Are Guaranteed Income Life Insurance Plans Worth it?
TABLE OF CONTENTS
If you are the sole earning member in your family, or even if you and your spouse both contribute to the household income, you no doubt have one or more people who are financially dependent on you. Alternatively, you may not be an earning member in your household, but you may contribute to the family in other ways, like taking care of the kids and managing the home. These contributions, although not financial in nature, are crucial to keep the household running.
So, no matter in what way you help run your family, it is true that in case something untoward were to happen to you, the surviving members of your household may find it financially difficult. If you are an earning member, the loss of income can be financially stressful for them. Alternatively, if your contributions are non-financial, your family may have to spend additional money to hire assistance in your absence.
Life insurance can help you and your loved ones be better prepared for such unexpected developments.
What is life insurance?
Life insurance is a contract between an insurance provider and the policyholder, where the insurance provider offers a life cover to the policyholder. A life cover is a financial benefit that covers the life of an individual, for a specified period of time called the policy term. This policy term can be 10, 15, 20 or even 30 years or more.
During the policy term, if the policyholder passes away, the insurance provider pays out the sum assured under the plan to the nominee. This is how a basic life cover works. A term insurance plan, which is the simplest kind of life insurance, is a pure life cover that offers only death benefits.
That said, there are other kinds of life insurance plans that offer different types of benefits over and above the basic life cover, like savings, investment or income. One such type of life insurance plan is the guaranteed1 income plan.
What is a guaranteed1 income plan?
A guaranteed1 income plan is a kind of life insurance plan. It offers a life cover combined with the benefit of guaranteed1 income to the policyholder. They are categorised as savings or endowment plans, and the income or the payouts that are due under these plans are assured or guaranteed1.
The ABSLI Assured Income Plus plan is one of the many guaranteed1 income plans you can buy online these days. As per this plan, you only need to pay your premiums for a short duration, and you can enjoy guaranteed1 income payouts over the long term. Here is a closer look at how the premium payment term and the income payout period compare.
Check out the details in the table below:
Premium Payment Term (PPT)
Benefit Payout Period
20, 25 or 30 years
20, 25 or 30 years
20 or 25 years
So, with a guaranteed1 income plan, you can set up a steady stream of supplementary or additional income. If you plan your purchase right, you may even be able to use this income benefit as a replacement for your primary income when you retire.
Are guaranteed1 income life insurance plans worth it?
Now that you know what guaranteed1 income plans are, you may be wondering if this is the right kind of insurance cover for your needs. To understand if these guaranteed1 income plans are worth it, let us weigh out the pros and cons of this kind of life insurance.
4 reasons a guaranteed1 income life insurance plan is worth it
The first and foremost benefit of a guaranteed1 income plan is the life cover it offers. This acts as a financial safety net for your loved ones in case of your demise during the policy term. The sum assured under the plan is paid out to your nominees in this case, and they can rely on these financial benefits to meet their everyday needs or pay for their life goals.
A guaranteed1 income plan also offers assured payouts periodically over the benefit payout period. This long-term income can be used to meet any extra expenses you may have in your day-to-day life. Or, if you are retired, you can make use of this income to replace your salary. Whatever be the scenario, there is no denying that additional income is always beneficial.
Low risk levels
The income payouts in this kind of a life insurance plan are also guaranteed1. This greatly reduces the risk associated with guaranteed1 income plans, because you need not worry about the possibility of your returns on investment becoming nil or negative. If you pay your insurance premiums throughout the premium payment term as needed, the income is assured.
Guaranteed1 income plans, being life insurance plans, offer tax benefits2 under section 80C and section 10(10D) of the Income Tax Act, 1961. As per section 80C, the premiums you pay are deductible from your gross total income, up to Rs. 1.5 lakhs per year. And as per section 10(10D), the payouts made under the policy are fully tax-free.
The only downside of a guaranteed1 income life insurance plan
There is only one potential downside of a guaranteed1 income plan. It does not offer inflation-beating returns. This is true with all guaranteed1, low-risk financial products. That said, you can use a guaranteed1 income life insurance plan to set off the risk from any other high-risk-high-reward product in your portfolio. So, this potential downside can actually be a blessing in disguise.
So, the bottom line is that a guaranteed1 income plan has a wide range of benefits that you can take advantage of. If you are looking for a single financial product that can protect your loved ones and simultaneously give you assured income for the long term, this kind of life insurance plan ticks all the boxes.
After weighing the finer details, if you think a guaranteed1 income plan is the right fit for your needs, you can simply visit the website of your preferred insurance provider and make your purchase online itself.
¹ Provided all due premiums are paid.
² Tax benefits are subject to changes in tax laws. Kindly consult your financial advisor for more details.
ABSLI Assured Income Plus(UIN: 109N127V05) is a non-linked non-participating individual life insurance savings plan.
ABSLI Vision LifeIncome Plus Plan
Get guaranteed regular income, cash-in-hand even while paying premiums PLUS life cover up to a maximum of age 100 UIN: 109N131V01
- *Guaranteed regular income for a period you choose
- Option to get cash-in-hand even while paying premiums
- Life cover up to a maximum of age 100
ABSLI Assured Savings Plan
Get life insurance cover and savings benefits to safeguard your family members incase of financial crisis (UIN: 109N134V03)
- Guaranteed3 benefits on death or maturity
- Loyalty Additions that boost your maturity corpus year on year
- Multiple policy & premium payment term options
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