Did you know? According to the Life Insurance Penetration rate by Economic Survey for 2021-22, the life insurance penetration in India is up from 2.74% in 2018 to 3.2% in 2021-22!.. This puts the Indian insurance market in the top 10 markets globally as people are becoming more aware of the importance of financial security.
One of the popular life insurance plans in India is the Guaranteed Life Insurance Plan, which offers assured returns with lifetime protection.
Because of the current rate hike environment affecting the equity market and the general prevalence of market risks some risk-averse investors prefer to invest in guaranteed return plans that provide assured returns as well as safety. Because they are not linked to the market, these plans can help you earn assured returns on your investments in addition to life insurance.
When looking for an investment plan, the word "guaranteed" can be very appealing. A guaranteed returns insurance plan will provide you with the following benefits: you can then decide why you should invest in a guaranteed returns insurance plan.
Features of the Best Guaranteed Returns Plan
- Guaranteed Returns: These plans are one of the best money savings plans as the premium paid accumulates and assures good returns on the investment. As a maturity benefit, the plan offers guaranteed returns. Furthermore, insurers offer a variety of payout choices to meet your specific requirements. For example, if your child plans to attend college in five years, you can invest in this plan and receive a lump sum benefit to fulfil this goal.
- Death Benefit to the Nominee: The life insurance component of the plan will ensure an assured payout to the nominee if you meet an unfortunate demise within the policy's term. This lump sum payment will undoubtedly assist your bereaved family in dealing with your untimely loss. If you are the principal earner in the family, it is critical that you invest in such a plan.
- Low-risk investment: Perfect for risk-averse investors as the money is invested in risk-free fixed-income securities. This plan is particularly safe to invest in for long-term benefits because the earnings are guaranteed. It is an excellent choice for cautious investors looking for a traditional savings plan.
- Accrual Additions: Some plans offered by Edelweiss Tokio Life Insurance offer accrual additions to long-term customers. Guaranteed return plans provide bonus and loyalty additions based on the policy's investment term. The longer you invest, the more you can anticipate earning in bonuses. Also, because you will need to stay invested for a longer period, it is best to begin early so that you can give your investment as much time to grow as possible.
- Retirement Planning: Endowment plans with Guaranteed Returns serve as significant retirement savings and investment plans. You can utilise them as regular monthly income plans if you are saving for retirement. You can choose the income period for the regular income plan and set it for a certain number of years or your entire life. For example, say Shruti starts investing in a guaranteed return plan as soon as she turns 30, with the aim of investing till she turns 60 and retires. The 30-year investment horizon can help Shruti accumulate a sizeable corpus with assured returns. The payout (lumpsum or periodic) from this policy after she retires can facilitate a comfortable and worry-free retirement.
- Additional Riders: You can add riders (add-on benefits) to your policy for enhanced coverage. For example, Waiver of Premium rider allows your policy benefits to continue till the end of the policy term by waiving off the remaining premiums in case you are no longer able to pay them due to a disability or critical illness. Similarly, you can add a Critical Illness Rider, Income Benefit Rider, Accidental Death Benefit Rider, Accidental Total and Permanent Disability Rider, and Payor Waiver Benefit Rider. .
- Loan Facility:You also become qualified for liquidity in the form of loans when you invest in guaranteed return insurance products. You are eligible to request a loan equal to up to 90% of the collected corpus (subject to your insurer's terms and conditions) once your plan has a surrender value.
- Tax Benefits: You can receive tax benefits while saving for the future. Section 80C allows you to deduct the premiums you pay towards the plan up to INR 1.5 lakhs. Furthermore, if you include suitable riders (for critical illness) with your coverage, you can claim Section 80D deductions of up to INR 50,000. Section 10D treats the entire maturity and death benefit amount as tax-free income.
Aastha Mestry - Portfolio Manager
An Author and a Full-Time Portfolio Manager, Aastha has 6 years of experience working in the Insurance Industry with businesses globally. With a profound interest in traveling, Aastha also loves to blog in her free time.