Be it sudden ups and downs in stock markets or the interest rates, in a developing country like India, financial uncertainty is very common. So, as an earning individual, you would want to park your hard-earned money at the right place, where there is no uncertainty.
A guaranteed return plan is a great investment opportunity if you are looking for some financial certainty in your life. Here are a few highlights about the plan that will help get a better idea.
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Benefits of a Guaranteed Return Plan
Here are the top benefits of a guaranteed return plan:
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Tax-Free Savings & Returns
When you invest in the stock market, you may get good returns. But, there you also need to pay taxes for the gains – Long Term Capital Gains Tax (LTCG) and Short Term Capital Gain Tax (STCG). So, if the investment is not much, there is no point in increasing your tax liability.
However, with guaranteed return insurance plans you get dual tax benefits. First, you can reduce your tax liability by making premium payments. Under Section 80C of the Income Tax (IT) Act, you can save up to 1.5 lakhs per financial year, which is a great relief if you fall above the 5 lakh tax slab.
In addition, these plans provide your tax-free returns. Under Section 10(10D) of the IT Act, you do not have to pay any taxes on maturity benefit or death benefit amount.
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Stable Investment Portfolio
Stock markets may have provided some great returns in the past. But every now and then, you can witness stock markets plummeting down to unexpected levels. When that happens you risk losing your money once and for all. So, if you are willing to take that risk, the stock market is for you. But, if you want a stable investment product that also provides a decent return, a guaranteed return insurance plan is for you.
Moreover, one of the key benefits of guaranteed return plans is its ability to provide better returns than most bank FDs. So, even with security, you are getting higher returns. In addition, Bank FDs can be for 5 to 10 years. But with these guaranteed plans, you can invest your money for a longer period.
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Death Benefit + Savings
Another unique feature of this plan is that it also serves as life insurance with guaranteed returns. It means that there is a death benefit along with a maturity benefit provided under this plan. In addition, the sum assured on maturity is not just a return of premium, but also accrued guaranteed additions during the policy tenure.
Moreover, some guaranteed returns plans in India also have the option of providing coverage for the spouse as well. This results in having two death benefits (for both spouses) under the same scheme.
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Option for Riders
No matter how comprehensive the plan is, there are always some gaps present. This is where riders come into the picture. Some of the different riders in the guaranteed return plan include accidental death & disability, Waiver of Premium, health rider, etc.
These riders help you broaden the coverage of the scheme with an extra premium payment. However, if you consider buying individual plans for each of these covers, the premium amount will increase considerably as compared to buying a rider along with this plan.
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Variable Options
These Guaranteed plans have a lot of flexibility. Most of these policies, including the Tata AIA life insurance policy provide three types of offerings – Endowment, Regular Income or Whole Life Income. Moreover, the flexibility of the plan is not just limited to the basic offerings. There are different options available in each plan.
Not just that, there are multiple premium payment terms for these options, from a single premium payment to paying an annual premium each year. Such a level of flexibility helps policyholders figure out the best plan as per their financial needs.
Key Takeaways
Now that you are well aware of all the features of a Guaranteed Return Plan, you no longer need to make your choices between a bank FD and the stock market. You know that you have a great third option. So, the only thing left to you is to choose a trusted insurance company which has a good claim settlement ratio.