IndiaFirst Life Guaranteed Monthly Income Plan

What is a guaranteed income insurance plan?

The word ‘guarantee’ is a powerful one—it evokes feelings of security, safety, and certainty. In today’s fast-paced life, guarantees are a steady reminder that there are some things in life that you can bank on. While trying to meet expenses and deal with the daily crunch of life, it is difficult to enjoy the little moments because you are busy worrying about how much they will cost you financially. However, there is so much joy in those little moments. It takes time to understand that what you considered little was not little at all.

What would it take for you to stop worrying about these expenses? An additional source of income that you can bank on could make all the difference. A smart insurance decision today could make your life in the future stress-free. A guaranteed income savings plan is an insurance choice that future-you will be thankful for. Get rid of the stress, and enjoy meeting your and your family’s goals seamlessly.

A guaranteed plan is one that provides an assured benefit to you. The amount that you will receive is guaranteed, fixed, and intimated to you when you buy the guaranteed income insurance plan. This type of traditional insurance savings plan offers you life cover as well as a guaranteed lump sum pay-out and bonuses (if applicable).

By providing assured pay-outs, a guaranteed income insurance plan offers you exactly what you need—financial security.

You should buy a guaranteed income insurance plan if:

• You want guaranteed benefits—no surprises, no risk.
• You want monthly/periodic pay-outs made to you so you can bank on a steady supplemental stream of income.
• You want your life covered, and a death benefit to secure your family’s financial future, in case of your untimely demise.
• You want to avail of tax benefits so your cumulative earnings from the policy are higher.
• You want the freedom to choose your premium payment terms and the policy duration.

How is an endowment plan different from other savings insurance plans?

Is an endowment policy better than a ULIP? Should you get a money-back plan or an endowment life insurance policy? Will a pure protection term insurance plan better suit your needs? Before choosing one insurance option over another, it is important to understand the principles on which these financial instruments operate.

Traditional insurance plans include options such as endowment policies, money-back plans, term insurance, and whole life policies. These traditional savings insurance plans are typically considered risk-free. Additionally, they offer multiple benefits in one plan. Along with traditional cover, these plans also offer a specific guaranteed amount of money as death or maturity benefit.

Furthermore, plans are classified as participating plans wherein the policy holder gets to share in the profits earned by the insurer, and non-participating plans wherein the policy holder gets a fixed predefined amount as the sum assured with no additional profit-related bonuses.

Endowment Plans vs. Money-back Policies

Endowment and money-back policies are similar in many ways with a few crucial differences. Both types of traditional savings insurance plans pay a death benefit in the form of the sum assured as well as any applicable bonuses, in case of the untimely demise of the life assured.

In a money-back policy, you receive a predefined percentage of the sum assured at periodic intervals. The remaining portion of the sum assured as well as any bonuses accrued during the policy term are released to you at the end of the period covered in the policy as maturity benefits.

In an endowment plan, there are no periodic payments made to you. You are required to make premium payments for a fixed amount of time, and at the time of maturity of the policy, you receive a guaranteed sum assured as well as any applicable bonuses announced by the insurer as a lump sum amount.

Depending on the type of endowment insurance plan, you may have to pay your premiums for a limited period after which your traditional cover continues, and guaranteed monthly income is released to you instead of a lump sum amount at one go.

If your goal is to save money that comes back to you at regular intervals so you can handle short-term expenses with ease, a money-back policy is a good option for you. If you are focused on saving money, watching it grow, and receiving a significant amount in the long-term, an endowment policy is your best bet.

Endowment Policy vs. ULIPs

ULIP or unit-linked insurance policies are insurance-cum-investment plans that rely on the performance of funds and their market value. Endowment plans are primarily non-linked insurance-cum-savings policies.

A ULIP typically locks your money in for 5 years or more. Since the value of the units purchased in your policy depends on the market performance of funds, you need to have a higher risk appetite than you would for traditional non-linked plans.

