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Understanding the difference between assured and guaranteed returns

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May 02, 2019
Investments serve as the basic tool for garnering returns for financial benefits over a period of time. As a responsible investor, it is pertinent for you to have a clear understanding of where your funds are being utilized and the end goals in sight. When it comes to choosing between various investment options, you must have a clear line of demarcation between the various plan features and options. Any investment decision must be duly accompanied with clear knowledge about the repercussions and the potential benefits that you expect to reap in the long run. These days, there are various insurance providers, who offer dual coverage options for meeting your investment needs as well as investment options. These providers offer plans that secure your fund growth for a fixed policy term and at the same time, offer coverage against any unforeseen circumstances in life. 

As part of the varied plan options, there are policies that offer assured benefits and then there are policies that offer guaranteed benefits. It is highly important for you to understand the basic difference between these two forms of returns to have a clear understanding of where to invest your funds for optimum returns. An assured return, in simple terms, is the one that is offered by an insurer or an investment plan provider wherein it is pre-decided that the benefits will be duly provided, irrespective of the market-performance of the fund option. What this means is simply that even if the fund-performance is not up to the mark or as per the expectations due to market-related volatility, yet the stated benefits will be duly given to the investor. However, an assured benefit is subject to the capital-resource health of the provider i.e. in case the provider declares bankruptcy or does not have sufficient funds, the investor is not entitled to the benefits.

In case of guaranteed returns, however, there is no such pre-existing condition and the provider is bound to pay the benefits to the investor, irrespective of the capital-resource base. This essentially means that a guaranteed, pre-decided and stated monetary benefit entitles the investor to receive the accrued benefits with a legally binding condition that does not change with the potentially fluctuating financial health of the provider. This means that if one hand, as an investor you must make sure that the insurance provider has the requisite financial backbone, at the same time you must ensure that you know exactly what is mentioned in the terms and conditions of the plan that you are choosing. Therefore, checking the CSR or Claim Settlement Ratio of an insurance provider before deciding to invest is imperative for you so that you can suit your particular needs and requirements.

HDFC Life offers HDFC Life Sanchay Plus- a non-linked and non-participating saving insurance plan that allows you to increase your fund-corpus through monetary growth and allows you to retain and multiply your savings fund for meeting your financial requirements and goals.
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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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