Are you looking for alternatives to traditional investment options to grow your money? If yes, then you can consider a guaranteed return investment plan. Exemplifying the popular principle of investing, these plans come with a fixed rate of return and little to no risk to your invested funds. Read on to explore more about guaranteed return insurance.
What is a Guaranteed Return Plan?
A guaranteed return plan acts as a financial tool that not only helps you get a guaranteed return upon maturity but also offers life insurance coverage during the policy term. Simply put, these policies let you plan for your future financial requirements, as well as safeguard your family’s financial future in your absence.
It is to be noted that on maturity, you receive a payout of the guaranteed amount either as a lump sum or a regular income over several months. Besides, guaranteed plans provide tax-free maturity benefits too.
- Inclusions: Natural death benefit, accidental death benefit, critical illness benefit and loan benefit
- Exclusions: Death resulting from suicide, adventure sports and risky activities
How Does a Guaranteed Return Investment Plan Work?
When you go for a guaranteed return insurance plan, you are required to pay a premium at regular intervals. While a small portion of this helps provide life coverage, the rest earns steady returns over time. When a guaranteed plan matures, you receive the guaranteed amount. If anything happens to you during the policy term, then the beneficiary gets the sum assured.
In a nutshell, a guaranteed return investment plan offers the dual benefits of building a corpus while offering life insurance at the same time.
Besides, it is important to note that guaranteed plans enable you to choose the corpus amount that you aim to save during the tenure of the policy. These guaranteed returns are paid out to you in case you outlive the policy tenure.
Under guaranteed return plans, you also get to determine how much of the premium you can save and how much will be contributed towards life insurance. In addition, you can choose the premium payment term and the payment frequency as per your preference.
Benefits of Guaranteed Return Plans
Here are the benefits you can reap upon investing in a guaranteed return investment plan:
- Meet future financial requirements, offering steady financial growth
- Protect your family during a difficult time, providing financial stability and support
- Safeguard your corpus as these guaranteed return plans are independent of market fluctuations
- Come with a dual benefit of savings and life insurance
- Provide steady returns over time
- Offer easy customisation in terms of selecting premium payment frequency and enhancing coverage with riders
- Get a tax deduction of up to Rs 1.50 lakh under Section 80C of the Income Tax Act, 1961
Who Should Buy a Guaranteed Return Plan?
In order to escape short-term market volatility, people mostly seek good long-term investment options. While zeroing in on an investment option, they also take into account their non-negotiable life goals like retirement planning, buying a home, and children’s education or marriage.
For risk-averse individuals, a guaranteed return investment plan is a better option that not only combines a fixed interest rate but also gives a higher return. Also, the interest earned is not taxable, which further grows one’s gains. Besides, funds in guaranteed plans are safe against market risks.
Ensuring wealth creation and protection, these guaranteed return insurance plans are best suited for:
- Parents who want to secure the future of their children
- Young professionals who have just begun their professional journey
- Newlyweds with financial aspirations like buying a home, travelling the world or starting a family
- Working women who often juggle various responsibilities
- Taxpayers get a tax deduction under Section 80C for premium payment and under Section 10 (10D) for the payout
In a nutshell, a guaranteed return investment plan ensures a peaceful future. From ensuring you don’t run out of money during retirement to making sure that your family members are well supported financially when you are no longer available to take care of their needs, guaranteed return insurance policies have plenty of benefits. Also, these plans beat market volatility, ensuring guaranteed returns despite any fluctuations.
