5 Tax Saving Investment Alternatives for Indian Citizens

What are Some Best Tax Saving Investment Alternatives?

Are you considering alternatives of investment plans for tax-saving? If so, the article might prove helpful in providing good guidance on tax saving investment options.

When we say ‘tax saving investments’, it implies the transactions that are exempted from tax payments. Now, basically three kinds of investments allow tax exemption on their transactions. But all investments go through three different kinds of transactions such as; early transaction, transaction of accumulated interest,  and the transaction of sum offered at maturity.

Now, if an investment receives EEE exemption or triple exemption, it means you can get tax exemption for all the three types of transactions mentioned above. On the other hand, an EET savings can fetch you tax exemptions from the first two transactions mentioned above, whereas an ETT savings will allow your investment to get exemption from only the first transaction mentioned above.

5 Best Tax Saving Investment Alternatives?

Based on the above details, there are many tax saving investment options that offer tax deductions as mentioned in the post below.

1. NPS or National Pension Scheme 

This is a savings plan that is specifically crafted for people who are willing to save for their retirement. Termed as one of the best pension plans in India,  NPS is a lucrative investment that also allows tax benefits. This plan suits people working in different jobs as well as the ones who are self-employed.

The most beneficial thing about NPS is that it allows additional tax deduction of up to INR 50,000. So, if you buy a National Pension Scheme, you can save over INR 2 lakh on your income per year.  However, the  downside of NPS is that the scheme has a long period of lock down during which you cannot withdraw money. Since NPS is dedicated for pensioners, it allows withdrawal only after the policyholder attains the age of 60.

The maturity amount is also exempted from tax if you decide to convert 40 percent of the capital into annuity. The rest 60 percent of the amount can be withdrawn as lump sum and this sum is also tax exempted. Thus, NPS serve as a perfect tax saving investment under 80c section of income tax.

2. PPF or Public Provident Fund 

If you are looking for long term saving plans,  PPF is another good option. The return rate of the linked debt-market along with the triple tax deduction option make this plan a popular one, especially if you are looking for long-term goals. PPF is a 15 year old long term investment plan. However, it allows the insured to withdraw a partial amount after completion of 5 years.

The limitation with PPF is that it allows an individual to invest INR 1.5 lakh as the maximum sum that can be deposited in one fiscal year. So, regardless of the number of PPF accounts you have on different individuals’ names, you can at the max deposit INR 1.5 lakh in one financial year.

3. Guaranteed Savings Plans

When it comes to best tax saving investments, you cannot skip the guaranteed savings plan presented by life insurance providers. Almost similar to ULIPs in terms of tax-exemption, these plans offer tax-benefit of the maturity amount if the yearly premium paid is below 10% of your sum insured. So, if you have premiums that go up to INR 1.5 lakh, it will allow you tax deductions.

However, in the case of guaranteed savings plans you do not get multiple options of funds. Rather it allows a minimum return on investment that is fixed along with offering life insurance coverage. So, if you have any financial goals that require to create a definite amount of money, this plan serves your purpose best.

4. ULIP or Unit Linked Insurance Plans 

ULIPs are plans that deserve to be mentioned as one of the best plans for tax saving. Here are the reasons for the same:

• ULIPs allow the option of multiple funds including safe liquid funds and high-risk equity growth funds.
• They allow investors to switch between funds. So, you can move from risk funds to safe funds anytime.
• They also secures your goal by offering you the option of premium protection. So, in case of your early demise, the plan is still protected.

ULIPs come with a long tenure of investment. They are simple plans that are easy to manage.  All you need is to plan an approach to your investment depending on the level of risk you want to take at the start of the policy. And as per your approach, the ULIP will manage your account and ensure the safety of your returns on maturity.

5. ELSS or Equity Linked Savings Scheme 

If you want to invest in mutual funds or equity funds, you can buy an ELSS plan, which is a very popular tax saving investment in India. This is a mutual fund scheme managed inertly by equity funds. It has a lock in period of 36 months, which applies to each deposit made in your account individually. So, you cannot move your ELSS savings to other investments before completing the lock-in period of 36 months. Once the period of lock-in is over, you can sell your share of units and transfer your funds to another safe investment option.

