Life Insurance 616 views January 2, 2020

Traditional Plans

Traditional Life Insurance plans are also known as guaranteed returns plans. They provide multiple benefits such as the return of income, coverage of risk and tax benefits. These life insurance plans cater to individuals who have a low-risk appetite. Another name of the traditional Life Insurance is whole life insurance, money back insurance or endowment insurance. This insurance plan has multiple benefits such as returns on a fixed income, safety along with benefits on tax. Traditional Life Insurance Plans are considered to be risk-free as it provides fixed returns at the maturity of the policy term or in the event of the death of the insured.

Term Insurance

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Traditional Plans or Guaranteed Returns provides insurance coverage to the insured/policyholder for his/her entire life. It never runs out, unlike a term life insurance plan. In case the policyholder meets with an unfortunate death the insurance policy payout is made to the beneficiaries/nominees of the insurance plan.

Features of Guaranteed Returns Insurance Plans or Traditional Insurance Plans

The Guaranteed Return Insurance Plans have attractive features which are beneficial for the individuals who are willing to opt for one. The features of Traditional/Guaranteed Returns Plans are stated below:

  1. It is a variant of life insurance plan which offers regular income to the insured for a specified term which generally varies from 10-30 years.
  2. This plan offers reversionary bonus and terminal bonus if any to the insured/ policyholder at the time of maturity of the policy.
  3. Traditional plans provide death benefits and maturity benefits to the insured.
  4. Guaranteed Return plans also provide the benefit of tax exemption and the term of the policy varies from 10-30 years.
  5. Endowment plan and money back plan are participating policies which are partially guaranteed policies. They offer guaranteed maturity proceeds with declared bonuses.
  6. Different Guaranteed returns insurance plans have different eligibility criteria for the individuals who are willing to opt for traditional plans. It is generally offered to salaried individuals

Types of Traditional Insurance Plan

There are four major types of Guaranteed Returns Insurance Plans offered by various insurance companies to its customers. They are as follows:

1. Whole Life Insurance

It is a life insurance policy that is guaranteed for the entire lifetime of the insured individual.

2. Money-Back Policies

Money-Back Traditional Insurance plans provide life coverage during policy term along with maturity benefits which are paid in instalments to the insured.

3. Endowment Plans

Endowment Plans of the traditional insurance plan are a combination of both insurance and investment policy. Under this plan, the insured will receive lump-sum amount along with the added bonuses ( if any) on the maturity of the policy or on the death of the insured.

Best Guaranteed Income Plans

There are various Guaranteed Income plans. You can choose one according to their unique features and your requirements. The names of best Guaranteed Income Plans in 2020 are stated below along with the name of insurance providers.

1. Max Life Guaranteed Monthly Plan

It is a money-back, the guaranteed life insurance plan.

2. LIC New Jeevan Anand Plan

It is a guaranteed return plan in LIC in which the sum assured is guaranteed.

3. Bajaj Goal Suraksha Plan

It is a guaranteed savings plan which helps you fulfil your financial goals with secured returns.

4. Tata AIA Life Insurance Fortune Guarantee Plan

It is a guaranteed return insurance plan offered by Tata AIA.

5. HDFC Life Sampoorn Samriddhi Plus Plan

It is an endowment plan which provides secured returns and life insurance coverage

6. Canara HSBC OBC Smart Stage

It is a Money Back Plan and is a guaranteed savings plan offered by Canara HSBC.

7. SBI Life Smart Money Back Gold Plan

It falls under a money-back plan and is a guaranteed monthly income plan offered by SBI.

Benefits of Traditional Insurance Plans or Guaranteed Return Investment Plans

  1. The traditional participating life insurance plans work on the 90/10 ruling in the industry. The insurer can retain only 1/10 part of the profits. The rest of the profit is shared with customers in the form of bonuses which are declared under with profit traditional plans.
  2. Traditional Life Insurance Plans provides higher returns on the investments and offers built-in guaranteed benefits without any chances of mis selling.
  3. No risks are involved in traditional plans as they invest in fixed income securities. This makes the plans a risk free plan.
  4. Traditional Insurance plans provide more protection as compared to ULIPs.
  5. The insured of the policy receives a reversionary bonus along with terminal bonus (if any) at the time of maturity of the policy or death if a participating policy is bought.
  6. Traditional Life Insurance Plans provides death benefits to the insured. If the insured dies an unfortunate death during the term of the premium payment policy, the beneficiary or nominee of the policy will receive the basic sum assured in the policy along with reversionary bonus or terminal bonus (in case of participating plans), if any and other benefits provided under the life insurance policy.
  7. Money-back plans provide liquidity through the regular money back benefits that they promise
  8. Traditional Life Insurance Plans attracts Income Tax Benefits as tax deduction under prescribed Section 80(C) is available for every year. Tax exemption under Section 10(10D) is also available on the proceedings of the maturity amount but it is subjected to certain terms and conditions stated in the insurance policy.
  9. There are optional riders too under traditional insurance plans. These riders help you in customising and increasing the coverage available under the policy

Who should consider choosing a Guaranteed Life Insurance Plan?

An individual should go for a traditional life insurance plan in the following circumstances:

  1. If you are looking for long-term financial stability as traditional plans provide long term benefits and are less prone to risk factors.
  2. If you are looking for coverage of risk and guaranteed returns on your premium payments on the policy.
  3. If you want continuous cash flow for your future life events like a child’s education and child’s marriage or your own retirement plan.
  4. If you are looking for higher tax saving instruments, then traditional plans are a good choice to save tax on your investments.

Conclusion

In today’s situation and age, it is really essential to maintain financial stability which has become quite difficult for individuals. On the basis of the requirements of financial stability in one’s life, the insurance companies have brought the benefit of various guaranteed life insurance with guaranteed returns. Some traditional insurance plans offer fully guaranteed returns whereas some offer partially guaranteed returns. Before you opt for a traditional plan you should compare life insurance returns for a few traditional insurance products, which can be computed through a guaranteed income plan calculator. Different guaranteed return investment plans have different traditional plan charges and terms of policy and pay. These are suitable for different needs. The essential feature of Guaranteed return plans is that it can provide you can the income yearly, monthly, half-yearly or quarterly. This innovative insurance policy is a traditional plan which comes with bonus facility. The insurance holders of this policy are not required to worry about the ups and downs of the market; rather they will get to enjoy the maximized returns on their investments.

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