All You Need to Know About Guaranteed Savings Plan

We all have specific long-term goals in life. And, to achieve those goals, you may need a large sum. This may include sending your child overseas for education, buying a retirement home, starting your own small business, etc. If you are also looking forward to plan your finances to support your future goals, you must know about the guaranteed savings plan. 

What is guaranteed savings plan?

A guaranteed savings plan is a type of life insurance policy commonly known as a guaranteed endowment plan. These policies are unique financial instruments that give you the dual benefits of life insurance protection and systematic savings so that you can build a sizeable corpus for the future. 

When you buy a guaranteed savings plan, most insurance companies give you the flexibility to choose the policy tenure, sum assured, and premium amount to suit your specific needs. You can invest and save money throughout the policy tenure. After the policy matures, the insurance company may pay the accrued amount in a lump sum or as regular income over a specific period as per the policy terms. 

Guaranteed savings plan are extremely popular among Indians, and many people have these plans in their portfolios for helping them in securing their retirement. 

Benefits of guaranteed savings plan

Flexible premium payment mode

When you buy a guaranteed savings plan, you can either pay a single premium in a lump sum or choose the regular premium payment mode. In the latter option, you can pay the premium periodically. 

Flexibility to choose the policy term

Apart from choosing the premium payment mode, you can select the policy tenure to suit your needs. If you think you will need regular income soon, you can choose a short-term plan. If you are saving for your long-term goals, you can select the policy tenure of 10 years or more. 

Death benefit

Guaranteed savings plans also have a death benefit clause. If something happens to you, the insurance company pays the sum insured to the nominee. Thus, you can be assured that your family’s financial future is secured even when you are not around. 

Loan facility

Under the guaranteed savings plan, you can avail of a loan against the policy’s surrender value. The maximum loan you can get is 80% of the policy’s surrender value. 

Things to consider while buying a guaranteed savings plan

Assess your future financial goals

You must choose a suitable guaranteed savings plan that perfectly aligns with your financial goal. For example, if you want to buy a retirement corpus, you may have a long time. In this case, you can choose a long-term policy and regular payout option. 

Choose riders

Riders can help you get additional protection and extend the coverage scope of your policy. Make sure that you assess your insurance needs and choose suitable riders. You can consider purchasing riders like a critical illness rider, a permanent disability rider, a premium waiver rider, etc. 

Consider the reputation and credibility of the insurer

When you invest your hard-earned savings, you want to get value returns and the best income from it. You can ensure this by paying close attention to the insurance company’s past performance, solvency and claim settlement ratios. These factors would give you a fair idea about the reputation and financial credibility of the insurance company. 

Final Word

Now that you know about the critical aspects of a guaranteed savings plan, do your due diligence and buy a savings plan now to secure your future.