Read More: Tax-Saving Investments That Can Be Done Online To Save Time.

Conclusion

Planning tax appropriately allows individuals to save up enough on their income. If you want to plan your investments cautiously, you must start with reading about the plans that you are willing to buy. Only when you have thorough knowledge of the schemes and their benefits, can you enjoy the fruits of the investments.

Also, being patient is another very essential aspect that you must have before you start investing. You must understand that no investment decision taken hurriedly can bear profitable results.

So, if you were thinking about where to invest to save tax, you now know the best options to invest your savings to save tax.
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A Beginner’s Guide to Retirement Pension Plans in India

What Do you Mean By Retirement Pension Plans?

Life seems to be wonderful till the time you have a job and you are drawing a handsome salary. But what about life after retirement? Have you thought about it?

Retirement Planning as a concept is still in its nascent phase in India, with very few actually giving it the due it deserves. A majority of the workforce is so caught up in meeting the needs for the present that the preparation for their future, post retirement takes a back seat. But the fact is that if you wish to be financially independent even after you are retired, you must work on retirement and pension plans from early on. For this, you have to calculate your expenses and needs that you are likely to have during your life as a retired individual. This would motivate you to be prudent about your expenses, increasing your savings for necessary investments as a part of your retirement planning.

You become used to living life in a certain way, especially when you have the means and you can afford the things you want. But the same may not be possible once you retire from your job. This is something that needs consideration. Hence, if you want your retired life to go as smooth as it is going now, you need to make certain pension plans.

Life can become difficult if you have to forgo things that you are used to because of lack of funds. Moreover, after you retire from your job; you actually find time to work on your retirement bucket list; do things that you always wished to do but never had the time. If you plan your finances well you would not only be financially independent to take care of your needs but also live the life that you wished for.  For instance, you can travel or pursue a new hobby.

Hence, planning your retirement is essential. Moreover, with the increasing life expectancy of people these days, pension plans have become all the more significant.

In this blog, we are guiding you on the best retirement pension plans in India:

Factors to take note of while opting for the best Pension Plans 

Retirement Planning has become indispensable considering the fact that living costs would continue to increase as will the inflation. Also, the health complications that are plaguing mankind, especially the senior citizens need advanced healthcare facilities; which do not come cheap.

Therefore below are certain suggestions that would help you in choosing the best pension plans for retirement saving.

Your return on investment rate should be higher than the inflation rate – 

Retirement Planning is a long-term goal, which many people might find difficult to continue, especially with the changing rates of inflation. There may be a time when inflation can unconstructively impact your capital and assets held for a long term.  Thus, having a higher return on investment as compared to the inflation rate is always necessary.

• Choose a Pension Plan that suits you accurately – While planning for your retirement, you must keep in mind the needs and aspirations of your family as well. You can’t miss out on the fact that you might have to provide for your family even after you are retired.  Also, you might like to calculate the financial security of your family when you are gone forever. Thus, you may like to have enough funds/retirement savings that can make your family’s living comfortable even after you are not there. Also, tax deductions should be taken into consideration while planning for retirement savings.
• Go for plans with low risk but regular and consistent returns – It is necessary to take risks if you want to expand your wealth. But if you are already late in planning for your pension and on the verge of retirement, you must choose plans with lower risks and greater returns. Thus, it is best to stick to a low-risk amount or plans offering guaranteed return so that you can avoid market volatility.
• Vesting Period – While opting for a retirement plan, it is important to ensure that you buy a policy that allows a vesting period matching your needs.  There are several pension schemes available in India. Some of these schemes may allow you to buy plans to stay secure financially at a young age, while you can also buy security at a time when you are nearing your retirement age. People can choose from a range of pension plans after reaching their 40s or even in their 60s in case of late retirement preparations.

• Buy a plan that allows appropriate annuity options – This is another important aspect to keep in mind while choosing the best retirement pension plans. So, always go for plans offering the best annuity of your choice. There are some long-term pension plans which allow guaranteed annuity for a certain number of years irrespective of whether the insured is alive or dead.  Conversely, there are plans that offer annuities to the nominee of the insured following his/her death.

