How can you save tax with a Guaranteed Savings Plan?


Everyone’s life is unique. Everyone has a diverse range of goals and objectives that they want to achieve. Every investor must create short-term and long-term financial plans basis the objectives.

Short-term plans help you meet your immediate monetary goals, while long-term plans are based on building financial safety and security.

Long-term financial plans are important as they not only help you align the funds towards big goals, but they also help you stay on track and finally help you achieve your goals.

Owing to a spike in inflation, market volatility, and the aftermath of the pandemic, these days, the need for a solid long-term financial plan has become more important than ever. As a cautious investor, it is advantageous for you to make a wholesome long-term financial plan and select the best investments as per your goals. As it is a long-term commitment, it is important that you select the investment avenues that offer competitive returns and safety against uncertainties.

A guaranteed savings plan can prove to be an intelligent choice for a long-term investment.

What are the guaranteed savings plans?

A guaranteed savings plan is generally a non-participating policy that aids you in reaching your long-term life goals. A guaranteed savings plan offers financial security by providing insurance coverage. Along with this, you get an assured return on your savings.

With such policies, you can make regular payments in the form of monthly or annual premiums for a specific term.

What are the benefits of a guaranteed savings plan?

Take a look at some of the key features and advantages of a guaranteed savings plan.

a) Premiums

You have the freedom to choose the frequency of premiums. You can opt to pay premiums over time or in one single payment. This will depend on your financial capability.

b) Policy Term

You can select a term that suits your needs and requirements. If you want to save towards short-term goals, then you can choose a savings plan with a shorter term. If you want to save towards a bigger goal like buying a house, planning a wedding, or retirement, then you can invest in a longer-term policy.

c) Guaranteed Maturity Benefits

Guaranteed savings plans offer you assured benefits soon as the plan is matured. The overall advantages will depend on the sum decided while purchasing the plan.

d) Death Benefit

In case of the insured person’s untimely demise, the insurer can provide a sum assured to his/her family.

What are the tax benefits offered by a guaranteed savings plan?

Guaranteed savings plans also help in saving taxes. The premiums you pay towards the guaranteed savings plan are exempted from taxes up to ₹ 1.5 lakh under Section 80C of the Income Tax Act of 1961. The maturity and death benefits received from a guaranteed savings plan are also tax-free under Section 10 (10D).

You must note that all the guaranteed savings plans differ from one insurance company to another. So, you must always read the terms, rules, conditions, and policy documents carefully before making your investment decision.

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