A Complete Guide to Saving Plans in India

Saving Plans in India - BimaBandhu

From our very childhood, we all can easily correlate savings to piggy banks. Our parents have told us about the importance of saving plans and helped us collect spare money with us for later use. As we grow old, the definition and importance of savings change for each one of us. While many individuals set aside a part of their earnings as savings regularly, others struggle to do.  

It is where saving plans come to our rescue. They can help us build the habit of saving money to fulfil various life goals. Want to know more about saving plans in detail? Let’s begin. 

What are Saving Plans in India? 

Saving plans are basically life insurance plans that offer an opportunity to save money and accumulate funds for later use. These plans are designed to encourage disciplined savings by giving you good returns over the plan tenure.  

You can buy a savings plan to achieve various short-term and long-term goals in life. In fact, many individuals purchase these plans for specific financial needs as per their risk appetite. Along with the benefit of accumulating funds for the future, saving plans also provide life insurance coverage. A death benefit is payable to the policy nominee in case of the untimely demise of the insured during the plan tenure.  

Point to Remember: There are two types of saving plans available in the market – one offered by the private life insurance companies in India, while others are introduced/backed by the Indian government (also known as saving schemes). The latter option constitutes a low-risk financial instrument but offers good returns. 

Let’s cater to both these types of saving plans in detail. 

What are the Benefits of Saving Plans (Offered by Private Insurers)? 

Also known as saving insurance plans, these saving plans are beneficial for individuals in the following ways: 

  • Long term savings to meet financial objectives in life 
  • Life insurance coverage 
  • Guaranteed payouts as per plan terms 
  • Tax saving benefits 

You May Like to Read: What is Insurance – Complete Guide 

What are the Primary Features to Consider While Buying Saving Plans? 

  • Entry age

It helps in determining your risk appetite, according to which you can select the most suitable saving plan for your needs.  

  • Policy term 

It is up to you to decide the plan tenure to accumulate significant funds to fulfil future goals in life. 

  • Life insurance coverage 

The life insurance element attached to saving plans must be carefully checked at the time of buying one. 

  • Rider options or add-ons 

You can include additional riders with your saving plan by paying an extra premium to receive more comprehensive benefits. 

Who Should Buy A Saving Plan? 

Ideally, every individual should buy a saving plan and keep on saving money with it. It is an ideal financial instrument for you if you want: 

  • Good return with disciplined savings 
  • To Fulfil life goals without facing financial constraints 
  • Complete life insurance cover 

Saving plan purchase suits the profile of all types of individuals, be it single, recently married, married with kids, or those nearing their retirement age.  

How to Select the Best Saving Plan in Life? 

Selecting a saving plan for the long term is a crucial financial decision in life. Hence, you must consider various aspects related to the right selection of a saving plan.  

  • Start with identifying your life goals – both long-term and short-term 
  • Assess your income versus current liabilities and regular financial needs 
  • Find and compare different saving plans in terms of their features and benefits 
  • Check for the flexibility to withdraw funds for emergency 
  • Use a saving plan calculator to get an idea of how the premium varies with changing the savings, life insurance coverage, and plan tenure 
  • Select the plan that aligns with your needs 
  • Add riders to maximize the saving plan’s benefits 

What are the Crucial Factors to Consider While Buying Saving Plans? 

Financial planning is important for every individual to live a stress-free life. One way to plan for your financial future is to buy a saving plan at the right age. Given below are certain important factors you should consider while buying any of the saving plans available: 

  • Your risk profile which can be different in different age categories 
  • Plan tenure as per your earnings and current age 
  • Financial goals in life 
  • Saving plans features and how they differ from other plans 
  • Flexibility to surrender the plan if needed 
  • Underlying charges related to the saving plans 

Why Should You Compare Saving Plans Before You Buy One? 

Saving plans comparison will give a good idea of the features as well as lacking in different plans available in the market. You can also decide if you want to buy saving insurance plans offered by private insurance companies or government-backed saving schemes.  

Name  Type   Maximum Maturity Age 
HDFC Life Pension Super Plus Plan  ULIP  75 years 
SBI Life Smart Wealth Builder Plan  ULIP  70 years 
Max Life Platinum Wealth Plan  ULIP   65/70 years 
ICICI Pru Subh Retirement Plan  ULIP  80 years 
Aegon Life Rising Start Plan  ULIP  75 years 
MetLife Money Back Plan  Money back plan  65 years 
Future Generali Select Insurance Plan  ULIP  75 years 
HDFC Life Pro Growth Plus Plan  ULIP  75 years 
Bharti AXA Life Secure Savings Plan  Traditional Savings Plan  70 years 
Kotak Classic Endowment Plan  Endowment Plan  75 years 

Disclaimer: We, at BimaBandhu, do not endorse any of the insurers or insurance products mentioned above. Reader’s discretion is advised before making any buying decision. 

Best Saving Plans/Schemes in India (Backed by the Government) 

Given below is a table that enlists some of the best saving plans you can choose from: 

Saving Plan  Current rate of interest 
Senior Citizen Savings Scheme  8.5% 
Recurring Deposits  Around 6% 
National Savings Certificate  7.9% 
Post Office Monthly Income Scheme  6.6% 
Kisan Vikas Patra (KVP)  7.6% 
Public Provident Fund (PPF)  7.1% 
Sukanya Samriddhi Yojana (SSY)  7.6% 
Pradhan Mantri Jan Dhan Yojana   – 
Employee Provident Fund (EPF)  8.6% 

Recommended Read: IRDAI- Approved Life Insurance Companies in India 

Saving Plans FAQs 

What are saving schemes? 

Indian banks, government, and Public Sector Institutions launch saving schemes for the welfare of citizens. Each of such schemes differs from the other in terms of interest rates, tax benefits, investment horizon, and similar other parameters.  

How can I create a savings plan? 

Ideally, you should start saving money after you start earning a regular income. Your savings plan should be based on your budget, goals, regular income, and expenses.  

Are saving plans tax-free? 

Not all saving plans offer tax benefits to the individuals. Thus, you are advised to check the tax implications of the chosen saving plan.  

Why are savings plans important in life? 

With a saving plan, you can create a significant corpus over time and be prepared to deal with any financial emergency. It will also help you meet your goals in life.  

Which types of saving plan should I choose? 

Different types of saving plans have unique features and benefits. You should select the one which meets your needs.  

How much savings should I have? 

Besides keeping the financial needs in mind, you should save at least 20% of your annual earnings. It will help you avoid a financial crunch if it occurs.  

Which saving plans are best? 

You can select from a wide variety of saving plans available in the market based on your needs, risk appetite, and income.   

 

 

 

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