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Savings Investment plans are life insurance plans that offer multiple avenues to not only save but also to grow your money. These investment plans help in systematic and disciplined investment ensuring that you and your family achieve your financial goals. Savings and Investment plans help you save regularly and be adequately prepared to meet family’s financial needs in the future. These investment plans offer various features that help meet your specific financial needs with investments made according to your appetite to take risks.
Besides providing an investment avenue, saving investments plans also provide insurance coverage. A death benefit is promised under the plan which is paid if the insured dies during the chosen policy tenure. Thus, saving investment plans not only create a corpus, they provide protection too.
Saving-Investment plans are customized Investments avenues for an individual with the objective to create a disciplined and periodic investment in various funds and finally achieve their future long-term financial goals along with an element of insurance support.
There are various Types of Savings Investment Plan in the Indian Insurance industry. The most common types of investment plans available in Indian Market are:
I. Participating Endowment Plan
II. Unit Linked Investment Plans (ULIP)
III. Guaranteed Return Plan
IV. Money Back Plan
V. Monthly Income Plan
Any insurance product with an element of savings in terms of maturity benefit is called a Savings Investment Plan.
The first such type are Endowment Plans. This type of plans are perfect for individuals who wishes to avail the dual advantage of investment plus insurance under the same roof. Endowment Plans provide the comfort of a guaranteed maturity benefit as well as a portion of the company’s profits as bonus. This type of plans can be taken to fulfil long as well as short term objectives in one’s life.
ULIP or Unit Linked Plans are a combination of insurance with investment opportunity where the maturity amount is not guaranteed as in the case of endowment plans. In this type of plans, the maturity amount depends on the fund chosen and the performance of the fund.
In ULIPs, the policyholder has the option to select the type of investment where his money will be allocated and whether it would be equity or debt, based on his own risk appetite.
Unit Linked Insurance Plans are considered to be one of the best investment avenue in India for those who are looking for coverage cum investment options. ULIPs offer both financial protection as well as life coverage. Even though the return on ULIP are subject to market risk, they give a leverage to make direct market investments and hence the final yield is much better as compared to other investment options. The ULIPs funds can be invested either into equity or debt funds or into a combination of both. The market value of the equity fund or debt fund is evaluated on the NAV (Net Asset Value) criteria.
Guaranteed Return Plans are a different variant of endowment plans. These plans offer assured return to the policyholder at the maturity of a specific investment policy. There are various investment plans available in the market under this category and the investor can compare to know the guaranteed return value and the set of terms and conditions of the said plan. These various conditions which could be applicable are Highest NAV, Maturity Guarantee, retirement benefit etc.
Money Back Plans are anticipated Endowment Plans. It means that the maturity benefit is guaranteed and would be payable in pre-defined intervals. For example, a money back plan would have survival benefits paid out to the policyholder every 5 years and the remaining amount with bonus on maturity. These plans help meet the interim liquidity crunches of an individual and are usually planned as per the milestones in a person's life like children educational expenses, marriage expenses, etc.
Monthly Income Plan are guaranteed traditional plans with a monthly outflow of income after a certain period. In this type of a plans, either maturity benefit or death benefit is payable monthly instead of a lump sum.
Market Linked Returns: Savings investment plan especially ULIPs offer the prospect to earn market linked returns since a part of the premiums paid in invested in various market linked funds and then onwards in different market instruments such as debt and equity in a fixed ratio. The proportion of debt and equity depends on the investor’s risk appetite. In case the market performs well, the investor will earn good returns.
3 in 1 benefit of Investment, Savings and Life Protection : Plan such as endowment and Unit linked plans brings true value of an investment with multiple benefits benefit of life insurance and savings at market linked returns, making them one of the best investment options. This helps one to instill the habit of investing saving which is crucial in building wealth over a period of time.
Flexibility: Savings Investment Plan comes in a wide assortment of investment avenues with significant scope for flexibility. The features such as switching between investment funds as per risk appetite and facility to withdraw funds partially and multiple premium payment options makes saving cum investment plan a must in everybody’s investment kitty.
Protection to loved ones: Saving Investment Policy fetches return on the investments along with insurance coverage. This ensures that in the case of any unfortunate event to the insured, the Nominee will receive the sum insured as well as the fund value. The return is provided as a Lump sum amount or in the form of monthly/quarterly/half yearly payments.
