Guaranteed return plans: Nowadays the economic environment is constantly changing. Sometimes interest rates go up, and sometimes they suddenly come down. The stock market is also full of ups and downs and this uncertainty has forced Indian people to rethink their financial planning. Where earlier people used to invest in FDs, recurring deposits or market-based schemes without much thought, now they are looking for such options which are stable, low risk, and can secure their financial future in the coming years. In such times, Guaranteed Return Plan (GRP) has emerged as a new source of relief and confidence for many people.
The biggest feature of guaranteed return plans is that they offer tax-free guaranteed returns of up to 6.9 percent from the day of inception. The future of interest rates or market decline has no impact on these schemes, hence today many investors are considering them as safe and stable options. These schemes are attracting everyone from everyday savers to those thinking of long term investment.
Pavit Laul, Head of Investments, Policybazaar.com, says why people are moving rapidly towards GRP. The biggest reason behind this is assured and stable returns. While even FDs, which were earlier considered safe, are no longer able to give the same income as before, guaranteed return plans lock the returns as soon as they are purchased. For example, FD interest used to be around 9 percent in 2011, but it came down to 6.05 percent by 2025. This means that it is becoming difficult to get returns that beat inflation. In contrast, GRPs offer fixed returns throughout the tenure, regardless of market volatility.
Why is guaranteed return plan popular?
● Tax saving on investment under section 80C.
● And most importantly, tax free maturity benefit under Section 10(10D) on annual premium up to ₹5 lakh.
● The interest rate does not change throughout the policy term.
● Maturity amount is available tax free.
● Compound growth continues at a fixed rate.
This means that the entire maturity amount is available tax free. In comparison, the interest income of FD is fully taxable, hence many people are considering GRP more beneficial. Investors can easily achieve long-term goals of 10, 15, 20 or 47 years. Another important thing is that guaranteed return plans are flexible in their payment structure.
● If someone wants to take lump sum amount on maturity, he can do so.
● If someone wants to take monthly/annual income for 5 to 30 years, then he can do so.
● Some people also want immediate income after investment, for that immediate income plans are available.
● Some people choose such a plan which provides stable income like pension in the later part of life. It is suitable for this also.
That means every investor can choose the option according to his life goals and budget.
GRPs are not just investments, but also include life insurance cover, due to which the family remains financially secure and even if the earning person is no longer present, the dreams and long term goals of the family do not stop. This is the reason why these plans are becoming popular today, especially among young parents, middle class families and those starting new investments.
