Guaranteed Income saving scheme is a traditional insurance-cum-investment which does not have a very transparent structure but guarantees a minimum income. Guaranteed Income saving has all the characteristics of a basic insurance cover that can be availed by the customer for tax benefit. Guaranteed income insurance plan comes under the non-participating category of insurance-cum investment plans that gives guarantee of investment benefits.

Guaranteed Income saving
Different insurance providers can offer this scheme in different packaging. An individual who goes for this product can either opt for limp sum at the end of the policy term. In case, you are going for periodic income like monthly or quarterly then you will need to pay the premium up to specific years. As a investor, you can go for both the options of getting lump sum and periodic payment. An investor will get the upfront information about the benefits but the companies usually do not disclose the net return on the investment.
Consider all the Benefits
Experts believe that considering only the net return and ignoring various other benefits of the guaranteed plan is a mistake. There is no other plan but guaranteed income plan that offers the assured return on the money. Thereafter, these plans also include the insurance coverage and tax benefits. In India, this plan has become popular, sighting the natural capital saving characteristics and at the same time getting guaranteed return even if the percentage is low. The plan is usually preferred by those who are above 35 years of age and as a hedge for those who already have invested in high risk high return instruments and are looking for hedging.
To quote an example of such plan we have Bharti Axa Monthly Income advantage plan where the individual who is 35 years of age and avails the policy for 24 years will get assured sum of Rs. 13,81,025/- if he pays annual premium of 1,00,000/- yearly ( Guaranteed Income saving)
Term of Premium Payment – 12 Years
After 13 years -Upto 24 years he will get monthly income of 10,000 per month(Rs 1,20,000/ yr_
On Maturity – Bonus Rs. 14,21,903/-.
Total Benefit: “Rs. 28,61,903/-”
‘Monthly Income 10000*12*12= Rs. 14,40,000/- + Bonus Rs. 14,21,903/-‘
There are various eligibility criteria and policy duration that one has to keep in consideration while buying the plan. There are similar plans by various other companies as well. Assured income plans are basically aimed at encouraging long term savings and add to the income of the customers. Guaranteed Income saving offer the income on the sum assured by the policy and not the value of the fund. There will be no change in the sum assured throughout the policy and only the fund value keeps on changing. The drawback of this scheme is that investors are not benefited from the compounding of returns.
For very long these products were considered as not worth the investment by the high risk- high return players. However, post demonetization banks are considering to lower down Fixed Deposit rates and this has give traction to such policies. The scheme is beneficial over the Fixed Deposit as it is an insurance scheme unlike Fixed deposit which do not offer insurance cover. Looking for such tax advice contact Saritha @8904015167 or email @saritha@saiconsultingservices.com