Guaranteed Returns Insurance Plan in India

The guaranteed rate of return in insurance refers to the minimum interest rate or return an insurance policy guarantees to pay the policyholder. The policy contract specifies this rate, usually a fixed percentage.

In India, the guaranteed rate of return for traditional life insurance policies is typically 4 - 6% per annum. However, this rate can vary depending on the insurance company, policy term, and other factors.

Guaranteed Returns Plans offer a combination of life insurance coverage and savings components, providing comprehensive financial security and growth. Here's a detailed breakdown of what is included in the plan:

• Natural Death Benefit: In the unfortunate event of the insured's demise resulting from any cause - be it an accident, injury, or illness. The designated beneficiary is entitled to a death benefit during the policy term. This ensures financial support for the nominee.
• Critical Illness Benefit: Recognising the financial toll of combating life-threatening diseases, certain insurers extend benefits covering critical illnesses. This feature provides a safety net for managing hefty medical expenses.
• Accidental Death Benefit: To further safeguard the insured's family, a provision for a lump sum payment is available if the insured's demise is the result of an accident. This benefit acts as an additional layer of financial protection.
• Loan Benefit: Understanding the need for financial flexibility, the plan offers the possibility to access loans against the policy. Policyholders can avail themselves of a loan amounting to 70-90% of the policy's surrender value, providing a ready source of funds when needed.

The reliability of a Guaranteed Returns Plan is rooted in its consistent outcomes. Unlike investments that fluctuate with the market, this plan guarantees a steady return rate. This ensures your investment is shielded from the market's volatility, providing a solid financial base.

Moving from the general dependability to particular aspects, let’s explore the Maturity Benefits within Guaranteed Returns Plans.

In terms of the maturity benefits associated with Guaranteed Returns Plans, they are crafted to deliver a predetermined amount after the policy period, safeguarding your investment objectives from the unpredictability of the market.

• Maturity and Death Benefits: Ensure clarity on both death benefit sums and expected maturity benefits.
• Premium Payment Term: Seek flexibility in payment options – single, regular, or limited (5, 7, or 10 years).
• Payment Frequency: Select from quarterly, half-yearly, or annual premium payments.
• Payout Options: Look for policies with various optional riders for tailored coverage.
• Riders: Aim for policies with a range of optional riders for enhanced protection.
• Payout Format: Verify if payouts are in a lump sum or staggered installments.
• Additional Benefits: Search for policies with guaranteed additions or loyalty incentives for improved returns.
• Insurer Reputation: Choose insurers with a strong reputation for dependable services.

Guaranteed Returns Plans often offer a variety of tax benefits, which can be particularly appealing to investors looking to save on taxes while ensuring a steady return. Here are some expected tax benefits associated with these plans:

• Tax Deductions on Premiums Paid: Under Section 80C of the Income Tax Act in India, premiums paid towards life insurance policies, including the Guaranteed Returns Plan, are eligible for a deduction. The maximum deduction available under this section is ₹1.5 lakh per financial year.
• Tax-Free Maturity Proceeds: The maturity proceeds of a guaranteed return plan are usually tax-free under Section 10(10D) of the Income Tax Act, provided the premium does not exceed 10% of the sum assured in any year. This means that the lump sum received at the end of the policy term is not subject to income tax.
• Tax-Free Death Benefits: In case of the policyholder's death, the death benefit received by the nominee is also tax-free under Section 10(10D) of the Income Tax Act. This ensures financial security for the policyholder’s family without the burden of taxes.