Guaranteed insurance plans suit those who are ultra-conservative and are not willing to take any risk with their capital.
The recent volatility in the stock market could have shaken the confidence of several investors. For those who are looking for a guaranteed return on their investments, there are guaranteed plans of life insurance companies to look at. The returns may be lower in guaranteed plans but policyholders are assured of a return irrespective of stock market movements.
IDBI Federal Life Insurance has recently launched IDBI Federal Life Insurance Guaranteed Wealth Plan, that offers guaranteed payouts for seven consecutive years or a lumpsum amount at maturity. The plan is not a unit-linked insurance plan and neither does it carry any bonuses. Instead of a bonus, it ensures that there is a guaranteed return in the policy.
One of the unique features of the plan is that the payouts remain guaranteed until the 14th year, irrespective of the volatility in the markets and interest rates. You pay premiums for the short and defined duration of the first 7 years of the policy while the life insurance cover will be there for 14 years. The benefits of this plan are guaranteed and will be paid out to you irrespective of market volatility. This plan can be used to actualise life’s milestones like children’s education and/or marriage, going for a holiday, renovation of a house, buying your dream car etc.
IDBI Federal Guaranteed Wealth Plan offers life cover for 14 years, and the policyholder would either get guaranteed income for the next seven consecutive years or a lump sum payout at maturity, after paying insurance premiums during the first seven years. The guaranteed annual payouts are a percentage of the annualized premium and depend on the age at entry of the insured and the premium amount.
This plan offers you two options i.e. Lump sum benefit and Regular Income benefit.
Under the Lump-sum benefit option, the policyholder is required to pay the premium only for the first 7 years. The plan then pays out the guaranteed sum assured at maturity, i.e. the end of the 14th policy year. The guaranteed sum assured on maturity is expressed as a percentage of the total annualized premiums payable. The insured stays covered for life for the entire term of 14 years.
Under the Regular Income Benefit option, the policyholder is required to pay a premium only for the first 7 years. The plan then pays out guaranteed annual payouts (GAP) starting from the end of 8th year till the end of the policy term. The insured stays covered for life for the entire term of 14 years. There is no guaranteed sum assured payable on maturity. The last GAP will be paid on survival to maturity.
Guaranteed insurance plans suit those who are ultra-conservative and are not willing to take any risk with their capital. The post-inflation returns in these plans are low and hence are not suitable for creation of wealth but suit preservation of money.