Capital Guarantee Plan Meaning , Types and Eligibility
Making investments in items with a strong market focus is one of the most unsettling fears people have. In an uncertain economy, first-time investors frequently worry about losing money. A wise investment strategy that prioritises investor safety is thus becoming increasingly necessary.
An innovative investment approach that provides investors with a 100% capital guarantee is known as the capital guarantee plan. The strategy essentially functions as a Unit Linked Investment Plan (ULIP), which combines the benefits that come with both investing and purchasing insurance.
What is a Capital Guarantee Solution Plan?
A hybrid of ULIPs and guaranteed return plans, capital guarantee solution plans offer both types of benefits. Investors can profit from market gains by investing in stock funds thanks to these plans' full guarantees and security of the money they have contributed throughout the years.
The guaranteed return products receive between 50 and 60 percent of invested cash, with ULIPs receiving the remainder. When the term of your policy expires, you get maturity value based on gains from both the traditional guarantee plan and the market-linked returns from the ULIP component.
The main advantage of these plans is that the premium you pay is fully guaranteed, ensuring the security of your entire investment regardless of market turbulence. Given the current low interest rates, it is advised to investigate investment solutions with long-term objectives like the capital guarantee solution plan.
Various Capital Guarantee Plan
Here are some of the different capital guarantee options that India has to offer.
Bajaj Allianz Life Guaranteed Income Goal: An opportunity to prolong life coverage past the policy term is provided by the Bajaj Allianz Life Guaranteed Income Goal, a non-linked, non-participating endowment life insurance plan. Along with lump payment and income benefits, it also provides an income benefit that guarantees a rise in earnings. Sections 80C and 10(10D) of the Income Tax Act of 1961 will provide you with tax benefits.
Canara HSBC Life Insurance Invest 4G: This solution offers 8 different fund possibilities. Additionally, investors have four alternatives for managing their portfolios: systematic transfer, safety switch, auto fund rebalancing, and return protector. The maturity fund value would be increased by any mortality charges that were incurred during the policy's duration. Additionally, it has three cover options: life, care, and century.
Edelweiss Tokio Life Wealth Secure +: Seven different fund alternatives are available for Edelweiss Tokio Life Wealth Secure +. It features a five-year low-term option. After the initial five years, partial withdrawals are permitted. It will give you built-in life insurance to safeguard your family. Loyalty additions, booster additions, and maturity additions are examples of fund additions.
HDFC Life Capital Shield; You are fully guaranteed to get 100% of your premium investments with HDFC Life Capital Shield. Without putting your assets at danger, you can benefit from returns connected to the market. According to standard T&C, the assured maturity benefit would equal 101% of the entire premiums paid. The plan additionally provides a death benefit that is equal to 105% of the total premiums paid (normal T&C apply). If all premium payments have been made, loyalty additions will be made at the end of the sixth policy year.
HDFC Life Click 2 Wealth: There are 11 different funds available to pick from in HDFC Life Click 2 Wealth. For the first five years of the policy's existence, policyholders are entitled to 101% of the premiums assigned to their fund. The proposer's final premiums are entirely waived in the case of his or her passing. The fact that this plan offers regular withdrawals that act as post-retirement income makes it acceptable as a retirement plan.
ICICI PruSignature: Four distinct portfolio strategies are available for selection in the ICICI PruSignature plan. The rewards of adulthood and death are also provided. After the first five years of the policy's term, if all premiums have been paid and the Life Assured is at least 18 years old, partial withdrawals are permitted. It costs INR 2,000 to make a partial withdrawal. Prior to the policy's maturity, you might choose to extend the duration of the policy.
SBI Life eWealth Insurance: This plan provides life insurance protection in addition to market-linked rewards. Under this solution, there are three different fund choices. The automatic asset allocation tool would relieve investors of any financial management concerns. Ten to thirty years are offered as policy terms. You have a choice between paying your premium annually and monthly.
Tata AIA Life Insurance Fortune Pro: There are 11 different fund alternatives available with Tata AIA Life Insurance Fortune Pro. A 15 to 40-year policy term is available. Starting in the eleventh year and continuing through the end of the policy term, loyalty benefits equaling 0.20 percent of the total units in the fund will be added.
Does this Help to Plan for a Long-Term Horizon?
Short-term investments generally carry some risk because they are frequently made in lump sums and are subject to market swings. If an investor makes long-term investments during market upswings, they can reduce their investment costs by averaging out their periodic payments over a longer time frame.
In accordance with these plans, you can choose any insurance term, ranging from 10 to 40 years, as well as any premium-paying term, ranging from 5, 7, or 12 years. According to your objective, you can choose the insurance policy and the payment terms. You should plan to invest over a period of 10 to 15 years because the equity markets have historically provided investors with significant returns.
What are the Eligibility Criteria for Capital Guarantee Solution?
The initial investment age, the number of years until your investment matures, the minimum investment amount, and the maximum number of investment years all play a role in determining whether you meet the requirements for capital guarantee solutions. From plan to plan, every criterion is different.
All of the solutions have a common minimum age requirement of 18 years, but each solution has a different maximum age limit.
Should you Invest in a Capital Guarantee Solution Plan?
For investors who wish to make long-term investments but do not want to accept the significant risks associated with market-linked investments, the capital guarantee solution plan is a possibility. You can invest in a capital guarantee plan to save for retirement, pay for your children's school, ensure your spouse's financial security in the event of your tragic demise, or achieve any other financial objectives.
Cash-guaranteed investments provide a risk-free option to pure market-linked goods at any given time because the latter might not yield good returns before endangering the invested funds in the case of a market drop. The capital guarantee investment plans provide investors with the assurance that their money is protected and aid in helping them lay a strong financial foundation by guaranteeing life and financial stability.
Guaranteed insurance products are widely favored by customers because they offer capital protection and reliable returns. The volatility of future cash sources can also be considerably reduced for consumers, and life insurance provides financial security for the family.
Conclusion
Investors who want to make long-term investments but lack the essential equity market understanding may consider investing in the capital guarantee solution plan. If the market declines due to the state of the economy, one might not get viable returns in products that are only related to the market. The capital guarantee solution plan, however, ensures investor returns and financial security.
By guaranteeing guaranteed returns and the chance to participate in market-linked incentives, the capital guarantee investment plan provides its participants with a safety net. It is flexible because it can help you achieve both of your long-term financial objectives.
