Par for the course: Lock in returns for long term with non-par plans

Avoid these plans if you require liquidity in the short run

Debt mutual funds lost to the indexation benefit on long-term capital gains from the start of this financial year (2023-24). Many investors are gravitating towards non-participating (non-par) plans of insurance companies in the wake of this change in tax rules.

How do these plans work?

Traditional (non-unit linked) plans are of two types: participating (par) and non-par. Returns of par plans are not guaranteed as they depend on insurer performance.

“Non-par plans don’t participate in the insurer’s profits. Their returns are also not market-linked. Hence, they can offer guaranteed returns,” says Deepesh Raghaw, Securities and Exchange Board of India-registered investment