An endowment plan locks in your money for a period of 2-3 years so your policy achieves paid-up value. At the time of the maturity of the policy or in case of the death of the life assured, an endowment plan offers the entire sum assured and any bonuses announced as a lump sum amount to the surviving policy holder or the beneficiary, respectively. An endowment plan features zero-risk and guaranteed returns.

Endowment Insurance Policy vs. Term Plans

Term insurance plans are pure protection insurance instruments that offer a no-frills traditional cover. An endowment plan serves the dual purpose of covering your life and helping you save for the future.

Also known as a pure life cover, term insurance plans cover your life for a specific period of time during which you are required to make premium payments. Since this type of insurance plan offers only a death benefit, the premiums to be paid are generally inexpensive and lower than most other insurance policies. In case you survive the duration of your policy term, you do not get any payment or percentage of the sum assured.

An endowment policy covers your life during the plan term. In case of your untimely demise, the insurer pays the sum assured and any bonuses announced to the nominees. However, if you survive the period covered in the policy, you are eligible for a maturity benefit which includes the sum assured and bonuses accrued, if any.

Endowment Insurance Plan vs. Fixed Deposits

Choosing a guaranteed endowment insurance plan is a better idea than going for traditional static savings plans like a fixed deposit.

With a fixed deposit, you earn a certain amount of interest based on how long you keep the money locked in. Though the maturity value you stand to receive is stated upfront, keep in mind that fixed deposits provide no life cover, and the gains you receive are taxable as per tax slabs.

With a guaranteed endowment insurance policy, you get assured income that is guaranteed upfront, tax benefits on premiums paid, and tax-free maturity/death benefits (as per prevailing tax laws).

Will a guaranteed monthly income endowment plan work for you?

When you buy a traditional insurance savings plan, your goal is to get traditional cover and some savings opportunities. Endowment plans allow you to make periodic premium payments and watch your money grow with the power of compound interest, while also protecting your family’s financial future in case of unfortunate circumstances.

An endowment plan is a popular traditional savings insurance instrument because you already know what you will be getting at the end of the policy term. When it comes to receiving your guaranteed returns, there are two pay-out options to choose from. You can either opt to receive the substantial sum assured in the form of a lump sum payment or choose a staggered model that offers you assured monthly income for a fixed period.

Would you rather have a lump sum amount (plus bonuses, if any) paid to you at the end of the policy term? This corpus could be used to pay for large expenses or plan for your retirement.

Or does the idea of receiving a guaranteed monthly income like a second salary offer you more security? A guaranteed monthly income endowment plan is designed to work as an additional backing so you can fulfil your financial goals with a regular monthly income.

If you are looking for life cover, flexibility in policy terms, and assured monthly income, a guaranteed monthly income endowment plan will work best for you.

How does the IndiaFirst Life Guaranteed Monthly Income Plan work?

IndiaFirst Life Guaranteed Monthly Income Plan is a non-linked, participating, limited premium, endowment life insurance plan that offers monthly guaranteed pay-outs post completion of your premium payment term and gap year (if opted). Let’s have a look at what this means for you:

What does ‘non-linked’ mean?

A non-linked plan is not dependent on the market value of units or funds. Since the volatility of the stock market has no bearing on the value of your policy, it is possible to provide you with guaranteed benefits. With the IndiaFirst Life Guaranteed Monthly Income Plan, you can choose your premium paying term, pay limited premiums, and then, enjoy life cover and assured monthly income for the rest of the duration of the policy. Non-linked policies like the IndiaFirst Life Guaranteed Monthly Income Plan are preferred options for those who are risk-averse.

What does ‘participating’ mean?

Endowment policies could be participating/with-profit or non-participating/non-profit. This has a direct impact on the bonuses you stand to gain from your chosen plan. A non-participating plan does not feature any bonuses, as the insurer does not share any profits made with their policy holders.

In participating plans, the insurer shares any profit generated via investments with their policy holders. A participating plan such as IndiaFirst Life Guaranteed Monthly Income Plan offers assured monthly income as well as simple reversionary and terminal bonus (if announced). ?