• Consider costs – It is equally important to constantly keep looking for options for better and low cost pension plans in India with high returns. Thus, understanding various savings plans thoroughly and examining their varied features is important before making a selection to suit your requirements best.

Read More: 6 Benefits of Early Retirement Planning in India

To Conclude

Retirement pension plans are bought to ensure a secured living when your monthly pay drops down or stops coming.  With pension plans, you can have a lump sum amount in hand at the time of your retirement. Further, you might also have a monthly annuity coming your way to make your living comfortable. However, having a clear understanding of the difference between pension plan and retirement plan may help you to invest better.

But you also need to decide on the time when you want to start planning for your retirement – in your young age or when you are in your middle age. Starting young allows you to take risks and plan better. But there are good options available even if you are planning your retirement late.

All you need is to make an informed decision for your retirement, the money that you need to save, and start investing. A pension plan calculator may be a good tool to guide you to estimate the money that you would need after retirement.
Found this post informational? Browse PayBima Blogs to read interesting posts related to Health Insurance, Car Insurance, Bike Insurance, Term Life Insurance and Investment section. You can visit PayBima to Buy Insurance Online.

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Best Child Insurance Plans in India 2022

Top Child Insurance Plans In India You Can Choose in 2022

Are you concerned about your child’s future due to the rising education costs? Do you want to invest in the best child insurance plan? If so, here are the top plans for your child’s education and future.

Every child is unique with their distinct aims and aspirations in life. However, they need the right platform and guidance to be able to achieve those. Right guidance can be gathered from parents, elders and teachers etc. But for the right platform, they need appropriate education.

Parents do their best to offer their child every possible means to help them excel in their chosen career and future. However, lack of capital comes as a hindrance in the way of fulfilling the dreams of many children. Hence, investing in a child insurance plan is a smart step towards securing a bright future for your child.

With the best child insurance plans, parents can bolster the financial future of their children. Most of these plans provide the option of getting flexible payments at regular intervals, which helps in realizing the dreams of your children. Further, these child insurance plans allow several added advantages, such as:

• Assured Benefits – Assured or guaranteed benefit of education is a confirmed feature of child life insurance plans. Unlike in other insurance plans, a child insurance policy allows the insured to avail a confirmed child education plan which is not available with other investments. Further, there are some child education insurance plans that are available with the incentive of premium exemption/waiver. With this benefit, a child can claim for maturity benefits regardless whether the parents are living or dead at the time of policy maturity. Thus, even if the parents die and the premiums of the policy are not paid, the plan still functions normally and allows the nominee to benefit from it.

• Dual Benefits – Most of the best child insurance plans in India serve the purpose of dual plans – investment and insurance. The investment element helps in saving prudently for the child while the insurance element allows psychological assurance to the parents regarding the financial well-being of their child in their absence.

10 top Insurance Plans for Children In India for 2022

If you are searching for insurance policies for your child, you can find several schemes that are available. However, the problem is that you can’t be sure about the benefits of these policies and which policy would suit your purpose well unless you have a good understanding of them.

• Bajaj Allianz Young Assure Plan
• Bharti AXA Life Child Advantage Plan
• Max Life Shiksha Plus Super Plan
• ICICI Pru Smart Kid Solution
• LIC New Children Money Back Plan
• HDFC Life Youngstar Super Premium Plan
• Aegon Life Rising Star Insurance Plan
• Birla Sun Life Vision Star Plan
• Future Generali Assured Child Education Plan
• Kotak HeadStart Child Assure Plan

So, how do you find out which is the best child insurance plan in India as per your requirement? Indeed it is a difficult choice. However, to make things simpler we are listing out details of a few best insurance plans for a child below to help you make an informed buying decision.

1. Bajaj Allianz Young Assure Plan

If you are looking for a conventional savings plan, you must invest in this plan.

Features:

1. Complete financial security together with life coverage benefit
2. Provides rider benefits to increase strength of policy coverage
3. Allows multiple premium payment options along with several options of policy terms
4. Offer higher sum assured rebate
5. Allows the policyholder to receive a terminal bonus plus vested bonus at maturity

2. Bharti AXA Life Child Advantage Plan

This non-linked plan is another beneficial option that comes with two payout options of money back and endowment.

