Savings Plan
What is a savings plan?
A savings plan is a unique financial instrument that lets you save money for future needs in a systematic manner while also providing you with life insurance coverage. It also helps you grow your money with stable returns making it a low-risk investment option. A savings plan offers death benefit to the nominee in case of an unfortunate event during the policy term.
Benefits of investing in a savings plan
Who should invest in a savings plan?
The following people can invest in a savings plan:
Conservative Investors
Since savings plans offer guaranteed> benefits and are not affected by market ups and downs, they make for the perfect choice for conservative investors. They can offer financial stability and match the low-risk appetite of conservative investors.
Young Professionals
Young professionals who are just starting out in their careers can benefit from investing in a savings plan. With guaranteed> returns and low-risk growth, a savings plan can help them to secure their investment and plan their further education, trips to beautiful places across the world, purchase of luxury goods and many more as the returns are guaranteed> at the inception of the policy.
Freelancers & Entrepreneurs
These professionals usually have fluctuating incomes, so a savings plan can help them to nullify these fluctuations by offering guaranteed> income.
Equity Investors
Savings plan is an ideal investment for equity investors looking to diversify their investments and reduce their exposure to the market. In addition to the guaranteed> return, they would also be benefited with the built-in insurance coverage.
Types of savings plans
Here are some different types of savings plans you can choose from:
Unit-Linked Insurance Plans (ULIPs)
Unit-Linked Insurance Plans (ULIPs) are investment-cum-insurance products that combine the benefits of life insurance and growth of money. They offer a life cover` along with the option to invest in equity, debt or hybrid funds~. They suit all risk appetites due to their diverse investment options. They also allow investors to switch between these funds as per their investment objectives and risk appetite.
Money Back Plans
Money-back plans are another type of life insurance plans that offer assured payouts at the time of maturity, in addition to the sum assured paid to the nominee in case of the policyholder's demise during the policy term. They can be a low-risk option for meeting several financial goals, such as children's education, marriage, or other life goals.
Endowment Plans
Endowment plans are a type of life insurance plans that offer both life insurance coverage and a savings component. These plans are designed to offer a savings component that can help investors meet future financial goals and provide financial security to the policyholder's loved ones in case of an unfortunate event.
Public Provident Fund (PPF)
Public Provident Fund (PPF) is a long-term savings scheme backed by the Government of India. It can help you build a retirement corpus or save for long-term financial goals. PPF is a low-risk investment option that is ideal for creating assured returns. This scheme suits those looking to invest between ₹ 500 to ₹ 1.5 lakh per financial year.
The Government of India reviews the PPF interest rate every quarter. The current PPF interest rate is 7.1% for Q4 FY2023-24.
Post Office Monthly Income Scheme (POMIS)
The Post Office Monthly Income Scheme (POMIS) is another government-backed savings scheme. It allows a maximum investment limit of ₹ 9 lakh for individual accounts and ₹ 15 lakh for joint accounts. POMIS is a secure investment option and can offer a steady income without the risk of market fluctuations.
Like other post office schemes, this scheme is backed by The Ministry of Finance. From 1st January 2024, interest rates for POMIS will be 7.4% per annum, payable monthly.
Senior Citizen Savings Scheme
Senior Citizen Savings Scheme can be opened by people aged 60 years and above or 55 years and above in some cases. The scheme can offer risk-free returns and help senior citizens fight inflation while also ensuring financial security. The scheme is supported by the Indian Government.
The current rates of interest for Senior Citizen Savings Scheme (SCSS) for Q4 FY2023-24 is 8.2% p.a.
Sukanya Samriddhi Yojana (SSY)
Sukanya Samriddhi Yojana (SSY) is a government-backed savings scheme aimed at promoting the welfare and education of the girl child. The SSY scheme allows parents or legal guardians to open an account in the name of a girl child. The scheme offers an attractive rate of interest and provides tax1 benefits subject to conditions under Section 80C of The Income Tax Act, 1961.
The interest rates for Sukanya Samriddhi Yojana are updated quarterly. Sukanya Samriddhi Yojana (SSY) interest rates for Q4 FY2023-24 is 8.2% p.a.
Atal Pension Yojana (APY)
Atal Pension Yojana (APY) is a government-backed pension scheme that can provide pension benefits to individuals working in the unorganised sector. The scheme aims to encourage workers to save for their retirement and ensure a steady stream of income during their retirement.
