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How to enroll in a monthly income plan for good returns?

dateKnowledge Centre Team dateJanuary 27, 2021 views123 Views
How to enroll in a monthly income plan for good returns?

In today's world, everybody seeks security and stability in life; to be financially secure and stable. To live the life of your dreams, you not just need financial backing but also a steady income for the future endeavours. As you grow in the journey of life, you might find yourself in a position where you are no longer financially independent or have a monthly income source. That's when retirement hits you; you are either dependent on your children or on your savings(if any) provided that you had planned it well.

In India, by 2050 there's a report by the United Nations claiming that nearly 20% of the population will be over 60. Meaning a majority of people will be dependent on someone or something for their financial needs, the retirees will have no choice but to feed in their savings (if any). And according to a report, only a handful of 33% of the working-Indians put anything aside for their life after retirement.

It's high time for any working individual to understand the importance of saving money and investing when they still have a job and monthly pay. Yes, not just saving but also investing in good saving plans. As they say, "Don't work for money, let the money work for you." And that's exactly what you want when you retire.

One of the best plans anyone can opt for is the "Monthly Income Plan", where you can expect fixed monthly income, over a very long period which can be up to 25yrs. Seems too good to be true!

Why should you invest in a Monthly Income plan?

When we talk about savings, the majority of people think of term insurances. And to be honest term insurance never really gives you the stability you seek. Term Insurance only works in case of death or disability where the amount usually gets exhausted due to immediate expenses leaving little to no funds for the future.

Whereas a Monthly Income plan is a debt-oriented mutual fund which enables the investors to receive monthly payouts. It is a mutual fund where the investment goes to the equity and debt market in a ratio of 20:80 or other similar proportions. This investment avenue guarantees monthly income after retirement with minimal risk designed to avail financial stability in your old days.

How does it work?

The investor or the policyholder pays the premium regularly as per the premium paying term. At the end of the term, if the investor survives, they get a regular monthly payout till the end of the policy tenure as mentioned in the policy (Where the policy tenure is longer the premium payment term.). When the policy tenure terminates, the investor gets some bonus, and with the payout of these bonuses, the Monthly Income plan ends.

Whereas, if the policyholder dies during the tenure, his/her nominee will be entitled to get the monthly payouts and the premiums paid by the investor until death. As usual, the tenure terminates giving bonuses to the nominee.

Who should invest in a Monthly Income plan?

Monthly Income Plans (MIP) are for risk-averse investors those who are willing to take the minimum risk possible. MIP's are best suited to retired persons or those who are soon going to retire and are willing to invest somewhere safe.

A Monthly Income plan is for those who want to have a backup for their regular income or simply looking for a guaranteed monthly income after retirement.

What are the types of Monthly Income plan?

Essentially, there are two types of Monthly Income Plans:

  • Dividend based Monthly Income plan:- These plans provide the investors monthly payouts made out of dividends. The dividends received by the investors are tax-free.
  • Growth Based Monthly Income plan:- If you opt for this option, you'll not receive any monthly or periodic payments. When you redeem the units, you get paid along with the capitals. Although this Monthly Income Plan does not give you a steady inflow of monthly payout, it results in wealth creation.

How to find the best Monthly Income Plan that guarantees good returns?

Not all Monthly Income plans (MIP) are the same. And with the market flooded with a plethora of MIPs to choose from it can be a little intimidating to pick one. The best Monthly Income plan will have the right combination of risk and returns suited to your needs and desires.

Given are our top picks to look for while deciding a Monthly Income Plan or MIP for yourself or your family members:

  • Financial Goals:- Firstly, you need to figure out, why are you choosing the Monthly Income Plan for investment? Meaning what are your reasons for choosing so, or what are your expectations or needs that you need to fulfil via this plan. What is the duration in which you want to achieve it? Have these things clear inside your mind. This is the very first step to choose the right MIP.
  • Risk Craving:- Although MIPs are well-known for their minimal risk, usually 70% or more in the debt funds and rest in stock, there can be plans with varying proportions and risk. If you are not willing to take too much risk, you can invest in a scheme with an equity component of 10 per cent. For high-risk takers, they can go for an equity component of 25- 30% accordingly.
  • MIP's Performance:- Before selecting any Monthly Income plan, it is essential to check their past returns over several years. It would be best if you choose a life insurance plan that has shown promising growth and steady performance over the past years in the bull and bear phases.
  • Maturity Profile:- Maturity profile is the term for which you will invest in the scheme till it matures and starts providing monthly returns. Please consider this point because bonds of longer tenure may involve bigger interest risks. And it also depends on you for how long you want to invest in the scheme.
  • Expense Proportion:- The expense proportion or ratio is the amount charged by these funds to run your investment. The best plans for you could be those that have a low expense ratio. The plans with higher expense ratios will catch up on your returns.

