Capital Guarantee Solutions: How to Secure Your Investment with Assured Return
You have probably heard countless times that investing in the stock market is key to growing your wealth. While market-linked products can offer attractive returns, they also come with the risk of losing your hard-earned capital. This lingering uncertainty can make even the most seasoned investors anxious. But what if there was a way to invest in market-linked funds without the fear of losing your initial investment?
Capital guarantee solutions are an answer to this problem. Not only do these plans let you invest in market-linked funds, but they also safeguard your invested capital. Let’s find out how.
What is a capital guarantee plan?
A capital guarantee plan combines the features of a Unit Linked Insurance Plan (ULIP) and a guaranteed return plan. It allows you to invest in market-linked securities like a ULIP and offers you a 100% guarantee on your capital, like a guaranteed return plan.
While your money gets a chance to grow by participating in the market, you can rest assured of receiving your entire invested capital back at maturity, irrespective of the market conditions.
Features and benefits of a capital guarantee plan
Below are some features and benefits of investing in a capital guarantee plan:
1. Guarantee of capital
As the name suggests, capital guarantee solutions offer a 100% guarantee on the return of your invested capital. This ensures that you get your initial investment back irrespective of the market performance. These plans eliminate uncertainty from your investment and add financial security, knowing no matter what, you will receive your capital at the end of the policy term.
2. Potential for wealth creation
Since capital guarantee plans invest in a variety of market-linked securities, such as equity, debt and hybrid funds, you get an opportunity to grow your wealth. You can invest in different funds of your choice and grow your wealth over the years. These plans can be used to prepare for several financial goals, like retirement, house ownership, major purchases like a car and more.
3. Tax benefits
The premiums paid up to ₹ 1.5 lakh per annum qualify for a tax deduction under Section 80C of The Income Tax Act, 1961. Additionally, the returns received from the policy are also exempt from tax under Section 10(10D) of the same Act, subject to certain conditions. These dual tax benefits allow you to save more money along the way and earn a higher yield.
4. Life cover
In addition to the investment component, capital guarantee solutions provide a life cover to safeguard the financial well-being of your loved ones. In the unfortunate event of the policyholder's untimely passing during the policy term, the nominee is entitled to a guaranteed death benefit. This payout helps ensure that their financial needs are met by offering support during an emotionally and financially challenging time.
5. Portfolio flexibility
Capital guarantee solutions offer a wide range of funds for you to choose from. Broadly categorised into equity, debt and hybrid funds, you can build a portfolio of suitable options aligned to your risk appetite and financial goals. Moreover, these plans also allow you to switch back and forth between funds to make the most of emerging opportunities. You can make these switches as many times as you want and completely free of cost.
6. Flexible premium payment term
You can pay the premium for a capital guarantee plan using flexible premium payment terms. These plans allow you to select a term based on your preference, such as monthly, quarterly, or annually. You can easily accommodate the plan into your budget without interrupting your other financial goals.
7. Systematic Withdrawal Facility
The capital guarantee solution plan features a Systematic Withdrawal Facility (SWP). The SWP features allow you to make free withdrawals as per your liquidity needs. You can access your funds anytime you want without disrupting your overall investment strategy.
Conclusion
Capital guarantee solutions offer a smart way to plan for your future goals by allowing you to participate in market growth without the risk of losing your capital. These plans are ideal for investment-minded individuals, even if you have a low-risk appetite. With a blend of capital security and growth potential, they are a unique investment option that should not be overlooked.
Disclaimer: This article is published in association with ICICI Prudential and not created by TNM Editorial.