Capital Guarantee Solution

Capital guaranteed investments are specifically designed financial products that combine the features of two or more products . Axis Max Life Insurance has introduced Capital Guarantee Solution 1 to serve as a life insurance solution to help you reap market-linked returns through the Axis Max Life Online Saving Plan and provides the confidence of guaranteed returns with Smart Wealth Advantage Guarantee Plan along with the provision of life insurance cover.

Under the capital guaranteed investments, the capital is entirely secure throughout the policy period, promising 100% capital returns to the investor and they also benefit from the market's linked return through money invested in funds of their choice which could be debt, equity, balance or a combination.

Before we understand more about how capital guarantee solution works, it is crucial to know more about the components that make up this solution – Axis Max Life Online Savings Plan and Smart Wealth Advantage Guarantee Plan. Let’s take a look at how these plans work:

Capital guarantee investments are becoming more popular because of their earning potential. However, as an investor, you would want to know what happens to your hard-earned income when you invest it in a policy. Hence, let’s understand how capital guarantee investments works in detail by considering the case of Mr. Mehra.

Mr. Mehra is 35, working as a government servant. He wishes to save for his dream house by finding the right investment vehicle. As a salaried man, he is worried about investing in market-linked products because of the volatile nature of returns.

He decides to play it safe by investing his money in a Capital Guarantee Solution. He makes a monthly investment of Rs. 20,000 for the next 5 years (premium payment term) and stays invested till the next 20 years (policy term).

Let’s take a look at both components of a Capital Guarantee Solution to understand how it works in both aspects for Mr. Mehra:

This table shows how the capital guarantee solutions differ from other common types of investment plans in India.

Capital guarantee plans offer a balanced approach and several benefits. Here are some of the key benefits of capital guarantee solutions:

• Assured payout at maturity

At the end of the term, you will receive the full invested capital with accumulated gains. This maturity amount provides stability and predictable planning. Since the principal invested is not at risk, this plan is also suited to the needs of conservative investors.

• Life cover for the entire term

This plan offers financial protection for your family throughout the policy term via death benefits of the plan. The nominee is liable to receive the benefit in the event of the life insured’s demise during the policy term.

• Capital Guarantee

Volatile markets may reduce earnings but cannot impact your protected capital. This way, you get a safer path to build your financial base.

• Long-Term Wealth Creation

A capital guarantee plan helps you build wealth in the long-term by allocating a portion of your premiums towards market-linked instruments. You can choose from a wide range of funds based on your risk appetite.

• Tax Benefit

A capital guarantee solution provides tax benefit on all premiums paid under Section 80C of the Income Tax Act. In case the plan is purchased with a critical illness and disability ride, the premium paid for the add-on is eligible for Section 80D benefit. What’s more, the maturity amount obtained from a capital guarantee plan is eligible for tax exemption under Section 10 (10D) of the Income Tax Act.

Capital guarantee plans suit different types of investors. Below are some key types of individuals who may benefit from capital guarantee solutions:

• Salaried Individuals

Salaried individuals may prefer a steady and safe long-term investment to secure their post retirement finances. A Capital guarantee solution protects their savings and supports long-term wealth creation..

• Self-Employed Professionals

As self-employed professionals face income fluctuations, they require stable financial protection. A capital guarantee plan brings that stability and encourages disciplined long-term investments.

• Long-Term Goal Seekers

People saving for a house, retirement, or their children’s higher education may be seeking predictable outcomes. A capital guarantee solution can help them stay on track to reach these goals.

• Investors With Low Risk Tolerance

Investors with low risk tolerance tend to avoid high volatility of their investment capital. The plan ensures that the principal amount invested is at no risk at any time.

• People Wanting Both Life Cover & Wealth Creation

These are individuals who want both growth and protection from a single plan. A capital guarantee plan offers the dual benefit along with the benefit of market-linked wealth creation .

• Investors Who Prefer Assured Outcomes

These investors want clarity on maturity values. Guaranteed capital supports such expectations by guaranteeing a minimum level of return. Returns beyond this minimum level are dependent on the market-linked investments made by the plan.

• First-Time Market Investors

First-time investors may choose to avoid purely market-linked investments. This plan is suitable for them, as it provides partial exposure to the potential of high growth with complete safety to the capital invested.