What are the Key eligibility conditions of a Guaranteed Savings Plan?

Guaranteed savings plans are one of the best investment options for risk-averse investors. Such plans offer assured returns with insurance coverage. Moreover, such plans allow investors to choose their premium amount and policy tenure.

Anybody can purchase a guaranteed savings plan provided they fulfil some basic eligibility conditions.

Key Eligibility Criteria for Purchasing a Guaranteed Savings Plan

  • Entry Age

It is the age at which you are allowed to purchase the policy.

  • Minimum Age

The minimum entry age for buying guaranteed savings plans is usually 3 years, as on the last birthday of the insured child. In such cases, parents control the policy till the minor attains the age of 18 years. 

  • Maximum Age

The maximum entry age is usually 60 years.

  • Maturity Age

It is the age at which you become eligible to receive the sum assured as per the policy terms.

  • Minimum Age

The minimum age to receive maturity benefits is usually 18 years. However, if you bought the policy online, then the minimum maturity age is 28 years.

  • Maximum Age

The maximum maturity age can vary depending on the policy tenure.

Other Important Terms You Should Know

  • Policy Term

It is the period for which your policy remains active, providing you with insurance coverage. You will receive full maturity benefits on successfully completing the policy term.

The nominee of the life insured can get death benefits in the unfortunate event of the death of the life insured.

  • Premium Payment Term

It is the number of years you pay the premium. The length and coverage of your policy term can differ depending on the premium amount you pay over the premium payment term. 

The following table illustrates the policy term coverage corresponding to the premium payment term considering the age and the premium amount being the same in all cases.

Premium Payment Term

(in Years (for illustration purposes))

Policy Term (in Years)
5 10
7 14
8 15
10 20

  • Premium Modal Factor

It is a calculation that insurance firms use to break down the annual premiums into smaller and more frequent payments. Typically, the following modal loadings are used to determine instalment premium:

Yearly- 100%, Half Yearly- 51%, Quarterly- 26%, Monthly- 8.8%

Let us understand this better with a simple example where the yearly premium is set at ₹12,000.00. The following table illustrates how the premium amount changes with payment frequency.

Premium Payment Frequency Premium Amount (in) Total Annual Premium (in)
Yearly 12,000.00 12,000,00
Half Yearly 6,120.00 12,240.00
Quarterly 3,120.00 12,480.00
Monthly 1,056.00 12,672.00

You can see that as you opt for a smaller premium, your premium amount becomes manageable, but you will pay more annually.

Click here to know more about the 3 tips to buy a Guaranteed Savings Plan.

Not all people like the market volatilities while investing for their future. Instead, they want stable and assured returns for a comfortable retirement. A guaranteed savings plan can be just the right choice for such investors as it shields them from volatility risks. Besides, the easy eligibility conditions and maturity payout rules make them a hassle-free investment choice for salaried individuals and business owners.

Visit here to know more about Savings Plan in India: https://www.kotaklife.com/online-plans/savings-plan

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