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What is a Guaranteed Return Plan?

A guaranteed return plan helps you save a specific amount of money over time and guarantees future returns with customizable return or income options based on your needs. To contribute to the Guaranteed Return Insurance Plan, you can decide whether you would rather save a lump sum as Single Pay or on a monthly, yearly, quarterly, or half-yearly basis by selecting a flexible premium payment mode.

These plans are appropriate for those who would prefer to avoid taking risks with potentially higher but uncertain returns that are influenced by the market in favor of safekeeping their money and receiving a guaranteed return. This plan offers life insurance to safeguard your loved ones in the event of your untimely death and allows you to save for future expenses.

Features of Guaranteed Return Insurance Plans in India

The features of the guaranteed return plans are as follows:

Guaranteed returns : You will receive guaranteed income under these plans for a set period of time. This income can help you reach life goals like saving for a child's education, buying a new home, or building a corpus for an early retirement. It can be lump sum, short-term, long-term, or immediate.

Flexibility in selecting returns : The plan offers you the option to receive an immediate, short-term, long-term, or guaranteed lump sum payment based on your needs and goals.

Guaranteed Extra Benefits to Build Corpus : A portion of the guaranteed maturity benefit will be added to your policy each year if you choose an endowment plan, which will help you gradually increase your corpus.

Life insurance coverage : Your family members are protected by a guaranteed return plan with multiple plan options starting on the date of policy issuance.

Simple premium payment : You can choose to pay the premium in installments over a period of one, two, three, or four years with this plan.

Why should you invest in a Guaranteed Return Plans?

Is a guaranteed plan not what you are looking for? Here are a few of the main justifications for acquiring a guaranteed return plan:

To Achieve Future Financial Objectives : To Achieve Future Financial Objectives

To Keep Your Family Safe : Included in these plans is a life insurance component that offers stability and support in hard times financially.

Helps to Protect Your Corpus : Plans with guaranteed returns are not affected by changes in the market. These are savings plans designed to protect the amount you have invested.

Benefits of Guaranteed Return Plans

Policyholders can take advantage of various benefits offered by these plans, such as the following:

100% guaranteed return : Plans are low-risk investment choices for the assured since they do not rely on the market and offer returns as early as the first day.

Benefit of Maturity : In addition to a guaranteed sum assured, guaranteed return plans offer a basic reversionary bonus and, if applicable, a terminal bonus at the end of the policy term.

Benefit on Death : The nominee or beneficiary receives payment of the death benefit and any applicable terminal and reversionary bonuses in the event that the policyholder dies within the policy term. Payments are made over the next 15 years or in accordance with the terms of the policy.

Additional Rider : Policyholders can frequently purchase optional riders or add-ons through Guaranteed Return Plans to enhance the coverage. These riders provide additional benefits or cover specific risks.

Ease and Availability :Plans with guaranteed returns are frequently simple to comprehend and uncomplicated. The customer receives additional benefits when they purchase the Guaranteed Return Plan online, such as no surprise fees, complete transparency, and understandable charge and return policies.

Risk Reduction and Diversification : Investment portfolio diversification and risk reduction can be enhanced by the inclusion of guaranteed return plans. While having a diverse investment strategy with a range of asset classes is important, adding a guaranteed return plan gives the portfolio stability and balance. This can lessen the possible risks connected to the portfolio's other investments.

How Does a Guaranteed Return Insurance Plan Work?

  • The policyholder pays the insurance company a premium in Guaranteed Return Plans in India. The insurer guarantees a specific rate of return in exchange over a predetermined time frame, usually between five and thirty years.
  • The policyholder pays the insurance company a premium in Guaranteed Return Plans in India. The insurer guarantees a specific rate of return in exchange over a predetermined time frame, usually between five and thirty years.
  • The primary goal of the Guaranteed Return Insurance plan is to provide a guaranteed return on investment, in contrast to traditional life insurance policies that prioritize the death benefit.
  • The policyholder has the option of receiving regular payouts during the policy term or receiving the payout at the conclusion of the policy term.
  • The policyholder has the option of receiving regular payouts during the policy term or receiving the payout at the conclusion of the policy term.

