There is a vast selection of financial and investment products on the market today that offer a guaranteed return on investment and enable you to accumulate wealth for the future. The two most prevalent investment products are fixed deposits and Guaranteed Income Plans, among the many available investment options. Guaranteed Income Plan is primarily an insurance product, but it is also an excellent investment product for the majority of individuals.
Short-term volatility is concealed in the case of long-term investments. The actual risk, however, is falling short of the corpus for significant life events such as child education, home purchase, marriage, retirement, etc. In these uncertain times, Guaranteed Income Plans function as a savings plan and offer guaranteed returns are regarded as an excellent investment. In addition, the Guaranteed Income Plan provides financial protection for your family in the event of a tragedy.
In order to assist you in determining which is the superior investment option, we have compared guaranteed return insurance products and fixed deposits in great detail.
Guaranteed Income Plan vs Fixed Deposits: What You Should Know
A guaranteed Income Plan is an insurance product that provides financial security to the insured's family in the event of his or her untimely death. In addition to providing insurance coverage for the insured's family, it also helps you achieve your long-term and short-term financial goals.
Guaranteed Income Plans offer a variety of investment alternatives, including money-back plans and endowment plans. Money-back plans offer a regular income in addition to a mortality benefit, whereas endowment plans offer a lump-sum payment as the maturity benefit. In addition, traditional plans offered by life insurance companies include both guaranteed benefits and a gratuity. Depending on your insurance objective, risk tolerance, investment amount, and investment horizon, you may contemplate investing in either monthly income plans or money-back plans.
In addition, these guaranteed return insurance products provide greater flexibility than the fixed deposit scheme. In addition to the guaranteed returns, these investment plans offer tax benefits under Sections 80C and 10(10D) of the Income Tax Act of 1961.
Fixed deposits are an investment plan with a guaranteed return that is suitable for both short- and long-term pay terms. The returns on fixed-income investments (FDs) are entirely guaranteed and offer a fixed interest rate of 7% to 8%. FDs have always been regarded as a safe investment option. Minimum investment terms for fixed deposits are one year, and maximum terms are ten years. Thus, in modern times, the returns generated by FDs are excellent and are regarded as a profitable investment option for conservative buyers.
A Brief Comparison of Guaranteed Income Plan vs Fixed Deposits:
Tenure
Permanent deposits are appropriate for both long-term and short-term investments ranging from 1 to 5 years.
The Guaranteed Income Plan, in contrast, provides life coverage as well as guaranteed returns for a term period of 10 years that can extend to a lifetime.
Portfolio
Starting investments in fixed deposits requires a minimum of Rs. 1,000. However, there is no utmost investment limit.
Interest is calculated by the bank based on the quantity of the investment. As a general rule, the greater the amount invested in FD, the greater the long-term return.
In contrast, the premium for a Guaranteed Income Plan varies from plan to plan and is dependent on a variety of factors, including the age of the policyholder, the value of the policy, the health of the insured, etc.
In the case of monthly income plans and guaranteed return plans, you are eligible to receive investment returns as a maturity benefit after the policy term has expired.
Guaranteed Return
Fixed Deposit offers a fixed return on investment, as it is mentioned in the beginning when you open the fixed deposit account.
The monthly income plan, on the other hand, provides a guaranteed and consistent income stream so that you can meet your monthly expenses and achieve your short-term financial objectives.
Moreover, investments in savings plans such as guaranteed return plans provide investors with guaranteed and greater returns than FDs.
Taxation
A tax-saving fixed deposit (FD) account is a type of FD account that provides a tax deduction under Section 80C of the Income Tax Act of 1961.
Sections 80C and 10(10D) of the Income Tax Act 1961 provide tax benefits on the premium paid and maturity proceeds of a Guaranteed Income Plan.
Wrapping it Up!
On the one hand, fixed deposit schemes help you develop a habit of saving. In contrast, Guaranteed Income Plans provide you with the financial security you need to deal with life's uncertainties. If you want to accumulate wealth over the long term and earn a guaranteed rate of return, fixed deposits may be the optimal investment product for you. Consider investing in a guaranteed return insurance product if you desire the dual benefits of life protection and investment.
