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How to choose the best insurance plan that gives guaranteed income?

dateKnowledge Centre Team dateFebruary 04, 2021 views145 Views
How to choose the best insurance plan that gives guaranteed income?

In real life, unexpected expenses are unavoidable. Even when you believe you have financial security; a sudden or unforeseen financial commitment can severely diminish your financial condition. Due to certain emergencies, they may also leave you in debt. Although you cannot plan for every contingency that may arise, life insurance offers some protection against financial loss from unforeseen circumstances.

The company promises to provide financial coverage (Repayment of amount) against unforeseen events for a certain fee (premium).

Guaranteed Income Plan

It takes ongoing initiative and perseverance to meet financial goals in time, no matter what they are. Although needs can be infinite, yet a person's wealth can make or break them. Therefore, an individual needs to maintain financial stability throughout life to ensure that their loved ones are financially secure even after (s)he is no longer around them. To ensure financial stability, companies offer mandatory retirement plans.

The guarantee word being added to regular payouts, these plans become an investment's leverage for risk-averse investors. These plans provide dual benefits, including life insurance and maturity benefits and guaranteed earnings in the form of yearly, monthly, or quarterly payouts decided by the policyholder at the time of purchasing the policy. If you invest in a guaranteed income policy, you take on a risk of getting periodic payouts from the policy at maturity. The amount of payouts depends on your share in the company's sale (i.e., sum assured).

Features

  • It is a life insurance plan that will take payments from the beneficiary until the insured person dies.
  • Provides a vested reversionary option along with a fixed, forward-looking boost at maturity.
  • Offers retirement and death benefits, as well as payouts.
  • Provides the benefit of reduced tax liability.
  • Policy timeframe can range from 3-30 years.

Who Should Go for Guaranteed Income Plans?

If you are looking for a long-term plan that will provide for your lifetime, then this plan is perfect for you. Anyone above the age of 18 and between the ages of 18-60 can buy a guaranteed income plan and enjoy all the benefits that come with it. The policy term concerning the market's performance is 10-30 years, and it is not dependent on market performance.

What Benefits Do You Get from a Guaranteed Insurance Plan?

Upon maturity, you will receive a simple reversionary benefit and be paid a percentage of pre-decided sum assured later.

Death Benefit: If you die before the policy term ends, your estate will receive the sum assured plus a reversionary and terminal bonus (if any). The regular payout is guaranteed for a fixed number of years, as specified in the insurance policy. If the nominee dies during the payout period, the policy's proceeds are distributed to the nominee's bank account.

Income Tax Benefit: The guaranteed income plan offers a tax deduction (every year) for paying premiums for the plan and a tax exemption on the final balance.

RETURN COMPARISON

In this table, we can see how a guaranteed income plan is different from any fixed deposits plan-

GUARANTEED INCOME PLAN 100% FIXED DEPOSITS
Investment over 10 years (6 lakhs) Investment over 10 years (6 lakhs)
5.5% Return (tax free) 5.4% Return(taxable)
Return after tax is 5.5% 4.9%  |  4.6%  |  4.2%

Tax slab  10%  20%  30%
In Case of death in your family In Case of death in your family
6 lakhs Zero

BENEFITS OF A GUARANTEED INCOME PLAN

Maturity Benefit

After it reaches the age of maturity, they receive a simple reversionary bonus. The life insured receives the basic reversionary bonus at the time of maturity along with the life insured. Bonus for terminals, if any. If the pay-out period is approximately 15 years, the insured is then. The regular amount paid is a predefined percentage of the amount guaranteed. Bonus plan, if any. If the pay-out period is somewhere around fifteen years, then the insured is paid the amount determined by industry consensus.

Death benefit

In the insured's unfortunate death during the premium payment term, the nominee will be given the sum. In addition to the reversionary bonuses, the nominee receives the basic sum assured amount. Bonus for terminals, if any. And the pay-outs are carried out for the next 15 years or as mentioned in the following 15 years.In the event of the insured's demise after the payment period of the premium or during the pay-out period, the nominee receives the guaranteed amount together with the other advantages.

Income Tax Benefits

Every year, tax deductions and tax exemptions under Section 80(C) are available. Section 10(10D), subject to terms and conditions, is available for maturity proceeds.