This scheme provides a fixed income to individuals post-retirement on the basis of their regular contributions. It does not have a fixed or floating interest rate on the contributions.
Employee Provident Fund (EPF)
The Employee Provident Fund (EPF) is a government-backed savings scheme that can help employees in the organised sector save for their future needs, like a financially independent retirement. Under the scheme, employees contribute a part of their salary towards the fund and the employer also contributes an equal amount. The EPF scheme is managed by the Employees' Provident Fund Organisation (EPFO).
The EPF interest rates are reviewed every year by the Employee Provident Fund Organisation (EPFO). For FY2022-23, it is fixed at 8.15%.
National Pension Scheme (NPS)
The National Pension Scheme (NPS) is a pension scheme sponsored by the Indian Government and regulated by the Pension Fund Regulatory and Development Authority (PFRDA). It aims to provide retirement benefits to employees of Government, private and unorganised sectors. The scheme offers tax1 benefits under Sections 80CCD(1) and 80CCD(2), along with various investment options for growth of money.
The investments made in the National Pension Scheme are equity-linked and don't have a fixed interest rate. The returns vary based on the fund's performance.
National Savings Certificate
National Savings Certificate (NSC) is a government-backed fixed-income investment scheme offered by India Post. The scheme offers fixed returns that are higher than traditional fixed deposits. Contributions of up to Rs. 1.5 lakh per year can be claimed as a deduction from taxable income under Section 80C of the Income Tax Act of 1961. This scheme is best suited for low-risk investors.
The interest rate of National Savings Certificate scheme is revised every quarter by the Indian Government and currently stands at 7.7% p.a. for Q4 FY2023-24.
Recurring Deposits
Recurring deposits are an investment option that allow investors to make regular deposits while getting a reasonable return. The investment tenure for recurring deposits can range from six months to ten years. Various banks and NBFCs offer this option. The interest rate offered can vary depending on the institution or bank.
Voluntary Provident Fund (VPF)
Voluntary Provident fund (VPF) is a scheme where an employee voluntarily contributes more than the maximum permissible employee contribution to EPF. Any amount deposited by the individual in Voluntary Provident fund (VPF), earns the same interest rate as that earned by the EPF contribution.
The VPF interest rate is the same as the EPF interest rate, and is reviewed annually by the Employee Provident Fund Organisation (EPFO). For FY2022-23, the interest is fixed at 8.15%.
Kisan Vikas Patra (KVP)
Kisan Vikas Patra (KVP) is a saving certificate scheme initially launched in 1988 by India Post. KVP certificates can be bought from select banks and post offices. The rates are fixed for specific periods of time, and is suited for people looking for low-risk investments. However, this scheme offers no tax benefits on purchase.
The current interest rate applicable to KVP is 7.5% per annum (Q4 FY2023-24).
Key features of a savings plan
Life Cover
A savings plan comes with a life cover ` and provides financial security to your dear ones in case something unfortunate happens to you.
Maturity Benefit
Savings plans come with maturity benefit. This brings certainty to your savings. Some savings plans also offer additions & bonuses that enhance the maturity corpus, thus helping you to achieve your financial goals faster
Flexible Premium Payment
Savings plans allow you to pay the premium monthly, quarterly, half-yearly or annually, as per your convenience.
Guaranteed Returns
A savings plan provides guaranteed> returns upon maturity, making it a reliable financial tool for securing your future. These returns are risk-free, which means you do not lose the money that is committed to you at the time of policy inception, provided you pay all premiums on time.
Tax Benefits
Savings plans qualify for tax benefits under various sections of The Income Tax Act, 1961. You can claim an annual tax deduction of up to ₹ 1.5 lakh under Section 80C1 of The Income Tax Act, 1961. Further, the death benefit and maturity amount are exempt from tax under Section 10(10D)1 of the same act.
Money Back Option
Savings plans offer money back benefit to the policyholder. The policyholder has the flexibility to chose the percentage of the premiums they would like to receive and also when they want to receive the money back.
A savings plan comes with a life cover ` and provides financial security to your dear ones in case something unfortunate happens to you.
Savings plans come with maturity benefit. This brings certainty to your savings. Some savings plans also offer additions & bonuses that enhance the maturity corpus, thus helping you to achieve your financial goals faster
Savings plans allow you to pay the premium monthly, quarterly, half-yearly or annually, as per your convenience.
