Savings Plan

What is a Savings Plan?

A savings plan is a financial strategy designed to help individuals accumulate money over time for future needs or goals. It involves regularly setting aside a portion of one's income, often into a dedicated account or investment product. Savings plans help to achieve financial objectives, whether that's for emergencies, education, retirement, or other long-term aspirations. In the event of the policyholder's death within the policy period, the savings plan provides a payout to the nominee.

Who Should Invest in Savings Plans?

1. People of every age group up to 60 years:

   This wide age range makes savings plans accessible to young adults starting their financial journey, as well as those nearing retirement.

2. People of all income groups:

   The affordability of premiums makes these plans inclusive, allowing individuals with different financial statuses to contribute.

3. Conservative investors with a low-risk appetite:

   For those who prioritize capital preservation and seek stable returns, savings plans offer a secure investment avenue.

4. Individuals wanting to save money for their future goals:

   Whether it's funding a child's education, purchasing a home, or securing retirement, savings plans provide a structured approach to achieving specific financial objectives.

Why Should You Invest in a Savings Plan?

• Encourage a structured approach to saving, building financial discipline by requiring regular contributions.

• They facilitate the achievement of specific financial goals, such as funding education, purchasing a home, or securing retirement.

• Many savings plans prioritize capital preservation, offering a relatively safe investment option, especially for those with a low-risk tolerance.

• Some savings plans offer the possibility of earning returns, allowing your savings to grow over time.

• They include a death benefit, providing financial security for your beneficiaries in the event of your untimely demise.

• The availability of plans with affordable premiums makes them accessible to individuals across various income levels.

• These plans help with long term financial planning by creating a habit of saving, and investing.

• Certain savings plans offer tax advantages, such as tax deductions on contributions or tax-free maturity proceeds, which can enhance overall returns.

Types of Savings Plans in 2025

There are several savings plans available in the market, from low-risk to high-risk involvement, depending upon the requirement and financial condition of the individual. Here are some of the best savings plans in India in 2025:

• Public Provident Fund (PPF)

• Monthly Income Plans

• Endowment Plans

• Money-Back Plans

• Unit Linked Insurance Plans (ULIPs)

• Sukanya Samriddhi Yojana (SSY)

• Atal Pension Yojana (APY)

• Kisan Vikas Patra (KVP)

• Employee Provident Fund (EPF)

• National Pension Scheme (NPS)

• National Savings Certificate (NSC)

• National Savings Schemes (NSS)

• Post-Office Savings Scheme (POSS)

• Senior Citizen Savings Scheme (SCSS)

1. Public Provident Fund (PPF)

   Public Provident Fund is a long-term savings scheme introduced by the National Saving Organization, which offers a term period of 15 years.

   Features of PPF Savings Plan:

   • As one of the safest investment options, PPF offers a fixed interest rate of 7.10%.

   • The interest earned on PPF is tax exempted.

   • The contribution made towards the PPF account up to the maximum limit of Rs.1.5 lakhs is tax exempted under section 80C of the IT Act.

   • PPF also offers flexibility as it can move from one bank and post office to another.

   • One can make a minimum contribution of Rs.500 and invest up to a maximum of Rs.1.5 lakhs.

2. Monthly Income Plans

   Monthly Income Plans are popular savings plans designed to provide a regular stream of income, making them ideal for individuals seeking financial stability. These monthly income plans are meant for individuals who desire periodic payouts to supplement their income or meet recurring expenses, such as retirement needs or regular household expenditures.

   Features of Monthly Income Plans:

   • A portion of the invested amount, or the generated interest, is paid out at regular intervals in a monthly income plan.

   • If the investor survives the term, they may receive the remaining corpus or a lump sum, depending on the plan's structure.

   • In case of death over the policy term (if it includes an insurance component), the beneficiary gets the full sum assured, irrespective of the payouts already made.

   • Returns may be influenced by market performance, depending on the specific plan.

   • Because of the regular income payouts and potential market-linked returns, the structure and risk profile of these plans vary significantly.

3. Endowment Plans

   Endowment Plans are regular saving plans that help build a corpus and give guaranteed maturity benefits and bonuses. The product is the best saving plan in India as they give returns that are equivalent to a fixed yield or deposit. In addition, they also combine insurance risk cover with add-on riders to primarily build a safety cushion in case something goes wrong.

   Features of Endowment Savings Plan:

   • They are clearly among the best investment options available to people looking for insurance coverage as well as investment and saving plans in India.

   • An endowment policy covers risk for a specified period, at the end of which the insured receives the sum assured plus all accrued bonuses.

   • They are considered highly expensive (considering the annual premium payment) as compared to a term or whole-life plan.

   • If the policyholder dies during the policy term, then a payout of the sum insured and the bonus is issued immediately to the beneficiary.

4. Money-Back Plans

   Money-back life insurance policies are popular savings plans as they offer the dual benefit of insurance and redemption of money at regular intervals. These plans are meant for individuals who require money at certain intervals in their lifetime to meet fixed short-term and long-term financial requirements such as buying a car or house.

