Everybody wants the best and a luxurious lifestyle for themselves and their family. It is very important to have sufficient savings so that one can stay financially sound during uncertain times. However, keeping all the money in a savings account is not an appropriate financial decision. You can deposit your surplus amount in fixed deposits or any other financial tool.
What is a Guaranteed Savings Plan
A guaranteed Saving Plan is a non-participating plan that offers an endowment assurance at a fixed amount. As per this plan, the policyholder will have to pay the premiums for a fixed period of time. However, once the plan matures, policyholders will receive all the designed benefits of the savings plan. The policyholder gets an assured sum of all their premiums paid at the end of the plan’s term with other advantages. The additions consist of a fixed interest rate that is added each year. Along with this, the plan offers a maturity bonus as well at the end of the term. The ones who opt for a savings plan, also have the right to apply for tax benefits.
Features of a Guaranteed Savings Plan
Various features of guaranteed savings plans are as under
Premium
With a guaranteed savings plan, you can choose to pay the premium amount either altogether, or in parts. These options are provided to reduce the burden on the policyholders.
Policy Term
The policyholder can choose the term that covers their needs.
Guaranteed Maturity Benefit
Under this plan, the policyholder is assured of getting the benefits after the policy is matured. Also, the maturity benefit can be paid in case the policyholder survives after the end of the policy term.
Death Benefits
Death benefit is provided by many policy providers. The benefit is provided to the nominee in case of the sudden demise of the policyholder.
Trial Period
If the policyholder is not satisfied with the terms and conditions of the policy, then they have the right to cancel the policy and return the documents within 15 to 30 days of commencement.
Guaranteed Savings Plan vs Fixed Deposit
| Factors | GSP | FD |
| Tenure | Ten to thirty years or even longer | One to five years |
| Investment | Min: ₹1000 Max: Limitless | Depends from plan to plan and generally ranges between ₹2500-₹500 per month |
| Returns | Monthly, quarterly, or annually | Guaranteed set of pre-determined returns |
| Payout | Collected funds can be invested in monthly or annual installments, or a lump sum payout of the corpus can opt for | Lumpsum payout at the end of tenure |
| Tax Benefits | Premiums up to ₹1.5 lakhs are exempted under Section 80C of the IT Act | No benefits generally. However, the 5-year tax-saving FD offers benefits under Section 80C of the IT Act |
Conclusion
With the above-mentioned details, you can easily differentiate between FD vs endowment plan and select which plan suits you well. Fixed deposits offer a flexible tenure, on the other hand, a savings plan offers a lot of maturity benefits. Therefore, it is advisable to have a combination of investment plans for a good outcome.