Guaranteed Maturity insurance plan

The Guaranteed maturity insurance plan has been launched by life Insurance companies which provide both protection and savings. If the insured person dies during the term of the policy, the insurance company gives a lump sum amount to his/ her family otherwise the insured person will get a lump sum amount at the time of maturity.

 

 a. Return

The return on these plans ranges between 4-8% excluding the mortality charges. So it offers lower return which may not beat the inflation. But if we separate insurance and investments and the investment portion is invested in Mutual Funds matching the goal horizon and risk appetite, the returns will be higher. 

b. Death cover

The Guaranteed maturity plan offers death benefit in case of unfortunate demise of the life insured during the policy term. The death benefit will be five times of the premium paid in case of single premium policy. If an individual have a Guaranteed maturity insurance plan for a single premium of Rs 1 lakh his/ her family will get 5 lakhs as death benefit in case of his/her death. But it will not be sufficient for all the needs of the family i.e children’s education, their marriage, loan outstandings, survival expenses of the family etc. In this situation, adequate term cover is preferable.(For more details on premium on term insurance.

c. Tax benefits

An individual will eligible to get deduction under section 80C after paying premium in the above scheme and the maturity value of this scheme is exempted from tax under section 10 (10D) but an individual should not buy insurance only to get tax benefit because there are various investment avenues where an individual can also avail tax benefits. These are public provident fund (PPF), National saving certificate (NSC) equity linked saving schemes (ELSS),Five year Bank FDs etc. 

d. Comparison   amongst Life Insurance Guaranteed products

Name of the company

Life insurance corporation

ING life insurance

Star union Dai-ichi life insurance

Name of product

Jeevan vriddhi

ING star life

Dhan suraksha plantinum

Net return(For 35 yrs investee)

8.12%

6.84%

7.10%

Investment period

10 years

12 years

10 years

80 C deduction

Yes

Yes

Yes

Tax treatment at the time of maturity

No

No

No

 

 Consult a SEBI registered investment adviser before buying a life insurance guaranteed products.

Last modified on Friday, 16 August 2013 12:20

Prakash Praharaj

Shri Prakash Praharaj has a passion for excellence. He has been awarded two gold medals for securing top positions both in Graduation and Post Graduation in Commerce. He is an MBA with specialization in Finance and marketing. He has been awarded Diploma in Treasury, Investment and Risk Management besides CAIIB from the Indian Institute of Bankers. He is a Certified Financial PlannerCM from the Financial Planning standards Board, India (FPSB), affiliated to FPSB, Denver, USA and Certified Personal Financial Adviser from NISM. He is also a SEBI registered Investment Adviser vide Reg. no. INA 000000045 dated 2nd August 2013.His book "Your Every day guide to Personal Finance and Insurance" has been published by CNBC TV 18 in August 2015.

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