Life insurance in India is an important financial tool that provides financial security to your loved ones in case of an untimely death and can also help you build your savings. There are different types of life insurance savings plans with customizable options to enhance the savings benefits.
Therefore, it is important to know the products and the associated features to research, compare and analyse the needs to make a well-informed decision.
Here is a detail about how you can help build your savings using life insurance plans.
Choosing Savings Insurance Plans
One way in which a saving plan in India can help you save money is by providing a guaranteed return on your investment. Savings insurance plans provide a life cover and a guaranteed return at the end of the policy tenure as a maturity benefit. As the returns are guaranteed, you can decide on the funds required based on your short-term or long-term money goals, invest in savings insurance plans, and pay the premiums accordingly.
In addition, you can customize the savings insurance plan based on your financial needs. For example, Tata AIA Life Insurance provides different payout options, such as the lump sum maturity benefit, regular income and a combination of lump sum and regular income. Therefore, if the investment is for retirement needs, you can choose the regular income option. Furthermore, you can use online premium calculators to help determine the premium for the life insurance plan based on your income and financial requirements.
Accumulating Cash Value
Another way that life insurance can help you build your savings is through the accumulation of cash value. Some life insurance policies, such as whole life insurance, have a savings component that allows you to accumulate cash value over time. This cash value can then be used to supplement your retirement income or to pay for unexpected expenses.
Saving Funds Periodically
One of the main benefits of life insurance is that it allows you to save money regularly through premium payments. These payments can be made monthly, quarterly, or annually, depending on your life insurance plan. In addition, you can choose to pay the premium regularly throughout the policy tenure or for a limited term. These options allow you to choose the best payment schedule for the savings plan, whether aligning with your salary schedule or any other regular income.
Long-Term Savings Options
Savings insurance plans provide the option to save funds for the long term. The longer the life insurance policy tenure, the higher and the better the benefits. Also, when you invest in retirement insurance plans early in life, you can choose a longer policy term and benefit from lesser premium rates. While paying a lesser premium is affordable, you will develop the discipline to save better and longer investing in the life insurance plan.
Saving On Tax
In addition to these savings benefits, life insurance can also provide tax benefits. In India, premiums paid for life insurance are eligible for tax deductions under Section 80C of the Income Tax Act. It means you can lower your taxable income by annual premium payments, which can help you save money on your taxes.
Life insurance can be an effective way to build long-term savings. Savings insurance plans combine the benefits of both savings and insurance, allowing policyholders to accumulate cash value over time, provide death benefits, and offer tax savings. In addition, these plans can provide a sense of security and peace of mind, knowing that the policyholder’s loved ones will be taken care of in case of an unfortunate event.