As depicted by its name, the monthly income plan or MIP is a scheme through which an investor can earn a certain amount of sum monthly based on the premium deposited for a certain period. The monthly income plans or MIPs fall into the hybrid mutual fund category and more than 70 to 80 per cent of the invested amount moves into debt funds. MIPs are specially designed for the risk-averse traditional investors.
There are various Monthly Income Plans or MIPs offered by the financial institutions in India. They are broadly categorized into two types.
Monthly Income Plans or MIPs are primarily for the traditional risk-averse investors. If you are one of those who wants to invest in market-linked debt funds and ready to take moderate risks, then MIPs are ideal for you. MIPs suit most to the investors who are on the verge of retirement or already retired and plan to have a retirement corpus. Monthly Income Plans give an opportunity to park your amount in a moderately safe scheme and earn monthly dividends from it.
Monthly Investment Plans or MIPs are the preferred investment schemes for traditional investors as they are feature rich.
Monthly Income Plans or MIPs offers outstanding benefits to investors. Below is a list of benefits offered by MIPs.
Majority of financial institutions in India offers customised Monthly Income Plans or MIPs based on the financial needs of the insured and nominees. Such plans ensure guaranteed monthly income with lump sum payout at the time of maturity. However, the payout is specific to the terms and conditions offered by your insurance provider. We have shortlisted four best Monthly Income Plans based on the evaluation of their features, benefits and returns offered to the investors. This will be helpful for you to decide the best suited Monthly Income Plan.
|S. No.||Name of the Monthly Income Plan||Benefits|
|1||Max Life Monthly Income Advantage Plan||a) Offers monthly payouts up to 10 years
b) The monthly payout gets doubled during the last five years
c) The monthly payment immediately starts post completion of the premium deposits
d) Provides guaranteed terminal premium benefits during the last payout
|2||Bharti AXA Life Monthly Income Plan Plus||a) The regular payout starts right after the end of the premium payment
b) Offers flexibility of choosing monthly payout options
c) Monthly income term can extend up to 30 years
d) Pays revisionary bonus during the end of the policy period
s) Provides premium waiver, hospital cash and accidental death benefits
|3||Canara HSBC Oriental Bank of Commerce Life Insurance Smart Monthly Income Plan||a) Insured has the flexibility to the set the monthly income based on which the amount of premium gets decided
b) Offers guaranteed monthly payouts up to 15 years
c) The sum assured amount is hundred time of the monthly payout
|4||MetLife Monthly Income Plan-10 Pay||a) Offers monthly payouts up to 15 years
b) The amount of monthly income can go up to 1 Lakh
Since Monthly Income Plans are equity-linked, they perform better than the absolute debt funds. Typically, most of the MIPs offer 10 to 12% returns which is better than the traditional schemes such as fixed deposits. However, dividend-based payouts are not guaranteed.
Since MIPs are debt funds, they are taxable. Both long-term capital gain (LTCG) and short-term capital gain (STCG) rules are applicable to MIPs. If a MIPs gets disposed of prior to three years, it will be taxed as per STCG rules, i.e. 15%. If the investors hold the shares for more than three years, it will come under LTCG and 20% tax will get implied. Monthly Income Plans are a great way to earn sustained monthly income during retirement.
A. A part of KYC fulfilment to start a Monthly Income Plan, you need to submit the below:
A. Monthly Income Plan should be the preferred investment scheme for the retired individual and housewives towards the creation of a monthly corpus
A. Yes, the Monthly Income Plans are taxable under Short-Term Capital Gain (STCG) and Long-Term Capital Gain (LTCG)
A. The Monthly Income Plans are two types.
A. In conservative MIPs, 15 to 30% of the capital gets invested in equities and risks are moderate. Thus, offers guaranteed monthly income.
On the other hand, the aggressive Monthly Income Plans are volatile as they are largely equity-linked. Since the aggressive MIPs depend on market conditions, the dividends are not guaranteed.
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