Benefits:

The Smart Monthly Income plan by Canara HSBC Oriental Bank Of Commerce Life Insurance brings peace to you for being a trustworthy entity and packs tremendous benefits.

  • Death benefits:- After the death of the life assured a death benefit equals to Death Benefit Sum Assured [Higher of Sum Assured or ten times Annualised Premium]. Including added You shall pay annual bonus and inherit the reward for the part of the year in which death happens and final bonus(if any) subject to at least 105% of Total Premiums Paid by the policyholder (excluding extra premiums, if any) to the nominee.
  • Income Benefit:- You will receive the decided monthly income during the last 15 years of the plan or from the end of 121st policy month (not the calendar month) up to the end of the policy term. "Set-off Option:" This option is for your benefit and will help you to adjust the premiums payable during year 11 to 15 from the profit receivable in these years.
  • Maturity Benefit:- On survival till maturity, Added Annual bonuses and final bonus, if any will be paid to the policyholder.
  • Tax Benefits:- You can avail tax benefit on the premium paid subject to currently applicable provisions of Section 80C of income Tax Act, 1961. The scheme guarantees a tax-free monthly income for 15 years to accomplish your dreams and desires.

Besides these, there are tons of other benefits and perks. Leave a legacy behind by choosing one of the most trusted plans out, the Smart Monthly Income plan by Canara HSBC Oriental Bank Of Commerce Life Insurance. Hopefully, now you are convinced about why you should enrol in a Monthly Income plan and how you can do it. If you are fully pumped up already to invest in a Monthly Income plan, then you might consider checking out our top recommendation for the Monthly Income plan, which will provide you great returns with minimal risk.

Check out Canara HSBC Oriental Bank of Commerce Life Insurance Smart Monthly Income plan. We are one of the leading and most trusted entities out there, with us you can never go wrong!

This plan by Canara HSBC Oriental Bank Of Commerce Life Insurance offers guaranteed tax-free monthly income for 15 years to accomplish your dreams and desires. Alongside life cover of 25 years, and annual and final bonuses to create enough financial backup for you and your loved ones.

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Frequently Asked Questions (FAQs) for Term Insurance

This being a term plan doesn't offer any payout after maturity or expiration date.

Each insurance company has its own term insurance premium calculator. If you want to check out the premium quote, go for the iSelect Star term plan calculator. It gives a premium amount based on your age, gender, habits, education, and annual income.

You can purchase an iSelect Star term plan anytime between 18 to 70 years of age.

It depends on your needs. For example, if you want to cover a child's education or wedding expenses, you have to include them in your coverage. Your premium will be calculated accordingly.

If your key purpose is to give your Family financial protection, go for the term insurance plan. And if you want some savings, in the end, go for a traditional life insurance plan.

Go for at least 12 times cover than your annual income. Or you can go as far as 20 times coverage as per your needs.

The right time is when you don't have anything to keep your Family safe from financial storms, and they rely on you for financial needs.

If you are unable to make the payment or suffering from a terminal illness, a term plan pays a part of the sum insured to treat your disease.

Term insurance riders are attachment or endorsements made, while taking the term insurance policy, as a supplementary coverage to policyholders. Apart from the core death benefit, term insurance riders offer below-given additional benefits:

  • Accidental Death Rider When a person suffers from a terminal illness, his/her family ends up spending a significant amount in treatment and medical expenses. Accelerated death rider pays a part of the sum insured in advance to cover such costs and save the family from running out of cash.
  • Accidental Disability Rider If the policyholder can't pay the premium because of an accident or permanent disability, a sudden disability this pays the premium on behalf of the policyholder till completion of policy term or for a defined duration.
  • Critical Illness Rider If the insured person gets a heart attack, cancer, or any other critical illness, this rider pays a lump sum on valid diagnosis.
  • Premium Waiver Rider If the policyholder is unable to make payments due to income loss or disability, a premium waiver rider waives off all future premium payments. And the term policy remains active until the expiration date.
  • Income Rider: The rider ensures that your family receives regular income + sum insured in case of unfortunate demise of life insured.

Anyone can go for life insurance as it offers some savings after the maturity date, but it doesn't cover the protection of your family . The best term insurance plan is solely designed for taking care of loved ones if something happens to you. Term plans act as a shield between your family and sudden financial fall. They make sure that your family lives a healthy life even after you. With a little amount paid per year, you can be worry-free from the family's financial conditions.

Questions that you need to ask while buying Term Insurance?

  1. 1. Amount of premium you have to pay based on your age, habits, education, and monthly income
  2. 2. The total number of benefits covered in the term plan. Do they include benefits that you care about the most?
  3. 3. How to save money on tax if you pay for the term plan?
  4. 4. Do they offer regular income options?
  5. 5. Can you change the coverage and premium in the future?
  6. 6. Does the claim consider valid if death occurs outside India?
  7. 7. Which kind of death is not covered by insurance?
  8. 8. Can NRIs take term insurance? If yes, what are the conditions?
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