Guaranteed Income Plans
A regular income flow cannot be taken for granted. Salary income ends with retirement, and even business or professional income canʼt be a certainty for life. This is why people focus on saving a portion of their income so that they maintain financial stability even after retirement or job loss. There are various ways you can invest to get an assured future income. All you need to do is explore this rainbow of opportunities. However, in this article, we stick to one such option. A tried and tested form of investment that has gained immense popularity for generations in India is the Guaranteed Income Plan.
Before we have a look at a few handpicked Guaranteed Income Plans, let us understand more about them, and why it makes sense to invest in one
The exact details of the guaranteed income plans may vary from product to product, but here is the gist behind it. You pay a premium for a fixed number of years and you get a guaranteed payback after a few years. For example, you may have to pay a premium for five years and start getting guaranteed income from the 10th till the 15th year. In case of death during the first five years, the insurer may provide a waiver of premium, while maintaining the assured maturity benefit. Besides, there is also a sum assured as a death benefit. So, against the premium payment for a specific number of years, you get a guaranteed pay-out in later years, while a sum remains assured as life cover. Notably, the amount invested grows at an agreed interest rate over the policy term
With this understanding of Guaranteed Income Plans, let us look at a few such plans that you can opt for today
It is promoted as a non-linked and non-participatory life insurance plan. Some of its key features are:
‣ A percentage of the sum assured accrues at a simple interest rate for each completed year, throughout the policy term
‣ The guaranteed addition is payable at the time of maturity or death, whichever is earlier, subject to the payment of all the premiums
‣ In case of surrender of the policy, the guaranteed addition during 5 and 19 years is 8% of the sum assured on maturity. In case it is during 20 to 40 years, it is 9%
‣ In the event of the death of the policyholder, the nominee will receive the sum assured and guaranteed additions, provided all premiums are paid
‣ The sum assured on death will be the higher of, (a) sum assured on maturity, (b) an absolute amount assured to be paid on death, (c) 105% of the total premium paid, or (d) 10 times of the annualized premium
Short for Guaranteed Income for Tomorrow (GIFT), ICICI Pru GIFT is protection and savings-oriented life insurance plan. In this product, you have three options
‣ Premium can be paid for 6, 7, 8, 10 or 12 years
‣ Regular income starts from the 2nd year onwards
‣ The policy term is a year more than the last premium paid year
‣ The income paid out from the second year till the end of the policy term is called guaranteed early income. The income received after the policy term is called guaranteed income
‣ The death benefit is the highest of (a) sum assured, (b) 105% of the premium paid till death, or (c) Annual guaranteed income X Death benefit factor for the plan
‣ In this plan, you can pay a premium for 5, 6, 7, 8, 10 or 12 years and receive guaranteed income for 5, 7 or 10 years. Death cover is applicable for the policy term, which is a premium payment period plus one year
‣ Guaranteed income can be opted as a monthly or yearly payout during the income period
‣ Entire guaranteed income can be taken as a lump sum in case of emergency
‣ In this plan, you pay a premium for a particular period and receive the guaranteed income as a lump-sum
‣ The premium payment term and the policy term can be selected from the options available
This non-participating, non-linked plan provides individual life cover and saving options.
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