In the modern era and age, it is essential to maintain financial stability which has become quite difficult for everyone.
On the basis of the requirements of financial stability in one’s life, the insurance companies have brought the benefit of various guaranteed life insurance with guaranteed returns. Some traditional insurance plans offer fully guaranteed returns whereas some offer partially guaranteed returns.
This innovative insurance policy is a traditional plan which comes with a bonus facility. The insurance holders of this policy are not required to worry about the ups and downs of the market; rather they will get to enjoy the maximized returns on their investments.
Traditional life insurance plans provide multiple benefits to the policy-holders like a fixed income return in case of death or maturity of the term, tax benefits, and risk cover.
Traditional Insurance plans are the oldest plans and cater to individuals with a low-risk appetite. Traditional Insurance plans usually offer guaranteed maturity proceeds and they invest in low-risk return options.
Unlike a term life insurance policy, this type of plan never runs out. In case of an inevitable death of the policy-holder, the insurance payout is made to the policy’s nominee or beneficiaries.
This plan also is known as whole life insurance, money back, or endowment insurance.
Whole Life Insurance: A traditional insurance policy contains that is a life insurance policy that is guaranteed for the entire lifetime of the insured individual.
Endowment Plans: These types of traditional insurance plans are a combination of both insurance and investment policy, and the death benefits are paid in lump-sum along with the bonuses (if any).
Money-Back Policies: These types of traditional insurance plan provide life coverage during the term of the policy, and maturity benefits are paid in installments to the policy-holder.
Why we opt traditional insurance plan?
Following are some circumstances under which an individual should opt a Traditional Insurance Plan:
- Looking for guaranteed returns on premium
- Looking for risk coverage
- Looking for tax saving
- Cash flow for future life events like a child’s education and marriages
1. As a traditional life insurance plans work on the 90/10 ruling in the industry. The insurer can retain only 1/10 part of the profits. The rest of the profit is shared with customers in the form of bonuses that are declared under profit traditional plans.
2. Under the traditional life insurance plans, policy-holder gets higher returns on the investments and offer built-in guaranteed benefits without any chances of mis-selling.
3. A traditional life insurance plan makes for a risk-free option, as the investment risk is entirely borne by the insurer or insurance company.
4. Traditional Insurance Plans provide more protection as compared to ULIPs (Unit Linked Insurance Plan).
5. Traditional Life Insurance Plans provide death benefits to the policy-holder. If the policy-holder dies an unfortunate death during the term of the premium payment policy, the nominee of the policy will receive the basic sum assured in the policy along with bonuses if any, and other benefits provided under the life insurance policy.
6. The Traditional Life Insurance Plan offers Income Tax Benefits as tax deduction under Section 80(C) for every year. Tax exemption under Section 10(10D) is also available on the proceedings of the maturity amount but it is subjected to certain terms and conditions stated in the insurance policy.
Best Traditional Plans in India 2020
- Max Life Guaranteed Monthly Plan
- LIC New Jeevan Anand Plan
- Aegon Religare iTerm insurance plan
- Aviva i- Life Plan
- Tata AIA Life Insurance Fortune Guarantee Plan
- Bajaj Goal Suraksha Plan
- HDFC Life Sampoorn Samridhi Plus Plan
- SBI Life Smart Money Back Gold Plan
- Canara HSBC OBC Smart Stage
- Birla Sun life Vision Endowment Plan