Experts Expose Misleading "Guaranteed" Returns on Indian Insurance Policies

As of 2025-09-05T13:03:44+00:00, many Indian savers have been drawn to insurance plans that claim to offer "guaranteed" returns. The idea of earning 8% or even 10% without market risks sounds appealing, but a personal finance expert has recently exposed the gap between these promises and the reality.

According to the expert, Abhishek Kumar, a bank manager had told someone exploring such a product that they could expect a "guaranteed 8% return, maybe even 10%." However, when Kumar ran the calculations, he found that the actual internal rate of return (IRR) for the policy in question was just 6% per year, not the 8-10% as claimed.

The expert explained that the so-called "guarantee" in these products is only partial, as the cash bonus projections are not actually assured. Additionally, the money remains locked for decades, restricting liquidity, while the headline numbers often overlook costs and the time value of money.

For those seeking both protection and growth, Kumar suggests a different approach. He advises opting for term plans for insurance cover and investing in instruments like the Public Provident Fund (PPF) or mutual funds, which offer more flexibility and potentially higher returns.

While these "guaranteed return" products may still suit extremely risk-averse investors who value predictability over high returns, Kumar cautions against getting pulled in by the 8-10% pitches, as the reality is often different from the promises.

Experts recommend that before signing up for any "guaranteed return" product, savers should calculate the IRR and compare it with other options like mutual funds, fixed deposits, or government schemes. As Kumar summarized, "Always calculate the return yourself and check alternatives. The headline number may look shiny, but the reality is often different."