The festive season is finally upon us. Many people believe that investing during this period, especially on the auspicious occasion of Dhanteras, is known to bring luck and prosperity. And the most obvious choice, every year, for most people, is gold. But instead of going the conventional route this Dhanteras, consider investing in something more meaningful to secure your future.

Among the many investment opportunities available in India, Guaranteed Income Plans are a popular and wise option to consider this festive season. These hybrid plans combine investment and insurance and give you an opportunity to grow your wealth in a safe and profitable way. These plans also offer tax deductions on premiums under Section 80(C) of the Income Tax Act, as well as tax exemptions on the maturity amount through Section 10(10D).

The appeal of Guaranteed Income Plans

Guaranteed Income Plans are carefully designed to provide investors with stability and consistent returns in the face of market volatility. These plans offer a guaranteed return on investment in exchange for a fixed premium for a specified period of time. Notably, the premium need not be a lump sum and can be paid over a specific number of years and customers also have a choice to pay the premium on a monthly/annual basis.

Investors can also customise the payout structure to suit their preferences, whether it be a lump sum, short-term, long-term, or income disbursement on specific dates. Some plans even include an option for accrual income, allowing earned income to accumulate with added interest.

Also Read: Buying silver this Dhanteras? Don’t make these 10 mistakes!

Unwavering tax-free returns

These plans are impervious to market performance and bonus components, making them free from ambiguity and ensuring returns in accordance with the pre-defined rate. Some of these plans promise a fixed return of up to 7.5%. These returns are tax-free under Section 10(10D) of the Income Tax Act, 1961, if your annual investment is less than Rs 5 lakh.

Ideal for retirement planning

These plans are ideal for people with no or irregular income, which make them the perfect investment tool for retirement planning. Here’s a simple example to illustrate its benefits. Suppose you invest Rs 20,000 per month for ten years in a Guaranteed Income Plan, followed by a two-year gap. Starting from the 13th year, you receive Rs 23,000 per month for 30 years. After investing Rs 24 lakh during the term, you receive all premiums paid back on maturity and are also able to accumulate a total of Rs 1.09 crore over three decades, which amounts to 4.5 times your initial investment.

Accessibility and flexibility

Guaranteed Income Plans are easily available to people between the ages of 18 and 60, with policy terms ranging from 5 to 30 years. It provides life insurance protection and ensures your family’s financial security in the event of an emergency. One can even choose optional add-ons for enhanced coverage like waiver of premium benefit.

Some new-age plans also offer unique advantages and discounts like existing customer discount and enhanced maturity benefits for female policyholders. Moreover, few guaranteed return plans offer the flexibility to surrender the policy within the initial five years provided all due premiums have been paid till a specific time and receive your initial investment.

Time is of the essence

The best time to invest in these plans is right now. As India progresses towards becoming a developed nation, returns across various asset classes are gradually diminishing. Consequently, the attractive returns guaranteed by these plans today may not be available in the near future. By purchasing a Guaranteed Income Plan, you can lock in your returns for 10-20 years, a unique advantage compared to other fixed deposit instruments.

In the midst of the festive celebrations, make a sound financial decision and invest in a Guaranteed Income Plan for a prosperous future. Don’t forget to compare various plans online and choose the one that suits you best.

(By Vivek Jain, Head-Investment, Policybazaar.com)

Disclaimer: This is the author’s personal opinion. Readers are advised to consult their financial planner before making any investment.