Taking control of your finances through financial planning involves managing your savings, expenses, assets, liabilities, and financial goals. Once you have a decent idea of your financial standing, you can create a well-diversified financial portfolio and invest in various avenues to achieve your financial objectives.
Understanding the significance of savings plans and insurance in financial planning is crucial. A savings insurance plan can safeguard you and your loved ones from life’s uncertainties and ensure a stable and comfortable financial future.
This article will explore the importance of a savings plan and Insurance in financial planning and how they can accelerate achieving your financial goals.
Importance of Savings Plans for Financial Planning
While devising strategies for financial planning, it is necessary to understand the importance of savings insurance plans for financial planning.
Insurance provides risk coverage to protect your savings
The insurance coverage in a savings plan can help you secure your savings. It provides a financial safety net against unexpected events that can cause significant financial losses. For example, by adding optional riders to your savings plan, you and your family are secured by the rider sum assured against specific risks such as critical illnesses, accidental death, and so on.
Therefore, you do not need to dip into your savings to face these emergencies, which allows your savings to grow unhindered. These benefits of saving money on your policy can reduce the financial burden on yourself and your family, which can help you save money that would have otherwise gone toward paying for unexpected expenses.
Choosing the right insurance coverage that fits your needs and budget and reviewing your policies regularly to ensure you are adequately covered is essential.
Different saving insurance plans for different needs
There are distinct advantages of money-saving policies that can boost your financial planning and significantly add to your savings. Some of these include the following-
- Retirement Plans: Retirement plans are annuities that can help you save for retirement and provide a source of income in your golden years. By contributing to these plans, you can benefit through saving for the future with the support of compound interest that shall help you grow your savings.
- Life Insurance: Life insurance can provide financial safety for your family in case of your unfortunate death. It can help cover funeral costs, outstanding debts, and future income loss.
- Optional Riders: Adding optional riders to your life insurance policy enhances the policy coverage. Each rider covers a specific set of risks that cannot be covered by your insurance plan. However, optional riders are not standalone coverage and must be added to a policy if they are to provide their benefits.
Policies like a Tata AIA savings plan can help you with long-term savings as well as comprehensive life insurance coverage.
Financial security
Insurance saving plans can play a critical role in providing financial security as it provides protection & safety cushion against unexpected events. As we all are well versed in the uncertain aspect of life, such as accidents, illness, or job loss can significantly impact financial stability.
Insurance risk coverage can also provide you with peace of mind and security, which can help you focus on achieving your long-term financial goals. When not worrying about unexpected financial expenses, you can put more effort into creating wealth through saving schemes and investing in your financial future.
Flexibility
Savings insurance plans are highly flexible. You can choose the policy term, financial coverage, premium payment mode, and payout options for your policy. For example, you can choose between single, regular, and limited premium payment options. In addition, you can choose to receive the maturity benefits of the savings insurance plans as a lump sum, a combination of lump sum and regular income, and regular income for a definite period.
Therefore, based on your financial condition and future expenses, you can decide on coverage, policy term, and payment and payout modes. You can purchase these savings insurance plans online by comparing the cost based on your customisation and deciding on a suitable policy.
Long-term advantage
For a savings plan to yield the maximum benefits, staying invested for the long term is always important. Savings insurance plans provide the option to stay insured and invested for the long term. Some savings insurance plans, such as Guaranteed Return Insurance Plans, provide a guaranteed return as a maturity benefit.
As the returns are guaranteed long-term, you can plan for definite financial goals such as paying for your higher education abroad, purchasing a new car, etc., and secure the finances in such a way that you accomplish the financial goals timely.
Tax benefits
While savings and insurance plans help secure the finances to accomplish all your financial goals, you can also benefit from paying excess taxes. For example, the premium you pay for life insurance savings plans will qualify for the tax deduction benefit under Section 80C. And the payout will qualify for the tax exemption under Section 10(10D) subject to the terms and conditions.
In addition, if you opt for the health rider options, the applicable premium will qualify for the tax deduction benefit under Section 80D. Therefore, apart from accumulating funds for your future financial expenses, you can also save a lot on taxes.
Making smart financial planning decisions involves understanding these important features and the optimal usage of these benefits to planning for achieving future financial goals timely.
Conclusion
Financial planning with a help of a savings policy is essential for achieving your long-term financial goals and securing your financial future. Savings and insurance plans play a crucial role in financial planning by protecting against unexpected events, building a cushion, mitigating financial risks, and enabling long-term financial planning.
By incorporating different savings and insurance plans, you can create a comprehensive financial plan that covers a range of financial risks and uncertainties, while also saving on taxes. This can help you achieve financial security and peace of mind, enabling you to focus on achieving your financial goals and living the life you desire.
