Second Income Risk

Guaranteed Plans

An investment plan is an insurance plan that helps you in saving wealth for the future. The premium payments are used to build a savings corpus, and to provide life cover
to you and your family. People choose investment plan because it provides an opportunity to grow their wealth to fulfil their future goals. 

Investment Plans provide the opportunity to create short-term and long-term wealth for the future. They help you meet your financial goals like child’s education, buying
a house, car, or even your dream vacation by accumulation of wealth over a period. Investment plans help you save in a systematic manner, protect your loved ones, and
save on taxes.

For example, a guaranteed income plan can help you in building the engines of income for tomorrow with life cover and tax benefits

Benefits :  Financial Protection Short and long-term goals such as child’s marriage, education, retirement, etc. can be fulfilled if you carefully plan your investments 

1 Good Returns Returns on investment plans are usually better if you consider post-tax yields compared to other investment options (especially in Unit-Linked Insurance Plans)

 2 Tax Benefits You get a tax deduction for the premium you pay under Section 80C and the money you receive on maturity is tax-free under Section 10 (10) D of the Income Tax Act. Please note that different plans have different tax exemptions and you are advised to carefully evaluate the same. 

3 Riders Benefits You can add riders like Critical Illness, Accidental death, waiver of premium, etc.

Variable plans/Par Plans

What is a Participating Term Insurance Plan?

A participating or par policy provides the policyholder with profit-sharing benefits. Say you purchase a policy from a life insurance company. Over the financial year, the company earns certain profits. If you have a participating plan, you receive a portion of these profits as a benefit against your policy. You receive the benefits as a bonus or dividend. You could receive the payouts every year and can use the money to:

• Offset your premium payment for the following year
• Earn interest by depositing the amount with the insurer

  A Quick Comparison

We can better understand the differences between these two plans by comparing crucial points of difference:

	Participating Policy	Non-Participating Policy
Meaning	As a policyholder, you receive a portion of the insurance company’s profits as an annual dividend payout. These plans are also called par or with-profit policies.	You do not receive any profits or dividends from the insurance company. These plans are also known as non-par or without-profit policies.
Non-Guaranteed Payments	You receive a bonus or dividend every year. The amount will change each time, and the benefit is not guaranteed. In a year of poor performance, the profit could be minimal.	Since there’s no profit-sharing, there are no non-guaranteed payments.
Guaranteed Payments	The bonus is not a guaranteed payment. The amount depends on the insurance company’s performance and profit earned during the financial year.	The plan offers a guaranteed maturity and death benefit payout. The individual does not have to worry about market fluctuation or the insurance company’s performance.

You can choose between a par or non-par policy based on your individual needs. What you cannot deny, however, is that you must purchase a life insurance policy. 

HDFC Life Sanchay Par Advantage Plan vs HDFC Life Sanchay Plus.

“Sanchay Par” gives Guaranteed Income during the income term that increases every year whereas “Sanchay Plus” is for Steady retirement income with Life Long Income Option.