Guaranteed Income Plans : Personal finance experts believe that insurance should be seen as a protection tool and not as an investment option. However, there are many such policies in the market which promise guaranteed income. In such a situation, confusion arises in the minds of people and they do not understand whether life insurance should be seen as an insurance or as an investment. According to Dhirendra Mahavanshi, co-founder of Turtlemint, a person buys a life insurance policy so that he can face the ups and downs in life and does not face any kind of financial problem. However, some people want guaranteed income along with savings keeping in mind the future security through this. Such people prefer guaranteed income plans from life insurance companies.
In a guaranteed income plan, investors get the amount back in a lump sum or over a specified time period after the policy maturity. In this the schedule is fixed in advance. When the policyholder completes the term, he is paid a fixed amount as per the plan. This income can be paid annually, quarterly, half-yearly or monthly. The income amount in such plans is fixed.
Life Certificate: You can submit the certificate of being alive in these five ways, even if you are abroad, there will be no problem
Mahavanshi further said, “If a person needs guaranteed income on a regular basis, then a guaranteed income plan is a better option for him. If we talk about financial planning, then guaranteed income plan is better for people who are nearing retirement and who want guaranteed income after retirement. Apart from this, if a person wants additional income, then a guaranteed income plan can prove to be helpful for that too.
It is believed that insurance should not be seen as a means of income. Rather, insurance should be seen only as insurance. So is it okay to mix insurance and income under a guaranteed income plan? In response to this question, Mahavanshi said that there are guaranteed income plans in the market and people should know all their aspects before buying the plan. “If a person’s needs are met by guaranteed income plans, then they can invest in such schemes.
Who should buy a Guaranteed Income Plan?
Mahavanshi said that there is a difference in the needs of different people. “Whether guaranteed income plans are a good fit for an individual or not depends on his needs, risk appetite and financial goals.” Guaranteed Income Plan can prove to be better for those individuals:
- Those who want to invest for medium or long term.
- Want to keep a guaranteed fund for future security.
- Want to avail insurance coverage on your investments.
- Want a guaranteed income for your needs.
Annuity Deposit Scheme: If you want money every month on FD, then deposit lump sum amount in this scheme of SBI, interest will be added to monthly income
Advantages of Guaranteed Income Plan
- There are many benefits of guaranteed income plans. Its first advantage is that it has guaranteed income. In this there is no risk of market volatility, that is, you get a fixed amount of income even if there is a market volatility or recession. Helpful for investors who do not want to take market risk.
- Guaranteed income plans are a source of additional income. If you need extra income to meet your expenses or if you want regular income after a certain age then this can prove to be a better option for you.
- The proceeds can be used to make partial or full payment of policy premiums, making premium payment easy and affordable.
- If the income is paid after death, the plan ensures that your family is financially secure even in your absence.
- The income you receive along with the premiums paid is tax-free subject to certain terms and conditions.
Disadvantages of Guaranteed Income Plan
According to Mahavanshi, one of the disadvantages of a guaranteed income plan is that the overall return of the product is usually lower as compared to other similar policies. This happens because in this policy, along with income, insurance is also attached. Therefore, this plan should be seen with insurance in addition to income.
(Article : Rajeev Kumar)