Additional Rider

The traditional plan incorporates an included rider Accidental Death Benefit Liability Insurance. There are traditional insurance plans that offer 100% guaranteed returns, and non-traditional insurance plans that offer partial returns. There are different terms and conditions within a particular plan, and different plans can be suitable for differing needs.

ABOUT CANARA BANK GUARANTEED INCOME INSURANCE PLAN

Canara HSBC Oriental Bank of Commerce Life Insurance Company Limited is a company formed jointly by three leading financial institutions – Canara Bank and Oriental Bank of Commerce, two of India's largest nationalised banks in terms of aggregate business, along with HSBC Insurance (Asia Pacific) Holdings Limited. The Joint Venture's shareholding pattern is that Canara Bank owns 51%, HSBC Insurance owns 26%, and Oriental Bank of Commerce owns 23%. Our goal is to lay out a wide variety of life insurance products backed by excellent customer service, so you can settle your life what you want. The Canara HSBC Oriental Bank of Commerce Life Insurance Smart Income Plan is a Non-Linking Non-Participating Plan.

Canara HSBC Oriental Bank of Commerce Life Insurance Company Limited, formed by three leading financial institutions - Canara Bank and Oriental Bank of Commerce, will be the first-ever joint life insurance company in India. Our mission is to impart a range of transparent life insurance products and is backed by excellent customer service. Canara HSBC Oriental Bank of Commerce Life Insurance Smart Immediate Income Plan isn't linked to another plan but is a Non-Participating Plan.

Guaranteed Income Advantage Plan

The Guaranteed Income Advantage Plan can create a lifetime income for you and keep your finances in order. The plan is designed to protect you and your money. The plan can aid you with meeting short- and long-term goals. The advantages of the plan are outlined below to make it clear for you.

Benefits:

  • Pay the premium for limited-term health insurance coverage and get life insurance for the entire term.
  • Tax benefits are provided under the plan and maybe claimed off of one's tax return.
  • The rate-payers pay a higher premium increase.
  • The beneficiary mentioned by the policy will receive the death benefit if the insured is still alive.
  • The premium paid to death is 105% of the insured's premium.
  • The amount to be paid on the death of a policyholder is guaranteed.
  • The insurer can enjoy the loan amount that's insured on the policy.

ELIGIBILITY

CRITERIA MAXIMUM MINIMUM
ENTRY AGE 60 Years 3 years for a policy term of 15 years 6 years for a policy term of 12 years
MATURITY AGE 75 YEARS 18 YEARS
SUM ASSURED Based on board approved underwriting policy document Determined according to minimum annualized premium, entry age, policy term/ premium payment term
POLICY TERM 12 Years/15 Years 12 Years/15 Years
ANNUAL PREMIUM Rs.1,00,000 Rs.1,00,000

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Frequently Asked Questions

What is saving plan?

A savings plan is likely to be different for everyone depending on the financial goal, risk profile, returns, and investment horizon. If you are young and want to save for your retirement, ULIPs like Invest 4G or Titanium Plus plan would be the best option. You are likely to create a large corpus by your retirement through market-linked returns if you invest in this savings plan. If capital protection is your aim, then traditional insurance plans such as Guaranteed Money Saving Plan should be suitable for you.

Who should invest in a Savings Plan?

If you are looking for a guaranteed income plan, then saving plans should be on your list of investments that you are planning to make. Savings plan require you to invest a pre-decided amount on a regular basis. People with a regular stream of income who require a lump-sum amount after a period should opt for a savings plan. Working professionals, self-employed people and businessmen should consider a savings plan to meet their long-term financial obligations. Saving plans are also ideal for people who are risk-averse and want to accumulate funds through relatively safer mediums. These saving plans inculcate financial discipline in policyholders which make them crucial for every portfolio.

How much money should you put in savings each month?

The amount that should be invested in a savings plan each month depends on the income, existing financial obligations and the long-term financial goal. If you have a steady income, you should save at least 20% of your monthly income. It is not necessary to invest your entire money into a savings scheme as investments should be diversified. Ideally, you should aim to have a financial buffer of over 10 times of your annual income. Choose an income plan based on your financial circumstances to stay afloat.

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What is the difference between saving and investing?

Saving is the money that you keep aside for emergencies or for buying any big-ticket item. Investing means growing or multiplying the wealth that you have by buying savings plan, or any other assets. Buying a savings plan will help you in achieving your investment goals such as retirement, your child’s higher education or marriage, or for buying a new house.

Which savings plan is best for retirement?