Features: 

1. Equipped with built-in benefit of premium waiver
2. Allows the insured to choose policy term
3. Offers income tax benefits under section 80C
4. 18 to 55 years is the age of entry for this plan

3. Max Life Shiksha Plus Super Plan

You can secure your child’s education and many other requirements with this plan.

Feature:

1. Provides comprehensive family coverage with education of the child
2. Policy terms ranges from 15-25 years
3. Offers 6 fund options under this plan
4. In the 12th year of the plan, additional units are added to the fund
5. Allows maturity benefits
6. Allows partial withdrawal in case of financial urgency

4. ICICI Pru Smart Kid Solution

With this comprehensive unit-linked policy you can protect the future of your child better.

Features:

1. Allows the child to receive lump sum money if any untoward incident happens to the policyholder during the duration of the plan
2. Offers dual premium – regular and single – payment options
3. Wealth booster and Loyalty Addition benefits are added advantages offered as part of this plan
4. Policy period ranges between 10 to 25 years

Also Read: Best Investment Plans for Child Education in India

5. LIC New Children Money Back Plan

With this child plan of LIC, you can meet several needs of your child in the growing stage such as education, marriage etc.

Features:

1. Maturity benefit equal to the sum assured plus relevant bonuses
2. Can avail survival benefit of over 20% of sum insured after a particular age of the policyholder
3. Allows rebate on a high premium
4. Allow the insured to buy loan
5. Offers death benefit to the nominee of the policy
6. HDFC Life Youngstar Super Premium Plan

6. HDFC Life Youngstar Super Premium Plan

This kid’s unit-linked policy offers dual benefits of investment and insurance to help the child at different life stages like education, marriage, etc.

Features:

1. Can customize the plan as per the needs of the child
2. Allows 100% waiver of future premiums if the insured dies during the middle of the policy
3. Also, if parents die in the middle of policy, it offers 50% of the premiums as annual income. For this the benefit payment option of ‘Save-n-Gain’ should be opted by parents at the time of buying the policy
4. Plan allows four investment funds
5. Tenure of the policy ranges from 10 years, 15 years, and 20 years

7. Aegon Life Rising Star Insurance Plan

Another unit-linked plan to safeguard the future of your child.

Features:

1. Financial security and triple benefit coverage till the age of 25 of the policyholder
2. Comes with 4 fund options
3. Allow withdrawal after 5 years of the plan
4. Offers maturity and death benefits
5. Allow the insured to pay add-on premium as top-ups

8. Birla Sun Life Vision Star Plan

Another good plan to finance the education of your child.

Features:

1. Allow death and maturity benefits
2. At maturity, the insured receives accrued bonuses
3. Pays regular payouts after completing 5 years of the plan
4. Boosts coverage with additional riders
5. Policy doesn’t stop even if the premiums are not paid after two years. It functions on the basis of reduced Paid-Up.

9. Future Generali Assured Child Education Plan

It is a non-linked, guaranteed payout plan.

Features:

1. Allow systematic savings till your kid turns 17
2. Allow three options to receive guaranteed payouts for his/her education
3. Several riders strengthens the plan
4. Allow death and maturity benefits
5. Age of entry between 21 to 50 years

10. Kotak HeadStart Child Assure Plan

Buy this plan to manage your child’s primary financial needs.

Features:

1. Allows 7 fund options and triple benefits
2. Financial security of a child
3. Allow to create wealth for future
4. Allows maturity benefits

To Conclude

Now you know about the top 10 child insurance plans in 2022 that you can invest in for your kid. The advice here is to have a thorough understanding and knowhow of the terms and conditions of the plans that you are likely to buy before going ahead with the investment. So, make an informed and wise investment decision by using a child insurance plan calculator to make sure that you secure your child’s future in the best way possible.
Found this post informational? Browse PayBima Blogs to read interesting posts related to Health Insurance, Car Insurance, Bike Insurance, Term Life Insurance and Investment section. You can visit PayBima to Buy Insurance Online.

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