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  • Post Office Monthly Income Scheme

    If you are looking for a safe investment option that will earn you decent returns, then you should consider one of the post office schemes. The post office monthly income scheme (POMIS) is not well-known among investors in the urban parts of the country. The population in urban India looks to invest in fixed deposits and other debt options for generating monthly incomes or even to just park their money. But the monthly income scheme offered by the Indian postal service, although lesser-known, offers a bouquet of benefits to the investor. It should be noted that the post office is still one of the largest banking service providers in the country. As it is governed by the Ministry of Finance, it is also associated with greater credibility than other investment avenues.

    Monthly Income Scheme (MIS) is an investment scheme that promises the investor guaranteed returns at an interest rate of 7.7% per annum. These returns can be availed as fixed monthly income. The most experienced of investors consider MIS to be one of the best options to invest funds in, as it provides the customer benefits of three kinds:

    • MIS keeps the capital intact.
    • It ensures that the customer receives a fixed monthly income.
    • It yields better returns than instruments that are debt-based.

    Key Features of Post Office Monthly Income Scheme:

    The maturity period for the Monthly Income Scheme is 5 years. So, the customer should ideally withdraw the amount after this duration. At the end of the term, the customer will receive all the funds that were invested in the scheme. He/she will also receive the benefit of the fixed monthly income for the complete duration.

    If the customer is compelled to withdraw the funds before 5 years, the following benefits will be payable:

    • Deposit withdrawal within 1 year - The customer receives no benefits.
    • Deposit withdrawal between 1 and 3 years - The customer receives the entire deposit after a nominal deduction of 2% as penalty.
    • Deposit withdrawal after 3 years - The customer receives the entire deposit after a nominal deduction of 1% as penalty.

    Other significant features of the scheme include the following:

    • The investment is absolutely risk-free.
    • The customer can choose to nominate another individual to receive the benefits in the event of his/her unfortunate death.
    • The scheme provides the option of a recurring deposit into which the funds can be moved.
    • Even minors can invest in POMIS.
    • The POMIS account can be transferred from one post office to another, absolutely free of cost.
    • For every deposit the customer makes at the post office, a separate account will have to be opened. The advantage here is that one person can open multiple accounts, up to the maximum possible account balance limit of Rs.4.5 lakh. This is the total amount that can be invested by the customer, including his/her share in all joint accounts.
    • The maturity amount that is received at the end of the investment term can be reinvested in POMIS.
    • There is no Tax Deduction at Source (TDS) for this scheme. However, the interests earned through the investment in the scheme are taxable.
    • The amount that is invested in POMIS is not eligible for tax rebates under Section 80C of the Income Tax Act, 1961.
    • The account can be opened by a cheque or cash. In case the customer chooses to provide the initial payment through a cheque, the date of realisation of the cheque in the Government account will be the date of opening of the customer’s account.
    • A joint account can be opened by two or three adults. All the account holders in the joint account have equal share. A single account can be converted to a joint account, if needed. The reverse is also possible.

    How Post Office Monthly Income Scheme Works?

    The process of investing in POMIS can be done easily and requires minimal documentation. The investor will be required to submit a copy of his/her identity proof, an address proof, and some passport size photographs. The ID proof can be the passport, ration card, PAN card, or voter identity card.

    At the beginning, the customer is required to open an account, either on an individual basis or as a joint account. The table below shows the minimum and maximum funds that can be invested in the post office monthly income scheme:

    Investment Amount
    Lower Cap Upper Cap
    Single Account Rs.1,500 Rs.4,50,000
    Joint Account Rs.1,500 Rs.9,00,000

    Let us analyse the investment process in MIS through an example:

    Suppose Mr.X invests Rs.1 lakh in the scheme, with a maturity period of 5 years. At the annual interest rate of 7.7%, he will receive a fixed monthly payout of Rs.641.66. At the end of the investment term, i.e., 5 years, he will get back the amount he deposited. This money can be withdrawn in two modes, i.e., he can either receive it directly from the post office or as a credit in his savings account through ECS. This amount can be withdrawn on a monthly basis; however, if desired by the customer, he can allow it to accumulate over a period of few months and then withdraw the accrued amount. The latter option is not very lucrative, as the accumulated funds do not earn any interests.

    A new feature has now been added to POMIS in order to make if more effective, in terms of returns. The customer can associate the account with a recurring deposit. Hence, the interest earned on the scheme can be invested in the recurring deposit on a monthly frequency. This is a great way to let your money grow, while still staying invested in the scheme.

