Check Out the Eligibility Criteria Before You Decide to Invest in Savings Plans
Updated On October 26, 2021 | by Kamal
A savings plan is typically a prearranged plan in which you can contribute money from your bank account or paycheck to a financial institution. After contributions are complete, the entity invests the money on behalf of the individual saver. The returns from these investments are used to provide income for those participating in the plan. Savings plans can help you double your hard-earned money. However, they aren’t for everyone. You’ll need to meet certain criteria before a savings scheme can accept your savings money. Find out if you are good enough to go ahead and set one up.
What are the Conditions for Purchasing a Savings Plan?
There are several conditions required to purchase a savings plan. An insurance company may consider several risk factors such as your habits like smoking or drinking, pre-existing health conditions, and a lot more other factors. Here’s a complete list of conditions imposed in savings plans:
1. Maturity Age
The maturity age is a timeframe after which your savings scheme expires, and you can withdraw the accumulated money. Moreover, talking about the date of maturity, it depends on whether you’re dead or the contract’s stipulation has been reached. At this point, you will no longer have to pay any premiums. Some plans also keep you covered for a few years past the maturity age.
2. Sum Assured
The minimum assured sum offered by a savings plan is Rs. 76,500, which certainly fits the bill for an average Indian household to manage their expenses. However, keep in mind that there is no upper limit on the maximum sum assured. You can choose to grow your corpus as long as you can pay premiums at a defined frequency.
But, there’s a limit on the minimum premium installment you can make annually in a savings scheme. It requires a minimum of Rs. 20,000 in form of premium payments, which can be either divided monthly, quarterly, or even half-yearly based on your investment preferences. Additionally, there’s no maximum limit on the number of premiums you can pay towards the policy, which means you can save as much money as you want to sustain a comfortable and wealthy future.
3. Premium Payment Terms
The number of years up to which you have to pay the premiums indicate the coverage as well as the length of your policy. However, don’t confuse it with your policy’s term as the latter uses the accumulated amount to cover you decades ahead of the maturity period of your plan. As a general rule of thumb, the more comprehensive cover you choose, the higher your premium amounts tend to be during the payment terms of your policy.
4. Entry Age
The entry age is a criterion that determines the minimum age for a person to be eligible for investing in a savings plan. Depending on the risk management system of a financial institution, they may have varying entry ages for investors. Generally, eighteen years is an ideal age for a person to start investing in a savings plan.
5. Premium Payment Mode
Depending on the number of premiums you have to pay towards the policy benefits, your policy tenure can either be long or short. Insurance companies provide you with ranging methods to pay your premiums, which do not affect the long-term benefits of your policy in any way. It’s usually kept very flexible to allow people from diverse financial backgrounds to invest in savings schemes.
6. Modal Factor
The modal factor is a fractional value used to convert your annual premiums into smaller chunks of payments required to be paid more frequently. The value of the modal factor is multiplied by your annual premium to determine how much money you need to pay every month. As a policyholder, you can always choose to change the mode of premium payment based on the modal factor of your preferred plan.
Best Savings Plans Available in India
When it comes to savings plans in India, there are a plethora of options for you to choose from. With such a wide range of options, you can surely feel overwhelmed. That’s why we’ve compiled a list of the best savings plans available in India to facilitate your decision-making:
1. Bajaj Life Insurance Capital Guarantee Solution
The Capital Guarantee Solution plan offered by Bajaj Life Insurance is a savings scheme that helps you invest your money in market-linked products and guaranteed upfronts to gain consistent returns without any excess level of risk involved.
With a return of over 14% in just seven years, this plan is categorized among the top-performing large-cap funds in the country. It is certainly an ideal saving plan to generate a financial cushion for your family and fulfill your dreams and aspirations in the future.
2. Aviva I-Growth Plan
The Aviva I-Growth Plan is a Unit Linked Insurance plan with an entry age of just eighteen years. It offers you combined benefits of investment and insurance, which make it ideal for long-term investments.
The plan features a maturity age of 60 years and allows you to choose from a variety of policy terms such as 10, 15, and 20 years. Moreover, you can also choose between multiple fund options to maximize your savings potential.
3. Canara HSBC Oriental Bank of Commerce – Invest 4G Plan
Being one of the most comprehensive savings plans available in the market, the Invest 4G Plan is a tax-saving plan that helps you accumulate a sufficient financial corpus to enjoy a financially secure future and fulfill all your dreams and aspirations in life.
The plan provides several customization options, which allow you to orient your investments according to specific goals. Moreover, you can also enjoy exceptional flexibility in pay-out options and premium payment terms.
Savings plans are a great way for families, couples, or individuals to save without fail. It offers peace of mind because you’re saving or paying regularly, and in an emergency, you can access the money quickly without transfer fees.