All You Need to Know About Life Insurance Guaranteed Returns Plans

During our active years in the workforce, most of us start planning for our retirement, how and when we will be able to spend good time with our family and yet, be financially stable. Most individuals wish to maintain a monthly income flow in their old age so that they can live their golden years with dignity. Additionally, it would help if this income wasn’t coming from volatile sources like stock market investments.

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While there are many saving schemes in India that banks and financial institutions offer, they do not promise regular and firm returns that an individual can get while still earning. It can be a bit strenuous looking for savings plans that offer such benefits. Insurance companies have understood these requirements their customers face and have launched the Guaranteed Returns Plan. 

What are Guaranteed Returns Plans?

Guaranteed Returns Plans are non-participating monthly income schemes provided by financial institutions. In these plans, the policyholder will pay a yearly premium for the plan's tenure. The insurer will decide the tenure as per their age and financial situation. Once the policy reaches maturity, the policyholder will start receiving guaranteed payouts similar to the monthly income earned by the policyholder. The payout amount will depend on the insurance coverage that the policyholder chooses, the premium amount they pay and the sum assured on the plan. Therefore, the policy term includes the period for which the policyholder must pay the premium and the period for which the policyholder gets the payout. 

These plans work quite well for individuals looking for assured returns in their golden years. Some of the features of these plans are listed below.

Features of Guaranteed Returns Plans:

1. Tax-free monthly payouts:

The plan ensures that if the policyholder has finished making the premium payments, they will get monthly income payouts for a specified tenure. The income obtained from the plan is exempted from the tax as per the Income Tax Act, 1961. Policyholders will also benefit from these tax exemptions.  

2. Twice the guaranteed income:

The guaranteed income plan generally has a payout period that is divided into two parts. In the first part, the policyholder gets the assured income every month. Once the first half of the tenure is finished, the monthly income gets doubled. 

3. Assured protection:

The monthly income plan also provides the policyholder with death benefits under the guaranteed protection. Based on the norms, if the policyholder passes away during the plan's tenure of the guaranteed income plan, the individual named the beneficiary gets the option of choosing their payout method. They can either opt for getting the benefits as lump-sum amounts or as an income for ten years after the policyholder's death. 

4. Immediate payout:

The policyholder will start getting the payouts as soon as they finish making the premium payments. Once the plan's tenure is done, the policyholder will begin getting the sum assured through monthly payouts. 

5. Flexible payout options:

When an individual requires a large fund in emergencies, these plans can be quite beneficial. The policyholder can opt for getting the payout after the plan matures the monthly income plan as the lump-sum amount. Otherwise, they may opt for getting it in the form of monthly income. 

Benefits of Guaranteed Returns Plans:

1. Second income source:

One of the best ways to be one step ahead of your expenses and take care of you and your loved ones' financial needs is through a regular income option. The guaranteed income plan provides individuals security, so even after they retire, their standard of living will not change by offering a smart value income. 

2. Maturity benefit:

Preparing for a long-term financial objective can be quite strenuous when many savings plans don't offer a safety cushion. With a guaranteed income plan, you can easily save up and get the maturity benefits through lump-sum returns. These returns will help you take care of any urgent financial needs, which require a big budget. 

3. Tax benefits:

Many individuals opt to invest in these plans because of the tax benefits they provide. With this plan's help, individuals can save around ₹1.5 lakhs based on the conditions listed in Section 80C of the ITA, 1961. 

4. Family security:

The Guaranteed Income Plan works better as a life cover as well. It will offer financial protection to not only you but also to your loved ones. This plan is quite beneficial for the families that depend on the individual for their financial needs. Many financial institutions and banks provide individuals with the ability to add the waiver of premium rider. With this rider, the policyholder's premiums will be waived off if they pass away. 

Who must opt for Guaranteed Insurance Plans?

These plans are ideal for risk-averse investors and those looking for assured returns from a plan. Any individuals from the age group of 18-60 years can purchase these plans. 

With a guaranteed return plan, the policyholder can rest free about their financial stability in their retirement years. These plans will provide assured returns to policyholders, which will help them take care of different adversities they face and maintain a steady income flow.  

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