How Are Traditional Plans And Guaranteed Plans Different?
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One of the easiest ways to save for retirement is to buy a traditional (fixed) life insurance policy. These policies offer a guaranteed payout if you die, and your spouse will receive the rest of the money.
To buy a traditional plan, you must have a job or be self-employed and have enough income to pay monthly premiums. What's more, these policies usually come with a rider that requires you to pay for 20% of your health expenses as long as you're alive.
However, there are many kinds of life insurance plans out there. And each has its pros and cons. Willing to know more about traditional and guaranteed plans? We’ve got you covered.
What are Traditional Plans?
If you are a person who isn’t interested in taking the risks associated with different insurance plans then, traditional plans are the best option for you to avail. These plans are the most primitive version of the insurance plans and have several benefits associated with them.
Traditional plans are often regarded with different terms like money-back insurance, endowment insurance, and whole life insurance. Traditional plans are perfect for individuals with a wish to get lifetime coverage over their premiums.
A whole life insurance plan will cover you for your complete lifetime, i.e., you can receive the benefits throughout your lifetime. Money-back insurance will provide you coverage during your policy tenure and till the fulfillment of the same. Lastly, an endowment plan is the best alternative for those who are willing to receive bonuses on their premiums. Endowment plans offer you coverage along with bonuses after the maturation of the policy or after your demise.
Pros of Traditional Plans
Traditional plans offer some distinct benefits which make them a likable option to many investors. Some pros are listed below:
- Financial stability for longer durations
- Assured returns for your premiums
- Tax exemptions
- Effortless cash withdrawals for urgent situations
- Well-structured risk coverage offered
What are Guaranteed Plans?
Guaranteed plans are assured life insurance plans wherein you will receive coverage for sure. Whatever the case, maturation of the policy or death of the policyholder, you are authorized for receiving the guaranteed benefits.
Guaranteed plans are a great source of investing your money, gaining coverage, and receiving extra savings on the same. Thus, if you wish to receive extra capital or if you are willing to expand your finances. Then, guaranteed plans are the best option for you to increase your financial output.
Pros of Guaranteed Plans
Guaranteed life insurance plans come with astounding benefits handy. Some alluring benefits that guaranteed plans cater to you are:
- As the name suggests, they offer you guaranteed returns for all plans which can be received altogether after the maturation of policy or when you wish to receive them during the tenure.
- If you are honest with paying your premiums regularly, then you can receive full-fledged death benefits without any hassle.
- Tax exemptions are offered in guaranteed plans as well.
- Flexibility in choosing the duration for paying the premium.
- Offers an extra income after your retirement years.
Differences Between Traditional and Guaranteed Plans
Differences between traditional and guaranteed plans are clear. With guaranteed plans, you get the fixed claim of your premiums along with the bonuses. On the contrary, traditional plans are best suited for people who don’t wish to stake their money at risk.
Conclusion
Both traditional and guaranteed plans have their set of advantages and disadvantages. After having a clear discussion with your insurer you can select a plan that best suits your needs.
Also read: Essential Documents For Buying Term Insurance Plans
