Investing in an insurance plan is a long-term activity. Although the policy delivers an assured sum as it gets matured or when claimed, a sufficient amount of funds gets locked for a certain period of time. Policies now come with newer modified versions which grant options to overcome such issues. The most preferred amongst all is the guaranteed return insurance plan.
What is a Guaranteed Returns Policy?
A guaranteed Return Plan or Monthly Income Plan creates a better path of financial management for the policyholder. A guaranteed return plan delivers steady returns over the duration of the policy and remains unaffected by market instability, unlike others. There are several insurance companies that are educating the masses to opt for a guaranteed return insurance policy.
For example, Guaranteed Return Insurance Plan or GRIP offered by Tata AIA life insurance company comes with benefits like add-on riders and spouse coverage. Similarly, one can check out different policies across insurance companies.
Are guaranteed Plans Good?
The features of a guaranteed return plan include:
Safer investment option
Life insurance with guaranteed returns is the best option for anyone with a low-risk appetite and desire for higher returns. These investments create a safety net for families’ financial decisions and protect them during financial crises. Irrespective of market volatility and fluctuations, life insurance plans with guaranteed returns provide guaranteed returns on maturity and financial security.
Higher tax-free returns
A guaranteed policy offers fixed returns on maturity. You can get tax deductions under Section 80-C of the Income Tax Act for the premiums paid. And the death benefits are also tax-free. Thus, a large number of people prefer a guaranteed return plan over investing in other options.
No surrender charges
An insurance plan with guaranteed returns is a better investment both from a long and short-term perspective. Such a plan allows users to surrender policies before due time with no penalty charges. This ensures that a guaranteed return insurance plan might be ideal even for short-term financial investors.
What Investments Offer Guaranteed Returns?
There are different return plans to choose from depending on one’s needs and priorities. Let’s understand the meaning of each of the given following plans:
Guaranteed income plan
In this plan, you must pay a premium for 10–12 years in exchange for a 12-year payout guarantee. These plans are best for old-age financial planning and guarantee a fixed rate of return post-retirement years.
Lifelong Income plan
If the policyholder takes a life-long income option, they are entitled to receive a regular income up until the age of 99. Thus, it is a source of income that ensures financial security throughout one’s life. There is no fixed time period for regular returns in a lifelong income plan as in the case of a long term income plan.
Long-term Income plan
By ensuring guaranteed payouts for 25 or 30 years, this option leaves one’s family with better financial security when at the conclusion of the Payout Period, the return of the premium paid is delivered. However, as with lifelong income plans, there is no coverage against any emergency fund-requirements
In these uncertain times, one cannot predict the future. This is the primary reason for a person to secure their well-being and prosperity through a guaranteed life insurance plan. These plans are less risky and are designed for higher returns. Anyone seeking to plan their future must definitely understand and opt for guaranteed return policies for a progressive return on investments and a secured future.