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4 Reasons Why Combining Protection with Savings Work

01-08-2022 |

Life insurance and savings are two important aspects of life without which financial independence becomes impossible for you and your family. Financial independence is the cornerstone for a happy, peaceful, and responsible life. Purchasing two different plans for protection and savings are possible.

However, a comprehensive plan that combines the benefits of saving in life insurance and provides guaranteed1 savings returns can also work for your requirements. Here are four reasons how it is beneficial.

 

Before we understand the reasons, let us know how a comprehensive plan provides insurance and savings benefits.


 

 What is a Life Insurance Guaranteed1 Return Plan?

 

A comprehensive savings insurance plan provides dual benefits: life cover and the guaranteed1 returns. The life cover ensures the sum assured to your nominee in case of your unexpected death, and the guaranteed1 returns are provided as a maturity benefit. It can be availed of as a lump sum amount, regular income or a combination of lump sum and regular annual income.

 

 Next, let us discuss how the combined plan savings protection can work for your various needs.

 

  1. Handling family responsibilities effectively: Fulfilling family responsibilities should be of primary concern. And, it is even more important if you contribute to the family’s financial requirements. For example, if you are the sole earning member in the family, you must ensure all the financial commitments are met at different stages as they arise. You also have to ensure that these commitments get fulfilled even in your absence. Hence, life cover to protect your family's financial future becomes prominent.

    However, savings cannot be compromised while purchasing a life cover. A dedicated savings plan will serve your financial needs in the future, such as your child’s education, and ensure a peaceful retirement. Tracking two different plans can be difficult if you have family and professional responsibilities.

    Therefore, a comprehensive plan with insurance and savings benefits such as life insurance with returns will be ideal for effectively handling family expenses. It makes managing financial expenses simple, convenient, and hassle-free.

  2. Safe investments with assured returns: Many risk-averse investors look for savings and investment solutions that are extremely safe. The reason is that responsibility for their family’s financial commitments compels them to stay away from the stock markets for earning high but risky returns. The risk arises from market volatility leading to price fluctuations that we cannot control.

    As the returns are guaranteed1 in the savings insurance plan, it is extremely safe. Therefore, you can plan for your long-term financial commitments, such as your child’s education, with precision. And since it is inclusive of the life cover, your family can plan for the commitments even in your absence. Your family can utilise the funds for paying off debts or any other pending loan repayment.

  3. Cost-effective: For many people, insurance and savings become divergent options. However, buying two different plans can be difficult due to cost constraints. For example, if you are about to retire in a few years and have your spouse and parents as your dependents, their financial security is your responsibility. Therefore, you have to ensure a regular income for their survival.

    With the monthly saving plan, you will be assured of receiving a regular monthly income when the plan matures. You can define an income period for the regular income or extend it until death. However, the base plan remains constant, with the life cover providing the death benefit to your nominee in case of your unexpected demise. Therefore, the policy becomes cost-effective.

    In addition to that, if you plan to invest early in life, the savings insurance plans will be available at extremely cheap premium rates. The reason is that when the insurers calculate the sum assured and the corresponding premium, they consider the probability of death risk. At a younger age, the possibility of having a pre-existing illness or any associated disorders is extremely less. It is an important factor that reduces the probability of death risk. Therefore, the premium rates get automatically adjusted and reduced to a great extent. You can access the plan online, compare and review the benefits and use the saving insurance calculator to find the approximate cost that you can expect for the policy term..
     
  4. Tax* benefits: Tax* benefits have always been a target for many people while considering insurance and savings plans. However, not all traditional saving schemes provide tax* benefits. With a savings insurance plan, you can avail of tax* benefits based on the premium you pay annually and get both the protection and savings benefits with the plan.

    The premium amount paid towards the policy and the generated returns qualifies for the tax* deduction and tax* exemption under Section 80C and Section 10(10D) of the Income Tax Act.


Conclusion


Life cover and savings play an important role if you have extreme financial responsibilities at different stages in your life. However, managing two different plans can be difficult if you are a busy professional and not affordable if you have cost consideration. A combination of protection and savings can resolve this scenario. Also, it ensures prompt and safe returns for risk-averse investors. And, the combined plan also works if tax* benefits are an important expectation.

 

So, look for comprehensive plans for effective financial management and stay invested in the long term for higher returns!

 

L&C/Advt/2022/Jul/1745

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Tata AIA Life Insurance

A joint venture between Tata Sons Pvt. Ltd. and AIA Group Ltd. (AIA),  Tata AIA Life Insurance  is one of the leading life insurance providers in India. We post everything you need to know about life insurance, tax savings and a variety of lateral topics such as savings and investments in this space. You can access and read a host of different blogs, articles and pages at the Tata AIA Life Insurance Knowledge Center or get in touch with us with any queries or questions!

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Disclaimers

  • Insurance cover is available under the product.
  • The products are underwritten by Tata AIA Life Insurance Company Ltd.
  • The plans are not a guaranteed issuance plan, and it will be subject to Company’s underwriting and acceptance.
  • For more details on risk factors, terms and conditions please read the sales brochure carefully before concluding a sale.
  • This blog is for information and illustrative purposes only and does not purport to any financial or investment services and do not offer or form part of any offer or recommendation. The information is not and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.
  • Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company.
  • Every effort is made to ensure that all information contained in this blog is accurate at the date of publication, however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.
  • *Income Tax benefits would be available as per the prevailing income tax laws, subject to fulfilment of conditions stipulated therein. Income Tax laws are subject to change from time to time. Tata AIA Life Insurance Company Ltd. does not assume responsibility on tax implications mentioned anywhere in this document. Please consult your own tax consultant to know the tax benefits available to you.
  • 1Guaranteed Returns/Payouts depend on Plan Option, Policy Term, Premium Payment Term and Age at entry