Stability and predictability are often the top considerations when it comes to making financial plans. If one guarantees returns, most investors will look for low-risk and steady income. A guaranteed return plan provides an assured payout plus flexible tenures with tax benefits and coverage in specific cases, depending on the chosen policy. Let us take a look at some key characteristics that determine the suitability of a guaranteed return plan as an investment.
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Guaranteed Payout Plans for Financial Protection:
The main appealing element of a guaranteed return plan is clarity on the return percentage that is paid at the end of the agreed period. In contrast to risky investments where one is never fully certain of what to expect in the future, these plans provide a specific amount that alleviates such fears, provided the insurer fulfills their contractual obligations. Reliability is particularly useful for cautious investors who seek to protect their sources of income.
Flexible Tenure Options:
Guaranteed return plans often come with a flexible tenure choice. You can select or adjust the tenure depending on your financial goals, such as saving for your child’s education or buying a home.
Tax Benefits:
Under the Income Tax Act, premiums paid may be eligible for deductions under Section 80C, and maturity benefits may also be exempt under Section 10(10D), subject to conditions. For example, the premium should not exceed 10% of the sum assured, and the policy must meet specific eligibility criteria. These provisions help in boosting overall returns from these plans while reducing tax liabilities considerably.
Life Coverage for Every Contingency:
Some assured return plans are a mix of investment and life insurance products, providing a double benefit in a single package. These plans can help in wealth creation in a low-risk manner while also ensuring that your family is financially protected in case of an unfortunate incident. It is important to check whether the chosen plan includes life insurance coverage before making a decision.
Low-Risk Returns:
As compared to other plans available in the market, guaranteed return plans are low-risk and unaffected by market volatility. While equities and other instruments may offer higher returns, their risk quotient is also higher. These factors often drive investors toward guaranteed return plans for stable future wealth creation. However, note that these plans are not entirely risk-free and depend on the insurer’s solvency and external factors like inflation.
Income Stream for Long-Term Security:
For those seeking regular income, guaranteed return plans offer payout options in the form of monthly or yearly annuities. This feature is particularly helpful for retirees or individuals looking for a reliable source of income to manage their expenses effectively. These plans can thus be suitable as post-retirement options as well.
Conclusion:
A guaranteed return plan is a versatile and reliable financial tool that caters to different needs, from providing predictable returns to offering life coverage (in some cases) and tax benefits. However, the suitability of these plans depends on individual financial goals and the terms of the policy. Investing in such a plan can help you achieve stable returns over time. Review your options carefully and take the first step toward a more secure future.