Chennai: Guaranteed return plans are one of the most trusted and affordable savings-insurance products available in the market today.
These plans suit conservative investors who do not want any volatility in returns and want a certain fixed amount on maturity.
Conservative investors who wish to avail tax-free returns and want to avail tax benefits on the premiums invested must stick to these plans for the best returns.
Considering the market conditions and the high volatility that we all have been witnessing since the last year, – with the onset of Covid-19 pandemic – maintaining financial stability has become the utmost priority.
Moreover, with most traditional investment products – bank fixed deposits mostly – losing interest of the investors due to drastic fall in the rate of interest, it is time to park your money in products that guaranteed returns.
Vivek Jain, head – investment, Policy Bazaar, says one of the most prominent reasons why guaranteed return products have created a niche for themselves in the savings-cum-protection products category is that these plans not just guarantee returns for 5 or 10 years but up to a maximum of 40 – 45 years – rightly catering to the reinvestment risk.
Non-participatory plans, instead of declaring bonus that may vary depending on the profits that insurers make offer a guaranteed return in lieu of a bonus that is much higher than the interest offered on most bank fixed deposits. As per market reports, the maximum returns that, most banks are offering for a 5-year fixed deposit is between 5 per cent – 5.5 per cent. However, the rate of returns on guaranteed returns products is as high as 6 per cent.
While some may offer returns in form of monthly instalments, there are also plans available in the market wherein you can choose to avail the payout options as annual income.