Insurance plans (Guaranteed Life Insurance Plans) are products that offer fixed returns on your savings. Along with this, it also gives many additional benefits. These plans are tailored to meet your evolving financial needs and goals. He tells us five reasons why one should invest in guaranteed insurance plans.
Fixed Return Guarantee
Unlike stocks and associated investments, the returns of guaranteed savings schemes are not affected by market volatility, meaning you are entitled to a guaranteed guarantee. Savings instruments, such as bank FDs, National Savings Certificates and Public Provident Fund (PPF), also offer guaranteed returns, but these returns can change with changing interest rates. Some of these forms also come with limitations, such as tax on returns and a limit on the maximum investment amount. Within this category, products from different insurers offer varied returns depending on the premium amount, premium payment term and maturity payment structure.
customized product structure
Over the years, insurers have made their guaranteed products more innovative with the option to personalize the payment structure as per the financial needs of the customer at various stages of his life. The payment structure varies from one plan to another. Some plans offer regular flow of income at predetermined intervals, while other plans make lump sum payments at maturity. Depending on the nature of your goals, you can avail the entire maturity benefit in one go on maturity of the plan or opt for a plan which pays the benefit amount as regular income over a period and at the time of maturity Pays a lump sum amount. In the plans offering both these payment options, the customer has to choose the payment structure at the time of inception of the plan. Also, most of the guaranteed savings plans offer multiple plan tenure options. You can choose the duration which is best for you, as per your preferences and needs. For example, if you are looking at major expenses like children’s education or retirement in the next 12-15 years, then you can go for a plan that matures after 12 years from the date of your commencement or after your golden years. Offers regular income during Having the right planning will help you achieve your goals with ease.
Life cover and more protection
One of the biggest advantages of guaranteed savings plans is that they ensure the financial security of your loved ones. Apart from offering guaranteed returns, they also offer a life cover. On the death of the insured, the nominees get a pre-determined sum insured, which can bridge the cash flow gap and secure their financial future. In addition, today many products with guaranteed savings offer riders the option to choose from, such as additional term insurance and critical illness plans, to increase protection. Riders charge a little extra, but they help increase the overall levels of protection through increased coverage.
Long Term Tax Free Returns
Unlike investment avenues, such as Mutual Funds (Non ELSS) and Direct Stock Investing, these products offer the benefit of tax savings at the time of payment of premiums and while availing maturity benefits. Premiums paid for insurance plans are also exempt from tax under section 80C of the Income Tax Act. In addition, insurance plans with guaranteed savings also offer long-term tax free returns under Section 10(10D) of the Income Tax Act.
Limited period for payment of premium
We live in a world full of uncertainties and products with long-term payment commitments may not be suitable for everyone. Guaranteed savings plans come with a limited premium paying tenure, which makes them an attractive savings proposition. Paying premium for a shorter term can help in getting higher returns in the long term