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What are Guaranteed Return Plans?

Published On Mar 22, 2023 10:00 AM By InsuranceDekho

The everyday expenses in every field are now witnessing a sharp increase. Owing to this rise, it is very important to do financial planning in advance which will help you in securing the future against uncertainties. Nowadays, most people prefer investing in different financial instruments such as ULIPs, investment, life insurance, health insurance, and many more. However, when picking any financial instrument, it is important to buy a plan that offers guaranteed returns despite the interest rate being comparatively higher. So, let us understand what exactly is a guaranteed return plan. 

What are guaranteed return plans

What is a Guaranteed Return Plan?

A Guaranteed Return Plan as the name suggests offers guaranteed returns to the policyholders. With a guaranteed return plan, policyholders can also enjoy life coverage benefits. This type of insurance product is different from other plans as, unlike other plans that offer life insurance coverage, a guaranteed return plan not just provides life insurance coverage in case of unfortunate demise but also provides a maturity benefit once the guaranteed plan matures. The best part about investing in a guaranteed return plan is you can get stable returns/income in the long run. Some of the other benefits of a Guaranteed Return Plan are as follows:

  • Tax Benefits: By investing in a guaranteed return plan, you can also get tax benefits. The tax benefit is offered on the premium that is paid towards guaranteed return plans as specified under section 80C of the Income Tax Act of 1961. Also, note that the maturity benefit received out of a Guaranteed Return Plan is also tax-exempted as per section 10(10D) of the Income Tax Act.
  • Less Affected by Market Risks: Investing in a Guaranteed Return Plan is a safe option as such a plan is affected less by market fluctuations. Thus, investing in a guaranteed return plan is safer as compared to other options like mutual funds, ULIPs, and others. Overall, it can be said that a guaranteed return plan is a low-risk plan. It is also important to note that as the risks associated with this plan are lower, so are the returns that you get out of a guaranteed return plan. 
  • Offers Financial Protection to Family Members: With a Guaranteed Return Plan, you can stay assured of getting financial protection not just for yourself but your family members as well. Thus, you can secure the future of your loved ones in your absence with a Guaranteed Return Plan.
  • Flexibility Returns: With a Guaranteed Return Plan, you can enjoy flexibility when it comes to payouts. Depending on your convenience, you can either get returns on a monthly basis or even receive lump sum payments on an annual basis. 
  • Better Option over FDs: As compared to bank fixed deposits (FDs), Guaranteed Return Plans offer a greater appreciation in the money invested. Moreover, while the maximum lock-in period in Bank Fixed Deposits is 10 years, in a Guaranteed Return Plan, policyholders can lock their money for a period of more than 45 years. Thus, greater returns can be obtained out of Guaranteed Return Plans in the long run. 

How Does Guaranteed Return Plan Function?

A Guaranteed Return Plan like all other plans depends on the sum assured chosen by the policyholder. Based on the sum assured, the insurer sets the premium for guaranteed return plans. Policyholders are supposed to pay the premium for these plans on a regular basis to keep their guaranteed plan active. Timely payment of premiums will also help dependants of policyholders in getting financial protection if the policyholder faces an unfortunate demise. Moreover, finally, a maturity benefit is also offered as a part of the premium towards guaranteed return plans.

Take Away

Thus, with a Guaranteed Return Plan, you can get stable returns in the long run that will also help you in securing your future. Moreover, it also offers additional benefits such as tax benefits, flexible payout options, low-risk investment options, and many more.

Also Read: 

Income Plan vs. ULIP - Major Differences You Should Know


This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

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