Saving money to live a better life ahead is a general principle that people follow. But, before saving your money, it is wise to have financial literacy. One should have proper knowledge about different insurance plans such as term policies, endowment insurance plans, savings plans, etc. This will aid people in taking a conscious decision by putting their funds in the right policy. Further, it will secure their future and promise a risk-free retirement.
However, certain people look for policies that give them a monthly return. Such saving insurance and monthly income plans are a source of a regular and steady income and prove to be a boon after retirement. But before buying a monthly income plan, there are certain factors that one should consider. This includes regular premiums, maturity returns, death benefits, complete risk coverage, terms and conditions, etc. Let us understand the concept of Monthly Income Plan or MIP in detail.
What is a Monthly Income Plan (MIP)?
In a monthly income scheme, an individual receives a certain amount every month. Premium payments typically accumulate after a few years. Monthly income plans are also called guaranteed monthly income plans, savings plans, pension plans, money savings plans, or assured monthly income plans in the life insurance industry.
There are several insurance companies that offer the best savings plans in India. One can opt for a MIP as per one’s requirement and budget. A monthly income plan calculator will also help the policyholder in taking the decision.
Reasons to Buy a Monthly Income Plan
Here are the reasons to buy a monthly income plan:
- You can apply for instant payouts
The reimbursement process does not take years after you finish paying your premiums. After the premium term is completed, the policyholder can begin receiving monthly payments from the insured.
- There is guaranteed protection
Monthly income systems also provide death benefits. It is part of their assured security. Upon the policyholder’s death, the nominee can receive the death benefits as a lump sum or as income for the next ten years. This tenure depends on the terms and conditions of the insurance agreement.
- Regular payments will be tax-free
A stagnant monthly income is guaranteed to the policyholder after all premiums are paid in full. You can make an estimate of the regular premiums with the monthly income plan calculator.
This steady monthly income can be used for later and before retirement. It depends on the individual’s preferences. This income comes in tax exemption. According to the Money Tax Act of 1961, the income earned through the savings plan is tax-free. One could get a tax-free benefit with the monthly income plan.
- The monthly income plan has the maturity benefit
Unlike term insurance, it does have a maturity benefit. You will get the lump-sum payout in total at the maturity of the plan. These returns might assist you in meeting any urgent financial necessity that necessitates a flexible budget.
- Protect your family’s future ambitious goal
Your financial plan’s function also involves safeguarding essential goals for your family. A monthly income plan includes contingency planning. Even if an accident occurs, it is vital for your family to maintain their lifestyle and fulfil their objectives. A financial plan can help you save money for insurance and emergency reserves to cover any scenario.
Thus, if you are confused about whether to buy a savings plan or not, then do not miss to consider the above-mentioned reasons.
Conclusion
It is always better to secure the future financially. For this, a monthly income plan is a right choice. A monthly income plan does have many advantages. For example, plans such as Smart Value Income Plan, a monthly income Tata AIA Life Insurance Policy is a sought-after monthly income plan. Similarly, there are many other money-saving plans that are offered by other insurance companies. So, with so many options, one can opt for a suitable monthly income plan.