Difference Between Guaranteed Savings Plan and Guaranteed Income Plan
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Difference Between Guaranteed Savings Plan and Guaranteed Income Plan

Difference Between Guaranteed Savings Plan and Guaranteed Income Plan
  • 26th Apr 2022 |
  • 2,964

As our lives get modernized with the growth of technologies, so do our requirements and needs. However, to ensure that we keep up the pace and update ourselves at the rate of the world around us, we need to be financially stable. Financial stability is not just about having enough in your account to sustain yourself. For many people, financial stability means having enough in the banks for a fulfilling and modern life. Now, to achieve financial stability, investment is a key process. But, the question here is where to invest to achieve stable financial growth and, at the same time, meet the requirements of our modern lives?

It is well known to us that modern problems need modern solutions. This fact highly influences even the financial world. So, it brought modern solutions for investment in the forms of Guaranteed Savings Plan and Guaranteed Income Plan.

This article will discuss the Guaranteed Savings Plan and Guaranteed Income Plan and tell you about the difference between Guaranteed Savings Plan and Guaranteed Income Plan. Once you understand the key points of the guaranteed savings plan vs guaranteed income plan, you will know which one is the best fit for you and your long-term goals.

Difference Between Guaranteed Savings Plan and Guaranteed Income Plan

What is a Guaranteed Savings Plan?

Straightforwardly, Guaranteed Savings Plan, also known as GSP, is a non-participating non-linked endowment life insurance plan. Too technical, right? Let us make it simpler for you.

GSPs are generally non-participating plans that have no role for the policyholder in investment matters, and the insurance company manages the whole fund. Additionally, GSPs also offer an endowment assurance at a fixed amount. As per the terms of GSP, you have to pay the premiums for a fixed tenure, and once the plan achieves maturity, you are entitled to its benefits. In addition to the fixed annual rate of interest component, these benefits also include advantages such as maturity bonuses and loyalty rewards, depending on the insurer.

What is a Guaranteed Income Plan?

A Guaranteed Income Plan (GIP), also known as Assured Income Plan, is a savings-cum protection plan. Many would say that it is a traditional plan. However, this plan follows traditional investment techniques in a modern way. This plan is also a dual benefit plan. Unlike ULIP plans, they do not offer short-term maturity. These are non-participating and do not allow you to participate in the investment strategy.

GIPs are investment tools that help you save money while providing a life cover for 30 long years. This gives you financial protection for you and your family from uncertainties and your absence.

In simple terms, GIPS are traditional non -participating insurance plans with a modern investment approach that offer maturity and death benefits. They have a very long maturity period and serve as a 2nd source of income post-retirement and your pension amount to help you meet the post-retirement requirement.

So, both the Savings Plan and Guaranteed Income Plan are a great choice for long-term financial stability. First, however, you must understand the difference between both of them.

Difference Between Guaranteed Savings Plan and Guaranteed Income Plan

Parameters

Guaranteed Savings Plan

Guaranteed Income Plan

Premiums

Annually or Installments

Annually or Installments

Policy Term

Min: 7 Years

Max: 10 Years

Min: 10 years

max: 30 years

Maturity Benefits

Guaranteed maturity benefit + Guaranteed additions

Assured income payout + lump sum benefit at the end of policy term

Taxability

Upto ₹1,50,000/- deducted under 80C per annum

Upto ₹1,00,000/- deducted under 80C per annum

Loan benefits

Yes, maximum up to 80% of the prevailing surrender value

Not available

Opting either of these plans depends on your financial goal and you must ensure that you don’t miss out on the premiums to avail maximum benefits from these plans.

Kotak e-Invest

In this policy, the investment risk in the investment portfolio is borne by the policyholder.

Features

  • Return of Mortality Charges*$
  • Enhanced Protection
  • Multiple Plan Options
  • Zero Premium Allocation Charges
  • Tax Savings^

Ref. No. KLI/22-23/E-BB/521

T&C

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