A guaranteed return plan is often regarded as the best option for those who are risk-averse by nature and want fixed returns to meet future goals. It also serves those who are looking for life coverage with their investment plans along with good tax benefits. However, what goes into choosing the best guaranteed return investment plan? Here are some aspects that you should keep in mind when you compare multiple life insurers or financial institutions offering these plans.
Selecting the Best Guaranteed Return Investment Plan- Some Tips
Here are the factors that you should remember while filtering the best guaranteed return investment plan that fits your needs.
- Return Rates- Always compare the return rates offered by multiple guaranteed return plans before deciding. Instead of choosing a plan solely based on the highest return rate, consider a balance between returns, tenure, liquidity, and tax implications to ensure it aligns with your financial needs.
- Tenure of Investment- You should ideally be able to invest over a longer tenure or a duration that is suitable for your financial goals. Check whether a particular plan offers a suitable tenure or not.
- Goal-Based Investing- You may have specific financial goals for which you want to choose the best guaranteed return investment. Check whether the plan modalities are in sync with the payout structure that matches the returns/income you need at various stages in your life. Some plans offer lump sum benefits, while others provide periodic payouts, so choose accordingly.
- Reputation of the Insurer- The reputation of the financial institution or life insurance company is important when choosing any such plan. Rather than relying solely on customer reviews and testimonials, check the claim settlement ratio (CSR), solvency ratio, and IRDAI ratings to assess the provider’s reliability.
- Life Coverage Aspects- See whether the plan offers life coverage for the investment tenure and whether you can customise it as per your needs. However, these plans typically provide limited life cover (usually 10 times the annual premium) and should not be seen as a replacement for a dedicated term insurance policy.
- Flexibility- Does the plan allow you to flexibly customise your premium payment frequency and the payouts that you will get? Check this carefully before proceeding. Not all plans allow flexible payout structures—some provide only lump sum benefits, while others offer annuities or structured payouts. Ensure the plan meets your financial goals. The plan should be able to offer you the same.
- Terms & Conditions- Check each plan’s terms and conditions carefully before finalising one that fits your needs. Look out for charges and hidden costs, along with other clauses that you may not understand. Take professional guidance if required to understand the same.
- Riders- Some plans allow you to incorporate riders like waiver of premium, accidental disability, or death benefits to widen your overall coverage. However, not all guaranteed return plans offer extensive rider options, so verify availability before choosing a plan.
The above-mentioned parameters will help you narrow down the best guaranteed return investment plan that helps you achieve your future goals, secure your family with life coverage, get tax benefits, and steer clear of market risks. However, tax benefits on guaranteed return plans depend on the premium amount—if the annual premium exceeds 5 lakh, the maturity proceeds may be taxable under income tax laws. Once done, complete the documentation and other formalities and add this plan to your portfolio. If chosen smartly, it can prove to be a secure investment option, though returns may not always outpace inflation.
