Avoid Market Fluctuations. Get Guaranteed Returns

When it comes to investing in market-linked funds, you have to be prepared to face the highs and lows that come with it. The market can provide high returns for your investment, but it can also be highly volatile. Funds that perform well may suddenly drop in value, and it can be extremely difficult to predict what investment will do well and what will fail. If you are averse to risk intrinsic to market-linked funds, then it would be optimal to opt for an investment option that gives guaranteed returns.

Guaranteed returns plans offer the security of long-term savings that will surely grow at a modest rate. Insurance plans that include savings elements are generally guaranteed savings plans, where you know the exact amount of returns you will be getting back at the end of the term. Of course, not all guaranteed plans are made equal, and you should look for a plan that is capable of providing returns that compensate for inflation. Moreover, the plan you choose should provide sufficient returns to help you fulfil your life goals.

Below are some of the main benefits of guaranteed returns plans that make them a popular alternative to market-linked funds.

Guaranteed Returns

All guaranteed plans come with an Internal Rate of Returns (IRR), which is the rate at which your savings will grow. The insurer will always disclose the IRR for a guaranteed plan before you finalise your purchase. This allows you to calculate your returns by yourself! Some plans have a static rate of returns, meaning that the rate will never grow over the course of the policy term. But long-term savings plans generally have increasing rate of returns, which greatly grows your savings corpus by the end of the policy and helps you compensate for inflation.

Flexibility of Income

Some guaranteed plans only provide a payout at the very end of the term. This payout is known as the maturity benefit and is usually paid out as a lumpsum amount. However, you can also opt for a guaranteed income plan if you want payouts regularly, even during the policy term itself. Guaranteed income plans provide monthly or annual income after the premium paying term comes to an end. Meaning that you can develop a second source of income for your family that is completely guaranteed! A few plans even offer income alongside a lumpsum payout at the end of your policy term.

Savings + Protection for Your Family

If you opt for an insurance savings plan like Edelweiss Tokio Life- Premier Guaranteed STAR, you will not only get guaranteed income for years to come, but you will also get life cover that can financially safeguard your family in your absence. Life is full of uncertainties, and sometimes the savings you have is not enough to provide for your loved ones when you are gone. The life cover amount paid out by an insurance policy can help your family maintain their standard of living even when they no longer have your income to depend upon.

Investment for All Life Stages

Guaranteed returns plans are quite affordable, with the minimum monthly premiums ranging from ₹1,000 to ₹4,000. Of course, some plans will be more expensive while others will have a lower barrier to entry. The main plus point is that you can start developing your savings corpus by just investing a small amount of money each year.

Ideal for Risk-Averse

If you invest in a guaranteed plan at a younger age, you can create a large savings corpus by investing a modest amount of money. Even a monthly savings of ₹1,000 can grow and become substantial 10 or 20 years down the line.

On the other hand, guaranteed plans are also ideal for those who are middle-aged or elderly and are cannot take risks with their money. If you have a family that depends on you, or need income during your retirement, then it might be wiser to opt for guaranteed income over the volatility of market-linked funds.

Enhanced Protection with Riders

Not just satisfied with life cover, then you can further enhance your insurance savings plan with optional riders! For example, Edelweiss Tokio Life- Premier Guaranteed Income offers a choice of six riders that can further enhance your family’s financial security. The Critical Illness Rider provides additional financial aid if you are diagnosed with any of the serious illnesses listed in the policy document. Similarly, the Accidental Disability Rider will financially cover for you and your family if you are incapacitated due to an accident and can no longer work.

The Waiver of Premium Rider ensures that your policy will remain active even without any further premium payments in case of critical illness diagnosis or accidents.

Loan Facility in Times of Need

Sometimes the savings you have is not sufficient to safeguard you against a financial emergency. This is why various guaranteed plans offer a loan option once your policy acquires a surrender value. A loan on policy will quickly provide you with liquid cash, and the only collateral for such a loan is the policy itself. If you fail to repay a policy loan, then your policy itself will lapse, but it won’t affect your CIBIL score at all!

Tax Benefits

Guaranteed plans come with a whole host of benefits, including tax exemptions and deductions! If you follow the Old Tax Regime, then you can avail of tax benefits under Section 80(C) and Section 10(10D) of the Income Tax Act.

Section 80(C) provides tax deductions of up to ₹1.5 lakhs annually for insurance premiums. Section 10(10D) offers tax exemptions for the maturity and survival benefits you receive from your insurance savings plans. However, not all savings plans are eligible for Section 10(10D) exemptions, so be sure to check your policy’s eligibility beforehand. Section 10(10D) also ensures that the death benefit/life cover for your insurance policy is completely tax free!

Conclusion

If you can’t or don’t want to invest in traditional market-linked funds, then a guaranteed savings plan is one of the best investment choices for you. Knowing that your returns are guaranteed, no matter

what, is an uplifting proposition for a lot of people. However, always ensure that the plan you choose can cover for your future expenses, life goals, and inflation rates. A guaranteed returns plan like Guaranteed Savings STAR offers guaranteed¹ returns, enhanced cover option, tax benefits³, and more… all with premiums just Rs. 3,000/month. Guaranteed Income plans caters to the need of guaranteed wealth accumulation, where you get extra benefits on higher premiums. Buy yours today!

 

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.