Know the Benefits of Guaranteed Savings Plans for Long-Term Financial Planning

Know the Benefits of Guaranteed Savings Plans for Long-Term Financial Planning


Today, in times of uncertainty, planning your finances is vital. It would help if you had a plan for all your short-term and long-term goals. It would help if you were meticulous about the investment choices you make to work towards accomplishing your goals and yet be assured that your family does not face any financial trouble when you are not around.

Experts recommend purchasing a robust life insurance cover for the family as the base for financial planning. However, it is better to look for a plan that helps you meet dual goals of life protection and capital growth. This is where a guaranteed savings plan plays an important role.

It helps you build a corpus for the retirement.

Retirement is inevitable. However, the last thing you may consider while planning your finances is retirement when you start working. However, it is paramount that you start saving from a young age so that you have the benefit of time to build a larger corpus.

With a guaranteed savings plan, you can save a small amount periodically towards retirement as you pay the policy premium. Thus, you need not invest in a separate plan. You can continue to invest towards your retirement and your long-term goals throughout the working years while you benefit from life protection.

Avail of a loan

A financial emergency can derail your entire financial planning. A sudden medical emergency or an unexpected considerable expense would mean you would have to dig into your savings. This may set back your long-term planning. However, if you have a guaranteed savings plan in your portfolio, you can quickly mitigate the situation.

You can avail of a quick loan against the policy’s surrender value and get immediate cash. Generally, the insurance companies allow you to borrow up to 80% of the surrender value. You can repay the amount over a period in smaller instalments, and the interest rate is usually affordable.

However, it is better to check the repayment terms and interest rate before taking a borrowing decision.

Minimal risk

One of the significant features of a guaranteed savings plan that makes it a must-have in your portfolio is the risk factor. Unlike the market-linked investment instruments whose returns are linked to market performance, a guaranteed savings plan assures the safety of your investment and provides guaranteed returns upon policy maturity.

Suitable for all

You may have heard that market-linked products like mutual funds, stocks, etc., provide high returns. However, to benefit from such investments, you must be well-versed with the market performance and know how to leverage the market volatility. Not to mention, you must constantly review the portfolio and take active investment decisions.

If you are not very financially savvy, you may risk losing your money. In contrast, the guaranteed savings plan is suitable for all as there is not zero risk involved. You can easily start investing in these plans even if you have no investment experience or expertise.

You only have to diligently pay the premium on time throughout the premium payment period and let your savings grow over time.

Final Word

Thus, a guaranteed savings plan helps you with long-term financial planning by offering life insurance protection and helping you build a corpus for future goals.