Income Capital Guarantee Solutions The Best Bet For Investment

The second wave of the pandemic has caused shock waves across India. We are reeling under the biggest economic recession. But, does that mean that you shouldn’t invest in these times? Or, are you confused about how to invest in the current market situation? To help customers safely navigate the markets, Policybazaar recently came up with Income Capital Guarantee Solutions — a unique plan which gives 100% capital guarantee to the investors along with the benefit of guaranteed income.

What Are Income Capital Guarantee Solutions?

Income Capital Guarantee Solution plans are a combination of Unit Linked Investment Plans (ULIPs) and guaranteed return plans. Under this plan, around 60% of the invested amount goes into the guaranteed return products and the rest goes into ULIPs. This ratio varies depending on the plan you choose. You get the maturity value based on the upside on market-linked return from the ULIP component as well as returns on the traditional guarantee plan when your policy tenure ends. You also get guaranteed income starting from the next year after your pay term gets over. Pay terms in these plans is 5 or 10 years and policy term is 25 years. If you have a long term horizon for investment and want to meet your financial goals such as child’s education, retirement, child’s marriage etc, then you should definitely invest in these plans.
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Triple benefits

The biggest advantage of the Income Capital Guarantee plan is that the premium you pay throughout the policy term is 100% guaranteed. This means, upon completion of the policy term, a customer is guaranteed to get back all the premium invested, hence safeguarding their investments in the current economic downturn. You also get a guaranteed income after your pay term ends, thus giving you peace of mind to enjoy your retirement phase.

The plan ensures zero risks to capital and returns on the upside of market-linked investments. Along with these advantages, investors also get a life cover which is 120 times of monthly premium from day 1. You can pay yearly, half-yearly, quarterly or monthly premium depending on your investment ability. Minimum premium to be paid per month is Rs 5,000, quarterly- Rs 15,000, half-yearly- 30,000 and yearly- Rs 60,000. The plan is available with HDFC Life on Policybazaar.

There are three variants of Income Capital Guarantee Solutions:

200% Capital Guarantee with income payout for 25 years

In this variant, investors get 200% returns on the invested capital. They also get guaranteed income (early liquidity option) from 12th year for 25 years. After 25 years, they get a lump sum amount from the guaranteed return component. There is also an advantage of partial withdrawal from 6th year onwards on the ULIP component. The pay term of the plan is only for 10 years. The plan is a combination of HDFC Life Click 2 Wealth and Sanchay Plus.

Let us give you an example. A 30-years-old person invests Rs 100000 for the first 10 years under this plan which is the pay term. From 12th year, he will get an annual income of Rs 58,700 till 25th year. This is from the guaranteed return component. He also gets Rs 6.18 lacs from the same component as lump sum at the end of 25th year. From the ULIP component, he gets Rs 43 lacs as lump sum when he turns 50- years old i.e. at the end of 20th year. So, the investor is getting a total benefit of Rs 64,15,000 at the end of the policy term on investing only Rs 10 lacs.

100% Capital Guarantee with income payout over 10 years

In this variant, investors get early liquidity with Guaranteed Income from 12th year of the policy. ULIP component has partial withdrawal from 6th year onwards in this variant. The guaranteed income starts from the 12th year for 10 years and ULIP component will give market upside. The plan is only for 10 years pay term. This plan is a combination of HDFC Life C2I +Sanchay Plus(Guaranteed Income).

100% Capital Guarantee with income payout for 30 years

This variant also has early liquidity option with Guaranteed Income from 7th year & ULIP can be partially withdrawn from 6th year onwards. Guaranteed income starts from 7th year for 30 years. You also get a lump sum at the end of 30 years. The pay term is for 5 years only. The plan is a combination of HDFC Life C2I +Sanchay Plus (LongTerm Income).

Why Should You Invest Right Now?

Historical data suggests that pandemic-driven market crashes are followed by big bull runs. During the SARS outbreak between January and March 2003, the Sensex had fallen by 11%. It went up nearly 80% after a year. Similarly, during the Zika outbreak, markets had fallen by 13.37% but after a year, they had risen by 27.09%. Last year, post the first wave of Covid-19, Sensex and equity markets gave excellent returns i.e. as high as 82%. Going by these trends, this may be a good time to start or even restart investing.

Sensex is likely to go up now because vaccination has been opened for people 18 years and above. Foreign vaccines like Sputnik V have also arrived in India. We are also getting help from US, European countries to speed up vaccine production. Positive developments will only boost markets in future & maximize returns. Moreover, in these uncertain times, when the markets are volatile, investing in a product that offers a 100% guarantee on the premium amount is a good option. If you invest in a pure market-linked product, you may not get good returns if the market goes down. So, if you are a risk-averse investor, Capital Guarantee Solutions is the way to go.