The Invest 4G plan with its multiple investment options and various portfolio management strategies for capital protection is an ideal saving plan for retirement. Also, Guaranteed Income4Life is also another savings plan that you can consider for building your retirement corpus as it acts as a guaranteed income plan that will provide you maturity benefits to manage your post-retirement expenses.

Which savings plan is best for long-term goals?

Smart Goals Plan is a savings plan with its unique features such as modification of the sum assured partial withdrawal and fund switch can help you plan for your long-term financial goals. Canara HSBC Oriental Bank of Commerce Life Insurance offers a wide variety of saving plans that you can invest in as per your risk appetite and investment goal.

Which savings plan is suitable for girl child?

The Future Smart unit-linked plan from Canara HSBC Oriental Bank of Commerce Life Insurance is the ideal savings plan for the girl child. Monthly Income Advantage Plans are also a good option if you are planning to invest in a savings plan for your girl child.

Where should I invest my money?

You should spread your investments across financial instruments. However, having the best savings cum guaranteed income plan in your portfolio is extremely important. Savings plan ensures financial stability and also helps in fulfilling short, medium and long-term monetary goals.

What is a monthly income advantage plan?

A monthly income advantage plan ensures that you lead a stress-free life with your loved ones as it provides a life cover along with giving you guaranteed monthly income. In short, it is a life insurance and income plan that will financially secure commitments made to your loved ones. Canara HSBC Oriental Bank of Commerce Life Insurance Guaranteed Income Advantage Plan is a monthly income advantage plan that provides life cover for the entire term while you pay premium only for a limited period.

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What is a good age to start saving money?

When you plan to invest in a financial product, it always pays well to start early. The earlier you start saving and investing, the better. When you start investing early, the capital gets adequate time multiply. Even a small amount invested for a long time can give substantial returns due to compounding in a savings plan. Invest in an income plan as early as possible to build a significant corpus that will later help you in life. Ensure that you buy the best saving plan in India that can be aligned with your investment goals.

Should you use a savings plan for retirement planning?

Yes. Retirement planning is one of the most important financial decisions of our lives. The best saving plan offers a host of features that may help you build your retirement corpus. Some of the saving plans like Guaranteed Income4Life offer guaranteed returns at policy maturity. Such returns can act as a regular income stream even after your retirement to help you stay financially stable.

Are saving plans beneficial for managing unexpected expenses?

Yes. Best saving plans in India offer partial withdrawal system that can be utilized during your rainy days. Being financially prepared to tackle such odds will help you manage any unforeseen expenses in a smooth manner. Buy a monthly income advantage plan that will generate a steady source of income for you to take care of both long-term and short-term financial goals.

How to save tax by using savings plan?

Saving plans are known for helping us achieve our financial goals. Best saving plans allow you to grow your wealth while providing life cover. Saving and investment plans are also beneficial for tax planning. Premiums of savings cum protection plans come with tax benefit under Section 80C of the Income Tax Act. Moreover, proceeds received upon the death of the policyholder or upon the maturity of the policy are tax free under Section 10 10(D).

What is the right age to start saving money?

When you plan to invest in an income plan, it always pays well to start early. The earlier you start investing in a savings plan, the better. When you start investing early, the appreciation in capital is significant. Even a small amount invested in the best saving scheme for a long time can give substantial returns due to compounding. Buy the best savings plan as soon as you start earning to achieve all your milestones on time.

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How a savings plan can help in building your child’s education fund?

Saving plans help in building wealth over time against the investments that you make. Buy the best savings plan to build an education fund for your child. The best saving plan for kids offered by Canara HSBC Oriental Bank of Commerce Life Insurance eases the stress of planning your child's future by providing a lump-sum payout on the investment. Consider investing in a monthly income advantage plan to assist you in fulfilling your financial goals.

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How Savings Plans by Canara HSBC Oriental Bank of Commerce Life Insurance can help you?

Every person has a unique reason to save and invest. With ULIP savings schemes, the company caters to people seeking wealth creation through capital appreciation. Contrarily, the traditional plans can help you save for important life goals without worrying about the fluctuation in fund value. All major savings plan offers partial withdrawal facility that can help you take care of unplanned contingencies. With savings plans from Canara HSBC Oriental Bank of Commerce Life Insurance, you get adequate flexibility while investing and receiving the savings benefits, which makes them a good investment choice for investors looking for income plans.

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