There are various plans wherein tax assets can claim benefits for the amount invested in Tax saving plans. Under the section 80 C and 80 D of Indian Income-tax Act, an individual is entitled to a deduction on the investment done or premium payment made. Such investments consist of funds such as Equity Linked Saving Scheme, Life Insurance, Fixed Deposits, Public Provident Fund, NSS and Bonds.
Points to remember before investing in Saving Investment Plan:
The policyholder should clearly indemnify their long term and short term financial objective prior investing in any saving Investment policy. This would allow the policyholder to decide what type and kind of investment to buy. For the ease of completion, the investor can set goals for specific time frame such as 1 year, 3 years, 5 years, 10 years, and so on. The Broad objectives to choose most suitable investment plan may include objectives such as purchasing a house, child's higher education and marriage or retirement planning.
Before opting for any saving investment avenue, one should clearly understand their risk capability and financial backing to match that risk. It is very important to strike a right balance between risk and returns associated with the policy. One can invest in an aggressive plan with the possibility of better returns however with higher risk.It is generally advisable that young investor with less financial dependency can go in for high-risk investment options, whereas investors6 with age and greater financial responsibilities, should opt for safer investment options with low to moderate risk.
One cannot deny the fact that Life is full of uncertainty and no one can predict what will happen next. For any unexpected situations and the crisis it is astute to combine fixed and liquid investments in a proportion. This would enable the investor to have enough cushions during any exigency. For any urgent requirement of cash, the liquidity aspect of any fund can be of great help.
It is always advisable to start with a small investment portfolio and then gradually increase the kitty with experience. Tax savings funds should ideally be a part of each and every investor's portfolio. One may opt for various premium payment frequencies ranging from monthly to annually.
There are numerous saving investment policies available in the market. Each and every plan has its own risk associated with it and the return may vary. In order to avoid investing in a wrong plan, the investor should ideally spend a good amount of time in researching about the fund before investing. Researching through the internet is one great way to know the best suited investment options. Apart from online research, Newspaper, magazines and journals are good sources of information related to the best saving investment options in India.
|Sl no||Plan Type||Plans Name||Entry Age||Maximum Maturity Age||Policy Term|
|1||ULIP||Future Generali Easy Invest Online Plan||0-50 years||18-70 years||10 to 20 years|
|2||ULIP||SBI eWealth||18-50 years||60 years||10-20 years|
|3||ULIP||HDFC Life Click2invest||30 days – 65 years||75 years||5-20 years|
|4||ULIP||ICICI Pru Smart Life||20-54 years||30-64 years||10-25 years|
|5||ULIP||Aegon iInvest||7-55 years||70 years||10/15/20/25 years|
|6||ULIP||Bajaj Future Gain||1-60 years||70 years||10 years|
|7||ULIP||Bajaj Allianz Fortune Gain||1-63 years||70 years||7-30 years|
|8||ULIP||Bharti AXA eFuture Invest||18-59 years||69 years||10 years|
|9||ULIP||Aviva iGrowth||18-50 years||60 years||10 to 20 years|
|10||ULIP||Bajaj Allianz Retire Rich||30-73 years||80 Years||7-30 years|
|11||Child Plan||SBI LifeSmart Scholar||0-17 years||65 years||8-25 years|
|12||Child Plan||HDFC SL YoungStar Super Premium||18-55 years||65/75 years||10 to 20 years|
|13||Child Plan||Aegon Life Rising Start Plan||1-15 years||75 years||10/15/20 years|
|14||Pension Plan||HDFC Life Pension Surplus Plan||35-65 Years||75 Years||10/15/20 years|
|15||Pension Plan||ICICI Pru Such Retirement Plan||35-70 years||80 years||20-25 years|
|16||Endowment Plan||Kotak Classic Endowment Plan||0 – 60 years||75 years||20 years|
|17||Endowment Plan||Birla Sun Life Insurance Bachat||30 days - 60 years||80 years||10-20 years|
|18||Insurance Plan||Max Life Platinum Wealth Plan||18-55 years||65/70 years||10-20 years|
|19||Insurance Plan||SBI Life Smart Wealth Builder Plan||7- 60 years||70 years||20 years|
|20||Insurance Plan||HDFC Life Pro-Growth Plus Plan||14 65 years||75 years||20/25 years|
|21||Insurance Plan||Future Generali Select Insurance Plan||7-60 Years||70 Years||20/25 years|
|22||Money Back Plan||MetLife Money Back Plan||13-55 Years||65 years||10 years|