Life insurance is a straightforward agreement between you and an insurance company. You pay regular premiums; in return, the insurer shields you and your loved ones from financial uncertainties.

Should you unfortunately pass away when the life insurance plan is active, your loved ones receive a sum of money, technically known as ‘sum assured’ from the insurer. The prime objective of this safety net is to ensure your family’s financial well-being when you are no longer there to provide for them.

But today’s insurance landscape offers more than just protection – some policies offer guaranteed returns*. These policies seamlessly combine life insurance with a clever blend of savings and investment elements. It is popular among individuals who seek both financial security and the potential for growing wealth. These policies can serve as a valuable tool for building long-term savings to achieve your financial milestones like retirement planning, funding your child’s education, property investments, and more.

Life insurance has evolved to be more than just a safety net; it empowers you to achieve your financial goals and objectives. In this article, we discuss all such plans that provide guaranteed returns* as an added advantage to financial security.

Guaranteed Return* Life Insurance Plans

If you’re planning to buy life insurance, here are some policies that provide assured returns –

1️⃣Endowment Plan

An endowment plan is a unique life insurance product that combines both insurance protection and a savings component. In case of an unfortunate event during the policy term, your chosen nominee will receive a sum known as the death benefit. And, if you outlive the policy term, you will be entitled to receive the accumulated savings corpus along with any applicable bonuses.

Here’s how the plan works – a part of your premium payments accumulates over time, resulting in a substantial lump-sum payout at the end of the specified term, regardless of whether you outlive the policy term or not.

Endowment plans foster disciplined and long-term savings. They enable you to build a substantial financial cushion for various future needs, such as retirement, your children’s education, etc. Therefore, this plan ensures guaranteed returns* by growing your savings over time.

Endowment plans can either be – participating or non-participating endowment plans.

  • Participating Endowment Plan
    In this option, your nominee or you will get a variable bonus along with the assured death or maturity benefit. A portion of your premiums are invested in safe financial instruments like bonds and securities, and you can enjoy both guaranteed* and non-guaranteed returns.

  • Non-Participating Endowment Plan
    This plan does not provide any bonuses and offers only guaranteed returns*. It ensures a fixed payout, which is disbursed either upon policy maturity or to your nominee in the event of your passing during the policy’s active term.

2️⃣Money-Back Plan

A Money-Back Plan is a smart blend of insurance and investment packaged into a single comprehensive plan.

The investment aspect of this plan is designed to provide you with regular payouts based on the schedule specified in your policy as long as you outlive the policy term. The insurance component, on the other hand, offers a safety cushion for your loved ones, ensuring that they can maintain a comfortable standard of living even in your absence.

A money-back plan is a low-risk financial tool because its returns are not influenced by the stock market’s performance, unlike other options such as ULIPs and mutual funds. If you make regular premium payments, you/your nominee get guaranteed returns* in the following ways –

  • If you outlive the policy term, you will be entitled to receive a maturity benefit.
  • In the unfortunate event of your passing, while the policy is active, your nominee will receive a sum of money known as the death benefit.
  • Throughout your lifetime, you will receive periodic payments (known as survival benefits) depending on the policy’s predefined schedule. This ensures a reliable source of income for every important milestone of your life.

Also, like endowment plans, money-back plans can also be either participating or non-participating.

3️⃣Retirement Policy

When you retire, your regular income stops, and covering everyday expenses can become challenging. During this phase, a retirement policy becomes a valuable financial support.

Here are the two major types of retirement plans available in the market today –

  • Pension Accumulation Plan
    A pension accumulation plan, also called a pension plan, is a life insurance plan specially crafted to help you save for your retirement while also providing insurance coverage. This plan gradually builds up a fund over time, which you can later utilise to secure a pension during your retirement years.

Pension accumulation plans can either be non-linked or linked.

  • Non-Linked Pension Accumulation Plan
    Under this plan, you pay premiums for a set period. Once the policy matures, you receive a predetermined lump sum that you can use to support your post-retirement needs and aspirations.

    • Linked Pension Accumulation Plan
      On the other hand, a linked pension accumulation plan invests your savings in market-linked instruments, systematically building a fund over time. And once your policy matures, it provides a lump sum amount to help you fulfil your retirement needs and goals.

  • Annuity Plan
    Annuity plans are a type of insurance product that is designed to provide you with a dependable, guaranteed income through regular payments. This allows you to maintain a comfortable lifestyle without the worry of exhausting your savings. When you opt for an annuity plan, you can tailor it to meet your needs by choosing either–
    • An immediate option, where the payouts start soon after you set up the plan, or
    • A deferred option, where the payments begin after a specified number of years in the future.

You can also have the flexibility to choose how you would like to receive your payments. Additionally, you can decide whether you want to receive income for the duration of your life or for a fixed period. This personalisation ensures your plan aligns with your unique financial objectives.

In the unfortunate event of your passing, the annuity benefits are provided to your chosen nominee, ensuring continued financial security.

To conclude

In a world of uncertainties, a guaranteed* return insurance plan serves as a secure anchor for your financial future. Its primary objective is to safeguard your loved ones, with a secondary focus on investment and wealth accrual. It is a smart choice that combines peace of mind with financial