FDs vs Guaranteed Return Plans: Why HNIs Are Rebalancing Portfolios Toward Certainty

For decades, fixed deposits had a loyal fan base in India households. They were simple, safe, and dependable. While FDs remain a familiar choice, individuals with higher spending power like to diversify their options. The shift isn't just about seeking higher numbers; it's about a fundamental rebalancing toward predictability in an increasingly volatile world.

As we move through 2026, India’s high-net-worth investors are now leaning towards guaranteed return plans. There are benefits unique to these plans that give them an edge over traditional instruments.

Pavit Laul, Head of Investment, Policybazaar.com, says, “For an HNI investor in the highest tax bracket, the drop in the rate of return hits even harder. This is because FD interest is taxable; meaning a 6 per cent FD can easily shrink to a post-tax return of around 4 to 4.5 per cent. Over 10, 20, or 30 years, the gap widens.”

What's Appealing About Guaranteed Return Plans

According to financial experts, a key differentiator for guaranteed return plans (GRPs) is their tax treatment. Maturity proceeds from GRPs are tax-free under Section 10(10D) of the Income Tax Act, provided the annual premium does not exceed Rs 5 lakh. Moreover, GRPs also get investors a tax rebate under Section 80C.

Laul points out that while FDs are subject to the renewal risk, where rates might drop by the time the investor’s deposit matures, GRPs offer a rare financial superpower - The Lock-In. GRPs are currently offering up to 6.9 per cent tax-free returns. Unlike FDs, which typically cap at 10 years, GRPs allow investors to lock in these rates for up to 45 years.

Flexibility That Moves The Needle

When HNIs invest money, they also tend to value flexibility, and GRPs have evolved to offer several options. HNIs have the flexibility to choose their premium and tenure. “GRPs also provide the option to choose how investors want to receive the maturity amount: lump sum, regular income (monthly or annual income) for 5-30 years or a mix of both,” says Laul.

For example, investors can opt for a lump sum if they need to meet an expense like a college fee. On the other hand, they can opt for a regular income stream if they want to have a steady post-retirement flow of funds.

Life Cover: An Underrated Feature For HNIs

While FDs don’t come with a life cover, guaranteed return plans do.

Insurance has become a necessity for most people today. Life cover offers that added layer of safety in case the earning member is no longer around. When combined with features such as stability, tax efficiency, and predictable returns, guaranteed return plans can help complete a well-rounded financial strategy, offering both protection and peace of mind.