In contrast to a high-risk, high-reward strategy, guaranteed return plans provide you with future assurance.
In an unpredictable world, safeguarding your and your loved ones’ financial futures is critical, particularly if you want to sail through the tumultuous phases of your life without any setbacks. The COVID-19 pandemic brought this feature to light when a little but lethal virus shocked the financial world, uprooting millions of lives and gravely jeopardising many people’s financial future.
In the midst of all this uncertainty, most of us desire certainty – future assurance. A new parent, for example, would want to guarantee that whatever uncertainty arises in their future does not interfere with their child’s life aspirations. To fund one’s future requirements, one must invest now. It might be difficult to get this level of confidence in investing, but that is where a guaranteed returns plan can help.
What do Guaranteed Return Plans entail?
Long-term investments benefit from guaranteed return schemes. They are unaffected by market volatility and provide a guaranteed return on investment over time. Most plans give a lump sum payout at maturity, while others offer monthly payments or a mix of the two. Along with guaranteed returns, many new age guaranteed return programmes provide payment flexibility, tenure options, and life insurance coverage.
Guaranteed return plans make sense for folks who have definite non-negotiable life objectives at defined phases of life since you know exactly how much money you will get when you reach maturity. So, for goals like as retirement, children’s education or marriage, or even purchasing a vehicle or a house, guaranteed return plans may help you prepare for and attain those objectives.
Advantages of Guaranteed Return Plans
Greater, tax-free returns: Your returns are not only assured, but they are also higher when compared to similar goods. The greatest aspect is that the returns are tax-free, which enhances your actual realised profits even more. For example, compared to a 5% return on fixed deposits, on which you must also pay income tax, guaranteed return plans may provide returns of up to 6-7%, tax-free. For example, a 30-year-old investor may earn up to 7.2% in the Max Smart Fixed Return Digital plan. When compared to other typical zero-risk savings choices, this is a fantastic option with much higher long-term returns. Not only that, but you may claim tax breaks on the premiums you pay.
Risk-free investment: With guaranteed return programmes, your assets are protected from the external world’s risks and volatility. When you choose a guaranteed return plan, you lock in the rate of return for the duration of the plan. One would observe that interest rates on fixed deposits and savings bank accounts have been declining over the previous decade or two, falling from above 9% to approximately 5%. Assured return programmes, on the other hand, provide you with guaranteed and larger returns. So, when interest rates fall or stock markets collapse, the interest rates you locked in stay constant, as do the plan’s maturity returns.
Insurance coverage: These plans include life insurance coverage, which assures that your family’s future is safe whether you live to the end of the policy term or pass away unexpectedly. So, in essence, this investment-insurance combination assures not only that you have enough financial support throughout your life, but it also establishes a strong safety net for your loved ones to protect them from life’s risks.
Payment and tenure flexibility: The new-age guaranteed returns plans provide a lot of flexibility, whether it’s in terms of the lock-in period or the frequency of premium payments. For example, one may choose for a guaranteed return plan that locks in the interest rate for up to 45 years. On the other hand, a plan with a five-year duration is also an option. Not only may these plans assist you with your long-term objectives, but they are also great for short-term financial planning due to their shorter lock-in time and ease of liquidity. Even in terms of premium payment, these plans provide a great deal of freedom. Aditya Birla Sun Life Insurance, for example, offers a “single-pay” option in which you pay only one premium in your lifetime and are covered for 5-10 years. Most guaranteed return plans also allow you to pay your premiums on a yearly, semi-annual, quarterly, or monthly basis.
Benefits for the modern age: Many of the new guaranteed return programmes are tailored for technologically savvy millennials. For example, the Max Life Smart Fixed-return Digital Plan has a streamlined digital onboarding procedure that is simple, fast, and painless, allowing you to be covered as soon as possible. All you have to do is pick how much you want to invest, choose the insurance term and type, and pay online. You can secure your loved ones’ future in three simple steps. It really is that simple. The plan also includes particular perks for female investors, such as increased maturity benefits as compared to male clients of the same age. Women investors stand to enjoy an extra 0.25% maturity benefit for a 5-year policy term and 0.5% additional maturity benefit for a 10-year policy term.
In contrast to a high-risk, high-reward strategy, guaranteed return programmes provide you with future assurance. You may use this investing vehicle to develop a substantial corpus for your future while also receiving insurance coverage. With poor fixed-income yields, these plans make a lot of sense to include in your portfolio.