Old habits die hard. India has traditionally been considered a nation of ‘savers’, and though that trend is slowly making way for investing in the financial markets with a tad bit more risk and reward, a large segment still looks at safe investments for their portfolio.
These investments range from FDs to PPF to traditional savings plans offered by life insurance companies. One of these plans is a guaranteed Income Plan, which is increasingly becoming a favored option for those looking for assured returns and a life cover in one package. They are distinctive life insurance products, offering a steady and reliable income at times in life when financial backing is of the utmost importance.
If you are considering Guaranteed income plans but are on the fence for any reason, this article is for you. We will clearly highlight what makes these savings plans ideal for you, and why these are one of the best choices for your savings strategy.
Let’s delve into Guaranteed Income Plans:
A guaranteed income plan is a traditional savings plan that combines insurance protection with assured returns in the form of regular (or lump sum) payouts after maturity. Guaranteed income plans grant the policyholder control over the period of the payouts as well as the choice of payout frequency—whether it be monthly, quarterly, annually, or a single lump sum. The payout is determined as a fixed percentage of the guaranteed sum or as a multiple of the annual premium paid by the policyholder, and it remains consistent over the payout term.
For individuals who are early in planning for long-term financial goals, like retirement, guaranteed income plans are ideal, benefiting from the power of compound interest. Also, a regular income stream makes managing finances and premium payments more manageable.
Perks of Guaranteed Income Plans:
Life Insurance Benefit
With a guaranteed return plan, you’re doing more than just saving money; you’re also providing protective cover for your family. If something happens to you, this plan ensures that your loved ones won’t face financial hardship because they’ll receive the sum assured.
Loan Option
Life is unpredictable, and sometimes you might need cash in a pinch. If you find yourself in such a spot, your guaranteed return plan is there for you. You can take out a loan against it, likely at a better rate than the bank’s, thanks to your foresight in choosing this plan.
Customizable Terms
Everyone’s financial journey is different, and a guaranteed return plan gets that. It lets you decide how long you want to save and how much you want to pay. You can even opt for a one-and-done single premium if that’s more your style.
Additional Riders
Think of riders as add-ons to your safety net. Adding a critical illness or permanent disability rider means if health issues strike, you won’t be left struggling with medical bills or worried about future premiums.
Secure Savings
In a world where investments can go up and down, a guaranteed return plan is the steady hand that guides your savings. It promises growth without the rollercoaster ride of the market, offering peace of mind about your financial future.
Tax Benefits
Let’s not forget the tax perks. You can benefit from tax deductions on your premiums, with up to ₹1,50,000 deductible under Section 80C. Additionally, you have the opportunity to receive a tax-free payout, as the maturity benefit is exempt from taxation under Section 10(10D). Please note that for policies issued after April 1, 2023, where the annual premium exceeds ₹5 lakh in Non-Unit linked life insurance, the exemption under Section 10(10D) does not apply.
How to go about choosing the right Guaranteed Income Plan?
Once you decide to go with a Guaranteed income plan, you must follow these steps to choose the best guaranteed income plan:
- Assess Your Financial Needs: Start by understanding your financial goals. Whether it’s early retirement, starting a business, or taking a sabbatical, knowing your goals helps you determine the income you’ll need.
- Calculate Required Sum Insured and Premium: Once you know your financial requirement, estimate the sum insured to meet this goal. Consider the impact of inflation when deciding on the policy term and calculating the premium.
- Understand Policy Features: Learn about the features of the plan you’re considering. Flexible options, like limited premium payment periods and extended policy terms, can align with various financial goals.
- Explore Plan Options and Choose Wisely: Compare different plans to find one that meets your financial needs and is cost-effective. Consider your income and family commitments in this decision.
- Select Add-On Benefits: Enhance your plan with riders for accidental death, disability, terminal illness, etc. These can provide additional benefits like lump-sum payouts or premium waivers in certain circumstances.
- Stay Committed to the Policy: For maximum benefits, maintain your policy for the full term. Starting early and adjusting your sum insured as needed can optimize your plan.
Conclusion: Go for Guaranteed Income Plans!
As a sure shot choice for your savings strategy, Guaranteed Income Plans are a great. These plans lock in guaranteed benefits from the start, so fluctuations in interest rates don’t affect the policy benefits or returns—positioning these plans as a valuable safeguard against interest rate changes impacting your other investments, if any. Hence, guaranteed income plans can play a significant role in your financial strategy from a savings standpoint, removing the unpredictability of returns and providing security for your family. Go for peace of mind and explore Guaranteed Income Plan options by Edelweiss Tokio Life Insurance.
Follow our WhatsApp channel
