“A penny saved is a penny earned.”-Benjamin Franklin.
What the famous author, publisher and inventor said is the fact of every individual that wants to save.
Savings in life are as significant as earning in life. Travel, education, marriage, jewellery and others are the segments where you would have to spend, if not now but in future. Life is full of such responsibilities that vary as you grow old. This is why with every year that passes by, ageing pushes you to save every penny in the way you can. While we need to set money aside for later use, keeping it in the best possible manner is the priority. Individuals save money by buying ULIPs, SIPs, Life Insurance, and paying taxes. The most comfortable and best way to save tax in India is by buying traditional life insurance policies.
These policies are available as tax saving plans which are an integral part of one’s life. The tax saving investment policies offer tax deductions under section 80 C or 80 CCC. The depth of tax benefits that these plans provide motivates people to invest frequently, but the rate of return affects people’s mindsets.
Let us look at the purpose of tax-saving investments insurance plans.
Why do you need a Tax Savings Investment Insurance Plan?
Every financial year, tax-saving investment insurance plans are required to save money and get the maximum benefit. Next, you can read a tax-saving guide that clarifies the purpose of buying the tax savings investment plan:
- Tax Savings: Buying an investment insurance plan is about tax savings to protect your finances in the long run.
- Build Long Term Financial Goals: The basic and primary benefit of the tax savings investment insurance plan is saving tax. They also serve as vital savings plans that help you build up a fund to achieve your short- and long-term financial objectives. Many of these tax-saving instruments are supported by the government, indicating that they are safe, transparent, and reliable investments.
- Tax deductions on long term savings: One of the advantages of tax planning is the ability to avail tax deductions on long-term purchases. For example, interest on an education loan and a savings account can be deducted from your taxes under the Income Tax Act. In addition, if you pay rent but do not receive House Rent Allowance, you may be eligible for a deduction for your house rent.
- More Savings for the future: When you buy tax savings instruments at an early age, you are on the go to build a considerable corpus of money. Starting early has its own benefit because, over time, these investment tools yield you a higher return.
After reading the purpose that the tax savings investment insurance plans help with, let us look at the best tax savings plan that you can opt for.
Bajaj Allianz Guaranteed Savings Goal Plan is a non-linked and non-participating life insurance plan. It assures you a life protection cover and savings over a long period. This is an Endowment plan which offers you these benefits:
- Guaranteed maturity benefit with guaranteed enhancer.
- Single premium payment term.
- Sum assured that will help you secure life goals.
ABSLI Guaranteed Milestone Plan is a plan that protects your life goals and comes with a guarantee. This savings plan provides you with a guaranteed death benefit on maturity. More features of the plans are:
- The sum assured under the plan is 15 X annualized premium
- Guaranteed Additions that boost your corpus.
- The plan gives you an option to cover your spouse in the same policy.
3. ABSLI Vision Life Income Plan
ABSLI Vision LifeIncome Plan is the savings plan that assures you to protect income even after retirement. The plan is a traditional participating whole life insurance plan which offers a combination of regular income and financial protection for the family in your absence.
- The plan gives you a whole life cover up to age 100.
- You get income for your entire life.
- The minimum entry age under this savings plan is 30 days.
- Individuals can choose the plan for a short premium paying term also.
Max Life Savings Advantage Plan is a non-linked participating individual life insurance savings plan. A savings plan puts you into the discipline of building a substantial corpus of money to support life’s financial goals. Apart from savings, this life insurance cover provides life cover that assures financial support to the members against all the contingencies.
- The savings advantage plan from Max Life is a flexible premium payment tenure and policy term.
- This plan partly guarantees payment of the lump sum amount on maturity.
- The savings plan also provides life insurance protection for your loved ones.
Max Life Monthly Income Advantage Plan is a non-linked participating individual life insurance plan that helps to keep your family financially empowered. This plan works wonders when the time is unfavourable. When you save continuously, you do not have a build-up pressure to meet the monetary commitments of your loved ones.
- Monthly income upto 30 years after the completion of the premium payment term.
- You get a Terminal bonus along with accrued compensation on maturity.
- The life cover pays the death benefit to the policyholder’s family in case of a sudden demise.
These savings plans help you save income tax deductions under Section 80 C and Section 10(10D) on the maturity benefit. In particular, you can avail of the tax exemption of Rs.1.5 lakhs towards your premium payments. Of course, the premium payment can be higher for higher coverage, but from the perspective of tax exemption, only Rs.1.5 lakhs is allowed.
Savings plans are essentially the requirement of every household, especially those who live with long term financial goals. The plans allow the policyholders to save regularly and enjoy considerable savings after some time. Choosing the right savings plan could be a challenge for some. While you look for the right plan for tax savings, you must keep in mind to buy the plans that give you coverage and payouts. In addition, the plans you pick must help you meet financial goals efficiently.