How does a guaranteed income plan work?

In today’s day and age, maintaining financial stability has become a priority which is very challenging for most individuals. The current pandemic has also led to higher awareness as well as averseness towards risk. With rising health and life risks along with a volatile economy, individuals want to secure their life and money, both. In times as such life insurance serves the purpose of safeguarding one’s financial needs when one is not around.

Protection is the bedrock of financial planning. we must first factor in the risk appetite and savings goal, then we can identify life goals. Once the product is identified, we should commit to it in a disciplined manner and remain committed to it throughout its term – only then can the intended benefit and returns from the product be achieved.

Understanding the need of every individual to be financially stable, has in turn created an innovation with many insurance companies to develop Guaranteed Income Plans. This innovative insurance product is a traditional and a very important plan that comes with bonus facility, where the insurance holders are not required to worry about the ups and downs of market; rather they get to enjoy the maximized returns. Its not just a guaranteed income but it works like a savings plan, a plan that assures a certain income. This is a life insurance plan which offers pure protection and assured returns. Guaranteed issue life insurance is specially for those people who need life insurance but don’t have any other options. Perhaps they want to provide money for heirs or final expenses. Or perhaps they want to provide a small legacy for children or grandchildren

Guaranteed Income is exactly how it sounds. The plan assures income yearly or half-yearly or quarterly or monthly. So, it is specifically designed to cater to the requirements of the risk-averse investors and offers them the regular income which is paid at a pre-defined percentage (selected by insured and insurer) of Sum Assured. The sum assured/monthly income that you stand to receive if you survive till the maturity of the policy term is guaranteed and in case of the death of the policy holder, the lump sum assured is guaranteed to the beneficiaries.

One can choose to pay premiums for 5, 6 or 10 years. Depending on the needs of an individual, such as supplementary future income requirements, an individual can opt for the Income Benefit option. If one wants to accrue savings for specific goals, the lump sum option can be opted for. The guaranteed income plan is usually an age group from 18 to 65 years. With this policy, you can avail tax benefits, on the premiums paid and benefits received. Most insurance companies do not require a medical underwriting to subscribe to this plan. These policies are generally geared towards the healthy or those with a pre-existing condition. To better understand this plan, assume there's a guaranteed plan for a term of 10 years but with a premium paying-term of 8 years. The plan offers guaranteed pay-out which is a certain percent of premium every year after maturity for 8 years. It means premium is to be paid once for 8 years but life cover will be provided for 10 years.

Guaranteed Income Insurance Plan is like a comprehensive life insurance plan at a very affordable cost, that aims to ensure that the visions you desired for your family in your lifetime, doesn't remain unfulfilled by the financial void which might get created due to an untoward event. Nothing can give you peace of mind quite like certainty, but unfortunately there aren’t many things in life with that kind of guarantee. Luckily, Guaranteed income Life Insurance is one of those few certain things you can count on.

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Created on May 18th 2022 01:42. Viewed 145 times.

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