Financial responsibilities in the current uncertain global situation cannot be fulfilled without adequate planning. The economic slowdown and its impact have caused people to think of multiple options to secure their financial future. A savings plan that offers a guaranteed return on investments can be a perfect idea for many.
What is a guaranteed return insurance plan?
Guaranteed return plans in India are life insurance policies that offer life cover and, additionally, guaranteed returns. The life cover will provide the sum assured to the nominee to reduce the financial burden in your absence. It will serve for managing debt and other financial commitments. You can enhance the benefits with add-on rider benefits such as the accidental death benefit rider, critical illness rider, total and permanent disability rider etc. In addition, there is a guaranteed return that will be paid in a preferred manner once the plan matures.
Here are seven reasons to suggest why guaranteed return investments are good and worth buying.
- Guaranteed returns: As the returns are guaranteed, you can plan for a definite long-term financial commitment such as your children’s education or marriage. Also, as the returns are assured at the plan’s inception, you can decide on the policy tenure based on your target requirement for funds.
- Different payout options: The insurers offer different payout options for the guaranteed return plan. The returns can be received on maturity as a lump sum amount, a combination of lump sum and guaranteed annual income, or a regular monthly income.
- Safe investment: The returns in a guaranteed return plan are not market-linked. Hence, there is no element of risk involved. For people looking for a conservative savings plan with fixed returns, it is an ideal plan. Also, it will serve as an additional source of income if you are engaged in a business and you cannot expect a regular salary income.
- Tax benefits: The premium amount paid towards the guaranteed return investments and the returns that accrue qualify for a tax deduction and tax exemption under the Income Tax Act, 1961.
- Customisable features: You can use the life insurance with guaranteed returns optimally by customising the plan with the preferred requirements based on your income. You can choose the premium payment mode as monthly, quarterly, half-yearly or yearly as per your convenience. Also, with the guaranteed return plan with a regular monthly income, you can choose the income period up to which you want to receive the income.
Using the TATA AIA calculator, you can arrive at the most affordable premium amount for maximum benefits based on your income.
- Long-term benefits: The plan is designed to accrue maximum returns in the long run. It is best advised that you start investing in such a savings plan at an early age so that you can provide maximum protection to your family and get a huge return in the long term at less cost. Further, at an early age, you will have fewer financial commitments so that you can get into the habit of the disciplined financial practice of saving regularly.
- Retirement benefits: It is one of the best retirement plans you can afford for a happy and self-sufficient living. With proper financial planning, you can derive the estimated amount of monthly requirements in your golden years. You can choose the guaranteed return plan with a regular monthly income to maintain a fulfilling lifestyle. It will ensure a fixed amount for a set income period to manage your financial commitments.
Suppose your family is dependent on your income for their financial needs, or you have financial commitments at different stages in life that you need to start planning early for retirement. In that case, a guaranteed return plan is necessary. Also, if you are looking for a long-term safe savings option that will guarantee insurance simultaneously, then a guaranteed return insurance plan is certainly worth buying!