Who Should Buy Guaranteed Return Plans?

Parents : Plans with guaranteed returns are available for parents who wish to safeguard their family's future. These policies assist you in creating a corpus to support your child's postsecondary education and aspirations. For your children, the life insurance component provides extra financial security.

Young Workers : Young employees who are risk averse can select guaranteed return plans to accumulate savings for their long-term objectives. The life insurance part also provides additional financial support to your loved ones in the event of your absence.

Taxpayers : Guaranteed return plans offer tax advantages under Section 80C of the Income Tax Act. Taxpayers may decide to sign up for these plans if they want to reduce their liabilities while pursuing future financial goals.

Working Women : Guaranteed return plans are a useful tool for confident young women to plan for the future. In order to meet their financial objectives, including retirement, they can accumulate a corpus.

Newly Weds : Recently married couples can invest in a guaranteed return plan to secure their financial future.

When should you buy a Guaranteed Return Plan?

Guaranteed return plans, like any other investment, ought to be connected to your financial goals. These goals will change according to where you are in life right now. A post-retirement income that is risk-free from the stock market is what some people desire, while others may want to safeguard their child's future. Still others may want to save money and have a second source of income. With a guaranteed return plan, any age and any life goal can be accomplished with effectiveness.

Tax Advantages for Guaranteed Returns Plans

Let us examine the tax benefits associated with guaranteed return plans:

Investment Tax Benefits : Under Section 80(C) of the Income Tax Act, 1961, you can receive tax benefits up to a maximum of 1.5 lakhs when you invest in a guaranteed return plan. This implies that your taxable income is reduced by the maximum amount you invest in these plans. This provision allows you to lower your total tax obligation.

Returns with Tax Benefits : The tax advantages on your returns are an additional benefit of guaranteed return plans. The maturity amount of these plans is tax-free under Section 10 (10D) of the Income Tax Act. You can save even more money by doing this, which guarantees that the returns on your investment are not taxed as income.

What Should You Consider Before Buying a Guaranteed Return Plan?

Take into account the following elements when purchasing a guaranteed insurance plan in India:

Identify your financial objectives : As with any investment, guaranteed return plans ought to be in line with your objectives. Think about your current situation and your financial goals, such as providing for your child's future, starting a second source of income, or saving for retirement.

Looking for assured profits : A guaranteed return plan is the best choice if you are risk averse and would rather have a guaranteed return on your investment. Regardless of changes in the market, these plans guarantee a payout.

Long-term financial gain : Plans with guaranteed returns have a lock-in period that can last anywhere from five to thirty years, making them long-term investments. Guaranteed return plans are something to think about if you are searching for a savings plan that will eventually produce a fixed income stream.

Making retirement plans : Guaranteed Return Insurance Plans are best suited for people seeking a fixed income stream in retirement who have low risk tolerance and would rather have stability than higher potential returns.

Protection of LifeIn the unfortunate event of your untimely death, it serves as a financial safety net, guaranteeing your loved ones' financial security. Even though life insurance is not directly tied to portfolio diversification, it is still a crucial factor in thorough financial planning.

Frequently Asked Questions

The length of the policy, how often you pay premiums, and your age all affect the returns on your plan.

The majority of guaranteed return plans have an age requirement of at least 18. You ought to review the particular eligibility requirements of the policy you have selected.

A number of variables, such as the amount invested, the term of the investment, and the guaranteed rate of return provided by the insurance company, affect how much income an investor can anticipate from a guaranteed return income plan.

Sure, tax savings are facilitated by guaranteed plans. Under certain conditions outlined in Section 10(10D) of the Income Tax Act of 1961, the maturity amount of such plans is tax-free, and the premiums paid for them are deductible under Section 80C.

Plans that offer guarantees should be chosen based on the financial objectives and age or stage of life of the individual. A young professional just starting out in their career, for instance, would benefit most from a long-term guaranteed plan because the premium is reasonable given the long tenure and increased time for investment yielding higher returns. Similarly, a person nearing retirement age who wants to supplement a guaranteed income stream might think about a short-term guaranteed plan.

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