- Guaranteed life insurance plans give the assurance of fixed returns after a certain period of time
- They offer guaranteed pay-outs which can act as a steady income with zero volatility
- The proceeds from these plans are tax-free unlike the returns that come from a bank fixed deposit
Life insurance plans are meant to protect one’s dependents from any financial liabilities, in the unfortunate event of the insured passing away. But, there are also life insurance plans available that give dual benefits of life insurance protection and guaranteed returns. These plans are known as guaranteed life insurance plans and they are of two types: participatory and non-participatory.
Of these, the non-participatory plans, differ from participatory plans in the sense that they give out guaranteed benefits instead of a bonus – which may differ on account of the profits made by insurers. The guaranteed benefits act as an attractive proposition for those who wish to get assured returns on their savings. Let us understand these more in detail.
Returns
In most of these plans, all the insured has to do is pay the premium for a certain number of years and get guaranteed pay-outs for the remainder of the policy term. The life insurance coverage, however, is there for the full duration of the policy term.
It is to be noted here that the guaranteed benefits accrue only on maturity and most of these plans offer a death benefit that is the highest option amongst the sum assured, 105% of the premiums paid or 10 times the annual premium.
Pay-out Structure
Many of these plans give the same rate of return but vary when it comes to disbursal of pay-outs. There are some plans that have a structure that is similar to that of a money-back plan, while others just pay a lump sum at the maturity date of the policy.
The money-back plans, also called ‘secondary income’ or ‘regular income’ plans, are ideal for meeting future financial requirements of a family. These can be anything from taking care of children’s education to their marriage expenses.
Tax Benefits
The pay-outs from these life insurance policies are tax-free and the insured will get the full amount on maturity.
Guaranteed life insurance plans make sense for those investors who prefer stability over volatility and are desirous of seeing a fixed amount being credited to their bank accounts after a certain amount of time. Exide Life Insurance offers such plans, to know more, feel free to visit our website.
