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Need assistance in choosing the right insurance plan? Get a call from our Expert.

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6 Tips to Remember When You Buy a Guaranteed Savings Plan

When you aim to secure your loved ones at all times and have enough savings to achieve your life goals, a guaranteed1 savings plan or monthly savings plan is what you need. A monthly savings plan is a simple blend of life insurance protection and goal-oriented savings that ultimately build a large enough corpus. To avail of the benefits under such a savings plan, you have to pay a one-time premium amount or periodic payments.

A guaranteed1 savings plan is a great investment avenue for those who are averse to taking any market-related risks with fluctuating investments. But this is only the overlay of a guaranteed1 savings plan.
 

Remembering these important tips will give you a better idea of whether a guaranteed1 savings policy matches your needs and fits your budget.
 

Tip 1: A guaranteed1 plan gives you assured and risk-free returns
 

A guaranteed1 savings plans give you assured and risk-free returns, the interest you will earn on them will be lesser than those accrued in market-linked insurance plans.
 

Market-linked insurance plans carry a risk of loss, so they are suitable for those investors who don’t mind taking on some risk. Moreover, in the guaranteed1 savings plan, you will not receive any bonuses2 or dividends from the profits made by the insurer. However, the rate of return in a guaranteed1 savings policy is enough to fulfil your goals and negate the effects of inflation.
 

Tip 2: A guaranteed1 savings plan provides life insurance protection.
 

A guaranteed1 savings plan is not just a wealth-creating tool. It also provides life insurance coverage to you and your loved ones in the form of a guaranteed1 death benefit. This death benefit (also called sum assured) is payable to the family members you choose (also called nominees) on your unfortunate demise.
 

This death benefit is in a lump sum, and once your nominees receive it, the guaranteed1 savings plan automatically expires. However, if you add your spouse to the life insurance coverage, the savings policy continues up to their survival. Ultimately, the death benefit aims to provide financial support to your family in your absence.
 

Tip 3: A guaranteed1 savings plan gives you the utmost flexibility.
 

In a guaranteed1 savings plan, you get to choose almost every feature. For instance, the guaranteed1 income you will receive during the income period after the completion of the premium paying term. You can choose to receive this guaranteed1 income in monthly or annual instalments and select the income period that is generally between 20 to 45 years.
 

With the TATA AIA savings plan, you also have the choice to not wait for the savings policy term to finish to start receiving your guaranteed1 income. You can opt for the critical illness benefit option, where you will immediately receive the guaranteed1 income if you get diagnosed with any of the 40 critical illnesses. Other flexibilities like choosing how much premium to pay, adding extra riders# to your savings plan, and getting the return of premiums3 paid are also available.
 

Tip 4: A guaranteed1 savings plan is for ticking off timely goals.
 

In a monthly savings plan, you receive regular income in monthly or annual instalments. This periodic nature of a guaranteed1 savings plan makes it ideal to fulfil your present and future goals. From daily expenses and utility payments to pursuing higher education or travelling the world, this savings plan helps you tick off goals that keep on arising. That is why this type of savings plan is not ideal if you are looking for a lump sum amount to strike-off goals that require a large one-time payment like paying the down payment of a house or buying a car/ vehicle. And as mentioned above, as this savings policy is non-linked, your returns will be mid-level.
 

Tip 5: A guaranteed1 savings plan offers additional riders# for extra protection.
 

Apart from the life insurance coverage and regular income, a monthly savings plan offers additional riders# for that extra layer of protection against life’s unpredictable nature. For instance, in the guaranteed1 savings plan of Tata AIA Life insurance, you get the freedom to add one or both of these riders#:
 

Tip 6: A guaranteed1 savings plan gives you profitable tax* benefits.
 

Apart from all the benefits listed above, it is also crucial to remember that the tax* benefits of a guaranteed1 or monthly savings plan make it a more viable insurance plan to save in. In such a savings plan, you get two very profitable tax* benefits under two provisions of the Income Tax Act, 1961:
 

  • As per Section 80C, you can claim tax* deductions the premiums paid by you towards buying the savings plan, provided the amount you claim is within the limit of ₹ 1,50,000 in a year.

  • As per Section 10(10D), both the regular income and life insurance benefits you will receive are exempt from tax* deductions.
     

However, remember that saving in a guaranteed1 savings plan due to the tax* benefits is simply the cherry on the cake, and it shouldn’t be the sole reason you get the savings plan.
 

To sum it up:

Remembering the nature of a guaranteed1 savings plan, its features, and the potential of the returns it provides will give you clarity before buying one. Buying an insurance plan is a long-term commitment, so you must know its features in and out before investing in it.
 

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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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Disclaimer

  • 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 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.
  • 1Guaranteed Returns/Payouts depend on Plan Option, Policy Term, Premium Payment Term and Age at entry
  • *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.
  • 2These bonuses are not guaranteed in nature. The Company may declare Cash Bonus rate annually in advance. The Cash Bonuses if declared, will be applicable provided all due premiums have been paid.
  • #Rider is not mandatory and is available for a nominal extra cost. For more details on benefits, premiums, and exclusions under the Rider, please contact Tata AIA Life's Insurance Advisor/ branch
  • 3Return of premium shall be the return of Total Premiums Paid (excluding loading for modal premiums and discount) by the policyholder at the end of the Income Period