Savings plan update

Updated: Aug 2, 2020

Investment in which individual contributes money on a regular basis in order to reach a financial goal on a short or long term basis.

A money-saving plan like a money-back plan is a great way to meet intermittent liquidity requirements at important stages in life. Since the payout intervals are fixed, a money-saving plan helps in the careful planning of crucial requirements at important milestones in life.

“ Money-back life insurance policies are popular as they offer the dual benefit of insurance and redemption of money at regular intervals.”

A portion of the sum assured is paid out at regular intervals in a money-back policy. If the policyholder survives the term, he gets the balance sum assured in the best saving plan. In case of death over the policy term, the beneficiary gets the full sum assured irrespective of the payouts already made. The bonus is also calculated on the full sum assured and not the balance money left. Because of these two reasons, premiums on money back plans are higher than endowment plans.

Healthcare costs are increasing at an alarming rate. Illnesses sometimes force families to borrow and sell assets to meet expenses turning medical emergencies into financial emergencies. This is why the insurance industry has come up with a novel innovation recently called the Health ULIP. Health ULIP is the best savings plan, designed for investing a portion of the premium to building a health fund to meet the future health-related expenses by investing in a long-term flexible savings plan with multiple fund options. A health fund allows one to claim health-related expenses and also fund future health insurance charges. It has the benefit of tax exemption on the premium paid under section 80D of the Income Tax Act.

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