GUARANTEED LIFE INSURANCE PLANS: A safety net for retirement planning
By Saikat Neogi
Individuals are preferring to buy guaranteed insurance plans which pay fixed regular payments after a specific period and also come with a life cover which is 10 times the annual premium paid. These plans offer tax-free returns, unlike fixed deposits or debt mutual funds. And for risk-averse individuals seeking regular income, they serve as a safety net for retirement planning.
Purchasing a guaranteed plan ensures locking in guaranteed returns for 10-20 years, a feature not commonly found in other fixed deposit instruments. For those prioritising stability and predictability, these plans can be appealing, assuring a known amount at maturity with minimal risk. However, these plans have limited access to funds before maturity, which might not be ideal if the individual requires financial flexibility. Also, investors must ensure that the annual premium does not exceed Rupees 5,00,000 for tax-free returns.
State-owned LIC has launched Jeevan Utsav, a non-linked guaranteed product offering income benefits of 10% of the sum assured annually. The income benefit starts after the periods specified in the policy linked to the premium paying term.
As timing plays a crucial role in determining an individual’s investment corpus, the current period presents an opportune moment for investing in these plans. These plans provide flexibility, allowing policyholders to choose between a lump-sum amount or a regular income stream on a monthly or yearly basis, decided at the policy’s outset.
Vivek Jain, head, Investments, Policybazaar.com, says when interest rates are high, guaranteed return insurance plans can indeed be an attractive option. “These plans offer a sense of security with assured returns, making them appealing
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