   Features of Money-Back Savings Plans:

   • A portion of the sum assured is paid out at regular intervals in a money-back policy.

   • If the policyholder survives the term, he gets the balance sum assured in the best saving plan.

   • In case of death over the policy term, the beneficiary gets the full sum assured, irrespective of the payouts already made.

   • The bonus is also calculated on the total sum assured, not the balance money left.

   • For these two reasons, premiums on money-back savings plans are higher than the endowment plans.

5. ULIPs (Unit Linked Insurance Plans)

   A ULIP is the best savings plan that combines the safety of insurance protection with wealth creation opportunities. A part of the investment goes towards providing life cover, and the residual portion is invested in a fund that invests in stocks or bonds.

   Features of ULIP Savings Plans:

   • As these products provide tax benefits and market-linked returns, they are one of the best investment plans for the long term.

   • ULIPs offer many investment funds to choose from, allowing the flexibility to shift between equity and debt based on market conditions and risk profiles.

   • ULIPs are structured in such a way that the protection and the savings elements are easily distinguishable and hence, can be managed according to one's specific needs.

6. Sukanya Samriddhi Yojana (SSY)

   The Sukanya Samriddhi Yojana is a savings scheme introduced by the Indian Ministry of Finance. This scheme was specifically introduced with the objective to secure the financial future of the girl child so that she can achieve the future milestones of life.

   Features of Sukanya Samridhhi Yojana Savings Plan:

   • Sukanya Samriddhi Yojana offers an annual interest rate of 8.2% on the principal amount.

   • One can open an SSY scheme at any post office or authorized bank in India.

   • One can make a minimum investment of Rs. 250 and can invest up to a maximum of Rs.1,50,000 in a financial year.

7. Atal Pension Yojana

   This is a government-initiated savings scheme specifically designed to benefit the weaker section of society.

   Features of Atal Pension Yojana Savings Plan:

   • Individuals who are working in unorganized sectors and those who need financial support from the government-sponsored welfare program can invest in Atal Pension Yojana.

   • Individuals between the age group of 18 years - 40 years are eligible to apply for this savings plan.

   • The premium rate of this savings plan is very low. The pension is provided to the individual post-retirement years.

8. Kisan Vikas Patra

   Kisan Vikas Patra (KVP) is a popular savings plan as it offers the benefit of guaranteed returns and a relatively safe investment avenue. This plan is meant for individuals who desire a secure, long-term savings option with a fixed doubling period for their investment.

   Features of Kisan Vikas Patra (KVP):

   • The invested amount doubles after a specific period, which is determined by the prevailing interest rate.

   • If the investor survives the maturity period, they receive the doubled maturity amount.

   • In case of the investor's death during the tenure, the nominee receives the maturity amount.

   • The interest rate is fixed at the time of purchase, ensuring a predictable return.

   • KVP can be purchased from any post office.

   • There is no upper limit on how much money can be invested into KVP.

   • The minimum investment is 1000 INR.

   • KVP can be transferred from one person to another.

9. Employee Provident Fund (EPF)

   Introduced by the Employee Provident Fund Organization (EPFO), Employee Provident Fund is a savings scheme wherein salaried individuals are obligated to make a financial contribution to the Provident Fund (PF) account.

   Features of EPF Savings Plan:

   • With the help of EPF, individuals can plan to make smart retirement planning and ensure they have a financially secure future after retirement.

   • In EPF, the employer and the employee make an equal contribution toward the scheme.

   • 12% of the employee's basic salary is contributed to the scheme, and the employers contribute a similar amount towards the EPF account.

   • The annual interest rate applicable to the contribution made towards the EPF account is between 8%-10%.

10. National Pension System (NPS)

    The National Pension System is a savings scheme that focuses on providing a secure source of monthly income after retirement.

    Features of National Pension System (NPS) Savings Plan:

    • To avail of the benefits offered by the NPS scheme, the employees have to make a small contribution as a premium payment towards the scheme while being employed.

    • The lump-sum fund accumulated throughout the entire tenure of the scheme is broken down as annuities.

    • These annuity installments are paid to the applicant every month post-retirement.

11. National Savings Certificate (NSC)

    The National Savings Certificate is a government-initiated savings scheme, which is a fixed-income investment plan that can be opened with any post office.

    Features of National Savings Certificate Savings Plan:

    • Along with the benefit of wealth accumulation, the investments made towards NSC up to the maximum limit of Rs.1.5 lakhs are eligible for tax exemption U/S 80 C of the Income Tax Act.

    • National Savings Certificate is best suited for mid-income investors who have a low-risk appetite.

    • NSC is similar to other fixed-income investment options such as Public Provident Fund (PPF) and Post-Office Fixed Deposits.

12. National Savings Schemes

    National Savings Schemes are government-backed best savings schemes wherein a total sum assured amount is paid after the completion of its maturity tenure. Moreover, the applicable interest rate is compounded annually.

