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Savings is very integral to our lives. Everyone saves in some form or other, only the manner changes. However, investing in a savings plan is one of the common means of savings. Moreover, there are different types of savings plans.
While for some, the priority is to only invest for the short term in the best savings plan with high returns, others want their savings plan to serve them for the long term.
Reasons Why Savings Plan is a Good Way to Invest for the Long Term
Here are some points that will help you understand why a savings plan is a great way to invest in the long run:
- Risk-free wealth creation
Everyone knows the importance of savings. Since our childhood, we have learned that savings help us increase our wealth. However, while there are many ways to increase your wealth, you need to be careful about the risks involved in some of them. Usually, short-term wealth creation plans come with considerably high risk because these are market-linked.
However, long-term savings options do not come with a lot of risks because they usually have guaranteed returns. Moreover, being a long-term plan, the interest amount accumulates during this period, thereby increasing wealth over the period.
- Comprehensive life cover
Most savings plans also have a component of life insurance. It helps you with dual benefits – returns on premium if you survive the maturity period and death benefit if you meet an untimely death.
In addition, some savings plans also have different coverage options. For example, the Tata AIA savings plan has rider options for health and accidental death. So, if you want additional coverage over and above the base cover, you can also go for that. Not just that, in some savings plans, you also get a joint life cover which includes you and your spouse.
So, if you invest long term, it means higher returns and a comprehensive life cover during that period.
- Robust retirement plan
Everyone needs a retirement plan, so why not plan it early. Moreover, even financial experts recommend getting a retirement plan as early as possible in your career. In this regard, a long-term investment plan helps you a lot, especially with its wealth creation features.
Moreover, if you start putting your money in a life insurance cum savings investment plan for the long term, then you would need to start young. As a result, the premium will be low because the savings plans also come with life insurance, whose premium depends on age. Moreover, in some of these savings plans, you can also get a monthly income plan for your post-retirement.
- Financial support when needed
Insurance companies understand that even if you have invested in savings, there are some situations where you might need some funds. This is why some insurance providers have savings plans which have a money-back element.
Here some amount is paid back to the policyholder during the policy tenure. It helps them meet their unplanned financial requirements without surrendering the policy. This serves as an advantage over long-term Fixed Deposits (FDs).
In case you are still not able to meet your unplanned financial needs, you can get a loan on the savings policy also. However, you can avail of this benefit only if the policy has acquired the Surrender Value.
Final Thoughts
In today’s day and age, various insurance providers claim to have the best saving plan for the long term. However, there is no one-size-fits-all when it comes to a savings plan. So, as a customer, it’s important that you choose the plan that is best for you. In addition, you also need to carefully assess your insurance provider on various parameters such as claim settlement ratio and their credibility in the market.
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