Strategic investments are very important to cushion individuals from increasing inflation rates and poor market conditions. Investments are subject to market risk. Risk-averse people may not like to invest in stock markets. This is where the importance of Guaranteed Investment Plans comes in place. Individuals can benefit from high returns through guaranteed return investment plans. Guaranteed Return Investment Plans provide predictable income streams. It acts as both insurance benefits and investment benefits. One can also get life insurance benefits through this guaranteed return investment plan.
How does the guaranteed investment plan work?
- The premium paid for the Guaranteed investment plan is divided into two parts, One is directed toward investment while the other is kept as a life insurance premium.
- The premium set aside for investment purposes generates returns, which increases the overall return of the investment plan. The returns are also not affected by the market conditions and, hence less risky compared to the returns of the stock market.
- In case the policyholder dies, the death benefit is provided from the life insurance aspect of the guaranteed investment plan.
Benefits of Guaranteed Investment Plan
Portfolio diversification
Guaranteed Investment Plan provides a kind of investment diversification whereby both insurance requirements and investment requirements of an individual are met. This balances risks and returns for the individuals.
Flexible payment terms
Guaranteed Investment plans allow people to pay premiums on a monthly, quarterly, annual, or one-time basis. It is thus upon the individuals and their choices to determine the correct time scale to pay the premiums.
Tax benefits
Section 80C of the Income Tax Act exempts the premiums paid for a Guaranteed Investment Plan from taxes. Additionally, Section 10(D) exempts the income received under it from taxes. As a result, there is no need to pay additional taxes on the income and premiums received.
Good financial security
The fact that a guaranteed investment plan offers set returns is perhaps its biggest advantage. Because you will know exactly what you will get after the policy term, this aids in financial planning. Furthermore, for risk-averse investors looking for steady returns, guaranteed return plans offer secure investments because their rewards are unaffected by market swings.
Guaranteed Return Investment Plans are best for people who want high returns but low risk with protection for health and well-being. It works as an insurance, savings, and investment. These kinds of investments provide better returns if started at the early stages of life. One can contact their insurance agent or nearby bank to know more about Guaranteed Investment Plans. There are different kinds of plans available and the best one will vary person to person. It is better to detail personal requirements to the agent to get the right product. However, note that there is a certain age limit up to which these Guaranteed Investment Plans can be taken. There are also some conditions that an individual has to satisfy to be eligible for these plans.