IndiaFirst Life Long Guaranteed Income Plan

What are guaranteed income plans?

Once upon a time, a single person's income was enough to run an average household, and financial stability was not something elusive. Today, having financial stability has become a goal to aspire to. Understanding the need for tools to create financial security, insurers are offering guaranteed savings plans.

Guaranteed income insurance plans are designed for investors who are risk-averse. Along with the benefits of traditional insurance plans, guaranteed income plans also offer maturity benefits and a chance to create a stream of income for when you will need it in the future. 

In a guaranteed income insurance plan, your life is covered for the policy term. Some plans allow you to pay premiums for a limited period of time. After your premium payment term ends, you begin to reap the benefits of regular income pay-outs. In other plans, you continue paying premiums over the term of the policy, and your pay-outs are doled out after the end of the term as maturity benefits on a staggered monthly / quarterly / yearly schedule.

A non-linked guaranteed income plan is not beholden to fluctuating market values. This way you can enjoy the peace of mind that comes with knowing that your cautious investment is never at risk due to the ups and downs of the equity market.

Irrespective of how much you are earning today, a second stream of income can only be helpful. Instead of focusing on how to make ends meet and pay for sudden expenses, a guaranteed income insurance plan allows you to relax knowing that you have made provisions for the financial stability of your household for years to come. Bask in the glorious benefits of a good guaranteed income plan — regular assured income, the return of premiums, life cover for the duration of the policy, and flexibility every step of the way.

Who should opt for guaranteed income plans?

When you hear the word 'guarantee,' it inspires trust. You know exactly what you will be getting, when, and for which duration. This surety allows you to plan your life without worrying about your financial security and freedom in your old age.

Is there anyone who would rather not have a stream of income kicking in when you need it? Anyone who wants to build a corpus, save efficiently, and receive a steady pay-out in their later years should opt for a guaranteed income insurance plan.

Consider adding a guaranteed income plan to your financial portfolio if:

• You value certainty in the face of life's ups and downs. You want to enjoy guaranteed benefits with no surprises and no risk to your investment.
• You want to create a steady stream of income that will supplement or replace your salary when you need it the most.
• You want a traditional cover that will take care of the financial needs of your family in case of your demise.
• You want to enjoy the benefits of traditional insurance plans with a healthy influx of modern investment advantages — life cover + survival / maturity benefits at the end of the policy term.
• You want to reap tax benefits on your invested corpus.
• You value flexibility and would like to customize how your savings plan works for you.
• You want a cautious investment instrument that is not linked to the rise and fall of market fund values.

Why is a guaranteed income plan an ideal savings instrument?

Most people focus on long-term financial goals. However, instead of building a corpus that will stand them in good stead in the later years of their life, the focus inevitably shifts to financial aspirations. You may want to buy a house, pay for your child's education, get your children married, or put money aside for emergencies. All of these aspirations involve money leaving your pocket. How about investing today so your money comes back to your bank account when you need it the most? This is where a guaranteed income plan comes in.

Along with the traditional cover, maturity benefits, and death benefits (in case of the policy holder's untimely demise), a guaranteed income plan features guaranteed earnings that are paid out to you at periodic intervals of your choosing.

Most savings plans in India help you create a corpus that is enhanced and returned to you in the form of a lump sum amount. While this may sound like a good idea to some people, it is important to think of exactly what you want from your savings plan. When you receive a lump sum, managing that money becomes a priority because you need to ensure that the money will last you a long time. Guaranteed income plans in India take the planning out of it for you — by offering your guaranteed periodic pay-outs after the policy matures.

So, if you buy a guaranteed income plan, you stand to gain guaranteed pay-outs in a periodic manner, life cover, and financial stability — everything you could hope for from your ideal no-risk savings insurance plan.

What are the factors to consider before buying guaranteed income savings plans?

A guaranteed income savings plan is a non-linked traditional insurance policy that presents no risk as it not connected to market performance. Such a plan offers returns in the form of periodic pay-outs that are guaranteed. Before you buy a guaranteed income plan, there are a few important factors to consider:

What proportion of risk-returns are you comfortable with?

