A Detailed Guide On Monthly Income Plans - Greyfont


A Detailed Guide On Monthly Income Plans


Monthly Income Plan is a kind of saving scheme ideal for customers who wishes to have extra income at periodic intervals. A set back on monthly income disturbs financial planning. Just to keep yourself safe from such uncalled for situations there are saviours such as MIP’s(Monthly Income Plans).


Getting to know MIPs


Monthly Income Plan provides you with assorted monthly returns after a specific period of time. There are various Mutual Funds offering such products. The basic difference between Mutual Funds and Insurance Based Plan is that the later gives you life cover. Some of them even give death benefits. There are extra benefits on maturity as well.


The monthly pay does not start as soon as you start investing. They provide you with monthly income only after a specific time period. Higher returns with lower premium ensures great satisfaction to the customers. Thus, giving a steady income. The insured receives certain amount of money on monthly basis in Mutual Funds. For example, if you choose a policy for 25 years duration and you pay premiums till 20th year, you start receiving monthly payments only after 16th year. This will go on till the policy matures or ends. Maturity amount is sure short in insurance based products. If the insured persons does not exist while the policy is active the nominee the benefits of the plan.


Types of MIPs


Dividend Based MIPs- This type of Mutual Fund invests in debt and equity services. This plan does not levy any additional taxes.

Growth Based MIPs - The investor can ensure a constant cash flow in this growth option. This a highly recommended plan as the total investment grows faster if you don’t ask for yearly dividend payout. This increases the net asset value of the fund (NAV).


Features of MIPs


  • The returns provided by the Mutual Plans are way better than bank FDs (Fixed Deposits).
  • There is no limit to the investment in Monthly Income Plans.
  • The right time to invest in MIP is when the interest rates are high.
  • They incur exit charge of 1%.
  • These are low equity funds hence can be taxed as per the rules.
  • There is no lock in period as that of FDs.




The pay out is usually in two parts, the lump sum on maturity or the monthly income. There ia a facility provided to the investors to pay or receive electronically via ECS(Electronic Mode of Transport). you can also give your bank account details before the payment starts or during the payments. The MIPs have a certain percentage of the sum assured that would act as monthly payments. Example, A policy that has 18 lakhs as the sum assured and 10% of the monthly income , the monthly payments would be 15000Indian Rupees. 10% of the sum assured would come to 180000 Indian Rupees and divided into 12 months would come to 15000 INR monthly income.


This can be considered as one of the best investment option for retirees to help them with their monthly expenses. There are various Monthly Investment Schemes in the market. Choosing the best one depends on your preference as the state of investments is dynamic.


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