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Guaranteed Income Plans for Young Adults

  5/22/24 7:34 AM

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  5/22/24 7:34 AM   |

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In our twenties, we have big hopes for the future. Financial planning is vital for making these dreams a reality. It allows us to buy a home, a car, or plan a vacation without incurring financial hardship. However, when you're a young adult attempting to help out with your family's finances, how realistic is that?

The reality is that 69% of Indian households do not have financial security, underscoring the critical need for improved financial literacy and planning education. By learning these skills early on, we may lay the groundwork for a secure and wealthy future. In the early stages of your job, your income may be low, and you may wish to invest whatever you can spare in safer investments. This is where guaranteed income plans can be a godsend for young adults, enabling them to achieve financial security and meet their responsibilities without any hitches.

Here’s learning more about guaranteed income plans for young adults and what they entail.

What is a Guaranteed Income Plan?

Guaranteed income plans are suitable for investors with lower risk appetite/tolerance.

They offer regular guaranteed payouts to keep you financially secure in addition to the maturity and death benefits provided by a life insurance policy. These are their two key advantages. Since they promise a fixed and regular income either yearly, monthly, or quarterly as selected by the policyholder or their nominee, these plans are known as guaranteed plans.

How Do Guaranteed Income Plans Help Young Adults?

As the name suggests, guaranteed return investment plans offer a fixed stream of income, while also providing life cover for the investor. A guaranteed income will benefit young adults by making it easier for them to meet basic needs, reducing stress, and helping them achieve certain financial goals at critical stages of their lives.

Young adults spend most of their funds on housing, transportation, and food—costs that increase significantly when they become financially independent. A guaranteed income will make it easier for young adults to plan and pursue their goals and increase opportunities to save, invest, and gain more access to financial freedom.

What Are the Features of a Guaranteed Income Plan?

Here are some of the key features offered by guaranteed income plans:

  • Comprehensive Coverage: Assured returns, maturity benefits, and life insurance are all included in guaranteed income savings plans. They are therefore a well-rounded choice for financial security.
  • Suitable for Various Age Groups: These plans cater to a wide age range. A guaranteed income plan is accessible to everyone between the ages of 18 and 65, thus being suitable for various life stages too.
  • Flexible Policy Periods: The policy term for such plans varies between 10 years and 30 years and can be chosen as per your requirements and goals.

What Are the Advantages of a Guaranteed Income Plan for Young Adults?

A guaranteed income plan comes with a lot of advantages for young adults, including the following:

  • Riders: Your guaranteed income plan can be tailored by adding different riders to increase the extent of your coverage, much like life insurance policies. Typical riders include benefits for waiver of premiums, accidental death benefit, critical illness rider, payor waiver benefit, and others.
  • Benefits from Taxes: Purchasing a guaranteed income plan has tax advantages. Under Section 10 (10D) of the Income Tax Act, the maturity benefit is free from income taxes. At the same time, the premiums you pay are also eligible for tax deductions under Section 80C, thereby leading to higher savings in the long run.
  • Long Term Benefits: With a guaranteed income plan, you can opt for a longer policy term to save money on premiums every year and build up an adequate fund for attractive returns at maturity. You can handle your normal costs and any other family commitments with the accumulating fund and consistent income, which will lessen your financial burden down the line.

For instance, let's say that after six years, you want to launch a new company. If that is the case, you will need to make sure that your family has a consistent source of income until you reach a point in your business where you are earning a consistent income. Guaranteed income plans can be of immense help with regard to avoiding such financial difficulties. Note that you will need to choose a plan with a suitable tenure to ensure that the benefits reach you at the desired time.

Conclusion

Young adults who end up taking on more responsibilities in the early stages of their lives and careers, right from educational costs to household expenses, need an investment option that will reward them properly in the long run, without incurring any major risks for their small savings amount. This is where a guaranteed income plan may make for a solid and beneficial investment. Do check out the offerings of Edelweiss Life Insurance to get a lifelong companion for your guaranteed income!

 

Aastha Mestry - Portfolio Manager       
An Author and a Full-Time Portfolio Manager, Aastha has 6 years of experience working in the Insurance Industry with businesses globally. With a profound interest in traveling, Aastha also loves to blog in her free time.

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