The 123s of Guaranteed Income Plans for First-Time Buyers

The new age generation is young, ambitious and eager to be independent by stepping into the world of finances. However, for many, entering this field for the first time may feel like learning to ride a bicycle – exciting yet overwhelming, balancing the desire to fulfil their aspirations, secure their loved ones financially and avoid financial missteps. At this critical juncture, finding the right starting point is essential. While there are many financial instruments, the most important one is having adequate life insurance coverage which serves as a stable launchpad, much like training wheels on a bicycle.

To start with, a guaranteed income life insurance plan may be an ideal choice of product in your financial planning, as it provides both life insurance and savings, which guarantees reliable income for a chosen period and builds a solid foundation for stability, offering the liberty to pursue your dreams and aspirations with confidence.

Under these plans an individual can choose a premium amount & frequency, premium payment term, policy term, pay-out period & income frequency and guaranteed income options. Through these flexibilities, they receive life insurance coverage during the policy term along with the guaranteed benefits for their family.

Key Benefits:

• I – Income: Guaranteed Income Insurance Plans provide reliable income, ideal for those concerned about market swings or outliving their savings. These products provide two options: Level Guaranteed Income, which offers fixed pay-outs, and Increasing Guaranteed Income, which grows by a fixed percentage, such as 5% simple interest annually. It gives individuals the confidence that their income can grow each year and counter the rising cost of inflation.

• N- Need-based: Life changes, and so does the need for a plan that adapts to those changes. Through such plans, one can pick the pay-out period and income frequency and can change it if the situation changes. They also get to choose pay-out period for a long term (such as ranging from 15, 20, 25 or 30 years) based on their future needs. The guaranteed income can be yearly, half-yearly, quarterly, or monthly.

• C – Clear Tax Advantages: As per prevailing norms under Income Tax Act, 1961 which are subject to change from time to time

• O – Officially Safe: Insurers are regulated by insurance authority to ensure they have reserves to meet their promises.

• M – Maturity Benefits: During the pay-out period, an individual is entitled to get income in part payments, plus returns on premiums paid, which gives them peace of mind that their future is secure. Some plans offer returns of up to 110% of premiums paid at the end of the pay-out period.

• E – Ensuring Your Loved Ones’ Future: It is a life insurance plan that helps in protecting the financial future of loved ones and provide a safety net in case of any unfortunate life event. Some plans come with add-on benefits, like an accident benefit rider, which is an optional feature that offers extra financial support in case of demise or disability due to an accident.

Buying such plans is easy, which starts from assessing one’s finances and savings, followed by setting income goals and timelines. It is important to also review the policy details carefully to ensure it provides optimal coverage and addresses insurance needs. In conclusion, a Guaranteed income life insurance plan offers a stable foundation, blending life insurance with guaranteed returns, ensuring both protection and growth for a secure future.

Disclaimer: The Views are Personal and not a part of the Outlook Money Editorial Feature