Guaranteed Income Plans

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What is Guaranteed Income Plan?

This plan offers an assured and guaranteed returns over the life of the product. The guaranteed income products enables you to lock in the investment returns for a very long term period. This can also provide regular annuity and can be used as a pension product.

Why Guaranteed Income Plans?

This is a non-participating life insurance plan where the returns are guaranteed over the life of the product by the Insurance company. The approximate returns ranges from 5.50% to 7% per annum.

Alternate source of income

Maturity benefit

Alternate source of income

Flexible terms

Why are you recommending a guaranteed income plan over mutual fund?

  • We use GIP as an alternative to the Mutual Fund Bond Portfolio, not entirely but a portion of it.
  • India is a developing economy, and as the country develops, it is noted that the interest rates keep moving downwards.
  • All developed economies have very low-interest rates.
  • By using this product, we can lock in a high tax-free return of 5.5% to 7% per annum for the next 20 years thereabout.

What is customiesd GIP?

This is a non-participating life insurance plan where the insurance company guarantees returns over the life of the product. The approximate returns range from 5.50% to 7% per annum. The best part is that the returns get locked in for almost 20 years. 

Is there any risk associated with guaranteed income plan?

  • There is no risk associated with Guaranteed Income Product.
  • The return is clearly mentioned in the Insurance Policy copy. Theoretically, if the interest rate goes up in India then the investor is exposed to the re-investment risk (i.e.- the investment gets locked in at a lower interest rate).
  • However, this has a very remote possibility as the guaranteed income products are generally for a very long period.
  • Over such a long period it would be difficult to hold a very high interest rate for a fast developing economy like India.

faq's

Guaranteed Income Plans are different from Endowment Policies. The Endowment policies are called Participating Insurance Products. This does not guarantee returns, the returns will be based on the Investment returns and also how the Insurance company performs. The Guaranteed Income Plans offer an assured and guaranteed returns over the life of the product. As India matures from a developing economy to a developed economy, the interest rates will most likely go down over a long term period. The guaranteed income products enables you to lock in the investment returns for a very long term period. It also provide regular annuity and can be used as a pension product. 

  • Alternate source of income 
  •  Maturity benefit 
  •  Family security 
  •  Tax benefits 
  •  Flexible terms

There is no risk associated with Guaranteed Income Product. The return is clearly mentioned in the Insurance Policy copy. Theoretically, if the interest rate goes up in India then the investor is exposed to the re-investment risk (i.e.- the investment gets locked in at a lower interest rate). However, this has a very remote possibility as the guaranteed income products are generally for a very long period. Over such a long period it would be difficult to hold a very high interest rate for a fast developing economy like India.

The general thumb rule ia life insurance cover of 10 times the annual premium amount. Having said that this an important feature of the product and many companies have different feature. Some companies offer life insurance cover only during the premium paying term while some offer over the entire policy term period. This will be explicitly mentioned in the illustration copy and the Insurance Policy Copy.

Section 80C of the Income Tax Act, of 1961 allows a deduction of up to Rs. 1, 50,000 for premiums, and Section 10(10D) exempts payouts from tax.

1. Monthly income tax-free After paying the premiums, the policyholder will receive monthly income payouts that are tax-free for a definite period! This income is exempt from tax under the Income Tax Act of 1961. 

2. Guaranteed income doubled In most guaranteed income plans, the payout period is divided into two parts. In the first part, the assured income is paid monthly to the policyholder. Upon completion of the first half of the tenure, the monthly income is doubled. 

3. Payouts are immediate With a guaranteed income plan, you don't have to wait years for your premiums to be paid. Once your tenure is complete, you can begin receiving the assured sum as a monthly payout. 

4. Protected by guarantee The monthly income scheme comes with guaranteed death benefits. The nominee will have the option to receive the death benefits as a lump-sum amount if the insurer dies during the tenure of the plan. After the insurer's death, the nominee can also receive this income for ten years. 

5. Options for flexible payouts For emergencies, you can receive the payout after the maturation of the monthly income as a lump sum.

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