In a fluctuating market scenario, it has become increasingly difficult to find an insurance plan that would minimise risk and yet offer essential financial security. In such a scenario, a guaranteed return plan helps restore financial stability.
A guaranteed return insurance plan is specifically designed for risk-averse investors. It offers them the benefit of life insurance, along with maturity benefits and a guaranteed rate of return. This innovative insurance product not only provides a guaranteed return on investments but also offers a bonus facility wherein policyholders need not worry about the fluctuating market; rather, they can enjoy maximised returns. This is one of the reasons why plans with a guaranteed return on investment in India are a sought-after investment choice.
What is a Guaranteed Return Insurance Plan?
A guaranteed return insurance plan promises return on maturity along with a life cover to protect your loved ones. A guaranteed return plan that is similar to an endowment life insurance, is a combination of a savings and investment plan that provides policyholders with the flexibility to choose their investment horizons to plan their future goals. The basic life insurance for the guaranteed return plan can be enhanced and strengthened with riders.
For most investors in India, short-term market volatility is not a matter of great concern as they prefer investments in long-term financial products. The risk lies primarily in falling short of the required corpus for one-time expenses such as a child’s higher education, marriage, or even retirement planning.
For unprecedented times like now, where the pandemic has greatly impacted investments, a guaranteed return investments plan is the best solution. It is important to have clarity on the guaranteed rate of return after a fixed period to avoid unpleasant surprises in the future. The essential life protection element that is offered with a guaranteed return plan ensures that the dependants receive the money in the unfortunate event of the policyholder’s death.
An endowment life insurance and an insurance plan with a guaranteed rate of return both fall under the category of life insurance products with an investment component. An endowment plan with guaranteed returns promises an assured return on investments. It is important to be aware of the intricacies of each policy to ensure you buy the best guaranteed return plans for your future financial stability. Adequate research will help policyholders choose the right plan for a guaranteed return on investment in India.
It is a good idea to purchase a plan offering guaranteed return investments online, as this will provide investors with a host of benefits such as extra payout on the corpus invested.
Benefits of Guaranteed Return Insurance Plan
The primary purpose of life insurance is to protect financial dependants. However, endowment plans guaranteed returns combine a savings plan in addition to protecting to help one save for their long-term financial goals. Some benefits of the best guaranteed return plans include:
- Guaranteed Returns: In an already volatile market scenario where stability from investments is a rare virtue, a guaranteed life insurance return becomes crucial. Protection of your loved ones is the central element of a life insurance plan, and this aspect is strengthened in a risk-averse guaranteed return insurance plan. As there has been a significant drop in the rate of interest on fixed deposits offered by banks, appropriate financial planning has been thrown off balance for a middle-class family. Considering this, a guaranteed return insurance plan is a saviour as the total sum assured is returned to the customer upon maturity or to the nominees in case of death during the term period.
- Savings for Future Goals: Savings are important, especially if you wish to achieve long-term financial goals. As mentioned before, a bank may fail to provide you with adequate returns. Meanwhile, long-term financial life goals such as a child’s higher education, marriage, or even retirement planning come with an added cost associated with them, and investors have to incorporate factors such as the rate of inflation to make them comprehensive. When it comes to building a corpus to achieving long-term goals, a guaranteed return insurance plan can be of great assistance. The plan comes with a saving component to progressively build a corpus in a worry-free manner for future financial stability.
- Tax benefits: Tax-payers are always looking for ways to reduce their taxable income. Section 80C of the Indian Income Tax Act allows exemptions of up to ₹1,50,000 on premiums paid towards life insurance. A guaranteed return plan enables you to save a good amount of your hard-earned money and invest it in financially securing your future. The bonus + maturity payouts to the policyholder, along with the life cover payout to the beneficiaries, are tax-exempt under Section 10(10D) of the Act.
- Riders: Riders are add-ons that help strengthen your basic policy. Policyholders have the option to strengthen their policy with a critical illness rider that offers protection against a host of pre-specified critical illnesses. The plan ensures that the policyholders receive a lump sum payment upon diagnosis of any of the listed critical illnesses.
When it comes to choosing life insurance for securing the future of our family, everyone likes to ensure that they make the best decision. If you are wondering how to buy the most suitable plan, here is a quick checklist for your reference:
- Undertake a market analysis. While the intricacies of market fluctuations remain hidden to the unseasoned investor, certain potent signs such as the receding rate of returns from seemingly stable investments indicate an unstable market scenario. To prepare against such unforeseen fluctuations, ensure that you invest in safe insurance plans such as those that offer guaranteed returns.
- Analyse your risk profile. This can be done by looking at your annual income and financial dependants. A guaranteed return insurance plan is ideal for the risk-averse.
- Check the guaranteed rate of return of the insurance company to see how those who have previously purchased the plan have benefited from it.
- You must understand everything about the policy by reading the documents carefully to avoid any unpleasant surprises.
1. Guaranteed returns on your investments
2. Guaranteed Accrual Additions from the 9th policy year on your returns
3. Flexibility to choose from multiple policy terms, premium paying terms and premium paying modes.
4. Waiver of Premium optional benefit rider to keep the policy active even in tough times.
5. Critical Illness Protection against 12 listed critical illnesses.
6. Option to avail a loan against the policy during emergencies.
7. Tax benefits as per the applicable tax norms.
8. Ability to enhance coverage with a choice of 6 riders.
A guaranteed return insurance plan ensures peace of mind in every stage of life. It helps your money grow while protecting your loved ones regardless of the changes in the financial market.
For more information regarding the Edelweiss Tokio Life Insurance GCAP plan, get in touch with us today!
Neha Panchal - Financial Content Writer
Neha used to be an Engineer by Profession and Writer by passion, which is until she started pursuing full-time writing. She's presently working as a Financial Content Writer, with a keen interest in all things related to the Insurance Sector.