A life insurance plan helps you protect your family financially in the event of your untimely demise. But then, did you know that there are certain life insurance plans that provide more than just a life cover? These types of insurance plans are what are commonly referred to as insurance cum savings plans. Interested to know more? Keep reading to find out everything there is to know about them.
What is a savings plan?
An insurance plan that combines a savings component aspect along with a life insurance cover is known as a savings plan. They are traditional endowment plans that are designed to allow you to save up for the future in a systematic manner.
The corpus that you accumulate through a savings plan is paid out to you on maturity. You can then use these funds to meet your life goals. A savings plan can either be a participating plan or a non-participating plan by nature.
In a participating plan, the insurance service provider may distribute bonuses (if any) at regular intervals throughout the entire tenure of the plan. These bonuses are paid out in addition to the basic sum assured. This effectively increases the total pay-out that you get to receive on maturity.
On the other hand, a non-participating plan is basically an insurance plan with guaranteed returns. Bonuses are not paid out to the holders of these plans. This means they only get to receive the sum assured.