Typically, investment instruments that present higher risk offer higher returns. However, for many people, the risk factor is just too high. Aggressive investors put their money in stocks and market funds hoping to get high returns. But the first step is to be okay with the stock prices plummeting and you losing your investment. Only when you can stand the thought of losing your hard-earned money if things go wrong should you consider investing in riskier investment tools.

If you do not have much of a risk appetite, turn your gaze towards traditional insurance savings plans that feature low-risk and guaranteed returns.

How long do you want your policy term to be?

There are two aspects to consider with guaranteed income plan terms—how long do you want to make premium payments, and how long would you like to receive periodic pay-outs from your policy? Guaranteed income plans offer you the flexibility to choose a limited premium-paying term and a fixed term during which you will receive periodic pay-outs.

You can choose to start a guaranteed income plan for your child and time it so your child can receive a steady stream of monthly income when they go to college. A guaranteed income plan is also a great tool to add to your retirement planning arsenal so you receive guaranteed periodic pay-outs once you retire.

What kind of pay-outs are you looking at?

Does a lump sum amount fit your needs better than a monthly pay-out? Consider your financial needs in the future, and decide whether an endowment policy that helps you build a corpus and offers a significant sum at maturity better suits your needs. Alternately, a guaranteed income endowment policy that offers lifelong pay-outs in a periodic manner might be alluring to you. Understand what kind of income generation you would like before choosing to buy a guaranteed income plan.

What influences your investment decisions?

There are some factors that influence every investor’s decisions, and these need to be considered before buying a guaranteed income plan.

What does your present lifestyle cost you?

Are you hoping to maintain this lifestyle in the future?

What is your income, and how much of it goes towards expenses?

Are tax savings important to you?

Do you want the peace of mind of traditional life cover?

How will inflation affect your financial stability in the decades to come?

Zero in on the questions that are influencing your decisions, get your answers, and then, find out which types of traditional insurance plans would suit your needs the best.

How does the IndiaFirst Life Long Guaranteed Income Plan work?

IndiaFirst Life Long Guaranteed Income Plan is a non-linked, non-participating, limited premium, endowment life insurance plan, which supports you and your family at all stages of life by providing life cover throughout the term of your policy as well as an assured income benefit.

Let’s have a look at what this means for you:

Non-linked

As a non-linked policy, the IndiaFirst Life Long Guaranteed Income Plan is not dependent on market fund values. Since the ups and downs of the market do not impact your policy offerings, it is possible for you to get guaranteed returns without fearing unpleasant surprises.

Non-participating

A non-participating policy is one that does not offer any dividends as it does not share in the company profits. As compared to participating policies, non-participating ones are more secure, offer guaranteed returns, and tend to have lower premium rates.

Limited premium

As a limited premium policy, the IndiaFirst Life Long Guaranteed Income Plan allows you to make premium payments for a limited amount of time, and receive pay-outs for a fixed period after that. With this plan, you get the benefits of traditional insurance throughout the term of the policy, and you also do not need to wait till the end of the policy to start receiving monetary pay-outs and benefits.

How does it work?

With the IndiaFirst Life Long Guaranteed Income Plan, you have a policy term of 10 years. You can choose a limited premium payment tenure of 5, 6, or 7 years. Based on the age at entry of the life assured, you either get a Definite Income Option with a fixed income period of 20 years or a Whole of Life Income Option with guaranteed income till you reach 99 years of age. You can choose to pay premiums at a monthly, quarterly, half-yearly, or yearly frequency. You can also choose to add IndiaFirst Life Waiver of Premium Rider and IndiaFirst Term Rider to this policy.

Here’s an example to help you understand the policy better:

At 40 years of age, Mr. Sharma purchased the IndiaFirst Life Long Guaranteed Income Plan. He received a Whole of Life Income option based on his age at entry. He pays an annual premium of Rs. 1,00,000 (exclusive of taxes) for a premium payment term of 5 years and a policy term of 10 years.

He opts to receive an annual income benefit which shall be Rs. 40,000 (40% of annualized premium) during the income benefit period starting from the end of the policy term up to the age of 99 years. He will also receive a lumpsum amount of Rs. 5,00,000 (return of total premiums paid, excluding rider premium, modal loading factor, applicable tax and underwriting, extra premium, if any) at the end of the income benefit period.

