund option to another as per the market movements and outlook. Most ULIPs let you make unlimited switches between funds.
3. Patience and Discipline Pays
If you simply save your money in a bank, the tendency to withdraw the money is higher and this does not lead to any growth. But if you remain patient and invest your money, systematically for a long time, it will give you good returns.
Getting into the habit of saving systematically early on helps in easing the stress of financial liabilities when you become older. Being able to start saving early for your future goals gives a very big financial advantage to young professionals these days.
4. Fight Inflation
Investment instrument like a ULIP offers you flexibility to invest in a portfolio of stock which minimizes risks. You can also choose the funds you want to invest in as per your risk appetite. Regular investments over a long period enable you to give time to your money in market, helping you build a larger corpus to achieve your life goals and also stabilizing your funds against market inflation.
Every individual – young or old, married or unmarried, must save for a rainy day. Having a corpus to fall back upon assures a stress-free life and helps you to plan your finances efficiently. There are multiple savings options in India to choose from. While the choice depends completely on your financial goals, Savings and Investment Plans offer a range that suit everyone.
Following people should buy a Savings and Investment Plan:
With age, the chances of falling ill or developing a serious medical condition goes up. As a result, as you age, the risk of insuring you also goes up, thereby increasing the premium. Therefore, it is advisable to buy Savings and Investment Plans at a younger age.
Women have a longer life expectancy than men. So, women enjoy a lower premium rate than men.
Your medical history, the chances of contracting a condition or any pre-existing condition pushes up the cost of insuring you, which, in turn, increases your premium.
This one is logical – the higher the sum assured, the higher will be the premium you pay for it.
Again, the longer the policy period, the higher will be the total premium outflow. However, you get discounts on the yearly premiums if you buy a policy for a very long tenure.
The total premium paid for single pay and limited pay policies is lower than regular pay options.
If you choose annual payment options or even half-yearly options, you can save on the total premium paid for the policy of your choice.
The Edelweiss Tokio Life Guaranteed Savings Plans can be further enhanced with a range of riders, such as Critical Illness Rider, Income Benefit Rider, Waiver of Premium Rider, Payor Waiver Benefit, Accidental Death Benefit and Accidental Disability Riders.
Edelweiss Tokio Life Insurance Company Limited was established in 2011 and has, ever since, developed a wide range of insurance solutions for education, impaired health, wealth accumulation, wealth enhancement, income substitution and retirement funding.
As a joint venture between Edelweiss, a leading Indian financial services company and Tokio Marine, a Japanese life insurance company, Edelweiss Tokio Life Insurance is the ideal choice because of the following reasons:
Our claim settlement process has 3 simple steps: i.e., Intimation of claim, Submission of documents & final step is a decision on the claim.
Our ULIP Edelweiss Tokio Life – Wealth Plus has won the ‘Best Product Innovation’ award at the Golden Globe Tigers Awards 2018.
Edelweiss Tokio Life GCAP
Edelweiss Tokio Life Active Income
Edelweiss Tokio Life Income Builder
100% Rider Sum Assured payout over and above the base policy sum assured if diagnosed with 1 of the 12 listed critical illnesses.
Assured regular income to the family after the policyholder’s demise to secure their financial future.
All future premium payments are waived off and benefits are continued to be paid in case of listed critical illness diagnosis or accidental total disability or death.
Available for policies where the policyholder and insured are separate individuals, this optional rider waives off all premium payments in case of the policyholder’s death.
Additional life cover payout to the authorised beneficiary, over and above the base sum assured, if the policyholder dies due to an accident.
Payment of additional lump sum amount to manage the added expenses if the policyholder meets with an accident which cases total and permanent disability.
INCLUSIONS OF SAVINGS AND INVESTMENT PLANS
EXCLUSIONS OF SAVINGS AND INVESTMENT PLANS
As the funds in an investment plan like a ULIP are linked with the share market, their performance is directly affected by the very market. The performance of any ULIP is hence market driven.
Savings and investment plans are safer as they give you guaranteed returns in case you outlive your policy term. In the event of your sad demise before the end of your policy term, your nominee would get the sum assured.
There are various plans wherein tax assets can claim benefits for the amount invested in savings and investment plans, such as ULIP. Under the section 80 C and 80 D of Indian Income-tax Act, an individual is entitled to a deduction on the investment done or premium payment made under savings plan.
Investment plans offer to help individuals in disciplined and periodic investment into different funds overtime so as to achieve their future financial goals.
Savings and Investment plans are customized investments avenues for an individual with the objective to create a disciplined and periodic investment in various funds and finally achieve their future long-term financial goals along with an element of insurance support.
Here are some of the best saving investment plans available in Indian market:
• Participating Endowment Plan
• Unit Linked Investment Plans (ULIP)
• Guaranteed Return Plan
• Money Back Plan
• Monthly Income Plan
There are two kinds of funds in an investment plan – equity fund and debt fund. An equity fund gives you high returns but also carries high risk. A debt fund is comparatively stable, is less risky and give you moderate but guaranteed returns.
Endowment plans are safer than most investment plans as they give you guaranteed returns in case you outlive your policy term. In the event of your sad demise before the end of your policy term, your nominee would get the sum assured.
A term plan gives your nominee the life cover amount (which is very high) in case of the policyholder’s sad demise. But if the policyholder outlives the policy term, he gets nothing. In a ULIP, which is an investment plan, you get a certain amount of returns based on the funds you’ve invested in, after the investment period. Bu if you expire before your policy term, your nominee would get the fund value up to that point.
0 - Provided the premium paying term is more than or equal to 10 years.
1 - This is applicable only if all due premiums are paid and the policy is inforce.
3 - As per provisions of Income Tax Act, 1961. Tax benefits are subject to changes in tax laws.
5 - If declared, Cash Bonus is a non-guaranteed bonus which may be payable based on the performance of the participating fund of the Company.
The Linked Insurance Products do not offer any liquidity during the first five years of the contract. The policyholder will not be able to surrender/withdraw the monies invested in Linked Insurance Products completely or partially till the end of the fifth year.
Unit Linked Life Insurance products are different from the traditional insurance products and are subject to the risk factors. The various funds offered under this contract are the names of the funds and do not in any way indicate the quality of these plans, their future prospects and returns. Please know the associated risks and the applicable charges from your Personal Financial Advisor or the Intermediary or policy document of the Insurer. The premium paid in unit linked life insurance policies are subject to investment risk associated with capital markets and the unit price of the units may go up or down based on the performance of investment fund and factors influencing the capital market and the policyholder is responsible for his/her decisions. For more details on risk factors, terms and conditions please read sales brochure carefully before concluding a sale.