What do you mean by ‘limited premium’?

A limited premium savings insurance plan allows you to pay the premiums for a limited amount of time while offering you full traditional cover throughout the policy. In the case of IndiaFirst Life Guaranteed Monthly Income Plan, not only will you enjoy traditional cover throughout the policy term but you also do not need to wait till the end of the policy to receive maturity benefits. A guaranteed monthly income is released to you after your limited premium payment tenure is over. At maturity of the policy, you get the last guaranteed monthly income payment and any bonuses, if announced.

How does it work?

With the IndiaFirst Life Guaranteed Monthly Income Plan, you can choose a policy term between 16 to 27 years. The policy term includes the limited premium-paying term, gap year/s, and the guaranteed regular income term.

The premium payment years are equal to the number of years during which you will receive an assured income. The gap period of 0, 3, or 5 years will be the time in years between the completion of the premium payment period and the start of first income pay-out. During the gap period, no guaranteed regular income will be paid, although death benefit continues and bonuses will accrue, for an in-force policy.

If your age at entry is between 18 and 35 years, your premium payment term is 8-11 years. For someone who is between 36 and 45 years at entry, the premium payment term is 9-11 years, and for those who are between 46 and 50 years at entry, the premium payment term is 9-10 years.

The guaranteed monthly income pay-outs will be in the range of 105% to 125% of the annualized premium. The pay-out of this survival benefit starts after the completion of your premium payment term in the policy. You will receive the survival benefit till the last month of your policy or date of death whichever is earlier.

In addition, the IndiaFirst Life Guaranteed Monthly Income Plan is eligible for simple reversionary bonus and terminal bonus, if any.

What are the key features of the IndiaFirst Life Guaranteed Monthly Income Plan?

• You get an assured income coming your way every month—guaranteed.
• With IndiaFirst Life Guaranteed Monthly Income Plan, you get more than what you pay for. You stand to receive between 105-125% of your premiums annually while enjoying regular support through monthly pay-outs.
• Set and achieve bigger goals with the help of timely assured pay-outs in this policy.
• Decide to plan your income better. Choose whether you want to start receiving your guaranteed monthly amount immediately after premium payment years or you prefer to wait a few years.
• With various flexibilities on offer, you can tailor the plan to suit your needs as you get a variety of premium payment, policy term options, and premium payment modes to choose from.
• Get risk-free returns in the form of an assured amount every month and annual bonuses (if any).
• You get the assurance that your family will be taken care of in case of your untimely demise.
• Avail of tax benefits for the premiums you pay and the benefits you receive as per applicable tax laws.

What do you get at the end of the IndiaFirst Life Guaranteed Monthly Income Plan term?

After the end of the premium payment term and gap year (if opted), you receive guaranteed monthly income pay-outs for a period equal to the number of years you paid the premiums for. At the end of the policy term, you stand to get the last instalment of your guaranteed monthly income along with accrued simple reversionary and terminal bonus, if any.

In case of the untimely demise of the policy holder during the term of the policy, the beneficiaries will receive the sum assured on death and any bonuses announced or 105% of the total premiums paid (excluding taxes and underwriting extras, if any), whichever amount is higher.

The nominee(s) has the option to receive the death benefit as a lump sum one-time amount or in monthly instalments over the period of 5, 10, or 15 years as opted at the inception of the plan.

What are the eligibility criteria to buy the IndiaFirst Life Guaranteed Monthly Income Plan?

• The minimum age at entry is 18 years and the maximum age at entry is 50 years.
• The minimum age at maturity is 34 years and the maximum age at maturity is 75 years.
• The Premium Payment Term is between 8 to 11 years. The policy term is a sum of the premium payment term, gap year, and guaranteed regular income term.
• The minimum basic sum assured is Rs. 75,000 and there is no maximum limit subject to board approved underwriting policy. The basic sum assured will be calculated based on your (life assured’s) age, gender, annual premium, premium payment term, or policy term and gap year chosen.