How Guaranteed Insurance Plans Help You Mitigate Financial Risks?

By Pragnesh Patel

In life's rapidly shifting landscape, financial security is no longer a luxury but now one essential part of living. No one can anticipate what lies around the next corner — a sudden illness, the loss of a job, or anything else. While no single plan guarantees complete financial well-being, having the right insurance products is crucial.

It's guaranteed insurance that steps in here, allowing you to reduce risks concerning your assets and have a better, more stable future for yourself and your family.

What Do Guaranteed Insurance Plans Include?

These special life insurance policies – guaranteed insurance plans are meant for those who seek returns along with life protection. These plans are designed to bring together the best of both worlds, offering financial protection for your family while also acting as a secure pathway to achieving those financial goals. Whereas a traditional insurance policy’s benefit may increase or decrease based on market performance, a guaranteed insurance plan guarantees fixed benefits — a valuable feature for risk-averse individuals during uncertain times.

Why Consider a Guaranteed Insurance Plan?

Peace of mind is one of the main reasons individuals go for these plans. Now, let’s see some of the key benefits:

Assured Returns

When most investments are at risk, guaranteed insurance plans are a beacon of hope. They pay out fixed amounts, predictably, at regular time periods or at maturity, so you’re never blindsided. Whether you’re saving for your child’s education or prepping for your retirement, these plans keep your goals secure regardless of market fluctuations.

Life Coverage

Life is uncertain, but your family’s future doesn’t have to be. These plans provide life cover,  along with guaranteed returns, leaving your dear ones financially stable in case of your unfortunate demise. These policies serve two purposes: providing life insurance and offering guaranteed returns, thus making them an effective tool for long-term planning.

Tax Benefits

Who wouldn’t want to save on taxes? Guaranteed insurance plans have provisions for premiums paid to be eligible for tax deductions under Section 80C of the Income Tax Act and maturity benefits received to be tax-free under Section 10(10D).  However, it is important to note that tax exemption under Section 10(10D) is conditional; if the annual premium exceeds 10% of the sum assured, the maturity proceeds may not be tax-exempt. This provides a double benefit for your financial savings.

Customisable Options

No financial needs are alike, and guaranteed insurance products cater to that uniqueness. Most insurers allow flexibility in policy terms, frequency of premium payments, and benefit payouts to meet your specific needs.

No Market Dependency

Guaranteed Insurance Plans are not linked to the stock market, unlike ULIPs (Unit-Linked Insurance Plans) or Mutual Funds. They are an ideal fit for risk-averse people who prefer surety over speculation.  However, they may provide lower returns compared to market-linked options, making them less suitable for aggressive wealthbuilding goals.

How Do They Mitigate Financial Risks?

Unpredictability in a variety of forms can often lead to personal financial risk. A guaranteed insurance plan gives a sense of security in terms of both payouts and life protection. When confronting a financial crisis, guaranteed insurance gives you a cushion. However, these plans are not intended for short-term liquidity needs and may not provide immediate access to funds in emergencies unless paired with riders. For example, if a medical emergency occurs, then the assured payouts can serve as a buffer to tide you over. You will not have to borrow money at high interest rates or tap into your savings fund.

Peace of Mind Is Expensive, But Worth the Investment

A guaranteed insurance plan not only protects your financial state here and now but will also be a good investment for the future. These plans can fit seamlessly with your life stage and plans, whether you are setting out into your new career, starting a family, or nearing the end of your working life.

The aim is not to accumulate wealth but to become financially secure and to have peace of mind. Yet with guaranteed insurance plans, you do not only purchase insurance coverage; you buy security, predictability, and carefree days ahead.