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Ways in which guaranteed payouts aid in meeting your family's needs

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November 27, 2020

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For most individuals, achieving and maintaining financial stability is an aspiration. However, it can be an uphill task to accumulate a substantial amount to meet your goals, especially in the initial days of earning. Understanding the need, insurance companies have come up with various innovative life insurance products such as the ones with guaranteed income benefits which help in building financial strength for the future. Guaranteed income plans are tailored to fit the requirements of investors who do not want to take risks that come with market linked returns. They offer the coverage of life insurance along with regular guaranteed payouts and maturity benefits.

This plan can be customised to suit everyone's needs. Salaried people who are from 18-60 years old are eligible for guaranteed income plans. The policy period extends from 10-30 years. The key difference between an endowment plan and a money-back plan is that in an endowment plan, you get the bonus and sum assured at the completion of the maturity term. But in a money-back plan, you receive a percentage of the sum assured at regular intervals of time.

Endowment plans provide both investment and insurance payout benefits. Guaranteed savings plans like endowment plans yield a fixed deposit with added riders that work as a safety cushion. Money-back plans offer both the benefit of insurance and redemption of money at regular intervals of time. According to IRDAI's 2017 official report, only 8% of Indians are assured after the death of the earning member in the family. Furthermore, only 75% of Indians are not insured by any life insurance as stated in the Handbook on Indian Insurance Statistics, 2016-17, by the IRDAI. Here are some of the benefits of having a Guaranteed Income Plan:

Income replacer

Insurance products provide guaranteed payouts at a fixed percentage of the sum assured selected by the insured and the insurer. The USP of these plans is that you can receive the income monthly, quarterly, half-yearly, or on a yearly basis. More importantly, they can help in securing you and your family financially especially after your retirement.

Budgeting one's corpus

Policies like endowment life insurance aids in a systematic way to combine savings with insurance. Utilizing your salary for future investments like your child's education or buying a house, these plans help in guaranteeing a fixed payout at the end of the maturity term. In case of your untimely death before the end of maturity period, the nominee will acquire the payout as a part of the death benefit. You can choose to benefit on a regular basis by opting for a regular interval of payouts of the corpus. This ensures a consistent flow of money for you and your family.

Risk-free guaranteed savings

Policies like money-back or endowment plans are tailor-made for risk-averse people who fear for the financial security of their future and thus come with many insurance payout benefits. They have low yet definite returns as long as fixed monthly payments are made. They yield a fixed payout ensuring financial stability. With a volatile economy, a need to find a stable insurance and investment policy.

Tax benefits

Life insurance also works as an instrument to save tax. Under Section 80(C) of the Income Tax Act, 1961, a tax deduction can be claimed on yearly payouts. Additionally, a tax exemption is provided once the maturity proceeds under Section 10(D) are received.

Meeting short-term and long-term goals

While choosing a life insurance policy, it is critical to note if it meets your requirements or not. The specifications of each person vary from one another differing in terms and goals. The Guaranteed Income Plans offers a host of benefits which include the choice to enjoy the policy benefits either in installments or in lump-sum. This allows you to accumulate money to achieve both short-term goals and long-term goals.

Conclusion

It is crucial to have a savings insurance plan that is utilized for meeting future goals. Guaranteed payouts provided by life insurance policies like endowment plans or money-back plans enable an easy, stable future.

With the HDFC Life Sanchay Plus, you don't have to worry about the fluctuating nature of the market. The Guaranteed Maturity options that offers assured  insurance payout benefits along with the choice of receiving your maturity claims either as regular payments or as a lump sum payout. You can also opt for a predetermined income till the age of 99 as a life long income option, or a long-term income option for a duration of 25-30 years.

ARN:ED/09/20/20581

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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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