One must have a sound financial plan in place to achieve their long-term goals. Merely saving a part of our income in fixed deposits or savings accounts is not enough nowadays when inflation is at an all-time high.
You need something that can offer inflation-beating returns and the ability to create a large corpus over time to help you achieve your big-ticket financial expenses, like buying a house, among others.
One such product that can play an excellent role in helping you meet your long-term goals is a guaranteed savings plan. Let’s understand these plans and how they can make your future dreams a reality.
What Are Guaranteed Savings Plans?
Guaranteed savings plans are financial investment plans that offer you a fixed and guaranteed maturity benefit at the end of the policy period. Unlike other investment options like ULIPs that may be linked to equity funds, guaranteed savings plans are not affected by market fluctuations. Hence, your maturity benefit would be the same irrespective of how the market is behaving. On top of that, guaranteed savings plans also offer life coverage, and in case the policyholder passes away, the nominee is paid the death benefit.
Guaranteed savings plan premiums can be paid on a monthly or annual basis. The biggest advantage of such plans is that they’re tax-deductible under Section 80C of the Income Tax Act for an amount of up to ₹1.5 lakh. The maturity and death benefit is also completely tax-free under Section 10(10D).
How Can Guaranteed Savings Plan Help Achieve Long-Term Goals?
It is important to visualise your long-term goals before you start saving money to achieve them. For example, purchasing a home is one of the most common long-term goals that require a significant amount of funds.
Other long-term goals are those that you know will come up as you age, like your children’s higher education, marriage, etc. So it is prudent to think and chart out these goals as early as possible, ideally, 12-15 years before they happen.
With the help of guaranteed savings plans, you can do just that since you start investing today and reap the dividends when you approach your goals. You can align your goals with the savings plan and choose a flexible payout structure. In this way, you can get the funds as you require them over the years.
One example of this is the birth of a child. As soon as your child is born, start a guaranteed savings plan with a tenure of 20 years, for example. Then, as your child reaches their age for education and marriage, your plan will give you the assured returns just in time for your child’s major expenses.
At the same time, the life protection that such plans guarantee can also ensure the financial security of your family. Your family will be protected from all sides.
A guaranteed savings plan is an excellent way to achieve your long-term goals and, at the same time, remain financially protected from uncertainties. The premium payments and payout structure of such plans are also flexible, and you can cater them to your own needs.
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