A guaranteed income plan is a type of life insurance plan that offers the dual benefit of financial security & guaranteed income for a definite period. This plan includes a regular payment of premium on the completion of which, the policyholder is entitled to a guaranteed income stream. These payouts may be monthly, quarterly, yearly, or in a lump sum. This Savings Plan offers you a combined benefit of insurance & disciplined savings, providing financial security, mental peace, reliability, & financial stability to the policyholder & their family members. These plans best suit those investors who want to invest in a fund not linked to markets & need guaranteed returns.
Factors to be considered while buying a Guaranteed Income Plan
The following are the factors that should be considered while choosing a guaranteed income plan:
- Determine your Financial Goals
Determine your short-term & long-term financial goals to help you select an appropriate plan. It includes the calculation of the income that will be required to meet your desired lifestyle & relevant expenses, considering your present savings & future financial obligations. This will help you ascertain the policy’s tenure, premium payment frequency, & the required corpus. An evaluation of your financial objectives before finalising the plan helps achieve higher benefits.
- Check the Liquidity in your Policy
Though these plans do not offer partial withdrawals, they start providing income benefits once a specified period is completed. Additionally, they offer to terminate the plan if no more required once the premium has been paid for a year against the surrender value. Hence, check the liquidity your plan offers in case of unforeseen circumstances.
- Check the Rider Options
Assess if any additional rider is required to enhance the protection at an added cost, which can be evaluated by considering your needs from the plan.
- Research about the Insurance Provider
Check for the records of the insurance service provider company to review income benefits paid, claim settlement ratio, customer reviews, solvency ratio, claim settlement process, etc.
- Check for Additional Benefits like Terminal Benefits
Evaluate whether additional benefits, like terminal benefits, are included, which means the maturity benefit that is paid at the end of the policy tenure. These benefits are paid along with income benefits; hence should be evaluated & compared to make an informed decision.
- Check for Flexibility in Premium Payment Terms
As there are many options available to make payment of premium, like single, regular, limited, etc., you should select a plan that well aligns with your budget.
Features & Benefits of a Guaranteed Income Plan
Provided are the features & benefits of a Guaranteed Income Plan:
- Guaranteed Income
This plan offers a definite & guaranteed amount of income to the policyholder, irrespective of the market situation. This ensures financial stability, disciplined savings, mental peace, & a predictable income stream.
- Premium Payment Options
This plan offers a policyholder to decide between the premium payment options available, namely, single, regular, or limited. This helps in assessing the overall benefits, commitments, & cash flow.
- Payout Frequencies
These plans also allow you to choose the frequency of the payouts, i.e. regular, lump sum or specific. This means how often you want to receive the payouts, depending on your financial requirements.
- Survival Benefit
This plan offers two types of benefits, namely income & terminal. Income benefits start with the end of the premium payment tenure & last throughout the income tenure. &, the terminal benefit is paid in a lump sum at the time of maturity.
- Death Benefit
In case the policyholder passes away at any time during the tenure, their beneficiaries will receive death benefits. This payout will be either in the form of regular income or in a lump sum according to the policyholder’s preferences.
- Policy Continuity
This means some of the plans also offer continuity benefits, i.e. in case of the death of the policyholder, their beneficiaries will receive income benefits along with the death benefits already received.
- Tax Benefits
The insurance premium paid towards the plan is eligible for a tax deduction u/s 80C of the Income Tax Act, 1961. Additionally, the benefits received on the maturity will be exempt from tax u/s 10(10D) of the Income Tax Act, 1961.
- Surrender Value
Once all the premiums are paid in the initial year, after which, if it is realised that it cannot be continued further. In that case, you are allowed to terminate the plan & receive the surrender value.
- Riders for Enhanced Coverage
This plan also allows you to add critical riders to enhance your current plan at an added cost. By buying these riders, the plan offers an added protection according to your choices & preferences.
Steps to Buy a Guaranteed Income Plan Online
Provided are the steps to be followed to buy a guaranteed income plan online:
Step 1: Assess Your Financial Requirements
Initially, assess your financial requirements, i.e. whether a regular stream of income or financial security for family members, or whether both are required.
Step 2: Research & Compare Plans
Look for different available Saving Schemes & compare them to check whether the income offered will fulfil your desired future financial obligations or not.
Step 3: Evaluate Features & Benefits
Evaluate the benefits associated with different plans in terms of coverage & payouts offered. These plans offer the dual benefit of insurance & guaranteed income.
Step 4: Use Online Financial Tools
You can also use the online calculators available to assess whether the income offered will meet your future financial commitments.
Step 5: Make the Purchase
Fill out the details required, review the terms & conditions, & upload documents before making the payment online.
Conclusion A guaranteed income plan offers multiple features & benefits, providing disciplined savings, mental peace, & financial protection. This assures that the same standard of living will be maintained irrespective of the market scenario. This plan provides the combined benefit of insurance & income benefit, which ensures financial protection along with a regular income stream.