In case of his death during the policy term, his loved ones receive the sum assured on death which is Rs. 11,69,000 in this case. He/his nominee can opt to receive this death benefit as a lump sum or in instalments over a period of 5, 10, or 15 years.

In case of his death during the income benefit period, his nominee shall continue receiving the future income benefit till the end of the income benefit period. At the end of the income benefit period, total premiums (with aforementioned exclusions) paid under the policy shall be paid to the nominee. The nominee shall have an option to receive the future benefit as a lump sum.

What are the key features of the IndiaFirst Life Long Guaranteed Income Plan?

• Enjoy the limited premium option by choosing to pay for 5/6/7 years for a 10-year policy. This way you pay for a shorter period and enjoy long-term benefits.
• Get guaranteed income to support you in fulfilling your financial goals.
• Give a boost to your lifestyle needs with the Definite Income Option wherein you get guaranteed income for a fixed period of 20 years or the Whole of Life Income Option wherein you get guaranteed income pay-outs till 99 years of age.
• Enjoy the return of total premiums (with aforementioned exclusions) paid at the end of the income benefit period.
• Get 100/115% of all the premiums paid at the end of the income period basis annual premium payable.
• Get the flexibility to receive the death benefit as a lump sum or as regular income pay-outs for 5,10 or 15 years.
• Expand your plan with optional IndiaFirst Term Rider and IndiaFirst Life Waiver of Premium Rider for enhanced benefits.
• Avail of the tax benefits that may be available on the premiums paid and benefits received as per prevailing tax laws.

What are the Income Benefit Options under the IndiaFirst Life Long Guaranteed Income Plan?

Depending on the age at the time of buying the policy, there are two different Income Benefit options for the life assured under the IndiaFirst Life Long Guaranteed Income Plan:

Definite Income Option

If the age at entry of the life assured is between 8 to 29 years, the Definite Income Option is applied to your policy. Under this option, a percentage of the annualized premium is paid as regular income for a fixed income period of 20 years starting from the end of the policy term.

The income benefit to be gained depends on the chosen premium payment term. This income benefit is a percentage of the annualized premium payable. In the case of a 5-year premium payment term, the income benefit is 45%. The income benefit is 50% and 60% for premium payment terms of 6 years and 7 years, respectively.

Whole of Life Income Option

If the age at entry of the life assured is between 30 to 60 years, the Whole of Life Income Option is applied to your policy. Under this option, a percentage of annualized premium is paid as regular income pay-out, starting from the end of the Policy Term up to 99 years of age.

In this case, the income benefit which is a percentage of the annualized premium payable is dependent on the life assured’s age at entry and chosen premium payment term.

For those between 30-45 years of age at the time of entry, the income benefit stands at 40% for a 5-year premium payment term, 45% for a 6-year premium payment term, and 55% for a 7-year premium payment term.

For those between 46-60 years of age at the time of entry, the income benefit stands at 35% for a 5-year premium payment term, 40% for a 6-year premium payment term, and 50% for a 7-year premium payment term.

In all cases, at the end of the income period, total premiums (with aforementioned exclusions) paid under the policy will be returned to you or the nominee and all benefits under the policy shall cease.

What are the eligibility criteria to buy the IndiaFirst Life Long Guaranteed Income Plan?

View the Sum Assured Multiplier table here.

• The entry age for applying is 8 to 29 years for Definite Income Option, and 30 to 60 years for Whole of Life Income option
• The premium payment terms are 5,6, or 7 years for a fixed 10-year policy term
• The Income Benefit Period is fixed for 20 years for Definite Income Option, and till 99 years of age for Whole of Life Income Option
• The minimum basic sum assured is Rs. 2,40,000, and there is no maximum limit on the sum assured.
• The minimum premium is Rs. 24,000 yearly, Rs. 12,286 half-yearly, Rs. 6,216 quarterly, and Rs. 2,088 on a monthly frequency, with no limit on the maximum premium amount.

View the Sum Assured Multiplier table here.