Life seems beautiful if your dreams are getting fulfilled, leading healthy
lifestyle and most importantly have a sound bank balance. Everyone dreams to
achieve them. However, with the growing inflation rates, better lifestyle
measures, just dreaming about them and saving some money in your piggy bank
won’t work. In order to achieve these goals, you need careful planning and
regular savings approach. You have to choose best saving plans available in the
markets.
A savings plan offered by insurance companies is one of the most
successful plans being sold out in markets for people. It allows you to enjoy
the benefits of life cover as well as earning from the market based funds.
Savings plan help individuals secure financial protection and attain their
financial goals. The suitability of savings plans vary from person to person,
as it depends on factors like budget, age, income sources, needs and wants of
an individual. These plans offered by insurance companies enable you to save
money for short, medium, long-term while receiving the benefits of life
insurance as well. The assured sum is paid out in addition to bonuses accrued
over the years, as a lump sum either when the plan matures or in the event of
the death of the insured person. The best saving plans help build a large
corpus and also beat inflation.
The article discusses few points to remember while choosing best of the
saving plans for your financial security:
Risk
Profile
For any form of investment the most important element is your risk
appetite. Your age, income source, family needs and financial goals are other
important determinants for the kind of risk you can take. Generally, young
people in their 20s and early 30s can opt for the higher risk, book profits and
switch earning to debt oriented funds on a later stage. ULIPs are amongst the best
saving plans for young customers who are willing to take risks to achieve
financial goals. On the other hand, debt funds, money-back plans are good
options for middle aged to old age people who prefer to have the guarantee of
the money being secure even though it generates lower returns.
Tenure
The tenure at which saving plans are set they play an important role in
determining your returns. Ideally, speaking the approach should be such that
the short-term plans should focus on debt funds, medium term on balance funds
and long-term on equity funds. You can start a small premium amount and build
it up over the policy tenure.
Goals
All saving plans should be aimed towards a financial goal. One should
have clear idea about the purpose of selecting a savings plan. Goals could be owning
a car, buying house, children’s education, marriage or retirement plans as
such. Tax savings is another purpose for working on plans.
Flexibility
There should be flexibility in terms of switching the funds or surrendering
if some investment is not working for you. While working on long-term goals, make
sure that your immediate needs are fulfilled. It is better to stick with medium
to long-term saving plans for the longer term so that they give better returns.
Charges
Last but not the least, charges are the crucial elements in such savings
plan. There are administrative, managements, upfront, partial withdrawal, fund
switching or surrender charges associated with a plan. Ensure that your charges
should not eat up most of your earnings. Your best savings plan should have minimum charges and
provide flexibility in terms of cash withdrawal, bonus receipt and term of the
policy.