When you talk about financial planning, you may invariably think of savings. Today, there are different ways to save money for the future. However, you must be smart in choosing the right savings avenue. It should let you build wealth over time and grow your savings. Let us see what are the maturity benefit in an assured savings plan in this topic.
Talking about savings avenues, you can invest in popular financial instruments like NPS (National Pension System), mutual funds, shares, stocks, etc. However, all these instruments carry an element of risk as they are all market-linked products. But, if you are just starting your investment or savings journey, you may look for a risk-free option. One such option is an assured savings plan.
Savings plans are savings-cum-insurance plans. Purchasing an assured savings plan at an early age is a great way to start your investment/savings journey. It serves two of the most important purposes of financial planning. It gives you insurance coverage and secures your family against future uncertainties and at the same time allows you to accumulate wealth for future needs. Besides, as the name suggests, an assured saving plan provides guaranteed maturity benefits.
Maturity Benefit in an Assured Savings Plan
A standard life insurance policy like term insurance does not offer any maturity benefit, meaning you don’t get any returns from the insurer at the end of the policy tenure. However, when you purchase an assured savings plan, you get guaranteed maturity benefits.
If you survive the full policy tenure, the insurer will pay the maturity benefit. However, to receive this benefit, you must fulfil one critical requirement, i.e., you must have paid all your premiums and there should be no outstanding amount.
Typically, when you receive the guaranteed maturity benefit from an assured savings plan, it includes the basic sum assured of the policy, the accrued guaranteed yearly additions, and the guaranteed loyalty additions.
Guaranteed Annual Addition
Typically, the insurance companies compute the guaranteed annual addition as a percentage of the total premium amount you pay annually. These additions accrue throughout the premium payment period you choose; it could be lesser than the actual policy tenure.
However, you or your family member may receive this amount back when the policy matures or in the event of your unfortunate demise, whichever happens earlier. Generally, the guaranteed annual addition ranges between 7% to 10% of the premium you pay annually.
Guaranteed Loyalty Addition
Like the guaranteed annual addition, insurance companies calculate the loyalty addition as a percentage of the basic sum assured, and it is payable at the end of policy term or maturity. The insurer companies have full discretion in deciding the loyalty addition rate but generally it ranges between 7% to 10%.
Frequently Asked Question
What is an Assured Savings Plan?
An assured savings plan offers a guaranteed lump sum payment at maturity, helping you achieve your financial goals. The profits allow you to reach long-term objectives like buying a home, paying for your children’s education, or saving for retirement while the guaranteed returns safeguard your investment.
A predetermined premium amount must be deposited on a regular basis. Systematic, long-term saving can help you create a corpus. The plan also provides assured premium increases, which boosts your wealth.
Life insurance2 is a component of the assured savings insurance plan. In the event of an emergency, it so shields your loved ones from financial difficulties.
What is an Assured Savings Plan’s Death Benefit?
If one of the tragic occurrences listed below takes place, your nominee will receive a lump sum payment:
A payment equal to 105 percent of all premiums paid at the time of death is the death benefit, which is equal to ten times your base premium for the year plus accrued GA GMB + GA.
What is the Maturity Benefit of the Assured Savings Plan?
If all of your premium payments are made by the end of the policy period, you will be eligible for the maturity benefit.
The Guaranteed Maturity Benefit (GMB) and accrued Guaranteed Additions (GA) will be combined. Therefore, Maturity Benefit is equal to GMB plus accumulated GA.
Conclusion
Buying an assured savings plan is an excellent savings option that allows you to get considerable returns in the long run, while securing your family and providing tax benefits. There are many savings plans in the market, and each of them are unique in their own way.
So, it is paramount that you compare the different plans in terms of coverage offered, the potential returns, the premium amount, etc, and choose the one that best suits your needs. Lastly, it is critical to read the policy documents carefully to understand the terms and conditions before you sign it. This maturity benefit in an assured savings plan will help you avoid legal hassles in the future.
