When it comes to investing hard-earned money, different people have different approaches. Some are willing to take on higher risks for higher rewards, while some look for a guaranteed regular income. Similarly, the choices have distinctions of tenure, premium, and more. Hence, you should always buy a savings plan depending on your risk appetite. The Indian Post Office offers several banking products and services. The Post Office Monthly Income Scheme is one of the most popular saving schemes. Let us delve deeper to understand its features and benefits.
14 Key Features and Benefits of Post Office Monthly Income Scheme
Being a government-backed investment, the returns for this scheme are guaranteed, and it comes with assured loyalty additions. Furthermore, it offers multiple benefits at limited premium pay.
The Post Office Monthly Income Scheme is one of the most popular short-term savings schemes.
The interest is payable on completion of a month from the opening date and so on till maturity. If the account holder does not claim the monthly interest, such interest shall not earn any additional interest.
You can close your account five years after the opening date by submitting the prescribed application form with the passbook at your Post Office. However, if the account holder dies before maturity, the account may be closed, and the nominee or legal heirs will get the refunded amount. The Post Office will only pay interest until the month preceding the refund.
3. Minimum deposit amount
The minimum amount for opening an account is INR 1000. In addition to this, the amount should be a multiple of 100. The low and limited premium pay makes it an affordable savings plan.
4. Maximum deposit amount
The maximum amount that single account holders can deposit is INR 4.5 lakhs. For joint accounts, this amount goes up to INR 9 lakhs.
5. Lock-in period
You cannot withdraw the whole amount from your Post Office Monthly Income Scheme account before the maturity period of five years is over.
6. Premature withdrawal
The following table shows how much of a return you are eligible to get if you withdraw early.
|Time of withdrawal||Outcome|
|Before one year||Zero benefits|
|Between the first and third year||The whole deposit after a 2% penalty|
|Between the third and fifth year||The whole deposit after a 1% penalty|
7. No tax benefits
Unlike some other investment and savings plans, this scheme does not offer any tax benefits. However, most people do not count this as a demerit because of its various other merits. Explore tax-saving plans by Canara HSBC Oriental Bank of Commerce Life Insurance.
8. Joint account facility
You can open your Post Office Monthly Income Scheme account as a joint account with up to 3 people.
9. Accounts of minors
You can open an account for a minor on their behalf as their legal guardian. A child over the age of ten can also apply for one in their name.
10. Flexible nomination facility
You are free to choose your nominee, who shall receive the refund of your savings scheme investment should something happen to you within its tenure.
11. Hassle-free transactions
The Post Office efficiently handles everything involved in the process: from the initial deposit to the monthly return payments. You can set up the interest payments for auto-withdrawal to make monthly interest payments a completely hassle-free process. You can also transfer the amount to another account without delay.
12. Guaranteed regular income
The savings plan is low-risk and government-backed, so you receive guaranteed income regularly. The returns are significant for a short-term investment while being without risk. You can also invest in other saving and investment plans like Guaranteed Income4Life Plan by Canara HSBC Oriental Bank of Commerce Life Insurance that offer guaranteed regular income for long-term.
You can decide to reinvest the guaranteed returns from this scheme towards investments with higher risks that, in turn, have the possibility of higher yields.
You are free to transfer your account from one post office to another according to your convenience. If you are moving to another location, you can move your Post Office Monthly Income Scheme account with you as it is; the account itself will remain unchanged.
Eligibility Criteria to Invest in Post Office Monthly Income Scheme
The scheme is open for the following categories of people. You can apply if you are:
- A single adult
- Up to 3 adults: holding a Joint Account (Joint A or Joint B)
- A guardian registering on behalf of a minor or a person of unsound mind
- A legal minor above ten years registering in his/her name
5 Steps to Start Post Office Monthly Income Scheme
Step One: If you do not have a Post Office savings account, open one with the Post Office of your choice.
Step Two: Collect or download the application form for the Post Office Monthly Income Scheme.
Step Three: Fill out the form, attach the other documents and submit it to the Post Office. Attach the duplicates and carry the originals at the time of submission for verification.
Step Four: Select a witness or nominee and have them sign your application form.
Step Five: Make the initial deposit via cash or cheque. In case of payment by cheque, the date of cheque realization will be the account opening date.
Documents Required to Open Post Office Monthly Income Scheme Account
The procedure for opening an account does not include too much hassle. You require the following essential documents.
- Identity proof (self-attested photocopies and the original).
- Address proof (self-attested photocopies and the original).
- Passport size photograph.
- The duly filled form.
That is everything you need to know about the Post Office Monthly Income Scheme. Its many features and benefits make it a popular product; however, you must consider all your investment options before choosing.
If you still want to explore other saving plans, you may consider Invest 4G, Guaranteed Income4Life, Guaranteed Savings Plan, Pension4Life, by Canara HSBC Oriental Bank of Commerce Life Insurance. These saving plans offer tax benefits under Income Tax Act. Also, if you buy any of these savings plan, you will get a life cover. So, these are life insurance cum savings plan that can go a long way in planning your financial strategy.