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.
 

L&C/Advt/2023/Feb/0539