Understanding the Features and Aspects of a Long-Term Savings Plan
One of your biggest responsibilities as a provider is to ensure that your spouse, children, and other loved ones are taken care of in the case of an unfortunate event. In the 21st century, it is impractical to rely on income as the sole source of money for your family. You need to diversify your funds and invest in a proper long-term savings plan. While there are many plans that cater to people with short-term needs, it is always a great idea to set up a corpus fund for the long run.
Features of a Long-Term Savings Plan
Well, to be precise, just saving money in your bank account is not enough if you want a proper savings plan that comes with a bunch of perks. Here are some of the features that you need to examine while you’re in the market for long term insurance or a long-term savings plan.
1. Term Period: It is pretty clear that the term period of a long-term plan is very large. Most people choose to buy coverage for at least 40 years so that they are able to take care of all of the major expenses that they will have to cover. These include setting aside money for education, weddings, functions, etc. Long term savings are also immune to market cycles as the length of the coverage period is so long. It is one of the most effective methods of wealth creation.
2. Compounding: Another feature of a long-term savings plan is the compounding factor. The money that you invest is going to be compounded quarterly or annually, depending on the plan and the premiums that you pay. You can also choose what kinds of investment options you’d like to go for. If you want to be cautious and conservative, you can choose to invest in government securities or corporate bonds. If you’re willing to take some risks, you can look into short term equities, mutual funds, and other financial instruments.
3. Diversification and Risk Minimization: Another major property of a long-term plan is the risk minimization process. If you invest in a long-term plan, then the risk of losing your money is quite less. As mentioned earlier, long term savings are immune to the cycles of the market. A long-term plan will also allow you to diversify and multiply all of the funds that you have. You can choose where you want to invest and how much you want to invest. This will ensure that you and your loved ones can enjoy the sunset years without worrying.
4. Tax Exempt and Inflation Exempt: Under Section 80C of the Indian Income Tax Act, you will be eligible for tax exemptions worth 1.5 lakh INR and more in the form of premium payments for the plan. In the case of your death, the amount that all of your beneficiaries will receive will also be 100% tax-exempt, according to Section 10D of the Indian Income Tax Act of 1961. These plans are also designed with a longer timeframe in mind, which means that your savings will be able to counter inflation as well.
Advantages of a Long-Term Savings Insurance Plan
Here are some of the main advantages that you will be able to enjoy if you opt for a good savings plan. First and foremost, you’ll be able to provide your family and loved ones with a good measure of financial security.
● Savings Fund is Liquid: A savings plan like this very liquid in nature, which means that you will be able to make use of the money in case of an emergency. The fluidity of a long-term savings plan makes it the ideal financial instrument for all kinds of incomes.
● Life Insurance + Savings: A long term savings insurance plan combines the benefits of a life insurance along with a long-term savings plan. In the case of your demise, your family will receive a large payout. You can also invest and multiply your money in preparation for large future expenses.
● Payout Flexibility: Plans like these provide savers with a large degree of flexibility when it comes to the payout method. There are two options you can choose from. You can choose to receive a large lump-sum upon maturity, or you can choose to receive a good stream of income continuously.
● Low Risks: Since you can choose the amount of risk you would like; you will be in charge of your funds. The risk associated with your investment is going to be very low, which means that you can save properly without having to compromise on your lifestyle and your comfort.
This is all the info that you need to know before investing in a long-term savings insurance plan. The sooner you get one, the more secure and safe your family and loved ones will be in the long run.