A savings plan provides guaranteed> returns upon maturity, making it a reliable financial tool for securing your future. These returns are risk-free, which means you do not lose the money that is committed to you at the time of policy inception, provided you pay all premiums on time.
Savings plans qualify for tax benefits under various sections of The Income Tax Act, 1961. You can claim an annual tax deduction of up to ₹ 1.5 lakh under Section 80C1 of The Income Tax Act, 1961. Further, the death benefit and maturity amount are exempt from tax under Section 10(10D)1 of the same act.
Savings plans offer money back benefit to the policyholder. The policyholder has the flexibility to chose the percentage of the premiums they would like to receive and also when they want to receive the money back.
Factors to consider before investing in a savings plan
Goal setting
Risk
assessment
Flexibility
Plan features
Additional
Fee & Charges
It is important to set a goal before starting any savings plan. This could be going on a dream vacation, buying an expensive car, making the down payment for a house, funding your child’s higher education or planning a comfortable retirement for yourself
Your risk appetite may vary depending on your age, life stage, income and goals. A plan that offers high returns may come with a high risk associated with it. It is important to evaluate the risks associated with various plans and choose a plan based on your risk appetite
A savings plan that can allow you to withdraw your money in case of a financial emergency can help you stay prepared for unforeseen difficult times. Many savings plans also offer you the flexibility to choose the premium payment frequency and the payout method as per your requirements. You should look for such flexible features when purchasing a savings plan
Different plans come with different features and you must pay attention to how each feature benefits you. You should try to look for plans that provide you with features like flexible premium payment options, free withdrawals, additional benefits on purchasing online and more. Also, look for a trustworthy brand so that you can be assured that your money is safe
Some savings plans may have hidden fees and charges. It is important to analyse these when selecting a plan to understand the overall costs.
Why choose a savings plan from ICICI Prudential Life Insurance?
5.81 Cr %
Lives covered as on March 31, 2024
2.04 Lakh Cr”
Benefits paid till March 31, 2024
1 Day
Claim SettlementΨ
30 Days Return Policy
if not satisfied, return (free look) the policy and get your money back
Explore protection and savings plans in different categories
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ICICI Pru GIFT Pro
- 100% Guaranteed>, tax-free1 income for both short-term and long-term needs
- Option¶ to get constant or increasing guaranteed> income
- Life cover` for the financial security of your family
- Flexibility to choose percentage of MoneyBackπ benefit and when you want to get MoneyBackπ benefit
- Option to receive all future guaranteed^ income and MoneyBackπ benefit by converting them into a lump sum3
0Conditions Apply
Check Returns
How to compare different savings plans?
There are a lot of savings plans available today. To choose the best savings plan, one should consider the following factors:
Size of life cover
The size of the life cover ` being offered is an important parameter. The more the life cover ` offered, the better the plan.
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Interest Rates and Returns
Interest rates and returns can widely vary across savings plans. You can use a savings plan calculator to understand how these rates impact your final yield and select a plan accordingly.
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Evaluate Liquidity and waiting Period
Some savings plan may have strict waiting period where you are not able to make any withdrawals. It is important to check these before you invest in a plan. This can help you plan your liquidity needs better and make informed decisions about future withdrawals.
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Tax Implications
Understanding the tax treatment of a savings plan is crucial for maximising tax benefits and effectively planning your withdrawals. Being aware of how your savings plan is taxed helps you make informed decisions and minimise your tax liabilities.
Premium
The best savings plan for you will be the one that fulfils all your requirements and at the same time, also fits into your budget.
Company Credentials
Savings plans involve investing over a long period of time. Hence, it is important to ensure that the insurance company is stable with a sound financial position and would be able to honour its commitment even several years after the original promise was made.
Documents required to purchase a savings plan
You may require the following documents to buy a savings plan
- Aadhaar Card
- Driving license
- Indian Voter Id Card
- Passport
- Completely filled policy application form
- Income proof (6 months’ bank statement/ ITR details/ last 3 months’ salary slips)
- Identity proof and address proofs for the KYC process
Frequently Asked Questions
COMP/DOC/Jun/2021/36/5937
COMP/DOC/Mar/2024/123/5655
COMP/DOC/Dec/2024/612/7813
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