In India, we all look for safe and reliable investment options. Fixed Deposits (FDs) have long been a favorite because they offer guaranteed returns. However, there’s a little-known option that can give you similar returns while offering more benefits: Life Insurance plans that work like an FD. These plans not only offer safety but also come with the added benefits of life cover, tax-free returns, and financial protection for your loved ones. In this article, we’ll explore the top 5 life insurance plans that give you returns like FDs, but with added advantages!
Why Life Insurance Over Fixed Deposits?
Before diving into the specific plans, let’s understand why life insurance is a better choice than a fixed deposit (FD).
- Tax-Free Returns: In India, the interest earned on fixed deposits is taxable, which means the returns are not fully yours. However, the returns from life insurance policies are tax-free under Section 10(10D) of the Income Tax Act.
- Financial Protection: A life insurance plan provides you with financial protection in case of an unfortunate event. An FD, on the other hand, does not offer any life cover.
- Higher Returns: Many life insurance plans, such as endowment plans or ULIPs, offer higher returns compared to traditional FDs.
- Risk Coverage: While FDs are relatively safe, they don’t cover you against any uncertainties in life. With life insurance plans, your family gets financial security in case of your sudden death.
Now that we understand the benefits, let’s take a look at the top 5 life insurance plans that provide returns like an FD.
1. LIC Jeevan Anand – Endowment Plan with Bonus Facility
Overview:
LIC’s Jeevan Anand is a combination plan that gives you the benefits of both risk cover and investment returns. It’s a non-linked, with-profits endowment plan that offers the benefits of a risk cover during the policy term and a lump sum benefit at the end of the term.
Key Features:
- Tax-free returns under Section 10(10D).
- You can earn bonuses that are paid out along with the sum assured.
- Premium waiver in case of total disability.
- Flexible tenure options (5, 10, 15, or 20 years).
Why it’s like an FD:
This plan gives you regular bonuses, and the returns are more than typical FD returns, plus it’s tax-free.
2. HDFC Life Sanchay Plus – A Traditional Plan with Assured Returns
Overview:
HDFC Life Sanchay Plus is a traditional life insurance plan offering guaranteed returns. It also offers a lump sum payout at the end of the policy term, making it a safe and reliable option for those who want to enjoy FD-like returns but with life cover.
Key Features:
- Guaranteed returns that are predictable and tax-free.
- The option to receive the payout either as a lump sum or in installments.
- Covers life risk while offering a fixed income return.
- Bonus facility for added returns.
Why it’s like an FD:
The returns from this plan are similar to FDs, but they come with the added advantage of life cover and tax benefits.
3. Bajaj Allianz Life Insurance – Save Assure Plan
Overview:
The Save Assure Plan from Bajaj Allianz is a traditional endowment plan that offers assured returns. It provides tax-free benefits at maturity and life coverage. Additionally, you get bonus additions throughout the policy term.
Key Features:
- Offers maturity benefits and bonus additions.
- Tax-free returns on maturity.
- Life cover for the entire policy period.
- Flexible premium paying options.
Why it’s like an FD:
The returns are assured and tax-free, making it a great alternative to FDs, with the added bonus of life insurance protection.
4. ICICI Prudential Life – ICICI Pru LifeTime Super
Overview:
ICICI Prudential LifeTime Super is a non-linked endowment plan that offers guaranteed additions and life cover. It’s designed for individuals who are looking for a plan that combines long-term savings with life protection.
Key Features:
- Guaranteed additions during the policy term.
- Tax-free returns under Section 10(10D).
- Offers flexibility in premium payment terms (single pay, limited pay, or regular pay).
- Provides life cover along with the savings benefit.
Why it’s like an FD:
With its guaranteed returns and tax-free payouts, it’s an excellent FD alternative that also covers your life insurance needs.
5. SBI Life – Smart Bachat Plan
Overview:
SBI Life’s Smart Bachat Plan is a non-participating endowment plan. It is a simple plan that offers life insurance as well as the benefit of tax-free returns. This plan is designed for people looking for guaranteed returns and security for their family.
Key Features:
- Guaranteed benefits on maturity.
- The option to choose the premium payment term.
- Tax-free returns on maturity and death benefits under Section 10(10D).
- Provides life coverage for the policyholder.
Why it’s like an FD:
This plan gives you guaranteed returns and is a great way to ensure that your family is protected while you earn tax-free returns on your savings.
Key Benefits of Life Insurance Plans Over Fixed Deposits
1. Higher Returns
While FDs give fixed interest, life insurance plans, especially endowment plans, can offer better returns with the benefit of bonuses.
2. Tax-Free Returns
Under Section 10(10D) of the Income Tax Act, the returns from life insurance policies are tax-free, whereas FD interest is taxable.
3. Life Protection
These plans provide life coverage, ensuring that your family is financially secure if something were to happen to you.
4. Flexibility
Life insurance plans often offer the option to choose your premium payment term, which can help in planning your finances better.
Conclusion
If you’re looking for safe, reliable returns like those from an FD but with added life coverage and tax-free benefits, life insurance plans are the way to go! The five options we discussed—LIC Jeevan Anand, HDFC Life Sanchay Plus, Bajaj Allianz Life Insurance Save Assure Plan, ICICI Prudential Life ICICI Pru LifeTime Super, and SBI Life Smart Bachat Plan—are all great choices that give you FD-like returns, plus extra security.
So, don’t just settle for FDs—invest in life insurance that not only secures your future financially but also ensures the financial security of your loved ones in your absence.