Have you heard of a guaranteed income plans? They are among the top investment choices when it comes to enjoying stable returns and assured financial security for your loved ones. It matters in the current scenario when market risks have gone up exponentially due to geopolitical developments and many other factors. Here is a look at some of the main features and benefits of these plans.

Guaranteed Income Plans- Major Aspects

Here are some of the key things to know about guaranteed income plans.

These are plans mostly offered by insurers, often linked to specific products like endowment plans or whole life insurance policies, offering life insurance coverage and potential to grow investments for the future.

If your tolerance for market risks is on the lower side, then you should automatically consider these plans. They ensure capital protection, meaning that your primary investment will generally be secure and handed to you upon maturity, though specific terms may apply. This will happen even in case of any fluctuations in the market.

The insurer will also keep you in the loop about the return rate, which will be stable and predictable. It will help you plan your finances for the future without any hassles. However, actual returns can vary based on the type of plan and prevailing interest rates.

Guaranteed income plans deploy investments in government bonds and fixed-income securities, among other comparatively low-risk options. It naturally reduces risk exposure considerably, but the investment strategy can differ significantly by insurer and product type.

Another advantage in this case pertains to the tax deductions that you can get on the premium payments. You can get deductions up to Rs. 1,50,000 on your premium payments annually towards the policy. Additionally, the maturity amount is tax-exempt under Section 10(10D). It will help you save more money on taxes as a result, thereby making for a win-win situation overall.

Life insurance coverage is the additional advantage that you get from a guaranteed income plan. Your nominees will receive the sum assured in case of your unfortunate and untimely demise within the policy tenure. It will help them take care of their financial needs without depending on anyone. However, the sum assured is subject to the terms of the policy, and there may be exclusions that apply.

You can build wealth for the long-term with these plans, investing in them for several years or even decades. This will help you get stable returns and a sizable corpus that can pay for your children’s educational costs or even your retirement. However, keep in mind that the growth may be slower compared to other investment options, like mutual funds, due to the conservative investment nature of these plans.

These plans are often ideal for retirement planning since they offer a steady income stream in the sunset years of your life. They can also help in case of sudden unemployment or financial crises arising from disabilities.

Concluding Notes- Choosing the Right Guaranteed Income Plan for Your Portfolio

You should compare multiple insurers before choosing a guaranteed income plan. Select the plan duration carefully along with checking the policy terms and conditions. Do note the life coverage amount, premium, and also the charges/fees that are payable on your part. You should also be able to get ample flexibility in terms of making your premium payments. The options are usually monthly, quarterly, or even yearly payments in this regard, but keep in mind that the options available can vary by insurer and plan type. There are many plans which also come with family income benefits. This means that in case you pass away or get a critical illness diagnosis, your family members will still keep getting the plan benefits without any disruptions. However, not all guaranteed income plans offer this feature, so check the specific terms regarding it.

In association with SBI Life