Should Monthly Income Plans be Part of Your Retirement Planning

For a salaried individual retirement comes with various perks, but it also means that your active source of income is no more. At such times, relying on your savings or pension funds might not suffice, especially considering how the costs of living increase every year due to inflation; you need a proper retirement plan and a regular source of alternate income. Systematic investment in a guaranteed monthly income plan can help you get that financial security you will need in your golden years.

What are monthly income plans?

A monthly income plan is a financial product that gives investors the benefit of earning a fixed revenue every month. It is a way for investors to receive alternate and regular income through debt investments and equity-oriented funds.

Around 80% of the investment is made into debt funds, while the rest is invested into equity funds. The income generated in these plans is usually high. Moreover, the risk attached is low to moderate, making it ideal for a risk-averse investor.

Usually, monthly income plan for senior citizens and first-time investors are most availed. All investors have to do is pay the monthly premiums set under the monthly income plan. After the end of the first policy year or the completion of a few terms, you start getting fixed monthly payouts for the entire duration of the monthly income plan.

Features and Benefits of a Monthly Income Plan for Senior Citizens

As a monthly income plan carries a low to moderate risk, the major investors are those planning for retirement, senior citizens, homemakers, or lay investors. It is extremely beneficial for those looking for a regular source of alternate income. Its features and benefits include:

  • No upper limit/ restriction on investment value: The best thing about a monthly income plan is that it has no upper limit on the investment value. This means that you are free to invest according to your earning capacity and financial requirements.
  • Nominal fund management charges: The guaranteed monthly income plan has extremely less fund management charges.  There is no entry load or processing fees, and the exit load charges are only 1%. Moreover, there is also no lock-in period for a fixed monthly income plan.
  • High liquidity:  As there is no lock-in period for a fixed monthly income plan, you have the option to withdraw and convert funds invested in it at any time. This is especially useful if you face an unforeseen emergency.
  • High return rate: Apart from being more liquid than a government monthly income scheme in India (like a Post Office Monthly Income Scheme) or a retirement pension plan, monthly income plans have a higher return rate. Their rate of returns is between 10% – 12%.
  • Investment plus life insurance: Some of the best monthly income plans offer investors the dual benefit of investment plus life insurance. So, while getting regular income returns, you also get life insurance protection to secure your loved ones.

Active Income Plan from Edelweiss Tokio Life Insurance is sentence

To help you reap the maximum benefits from a monthly income plan, we have the Edelweiss Tokio Guaranteed Income Plan – Active Income Plan for you. This plan offers you benefits such as:

  • Two freedom to choose between two guaranteed income options:

» The Early Income Benefit option that gives you the income from the start of the second year of the monthly income plan.

» The Deferred Income Benefit option that gives you the income after the end of one year of the term/ paying premiums.

  • A guaranteed income until you are 99 years old for lifelong financial support to your loved ones
  •  A life insurance coverage that pays a death benefit to your family in case of your unfortunate demise
  • A guaranteed maturity benefit at the end of the monthly income plan
  •  A family income benefit that continues to pay your family the income benefit along with the maturity benefit in case you get diagnosed with a critical illness. It also waives off the burden of paying future premiums off their shoulders.
  • The choice of taking a loan from the monthly income planin case of an emergency
  • The liberty to add six optional riders (added advantages) to your monthly income plan to enhance the level of financial security, including: 

» The Accidental Death Benefit rider

» The Accidental Total and Permanent Disability rider

» The Critical Illness Rider

» The Income Benefit Rider

» The Waiver of Premium Rider

» The Payor Benefit Waiver Rider 

  • Tax benefits on the premiums paid for the monthly income plan, wherein premiums up to ₹1,50,000 in a year are exempt from tax-deductions, making you eligible for getting a refund. This is as per Section 80C of the Income Tax Act, 1961.  

To conclude

A monthly income plan will keep your money safe from inflation and help it grow as per the fluctuating market rates. It will take care of your post-retirement needs, such as healthcare, leisure travelling, and daily spending. Thus, it is vital to find the best investment plan for monthly income, offering you maximum benefits. It is also crucial to compare the different monthly income plans available in the investment market. Comparing will make you aware of the different features and advantages of a monthly income plan and lead you to the best plan for monthly income. However, before you set to do so, envision the type of life you want to live post-retirement and assess your future financial needs.

Chirag Iyer – BFSI Enthusiast
Chirag is a writer and an avid reader who loves to drink coffee! His other interests include boxing, karate, and singing

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