    Eligibility Conditions for Post Office Monthly Income Scheme:

    The post office monthly income scheme has been specifically designed for investors who are averse to risks (implying a reluctance to invest in equity instruments), but however, are looking for fixed monthly payouts. Investors in this scheme are hence, usually found to be people in retirement or senior citizens.

    • The only prerequisite to be able to invest in this scheme is that the customer should be a resident of India. NRIs cannot avail the benefits of this scheme.
    • The minimum age limit for entry into the scheme is 10 years.
    • The maximum amount that a minor can invest in POMIS is Rs.3,00,000.

    Monthly Income Scheme versus Monthly Income Plans:

    Customers often confuse the monthly income scheme with the monthly income plans that are associated with mutual funds and insurance. The key differences between the three are highlighted in the table below:

    Monthly Income Scheme Monthly Income Plan (Mutual Funds) Monthly Income Plan (Insurance)
    The post office monthly income scheme provides a guaranteed monthly income at an annual interest rate of 7.7%. The monthly income plan is a mutual fund in which the money is invested. The investments are in the ratio of 20:80 for equity-debt instruments. This is a type of retirement plan in which annuities are paid to the customer on a monthly basis.
    A guaranteed monthly income is provided. Monthly income is not guaranteed for investments in mutual funds. The returns depend on the earnings for that specific period. Monthly income is guaranteed and is a fixed amount. It is based on the premiums paid during the policy tenure.
    TDS is not applicable. However, there will be taxes levied on the interest earned. TDS is not applicable. The monthly annuity is taxable.
    MIS is suited for investors who cannot afford to take risks. MIPs are suitable for investors who do not have a great risk appetite, and stay in between the safe debt funds and the risky equity funds. These plans are for investors who prefer the dual benefits of investment and insurance.
    After a locking period of 1 year, the investor can withdraw the funds with a minimal penalty of 1-2%. The investor will be charged 1% exit load if the units are cashed within 1 year, post investment. As this is a long-term plan, the investment tenure is quite long. The insured will have to bear surrender charges for withdrawing the amount before the completion of the policy term.
    The limits for investing in POMIS are, Rs.4.5 lakh for an individual account and Rs.9 lakh for a joint account. There are no limits for the investment in MIPs. There is no limit on the amount invested.
    The returns are at a fixed rate of interest. The returns from MIPs are not fixed. They are quite volatile, as they can rise to 14%, and plunge negatively, based on the market fluctuations. The monthly income insurance plans are intended to secure the capital and insure the policyholder. So, returns are not the priority here.

    Post Office Monthly Income Scheme FAQs:

    1. What happens when the customer invests more than the prescribed limit?

    A. In the event of a breach of limit, the post office will ask the customer to withdraw the additional amount immediately. For the time period between the deposit of the excess amount and the withdrawal, the investor will be paid only the post office savings account interest rate for the excess amount.

    2. What happens when the investor does not withdraw the funds after 5 years?

    A. If the amount and the interest is not withdrawn after 5 years, then that account will earn a simple interest (as per the post office savings account interest rate) up to 2 years. Following this, the final amount will be kept idle, until withdrawn.

    3. When can the depositor assign a nominee?

    A. The customer can assign a nominee, either at the time of initial investment or during the term of the scheme. In case the depositor wants to nominate after the account is opened, then he/she will be required to submit an application to the concerned post office.

    4. What happens at the death of the depositor?

    A. In the event of death, the nominee of the investor must close the account. He/she is not allowed to continue investing in the account. The amount that has been deposited, along with the interest accrued (up to the preceding month) is paid to the nominee.

    5. How is the interest payable?

    A. There are three ways in which the interest can be availed:

    • The interest will be automatically credited to the savings account with the post office.
    • The depositor can request for interest withdrawal every month. He/she will receive the amount either as cash or through a cheque, as required.
    • The interest can also be availed through post-dated cheques. The validity of the cheque will be 3 months from the date of issuance. However, this facility can be availed only if the cheque amount is greater than Rs.100. If the depositor has lost the cheque, he/she will have to sign an indemnity bond for duplicate cheques to be issued. It should be noted that the validity period of the cheque and a month of reconciliation time should have elapsed before the duplicate cheque is issued. If the depositor initiates a pre-closure of the account, he/she will have to return the unused cheques with a penalty of Rs.4 per cheque. If the depositor faces death, the nominee will have to return these unused cheques, but will not be required to pay any penalty. If the post-dated cheque option is chosen for availing interest, the account holder receives the final amount (after 5 years) through the cheque only.

