Planning to buy a guaranteed return plan? Take a look at these factors
A guaranteed return plan is a type of savings plan that offers regular returns along with protection of insurance coverage.
A guaranteed return plan is a type of savings plan that comes with life insurance coverage for those who want to receive a secured lump sum in the future. These plans come with customisable returns or income options. Among all the savings plans available in the market, a guaranteed return plan can be considered a suitable investment avenue if you are looking for a secured return with insurance coverage.
These plans come with a range of features and benefits; however, one should consider a few factors before investing in such policies.
What is a Guaranteed Return Plan?
Several insurance companies offer guaranteed return plans with a number of benefits, including regular returns and insurance coverage. These are low-risk insurance products that provide the guarantee of a fixed return on investments for a specified period.
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Under a Guaranteed Return Plan, policyholders can pay a fixed premium on a monthly, quarterly, half-yearly, or yearly basis during the plan's tenure. Upon maturity, the investor can receive the lump sum amount with a guaranteed bonus.
Along with the guaranteed returns, nominees can also receive the sum assured in case of the death of the policyholder during the policy tenure.
Features of a Guaranteed Return Plan
1. The plan provides investors with guaranteed income over a specified period in the form of a lump sum, short-term, long-term, or immediate income in the future.
2. Investors can also avail flexibility in terms of returns as they opt to receive a lump sum amount or in the form of fixed income on a monthly or yearly basis.
3. Investors, upon choosing an endowment plan, will receive additional benefits that will be accumulated each year.
4. Apart from regular income, a guaranteed return plan also provides life insurance coverage.
6. Investors can also add optional riders or add-ons to enhance the coverage.
7. Many guaranteed return plans also offer tax benefits on the premium paid.
Factors to consider before buying a Guaranteed Return Plan
Keeping in view the aforementioned features, one should consider the following factors before buying a guaranteed return plan:
1. Investors must determine their financial goals to align them with the plan. Considering what stage you are in and what you are saving for is important before buying a guaranteed return plan.
2. Those who want to receive a guaranteed return without any risk can go for a guaranteed return plan.
3. Investors looking for a long-term plan that comes with a lock-in period can put their money in a guaranteed return plan, as it will generate a fixed income stream in the long run.
4. Those willing to save their funds for the retirement phase with lower risks, more stability, and higher returns can choose guaranteed return insurance plans. These plans are ideal for individuals with a low-risk tolerance who prefer stability over higher potential returns.