    Features of National Savings Scheme (NSS):

    • The interest rates offered by NSS are updated and revised on a quarterly basis.

    • It also provides the flexibility to increase the scheme's tenure as per the investment objectives.

    • The investors get the benefit of creating a financial cushion for the future.

    • They can also avail the advantage of tax exemption under Section 80C of the Income Tax Act.

13. Post Office Savings Scheme

    As one of the most reliable and secure saving plans, it is best suited for investors who have a low-risk appetite.

    Features of Post Office Savings Scheme:

    • Along with the benefit of higher returns, the post-office savings scheme is easy to access and hassle-free.

    • One can also open a POSS account in the name of the minor.

    • With an interest rate of 4%, this savings plan is best suited for individuals who do not have a high-risk appetite.

14. Senior Citizen Savings Scheme (SCSS)

    A senior citizen savings scheme is specifically introduced, keeping in mind the needs of the senior citizens in India.

    Features of Senior Citizen Savings Scheme:

    • An individual, at least 60 years of age, can avail of this saving scheme.

    • However, individuals aged between 55 and 60 years and those who have opted for voluntary retirement schemes can open senior citizen savings schemes.

    • It offers the benefit of financial security after retirement.

    • The SCSS also offers the benefit of tax exemption under section 80C of the Income Tax Act.

Key Features of Savings Plan

Here are the main highlights of the best savings plans and why one should consider buying them over any other plan in the market.

1. Life Cover

   A savings plan comes with a life cover, ensuring financial security for your loved ones in case of any unfortunate event.

2. Maturity Benefit

   Enjoy the assurance of a maturity benefit that adds certainty to your savings. Some plans also offer bonuses and additions, helping you grow your corpus faster.

3. Steady Returns

   Savings plans provide risk-free and stable returns, ensuring that your committed money remains intact as long as you pay all premiums on time.

4. Flexible Premium Payment

   Choose a payment frequency that suits you—monthly, quarterly, half-yearly, or annually—for added convenience.

Benefits of a Savings Plan

Here’s why you should consider a savings plan:

1. Financial Protection:

   Life is unpredictable, but your family’s financial stability doesn’t have to be. A savings plan ensures that your dependents remain financially secure even in your absence, helping them maintain the lifestyle you envisioned for them.

2. Tax Benefits:

   Enjoy tax savings while securing your future. Premiums paid towards a savings plan qualify for deductions under Section 80C of the Income Tax Act, 1961. Additionally, the maturity proceeds may be tax-free under Section 10(10D), subject to conditions.

3. Retirement Savings:

   Turn small, regular savings into a large retirement corpus. With disciplined contributions, a savings plan can accumulate substantial wealth over time, ensuring a stress-free and financially independent retirement.

Important Factors to Consider While Investing in Saving Plans

1. Financial Goals

   • Define your short-term and long-term financial objectives.

   • Choose a plan that aligns with your goals, whether it's wealth accumulation, retirement, or your child’s education.

2. Risk Appetite

   • Assess your willingness to take risks.

   • Fixed saving plans offer stability, while market-linked options provide growth potential with higher risk.

3. Returns & Growth Potential

   • Compare interest rates, returns, and historical performance.

   • Look for plans with stable and competitive returns.

4. Liquidity & Lock-in Period

   • Check if the plan allows partial withdrawals.

   • Understand the lock-in period before investing to avoid liquidity issues.

5. Tax Benefits

   • Evaluate tax exemptions under Sections 80C, 10(10D), or 80CCD.

   • Ensure the plan helps optimize your tax liability.

6. Inflation Protection

   • Choose plans that can outpace inflation to maintain purchasing power.

7. Flexibility & Customization

   • Look for plans that allow top-ups, premium adjustments, or withdrawal flexibility.

Documents Required to Buy a Savings Plan

Below are the documents required to buy a savings plan:

• Completely filled policy application form

• Driving license

• Identity proof and address proofs for the KYC process

• Income proof (6 months’ bank statement/ ITR details/ last 3 months’ salary slips)

• Aadhaar Card

• Passport

• Indian Voter Id Card

How to Compare Savings Plans in India?

Below are the points to consider on how to compare savings plans in India:

1. Size of Life Cover

   • A higher life cover ensures better financial protection for your family.

   • Compare different plans to see which offers the most coverage for your premium.

2. Premium

   • Choose a savings plan that meets your financial goals while staying within your budget.

   • Ensure that the premium is affordable in the long run without straining your finances.

3. Company Credentials

   • Since savings plans require long-term commitment, the insurer's financial stability is crucial.

   • Check the company’s claim settlement ratio, reputation, and financial health to ensure reliability.

Conclusion

Choosing the right savings plan requires careful evaluation of factors like life cover, premium affordability, and the insurer’s credibility. A well-planned savings strategy not only helps meet future financial goals but also ensures peace of mind. By comparing options and aligning them with your financial needs, you can maximize the benefits of your investment while ensuring a financially stable future.