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Should Monthly Income Plans be Part of Your Retirement Planning

  1/3/24 12:21 PM

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  1/3/24 12:21 PM   |

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For a salaried individual retirement comes with various perks, but it also means that you no longer have an active source of income. At such times, relying on your savings or pension funds might not suffice, especially considering how the costs of living is increasing each 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 during 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. You initially invest a sum of money into the plan and allow it to grow for a few years. Once the investment term is over, you will start to receive monthly income through the plan.  

Insurance Plans with Monthly Income

You can even get an insurance plan with income benefit options. Such plans are called endowment plans, and the premiums you pay toward insurance also act as your invested sum. In such plans, you start receiving monthly income after the premium paying term or at any other time specified by your policy terms and conditions.

What are Guaranteed Income Plans?

Guaranteed income plans are the ideal for those who are risk averse. In a guaranteed plan, you know exactly how much money you are getting back. The income you receive will depend on the plan’s internal rate of returns, which is decided during the inception of the plan itself. Rate of returns remain constant for the remainder of your policy term. This means that you can set your budgets accurately as you the exact value of the income you will be getting each month.

Features and Benefits of a Monthly Income Plan for Senior Citizens

Monthly income plans are low to moderate risk investments. This is why such plans are best for 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.

Cash Value: The monetary worth of your monthly income plan is known as the ‘cash value’. As your investments continue to grow, your plan’s cash value will grow in tandem. The monthly income you receive from your plan is also derived from the cash value. Some income plans even let your directly withdraw money from the cash value in case of emergencies.

Alternatively, a few plans offer ‘loan options’ that let you borrow the money saved in the cash value. Loan on policies have a modest interest rate and the only collateral is the insurance plan itself. These options are great for those who want quick access to money during financial hardships.

High Rate of Returns: A monthly income plan generally has a higher rate of returns when compared to a retirement pension plan or a general savings account.

Investment Plus Life Insurance: Some of the best monthly income plans offer investors the dual benefit of investment plus life insurance. While getting regular income returns, your loved ones will also be protected thanks to the insurance life cover.

Choose Edelweiss Life Life- Active Income to reap the benefits of monthly income alongside insurance. Some of the plan’s core features include:

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

» The Deferred Income Benefit option gives you income after the end of the premium paying term.

» Guaranteed income until you are 99 years old for lifelong financial support.

» 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.

» The choice of taking a loan from the monthly income plan in case of an emergency.

» Six optional riders (added advantages) for added 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 Monthly Income Plans

In you buy a monthly income plan with insurance, then you get tax deductions of up to ₹1,50,000 on the premiums paid thanks to Section 80C of the Income Tax Act. The monthly income and maturity benefit of your income plan may also be tax exempt depending on whether or not it meets the terms and conditions stipulated on Section 10(10D).

To Conclude

A monthly income plan will safeguard you from inflation and help you maintain your standard of living despite market fluctuations. Monthly income plans can also help you 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 that offers you the most benefits. It is also crucial to compare different monthly income plans available in the market. Choose a plan with features that best suit your needs and financial goals.


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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