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Do Guaranteed Income Plans Have Tax Exemptions?

  1/12/23 10:07 AM

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Guaranteed income plans are financial products that provide a stream of payments to an individual over a set period of time. They can be purchased from insurance companies and are often used as a way to provide retirement income or as a means of preserving wealth.

One question that many people have about guaranteed income plans is whether they have tax exemptions. The answer to this question depends on the type of plan you have and how it is structured.

In conclusion, whether or not a guaranteed income plan has tax exemptions depends on the type of annuity it is and how it is structured. Deferred annuities have tax-deferred growth, while immediate annuities do not. It's important to carefully consider the tax implications of any financial product before deciding. As always, it's a good idea to consult with a financial professional or tax advisor for personalized advice on your specific situation.

A guaranteed income plan also offers tax exemption under the sections 80C and 10(10D) of the Income Tax Act, 1961 and these exemptions are available for the payable premiums and also the maturity proceeds, after completion of the policy term

Why Should You Choose a Guaranteed Income Plan?

As humans, we generally want to get the most out of our resources. When it comes to tax planning in India, it's important to find an investment plan that offers both tax benefits and assured returns. The recent pandemic has highlighted the importance of having a reliable source of income, and with market fluctuations, it can be difficult to predict the outcomes of certain investments.

A guaranteed income plan is a good option in this situation because it provides fixed returns that are not affected by market conditions or interest rates. These plans, also known as guaranteed income and savings plans, offer a clear "pay and get" structure as guaranteed by the insurance company. In addition to providing a steady income, these plans also include life insurance coverage and tax benefits. 

What are the Tax Benefits Available with a Guaranteed Income Plan?

A guaranteed income plan is a type of life insurance plan that firstly offers the financial security of guaranteed income disbursed monthly, quarterly, yearly, or as a lump sum, depending upon the plan option chosen by you. Investment in the plan builds a future corpus to pay for your child’s future education, or to buy your dream house. Whatever your life goal is - short term or long term; there is a plan to make it happen.

A guaranteed income plan comes with tax benefits up to a value of Rs 64,116 as the premiums you pay are eligible for deductions under section 80(C) and the income you get has tax benefits under section 10(10D).

Secondly, it provides life cover, and in the unfortunate event of critical illnesses or your demise, the death/illness benefit is passed on to the nominee, which may be used to pay debts or fund life events such as marriage, education, etc.


In conclusion, a guaranteed income plan is a financial product that provides a stream of payments to an individual over a set period of time. It offers a reliable source of income that is not affected by market conditions or interest rates, and often includes life insurance coverage and tax benefits. The tax benefits available with a guaranteed income plan include deductions for premiums paid under Section 80(C) of the Income Tax Act and tax-free income from the plan under Section 10(10D). These tax benefits, along with the financial security and life insurance coverage offered by the plan, make it a good choice for those looking to plan for the future and secure their financial well-being. It's important to carefully consider the tax implications of any financial product and to consult with a financial professional or tax advisor for personalized advice on your specific situation.


Swati Tumar - Travel & Finance Writer

Swati is a Writer in the day and an illlustrator at night. Among her interests, she is quite fond of art and all things creative. She often indulges herself in creating doodles, illustrations, and other forms of content. She identifies herself as an avid traveler and shameless foodie.

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