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Guaranteed Return Plans are non-participatory monthly income plans offered by financial institutions. For these plans, the policyholder will pay an annual premium for the term of the plan.

    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:

  • Tax-free monthly payouts: 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.
  • 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 doubles.
  • 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.
  • Immediate payout: The policyholder will start getting the payouts as soon as they finish making the premium payments.
  • Flexible payout options: 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 Return Plans:

  • Second income source: 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.
  • 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.
  • 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.
  • 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.

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. During our active years, many of us are planning to retire, and we are planning how and when we can have a good time with our family and still be financially stable.

Many people want to save money every month in their old age so they can look forward to their golden years. It is also important that income does not come from volatile sources, such as investments in a stock market.