    6. What happens when the interest payout date is on a postal holiday?

    A. In such a case, the interest will be credited on the immediately preceding working day.

    7. Is any bonus paid at the time of maturity?

    A. Currently, no bonuses are paid at maturity of the scheme. However, for accounts that were opened between 8th December 2007 and 30th November 2011, there was a 5% bonus offered at maturity.

    8. What happens when a depositor who holds a joint account faces death?

    A. After the death of a joint holder, the account is treated as a single account held by the surviving account holder. Then the account will continue, as per the maximum limit of the surviving depositor’s investments in the scheme. If the post office finds excess deposit at this time, the surviving depositor will have to withdraw the same immediately.

    9. Is the monthly interest automatically deposited to the post office recurring deposit (RD)?

    A. No automatic deposit will not be done. The interest from the monthly income scheme is first moved to the post office savings account. Subsequently, the investor can deposit this amount into the RD account.

    10. Is the amount deposited in POMIS liable to wealth tax?

    A. The amount that is invested in the post office monthly income scheme is exempt from wealth tax.

    GST of 18% is applicable on life insurance effective from the 1st of July, 2017

    Post Office Monthly Income Scheme Reviews

  • Page 1 of 50 1 2 3 4 5
    • LIC Life Insurance
      "Excellent"
      0.5 5.0/5 "Blown Away!"
      I have my Life Insurance with LIC. The tenure period is 16 years and Its a long term policy, I am happy with the policy returns and the coverage is 5 lakhs. Its a tax benefits and premium paid on yearly basis. Here I have an online option payment which is very comfortable. The customer service and responses was really good so its recommendable also.
      Was this review helpful? 0
      , haldwani
      Reviewed on Oct 21, 2017
    • LIC Life Insurance
      "Good experience"
      0.5 5.0/5 "Blown Away!"
      My Life Insurance was taken with LIC 2 years back. Its a long term policy , the tenure period is 16 years .The customer service and responsiveness was satisfactory. I get tax benefit and premium paid on monthly basis. I am happy with the policy coverage and benefits so Its recommendable.
      Was this review helpful? 0
      , khanna
      Reviewed on Oct 21, 2017
    • LIC Life Insurance
      "Better"
      0.5 5.0/5 "Blown Away!"
      I have taken 2 policies with LIC. Both Jeevan Anand and endowment policy is a tenure of 21 years. I pay premium of Rs.15,500/ yearly. It is a long term policy. The agent was very helpful. I normally pay to the LIC agent as cash and he makes the payment on my behalf. I am not happy with the return amount which is low.
      Was this review helpful? 0
      , chennai
      Reviewed on Oct 21, 2017
    • SBI Life Life Insurance
      "Very good life insurance"
      0.5 5.0/5 "Blown Away!"
      SBI life insurance part is very good i am holding this insurance for a long time . I am yet to reap the benefits. As I was suggested to take this insurance I had opted for it, I had received all the deliverable from them on time. I normally pay a premium of rs 400 on a monthly basis.
      Was this review helpful? 0
      , madurai
      Reviewed on Oct 21, 2017
    • LIC Life Insurance
      "Its good"
      0.5 5.0/5 "Blown Away!"
      I am holding a Jeevan Anand for my daughter and for my son too. I normally pay a premium of 15k for both. I normally get benefits like after 15 years, I will get bonus which is 6 times of the money which I had invested as returns.I normally make the payment through net banking
      Was this review helpful? 0
      , balotra
      Reviewed on Oct 21, 2017
    • LIC Life Insurance
      "Trusted life coverage"
      0.5 5.0/5 "Blown Away!"
      I am making Rs.3760 premium amount on quarterly basis for Money back policy it has the tenure period of 15 years. I am getting the bonus interest around 20 to 30,000. After maturity period I will be getting some sum assured value. LIC payment gate is also improved and good.
      Was this review helpful? 0
      , mumbai
      Reviewed on Oct 21, 2017
    • LIC Life Insurance
      "Best policy to use"
      0.5 5.0/5 "Blown Away!"
      I am using LIC policy from last 5 years and it is a long term policy. The customer service was good and prompt. The tenure of this policy is 20 years. I pay a premium of Rs. 1450 once in three months. I get a benefit upto 1.25 lakhs which is good and i am also happy with the coverage returns. I must say, this is one of the best policy to use.
      Was this review helpful? 0
      , chennai
      Reviewed on Oct 21, 2017
    • LIC Life Insurance
      "Good service"
      0.5 4.0/5 "Great!"
