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Guaranteed return plans offer up to 6.9% tax-free returns from day one, remaining unaffected by future interest rate changes or market fluctuations
FDs, which were considered safe investments, no longer offer the same returns as before. (Representative/Shutterstock)
The financial environment is continually evolving, with interest rates fluctuating and the stock market remaining unpredictable. This uncertainty has prompted many in India to reconsider their financial planning strategies.
Previously, investments were made in fixed deposits (FDs), recurring deposits, or market-based schemes with little consideration. Nowadays, people are seeking options that are stable, low-risk, and capable of securing their financial future for years to come.
In this context, guaranteed return plans (GRP) have emerged as a new source of relief and trust for many investors.
The primary advantage of guaranteed return plans is that they offer up to 6.9 percent tax-free guaranteed returns from the outset. These plans remain unaffected by future interest rates or market downturns, which makes them appealing as safe and stable investment options. These schemes attract a wide range of investors, from daily savers to those contemplating long-term investments.
Pavitt Laul, Head of Investments at Policybazaar.com, highlighted that the assured and stable returns are the main reason for the increasing popularity of GRP.
Previously, FDs, which were considered safe investments, no longer offer the same returns as before. With a guaranteed return plan, returns are locked in from the moment of purchase. For instance, FD interest rates were around 9 percent in 2011 but had dropped to 6.05 percent by 2025. This decline makes it increasingly difficult to outpace inflation with such returns. Conversely, GRP guarantees fixed returns for the entire period, regardless of market fluctuations.
Why Guaranteed Return Plans Are So Popular
- Tax savings on investments under Section 80C.
- Tax-free maturity benefits on annual premiums up to Rs 5 lakh under Section 10(10D).
- Fixed interest rates throughout the policy period.
- Tax-free maturity amount.
- Compound growth at a fixed rate.
The entire maturity amount of a Guaranteed Return Plan (GRP) is tax-free, making it more attractive than fixed deposits, where the interest income is fully taxable. This tax advantage, combined with the ability to plan for long-term goals of 10, 15, 20, or even 47 years, makes GRPs appealing to many investors.
Another advantage is the flexibility in payment options:
- Investors can opt for a lump sum at maturity.
- They can choose monthly or annual payouts for 5 to 30 years.
- Immediate income plans are available for those who want returns right after investing.
- Some plans provide a steady income later in life, functioning like a pension.
This flexibility allows every investor to select an option suited to their life goals and budget.
GRPs are not just investment tools—they also include life insurance cover, providing financial security for the family and ensuring that long-term goals remain achievable even in the absence of the breadwinner. This combination of tax benefits, flexibility, and security is why GRPs are increasingly popular, especially among young parents, middle-class families, and new investors.\
Disclaimer:Disclaimer: The views and investment tips by experts in this News18.com report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decisions.
November 25, 2025, 19:30 IST
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