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Everything You Need to Know About Tax Saving Plan

Buy the most suitable tax saving plan in India by Alankit insurance. Check out the various insurance plans to choose the one that is best fit for you.

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Everything You Need to Know About Tax Saving Plan

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  1. Everything You Need to Know About Tax Saving Plan

  2. People generally buy insurance plans simply out of the need to get financial coverage during emergencies rather than with the intention of investing their money. However, investment-linked insurance plans provide the dual advantage of investment and protection. As investment-instruments, life insurance plans not only help create wealth for the future but also offer tax benefits. That is, the premium paid by a policyholder in such Tax saving plans in India is eligible for deductions under section 80C of the income tax act. While a part of the premium provides the policyholder with life cover, on the other hand, the remaining part is invested in specific investment funds the policyholder chooses viz. stocks, bonds and other assets. The funds will be managed by fund managers of the insurance company.

  3. Why should you buy? • Flexibility: Such an insurance plan guarantees flexibility to the policyholders to choose their own level of protection and investment. Moreover; it allows them to select the type of funds based on their risk aptitude and investment objectives. Not only this, but policyholders can also vary the amount of their premium payments or coverage depending on their personal financial conditions. • Savings for retirement: Investment-linked insurance plans serve the purpose of an ideal savings plan for those who want to remain financially secure in their retirement years. They ensure that the right amount of funds is available at the right time and allows one to maintain a good standard of living by taking care of unplanned expenses.

  4. Tax benefits: With health insurance plans as the best Tax saving plans in India, an individual can hope to reduce net tax liability by reducing the computable tax base. The premiums paid on life insurance policies are eligible for tax deductions under section 80C; premiums on pension policies are eligible for deductions under Section 80CCC - Section 80C and 80CCD(1); and premium son health insurance policies are eligible for deductions under Section 80D. • Effective risk management: Such insurance plans allow one to manage risks better and thus avoid getting locked into one fund. If a fund is not performing well, the policyholder can make a selection between equity and debt instruments.

  5. What are the types of investment insurance plans? In terms of the manner of payment made for the policy, investment insurance plansare classified as: Single premium-plan: A single premium-plan basically involves the payment of a single lump-sum premium by the policyholder. Such a plan will rid the policyholder of worries about making regular premium payments or about lapsing. Regular-premium plan: A regular-premium plan lets a policyholder make premium payment for the policy at regular intervals like monthly, quarterly, half-yearly or annually. Such a plan is beneficial if the policyholder does not wish to invest a large sum of money right at the start of the plan.

  6. How to choose investment insurance plans? Listed below are some tips that will help potential investors and policy buyers in making the right choice when buying insurance plans: • Know your needs: Policy buyers must clearly define the types of funds, the level of protection and the amount of money they wish to invest in any of the best Tax saving plans in Indiaoffered by insurance companies. • Compare: They should carefully assess the options and compare policies to pick the right plan with the right fund as per their specific requirements. • Know your risk appetite: They should be aware of their own risk appetite and must buy accordingly. • Set your time period: Potential buyers must decide on the time period they need to stay invested and build a corpus viz. 10 years, 15 years or even longer.

  7. Choose payment modality: Policy buyers must opt for the best payment modality depending on their capacity and personal preferences. Based on their present expenses, they can either choose to make annual investments with a lump-sum amount or regular payment of smaller premiums. • Set your portfolio strategy: It is important to understand how involved buyers wish to be in an investment and to know whether they would want to manage their fund on their own. Speaking to an expert helps in finding out the best portfolio strategy. • Assess the market: Policy buyers are advised to actively keep a track on the market situation, when focusing on their funds invested in investment insurance plans.

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