The Buyt Desk
You buy life insurance to cover your life, you buy health insurance to cover your medical cost and an accident policy to safeguard you against any mishaps. These insurances give you a cover against unforeseen situations in life without giving you any return. But what if your insurance can serve the dual purpose of life cover and return? This is what guaranteed insurance plans do. It is a life insurance product that comes with guaranteed returns in addition to providing a life cover to secure the future. In this insurance plan, returns are not subject to changing interest rates and market volatility.
Life insurance plans aim to protect the person who has taken the life insurance and his family. However, a guaranteed insurance plan which is also saving oriented simultaneously provides insurance benefits.
These plans have a pre-defined schedule and amount to be paid to the policyholder if he survives till the maturity period. The insurance company pays this amount to the policyholder monthly, annually, quarterly or half-yearly.
What Role Guaranteed Insurance Plan Play In Overall Financial Planning?
The guaranteed insurance plan comes with two elements that make it an appealing alternative, fixed and guaranteed return and life cover to give financial security to loved ones. It is a great investment product for people with low-risk appetites.
The guaranteed insurance plan comes with a host of benefits. And insurance companies provide many options of paying return on it, which can be utilized to address various financial goals and life-stage needs.
These insurance plans can also fulfil the requirement for regular cash flow if policyholders choose a steady income payout mode. And the lump sum corpus can help to accomplish big goals.
Talking about the interest rate, this plan’s offer might not seem alluring, as it remains on a lower side in comparison to saving schemes which focus on the absolute return. Guaranteed insurance plans are comprehensive plans.
The IRR of these plans varies according to the company and product, policyholders age and payout structure.
Furthermore, guaranteed insurance products IRR remains unaffected by the fluctuating interest rate. However, even in the low-interest scenario, these products offer many benefits that no other product offers, such as life cover, guaranteed return, additional riders, tax benefits, safety net.
What Are The Tax Benefits Of a Guaranteed Insurance Plan?
The guaranteed Insurance Plan offers tax benefits under section 80C of the Income-tax act. It is in addition to tax-free proceeds under section 10(10)D in the condition of death or maturity.
In case you have a very low-risk appetite. You are looking for a long-term investment product that gives you multiple benefits, such as health protection, financial protection and future protection, a Guaranteed Insurance plan is a suitable option for you.
