Insurance

Monthly Income Plans? Here’s What You Must Know

Monthly Income Plans

Published on July 1st, 2020

Hard work pays off, and smart decisions have a fruitful bearing in the future. If you want to live a comfortable life and fulfil your dreams as well, you must invest in monthly income plans. A monthly income investment plan is like a mutual fund through which you invest in equity.

Accordingly, you will receive a certain sum of money every month. This money usually accumulates after a few years of payment of premium.

The monthly income plans also provide an insurance cover to the policyholder along with a maturity benefit payment after the policy tenure.

Here are a few reasons that imply why it is beneficial to invest in monthly income plans:

1. Flexibility To Choose The Premium Payment Tenure

While contemplating what is an investment in terms of monthly income plans, it is essential to understand the integrities.

A monthly income plan can be the best investment plan for you if you wish to create an alternative source of income for your regular income.

You have the benefit of choosing the premium payment tenure and avail of higher liquidity. An important aspect to consider is the movement of net asset value (NAV).

In the case of monthly income plans, the rise in the interest rates causes a fall in NAV and vice-versa. Therefore, you will benefit more when you invest in monthly income plans when there are higher interest rates.

The investment plan, such as the monthly investment plan, follows a different pattern. The dividends that are declared are not the representation of the total earnings of the fund but a fraction of it.

The surplus that remains is used in the future in declaring dividends when there are no substantial earnings on the fund.

2. Maximal Tax Benefits Under Section 80C

Term Insurance

The monthly income plans provide tax benefits under Section 80C and Section 10(10D) of the Indian Income Tax Act. With this investment plan, you will get a deduction of up to Rs 1.5 lakh.

It is also stated that the deductions must be from the amount from a monthly income policy with a lower premium and must be lesser than 10% of the insured sum.

Therefore, the best investment plan will ensure that you get maximal tax benefits and secure your dreams better.

3. Long term Financial Protection For Your Loved Ones

A significant advantage of monthly income plans is that when unseen situations take place, your family is protected financially.

This plan requires the policyholder to pay the premiums regularly throughout the policy term. If the policyholder survives the term period, he gets a regular monthly income.

Further, when the policy tenure ends, the insured receives a terminal bonus and a simple revisionary bonus. The monthly income plan terminates after the bonuses are paid.

If sudden unannounced events take place and you as the policyholder are not around, your family gets the payments.

Your nominee will be entitled to the regular monthly income as well as the premiums paid by you till death. At the end of the policy tenure, your nominee will get the terminal and revisionary bonus.

Therefore, even in your absence, your family will be secured with a safety net. Their daily lives will not get interrupted with inconveniences.

The insurance companies will help you understand all the inclusions and exclusions of different plans.

Your confusion regarding the plans will get solved with their solutions. They will provide you will all the required information. You can make informed decisions that are best suited for your financial planning.

4. Ensure Financial Protection With Monthly Income Plans

An investment plan, such as a monthly income plan, does not have an upper limit of the investment amount. You can invest as per your capability and requirements.

The monthly income plans are more liquid as they do not have any lock-in period. You have the option of withdrawing as and when needed.

At the same time, these plans also help you reduce your overall tax burden, including TDS (tax deducted at source).

If you are wondering about what is TDS or how you can minimize it using a monthly income plan, remember that an all-inclusive investment plan from reputable life insurance companies like Max Life Insurance is your best bet.

These plans are a low-risk financial instrument and usually provide good returns. Another benefit of the monthly income plan is that it is an open-ended investment plan.

You will not be charged for entering the scheme. You might have to face an exit load charge, which is usually less than one % of the total invested amount.

If due to some uncertain and unseen event, you are not around, your family will be financially protected with such a scheme.