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Age and financial needs never remain constant. They both change with time. For instance, a teenager would like to spend on what he wants while a middle-aged man would like to save for what he wishes for.

However, the reality says, neither you nor anyone can work endlessly throughout life, then how these big or small demands can get fulfilled after a certain age (ie. after your retirement).monthly income schemes for parents

Well, with changing times and orthodox thoughts, it’s not wise to be totally dependent on your children. It’s uncertain whether they would want to be with you or not in the future. So, it is better to plan for your retirement via an early investment in the right plan that can benefit you to build up a source of regular income or a vast corpus with lower premiums.

Multiple investment options like monthly investment plans for senior citizens, mutual funds, life insurance policies, and more are available to meet the financial goals of individuals after their retirement, or when the sources of regular income are stopped. However, remember, “One size fits all” policy does not work in investment schemes for senior citizens. Depending on the portfolio of the senior citizen, the best investment plan can be selected.

For instance, if you are supposed to get a pension from your employer after your retirement, then you don’t need a monthly plan for yourself. Instead, you must invest in policies that provide you with better returns or sum assured to safeguard yourself and your family against increased annual inflation rates.

However, if you are self-employed or working in the unorganized sector, then you need monthly income plans for senior citizens for regular cash flow to meet your daily expenses.

Top-most Monthly Investment Plans For Senior Citizens in 2020

1. Bank Fixed Deposits


Do you know that there are separate interest rates on fixed deposits (in banks) for young/middle-aged customers and senior citizens? Below is the table giving you an idea of current interest rate on FD deposits in government and private banks:

Bank

Maximum Interest rate for regular citizens

Maximum Interest rate for senior citizens

Canara Bank

5.75%

6.25%

ICICI bank

5.75%

6.25%

HDFC bank

5.75%

6.50%

SBI bank

5.4%

6.20

Axis bank

5.80*

6.45*

* For amount below 2 crore

Moreover, following section 80 TTB of income tax, no tax will be charged on the interest income received up to Rs. 50,000 on fixed deposits for senior citizens.

So, for your monthly income after retirement, just open a fixed deposit account for a specific amount and tenure, and after completion of tenure or maturity of fixed deposit, the bank will pay you the entire amount (Principal amount + interest) annuities in terms of monthly payout at the similar interest rate.

For example, let’s understand with a simple illustration:

You have invested Rs.100,000 as fixed deposit for two years with the interest rate of 7.25%

Instalment amount

Tenure

Interest rate

Total corpus

Monthly payouts

Rs. 100,000

24 months

7.25%

115,454

Rs. 5,182 each month for 2 years

2. Post Office Monthly Income Scheme (POMIS)


Besides transferring your parcels and letters, the post office scheme for senior citizens is the right place to invest for better and secured returns. It has several short and long term schemes to fulfil the financial needs of every individual without any compromise. 

As a monthly investment plan for senior citizens, it offers Post Office Monthly Income Scheme (POMIS) to the residents of India (of or above 10 years of age). 

Features of Post Office Monthly Income Scheme include

  • Fixed interest rate of 6.60 for Q1 FY 20-21 (April – June 2020)
  • Can be opened by individuals singly or jointly (max three adult holders)
  • Account can be transferred freely from one post office to another
  • Guaranteed returns
  • Premature withdrawals are applicable, but with a penalty
  • No TDS deduction
  • Low-risk investment
  • Maximum amount of investment for a single account: 4.5 lakhs
  • Maximum amount of investment for a joint account: 9 lakhs

3. Senior Citizens' Saving Scheme (SCSS)


As the name indicates, SCSS is designed as monthly saving schemes for senior citizens, interested in a regular stream of income without any risk. Eligible candidates for this scheme include:

  • Senior citizens of age 60 years or more
  • Retired defence personnel of age 50 years or more
  • Early retirees of age 55-60 years, who have gone for voluntary retirement*

*They need to invest in this scheme within one month of getting retirement benefits

Key Features of Senior Citizens' Saving Scheme

  • Available at both banks and post-office
  • Reliable investment option for senior citizens
  • Availability of nomination facility
  • Tax benefits under section 80 C of Income-tax
  • The fixed tenure is of five years; however, after maturity, it can be extended up to next three years
  • The interest rate of SCSS is 7.4% for 2020-2021 (Q1) (the interest rate of SCSS has dropped down significantly in a few years. In 2012-13, it was 9.3 %.)

So if you are interested in a risk-free return, then visit your nearby bank or post-office to avail the benefit of SCSS. Below is the list of banks applicable for SCSS account:

  • Allahabad Bank
  • Andhra bank
  • Bank of Maharashtra
  • Bank of Baroda
  • Bank of India
  • Corporation Bank
  • Canara Bank
  • Central Bank of India
  • Dena Bank
  • IDBI Bank
  • Indian Bank
  • Indian Overseas Bank
  • Punjab National Bank
  • State Bank of India
  • Syndicate Bank
  • UCO Bank
  • Union Bank of India
  • Vijaya Bank
  • ICICI Bank

4. Pradhan Mantri Vaya Vandana Yojana


The government of India exclusively designed this scheme as monthly income plans for senior citizens of India. Earlier it was available from May 04th, 2017 to March 31St 2020; however, it is now extended for further three years, ie. up to March 31st 2023.

Features of Pradhan Mantri Vaya Vandana Yojana:

  • Minimum Entry Age for the scheme: 60 years (completed)
  • Maximum Entry Age for the scheme: No limit
  • Policy Term of the scheme: 10 years
  • Investment limit for the scheme: Rs 15 lakh per senior citizen

Minimum Pension:

Monthly

RS. 1,000/ per month

Quarterly

Rs. 3,000/- per quarter

Half-yearly

Rs.6,000/- per half-year

Annually

Rs.12,000/- per year

Maximum Pension:

Monthly

RS. 9,250/ per month

Quarterly

Rs. 27,750/- per quarter

Half-yearly

Rs. 55,500/- per half-year

Annually

Rs.1,11,000/- per year

Purchase Amount

  • Minimum purchase amount for yearly pension: Rs. 1,56,658
  • Maximum purchase amount for yearly pension: Rs. 14,49,086
  • Minimum purchase amount for monthly pension: Rs.1,62,162
  • Maximum purchase amount for monthly pension: Rs.15,00,000

5. Mutual Fund Monthly Income Plan


Among other monthly investment plans for senior citizens, these are hybrid funds which invest in both debts (80%) and equities. Due to hybrid nature, the returns of these plans are significantly higher; however, subjected to market risks. Based on the availability of a distributable surplus, the investor is liable to receive income in the form of dividends. So if you want a better retirement income during your retired years, then you can take risk of investing in mutual funds after understanding all the terms and conditions.

Below is the list of some popular Mutual fund Monthly income plans:

  • ICICI Prudential Regular Savings Fund
  • Kotak Debt Hybrid fund
  • SBI Debt Hybrid Fund
  • Reliance Hybrid Bond Fund

Irrespective of age, everyone has a long list of his/her financial goals. Being a senior citizen, you can avail some extra benefits over others to meet your goals. Just choose the right monthly plan and enjoy your retirement with your loved one's tension free. For expert advice, contact customer care services of PolicyX.com. We can help you to manage your finances after your retirement by investing in the right monthly investment plans for senior citizens.

Naval Goel is the founder of PolicyX.com. He is an Associate Member of the Indian Institute of Insurance`, Pune. He has been authorized by IRDA to act as a Principal Officer of PolicyX.com Insurance Web Aggregator.
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