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Fixed Income Investment Schemes That Offer Guaranteed Returns

Fixed Income Investment Schemes That Offer Guaranteed Returns
October 23, 2023


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

When it comes to investing, risk-averse individuals often choose fixed income investment schemes to secure their financial future. They offer a sense of stability and security as they guarantee regular returns. Let’s explore some of the most popular fixed income investment schemes in India that offer guaranteed returns for investors seeking a reliable source of income.

What Are Fixed Income Investment Schemes?

Fixed income investment schemes allow individuals to invest a predetermined amount for a specific period. In return, the investment provides a fixed interest income. The principal amount remains intact throughout the investment tenure, ensuring a certain level of safety for investors.

Popular Investments Offering a Fixed Income

  • Public Provident Fund (PPF)

    The PPF is a government-backed savings scheme offering attractive interest rates and tax benefits. Investors can deposit a minimum of Rs. 500 and up to a maximum of Rs. 1.5 lakh annually in their PPF account. They must stay invested for 15 years and can increase the tenure in five-year blocks. The PPF interest rate gets reviewed and revised periodically, ensuring returns that outpace inflation.

    The PPF scheme’s key advantage lies in its EEE (Exempt-Exempt-Exempt) tax status. The contributions, interest earned, and maturity amount are all tax-free. Conservative investors seeking guaranteed returns and tax savings can rely on the PPF for financial stability.

  • Tax Saving Fixed Deposits (FDs)

    Fixed Deposits (FDs) by Banks or Post offices are one of the most popular and easily accessible fixed income investment options in India. FDs offer guaranteed returns over a predetermined period, with interest rates that vary based on the bank, deposit tenure, and prevailing market conditions. Investors can invest for as little as a few months or several years based on their financial goals. The amount invested in FDs enjoys tax benefits under Section 80C# of the Income Tax Act up to Rs.1.5 lakh annually. These tax saving FDs have a lock in period of 5 years and are notified by the Central Government of India. However, the interest is taxable and subject to Tax Deducted at Source (TDS).

  • Senior Citizen Savings Scheme (SCSS)

    Designed exclusively for senior citizens, the Senior Citizen Savings Scheme (SCSS) is a fixed income investment option that offers attractive returns and financial security for retirees. Eligible individuals above 60, or those above 55 who have retired on superannuation, can invest in this scheme. SCSS comes with a maturity period of five years, which investors can extend for an additional three years. The maximum deposit of Rs. 30 lakhs can be made in SCSS. The government determines the SCSS interest rate and revises it periodically.

    Investments made towards the SCSS qualify for tax deductions under Section 80C of the Income Tax Act. The interest earned is taxable. However, senior citizens can claim a deduction of up to Rs. 50,000 per year on interest earned under Section 80TTB

  • Post Office National Savings Monthly Income Scheme (MIS) Account

    The Post Office National Savings Monthly Income Scheme (MIS) Account is a fixed income investment scheme suitable for investors who want a regular monthly income. The scheme offers a guaranteed monthly payout, making it an excellent option for retirees or those seeking a steady income stream.

    Investors can deposit a minimum of Rs. 1000 and a maximum of Rs.  9 lakhs individually, or Rs. 15 lakhs jointly. The tenure of the MIS is five years; which investors can extend with the option to withdraw the accumulated interest every month. The interest earned is taxable in the hand of depositor.

  • Five-Year National Savings Certificates (NSCs)

    The five-year National Savings Certificates (NSCs) are secure fixed income investment schemes providing guaranteed returns and tax savings. Backed by the government, NSCs are available at post offices across India. Investors can purchase a certificate for denominations as low as Rs. 1000.

    The interest rates on NSCs are relatively attractive and remain fixed throughout the investment tenure. The interest earned is taxable, but being a tax-saving instrument under Section 80C, investors can claim deductions up to Rs. 1.5 lakh in a financial year.

Understanding the Importance of ULIPs in Financial Planning

Fixed income investment schemes offer guaranteed returns and are crucial for a well-balanced investment portfolio. However, investors must strike a balance between risk and reward. Apart from these fixed income schemes, it is equally essential to consider investment options with the potential for higher returns, such as Unit-Linked Insurance Plans (ULIPs).

ULIPs combine insurance coverage with investment growth in a single plan. A part of the premium goes towards life insurance coverage. The rest gets invested in equity, debt, or a mix of both funds based on the investor’s risk appetite. ULIPs offer the potential for higher returns over the long term.

Fixed income investment schemes are the backbone of a stable and secure financial plan. They offer guaranteed returns and ensure your financial well-being. Government-backed schemes like PPF, SCSS, and NSCs provide a sense of security while catering to the diverse needs of investors. Fixed income instruments can work with market-linked investments like ULIPs to offer better returns in the long run.

Before making any investment decisions, investors should carefully assess their financial objectives, risk tolerance, and investment horizon. Seeking guidance from financial experts or investment advisors can also help individuals build a comprehensive investment strategy tailored to their needs and goals.

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ARN - INT/MC/10/23/5245

Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Author Profile Written By:
Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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We at HDFC Life are committed to offer innovative products and services that enable individuals live a ‘Life of Pride’. For over two decades we have been providing life insurance plans - protection, pension, savings, investment, annuity and health.

#Tax benefits are subject to conditions under Section 80C and other provisions of the Income Tax Act, 1961.

# The afore stated views are based on the current Income-tax law. Tax Laws are also subject to change from time to time. Also, the customer is requested to seek tax advice from his Chartered Accountant or personal tax advisor with respect to his personal tax liabilities under the Income-tax law.

The Unit Linked Insurance products do not offer any liquidity during the first five years of the contract. The policyholders will not be able to surrender or withdraw the monies invested in Unit Linked Insurance Products completely or partially till the end of fifth year.

Unit Linked Life Insurance products are different from the traditional insurance products and are subject to the risk factors. The premium paid in Unit Linked Life Insurance policies are subject to investment risks associated with capital markets and the NAVs of the units may go up or down based on the performance of fund and factors influencing the capital market and the insured is responsible for his/her decisions. HDFC Life Insurance Company Limited is only the name of the Insurance Company, The name of the company, name of the contract does not in any way indicate the quality of the contract, its future prospects or returns. Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document of the insurer. The various funds offered under this contract are the names of the funds and do not in any way indicate the quality of these plans, their future prospects and returns.