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Why Do You Need A Savings Plan?

Remember how your parents advised you on the importance of savings as a child? You grew up, and your bank or financial advisor started suggesting you to open a Savings Plan. Now, you are left wondering – why go for a savings plan when there are so many other options? Truth be told, some of those options might even have better benefits. Considering that fact, is getting a savings plan really necessary and viable?

Well, the fact is that you should pay heed to that financial advisor or your bank in this matter. Getting a savings plan can be beneficial in more ways than one.

What exactly is a savings plan?

Savings plans are basically one of the types of insurance plans whose aim is to let you save and accumulate funds for your future. They also come with life coverage so that the beneficiaries get the financial benefits in case of the policyholder’s untimely demise. The plan will also have maturity benefits and offer steady returns. So, all in all, a savings plan is a good choice for assured benefits and zero-risk involvement.

Advantages of a savings policy

Now that you know the basic tenets of a savings policy, let’s tell you all the reasons why you need to get a savings policy:

Inculcating the habit of savings – Think of the savings policy as one of the first steps to inculcate saving habits in yourself. It will create a sense of financial discipline, which will be immensely beneficial to you in the later stages of life.

A way to keep financial stress at bay – Thanks to the death benefits and maturity benefits offered as a part of the policy, you will not have to worry about financial distress in times of need. You can be assured that your dependents will have monetary support in your absence. You can even have financial support when you are about to retire.

Comes with major tax benefits – Since it is a type of insurance plan, you are entitled to tax benefits as a policyholder. Under the Income Tax Act (Section 80C), you can get a tax deduction of up to INR 1.5 Lakh towards the premium payments. Moreover, Section 10(10D) also exempts the death and maturity benefits from taxes.

The flexibility factor – Another reason to opt for the policy is that you can choose to pay the premiums as you want. So, from monthly to annually, you can select a mode that suits you the best. Additionally, you can withdraw the money in case of an emergency. Such flexibility comes in handy when you are in a financial emergency and need money urgently.

The bottom line

Insurance policies are of different types, and each has its own set of benefits. Of course, you can get any other insurance policy you want. But make sure also to keep a savings policy in the mix. It will not only act as an additional fund to store money but also help you in times of monetary needs.

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