When you want to live a relaxed and stress-free life post retirement or even during your working years, relying only on your savings will seldom be enough. While savings are essential to prepare for a rainy day, investing your money is what will get you through the storm. As opposed to stagnant money, investing grows your income through the magic of compounding and negates the effect of inflation. While there are several investment options to increase your wealth, a monthly income investment plan is one you should pay attention to if you want to secure a regular stream of secondary income for an extended period of time, along with life cover.
What is a monthly income investment plan?
True to its name, a monthly income investment plan is an insurance product that gives you fixed monthly income payouts for a long time in exchange for the payment of periodic sums called premiums. It is also known as a guaranteed monthly income plan, as the monthly payouts it gives are guaranteed.
Compared to the tenure of a monthly income plan (which can even go up to 99 years!), the premium paying term is less – and between 5 to 12 years. This makes the monthly income plan ideal for those in their prime working years as a source of supplementary income. Or for those who are about to retire and want to secure themselves and their family in the absence of their primary income.
Moreover, the returns generated are higher (between 8%-12%) than traditional investments such as Fixed Deposits or Post-Office Monthly Income Schemes that also give monthly income payouts but at lower interest rates of around 6%-7%.
What are the types of monthly income plans?
Monthly income plans fall into two broad categories –market-linked monthly income plans and non-linked monthly income plans.
As the name suggests, market-linked monthly income plans give returns based on the performance of the investment avenue in which your premiums are invested in. These avenues are equity or debt-oriented and carry a low to medium amount of risk. Here, the returns are higher but not guaranteed and vary as per market fluctuations.
In non-linked monthly income plans, the returns you receive are guaranteed and independent from any market risks. So, you still receive uninterrupted and assured returns on your investment.
As the returns from monthly income plans can be non-linked and safe from any market fluctuations. This makes it the best investment plan for monthly income.
How do you invest in a monthly income plan?
To invest in a fixed monthly income plan, all you need to is:
1. Select a monthly income plan of your choice.
2. Read the features, benefits, and policy wordings in their entirety.
3. Compare the monthly income plan with other existing plans
4. Once you find a suitable plan, proceed to choose the frequency of premium payment (either in a one-time lump sum or monthly, quarterly, semi-annual or annual payments).
Moreover, anyone between the ages of 18 to 65 years can buy a monthly income investment plan, according to their needs and budget.
What are the benefits of a monthly income plan?
A monthly income plan has plenty of benefits. It gives:
- Fixed periodic monthly payouts
- Flexible premium payment options where you can choose to pay the premiums in a one-time lump sum or on a monthly, quarterly, semi-annual, or annual basis.
- Life insurance coverage with a fixed death benefit payout that gives the entire sum assured to your nominee on your unfortunate demise
- A maturity benefit in case you survive the term of the policy includes:
» The entire sum assured
» Any cumulative paid-up additions
» A terminal bonus
- Any company-earned cash bonuses
- An extra layer of protection for those tough times with multiple riders (on the payment of more premiums). These include:
» A Critical Illness Rider: This rider pays an additional sum assured to you if you get diagnosed with a critical illness such as cancer, heart disease, and kidney failure, etc. - illnesses of a life-threatening nature. Moreover, in the case of your unfortunate demise or diagnosis with a critical illness, your loved ones can remain secure and continue to receive the monthly payouts without having to pay any future premiums.
» An Accidental Death Benefit Rider: It provides an additional sum assured over and above the base sum assured for complete financial security in the event of your death due to an accident.
» An Accidental Total and Permanent Disability Rider: It provides an additional sum assured over and above the base sum assured for your sustenance and recovery in case you develop a permanent injury due to an accident.
» The Waiver of Premium Rider: It waives off the payment of future premiums in case you or the person you insure (called the life insured) develops a critical illness or suffers from a permanent disability due to an accident.
A pioneer in offering diverse life insurance solutions – Edelweiss Tokio Life offers viable guaranteed income plans. The Edelweiss Tokio guaranteed income plan ensures that you get double the benefits in a single plan! Described as a plan having a ‘Single battery and double power!’ this plan offers the dual advantage of life insurance protection and guaranteed monthly income returns.
Monthly income plan insurance is one of the few instruments to give both life insurance protection and a steady flow of income. It is perfect for those who are averse to taking high risks in the investment market.
Remember, the best monthly income plan is dependable, reliable, and gives you and your loved ones the best of both worlds in your presence or absence.
To know more about monthly income plans, click here!
Swati Tumar - Travel & Finance Writer
Swati is a Writer in the day and an illustrator at night. Among her interests, she is quite fond of art and all things creative. She often indulges herself in creating doodles, illustrations, and other forms of content. She identifies herself as an avid traveler and shameless foodie.