5 REASONS TO BUY GUARANTEED INCOME PLANS TO SECURE FINANCIAL FUTURE. On or before 31 March is the best time to avail maximum tax benefits!
Guaranteed income plans offer several advantages for individuals looking to secure their financial future. Here are few of the key benefits of guaranteed income plans:
1. Guaranteed income: As the name suggests, guaranteed income plans offer a guaranteed income to the policyholder for a fixed period of time. This means that you can plan your finances in advance and have peace of mind knowing that you will receive a fixed income irrespective of market conditions.
2. Tax benefits: Guaranteed income plans also offer tax benefits to policyholders. The premiums paid towards these plans are eligible for tax benefits u/s 80C of the Income Tax Act,1961. Additionally, the income received from these plans is also tax-free under Section 10(10D) of the Income Tax Act,1961.
3. Flexible payout options: Guaranteed income plans offer flexible payout options, allowing policyholders to choose the frequency of income payouts based on their financial needs and requirements. You can opt for monthly, quarterly, half-yearly, or annual payouts depending on your preference.
4. Protection against inflation: Guaranteed income plans also provide protection against inflation by offering a fixed payout that increases over time. This means that the income received from the plan will increase at a pre-determined rate, helping policyholders to maintain their purchasing power and meet their expenses even in every phase of of inflation.
5. No market risk: Guaranteed income plans do not expose policyholders to market risk as the payout is fixed and does not depend on market fluctuations. This makes these plans a safe and secure investment option for individuals looking to secure their financial future.
The Budget 2023 proposed several changes in various sectors and the Life Insurance category also gets the significant change. Returns from traditional plans(Other than ULIPs) issued on or after 01-04-2023 will be taxable if the premium from one or more policies exceed Rs. 5 Lacs. This change proposed for the life insurance category might imply on the guaranteed income plans and the users also benefitted the tax-efficiency of these plans.
What can be the alternative post 31 March, 2023?
Though Guaranteed Income Plans are a great option that provide several benefits in one plan, however if one is looking for an equally good alternative that also provides tax benefit that ULIP is a very good option.
ULIPs
ULIPs (Unit Linked Insurance Plans) are financial products that combine the benefits of life insurance with the flexibility of investing in a variety of asset classes.
These funds can be equity-oriented, debt-oriented or a mix of both, depending on the risk appetite of the investor. The returns on these investments are linked to the performance of the underlying assets. One of the key features of ULIPs is the flexibility they offer in terms of investment and insurance. Investors can choose the level of insurance cover they require and also select the investment fund options that align with their financial goals and risk appetite. Additionally, ULIPs also offer tax benefits under Section 80C of the Income Tax Act, 1961.
Benefits of Investing in ULIPs
Here are some advantages of investing in ULIP plans in India:
- Flexibility: ULIPs offer investors flexibility in terms of investment and insurance options. Investors can choose the level of insurance coverage they require and also select the investment funds that align with their financial goals and risk appetite.
- Tax Benefits: ULIPs offer tax benefits u/s 80C of the Income Tax Act, 1961 where the premiums paid towards ULIPs are deductible up to a maximum of Rs. 1.5 lakh per year. Additionally, the proceeds received on maturity or the policyholder's death are tax-free.
- Wealth creation: ULIPs offer the potential for wealth creation through investment in various asset classes such as equities, debt, and hybrid funds. Over the long-term, investments in equity-oriented funds with the capability to generate higher returns compared to traditional investment avenues such as fixed deposits and recurring deposits.
- Life Insurance Cover: ULIPs offer life insurance coverage, which can provide financial security to the policyholder’s family in case of any unfortunate event. The insurance cover provided by ULIPs is linked to the premium paid by the policyholder.
- Fund Switching: ULIPs offer the flexibility to switch between investment funds based on market conditions and the investor's risk appetite. This allows investors to make changes to their investment portfolio as per their investment goals and market conditions.
- Partial Withdrawal: ULIPs allow policyholders to make partial withdrawals ( as per policy and plan specifications) from their investment funds after a certain lock-in period. This can provide liquidity to the policyholder in case of any unforeseen financial requirement.
When it comes to securing one’s family and planning for their future, it is important to make the correct decision at critical times to reap maximum benefits. If you are looking to buy Guaranteed Income Plans, then buying it before 31st March, 2023 is the ideal time.
