When it comes to seeking a happy life, we often have a wish list ready. While all our aspirations might not come with a guarantee of fulfillment, some could certainly be guaranteed through better financial planning.
There are various investment avenues available today that can help you yield high returns but not all may offer financial protection and suit your income levels, riskappetite, and various life-stage goals. For instance, given the market volatility and the risk associated with it, investing in stocks may not work well for everyone. Most Indians prefer receiving fixed returns on their savings, which explains the popularity of savings instruments like bank FDs, Public Provident Fund, and National Savings Scheme. However, these instruments come with downsides such as fluctuating interest rates, taxation on returns, and cap on the maximum amount that can be invested. Unlike insurance products, they don’t have a life cover attached to them.
High Guarantee, Low Risk
Guaranteed life insurance plans offer guaranteed returns on savings and are not subject to market volatility or changing interest rates. The element of fixed and guaranteed returns makes them an appealing proposition, especially for individuals who have a low risk appetite.
Insurers, over the years, have made their guaranteed products more innovative with the option to customise the payout structure according to customer’s financial goals. The payout structure varies from one plan to another. While some plans offer a regular flow of income at predetermined intervals, others make a lump sum payout at the time of maturity.
Exide Life Guaranteed Wealth Plus offers up to 350 per cent guaranteed returns and comes with two variant options - income and lump sum. Under the income, you can pay premiums for six years and avail guaranteed fixed income payout for 30 years. On maturity, you also receive 100 per cent of the premiums paid. This is a lucrative option if you want to provision for an additional stream of income to meet future goals. Under the ‘lump sum’ variant, after paying premiums for six years, you can avail of the maturity benefit as a lump sum at the end of the policy term (12 or 15 years). The product offers continuous life cover throughout the income payout period further strengthening the protection-cum-returns proposition. It offers an Internal Rate of Return (IRR) of up to 6.31 per cent.
Additional Benefits
These products also cushion your savings against market volatility. Premiums paid towards insurance policies are eligible for tax deduction under Section 80C of the Income Tax Act. Plans such as the Exide Life Guaranteed Wealth Plus also offer long-term tax-free returns under Section 10(10D) of the Income Tax Act.
A host of guaranteed savings products offer the choice of opting for riders to enhance protection. Though riders come at a small added cost, they help fill the gap in overall protection through higher coverage.
In times when the world is masked in an air of uncertainty, individuals are switching to guaranteed products. If you are looking for fixed returns and want to steer-clear of market volatility, guaranteed savings plans are just the right fit. New-age guaranteed products like the Exide Life Guaranteed Wealth Plus are an attractive proposition that competes with some of the most popular savings instruments in offering the best-in-class returns and continuous life cover.
The author is Director - Strategy, Exide Life Insurance