      I have my Life Insurance with LIC . Its a corporate Insurance since my company has a tie with I have taken. Its a cash back policy and the tenure period is 20 years .I am paying through cheques or directly at the office so its bit inconvenient . Its a tax benefits and premium paid on yearly basis.I am satisfied with the policy coverage and benefits. The customer service and responses was also up to the mark,
      Was this review helpful? 0
      , pune
      Reviewed on Oct 21, 2017
    • HDFC Life Life Insurance
      "Not a good policy to use"
      0.5 2.0/5 "Expected more"
      I am using HDFC life insurance from last 6 months and it is a cash back policy. The tenure of this policy is 2 years. I had a bad experience with this life insurance policy because the claim amount was not satisfactory. I have a coverage upto 4 lakhs which is very good. I was admitted in the hospital and the settlement amount was Rs. 70000 out of which they coverd only Rs. 20000, the claim amount was much low comparatively. I pay my premium on half yearly basis and the payment option is much convinient when compared to other life insurance.
      Was this review helpful? 0
      , mumbai
      Reviewed on Oct 21, 2017
    • LIC Life Insurance
      "good service"
      0.5 4.0/5 "Great!"
      It was very long before I took my life insurance with LIC the service from LIC was good I have submitted all my documents directly the representatives of LIC is very good they use to update me regularly regarding new schemes offers also I use to get regular intimations regarding my premium regularly and I have taken 2 policy's so far with LIC .
      Was this review helpful? 0
      , kolkata
      Reviewed on Oct 21, 2017
    • Aviva Life Insurance
      "Good protect insurance"
      0.5 4.5/5 "Excellent!"
      I have Aviva life insurance, taken policy before four years from them, every annum I used to make the premium around Rs.16,000, its pure term insurance after me. My family will get the reimbursement of Rs.50 lakhs. I used to make the payment through netbanking, even I received the policy copy/
      Was this review helpful? 0
      , bangalore
      Reviewed on Oct 20, 2017
    • Aegon Life Life Insurance
      "Good Insurance"
      0.5 4.5/5 "Excellent!"
      Through online channel I have taken life insurance, comes term insurance from Aegon life, I took the policy cover of Rs. 1.4 crore, my family will get the reimburse amount on monthly basis . I am paying low premium it has good protection for the nominees.
      Was this review helpful? 0
      , bangalore
      Reviewed on Oct 20, 2017
    • LIC Life Insurance
      "Good policy to use"
      0.5 4.0/5 "Great!"
      I hold LIC policy from last 5 years and it is a cash back policy. The tenure of this policy is 20 years. I pay premium of Rs. 2200 on quarterly basis, this amount get auto deducted from my savings account. There will be a cashback after 5 years and i am also satisfied with the returns.
      Was this review helpful? 0
      , chennai
      Reviewed on Oct 20, 2017
    • LIC Life Insurance
      "excellent service"
      0.5 5.0/5 "Blown Away!"
      I have taken with 3 policy's so far with LIFE INSURANCE CORPORATION OF INDIA the customer service is very good and the staffs of LIFE INSURANCE CORPORATION OF INDIA was very helpful they use to update me regarding new schemes and offers so I would say the service is excellent.
      Was this review helpful? 0
      , bangalore
      Reviewed on Oct 20, 2017
    • LIC Life Insurance
      "excellent service"
      0.5 5.0/5 "Blown Away!"
      The service of LIFE INSURANCE CORPORATION OF INDIA is very excellent ,the staffs of LIFE INSURANCE CORPORATION OF INDIA is very good and helpful they use to update me regularly regarding new schemes and offers and I have taken 1 policy so far with LIFE INSURANCE CORPORATION OF INDIA and I use to pay my amount through online ,service is good.
      Was this review helpful? 0
      , bangalore
      Reviewed on Oct 20, 2017
    • LIC Life Insurance
      "Good policy to use"
      0.5 4.0/5 "Great!"
      I hold a LIC policy from last 7 years and it is a return back policy, the tenure of the policy is 18 years. I pay the premium of Rs. 6900 once in three months. I make my payment through debit card and it is very convinient to me. I am also satisfied with the coverage returns which they are giving.
      Was this review helpful? 0
      , gurgaon
      Reviewed on Oct 20, 2017
    • ICICI Prudential Life Insurance
      "Average experience"
      0.5 3.0/5 "Satisfactory"
      I have taken a life insurance from ICICI Prudential and the process to get this policy was easy. It has been seven years now that I am paying my premium. The only hassle I am facing is about the ECS deduction. Though I have given the date suitable and the ECS happens on that day, still there are charges again from my account.
      Was this review helpful? 0
      , bangalore
      Reviewed on Oct 19, 2017
    • LIC Life Insurance
      "LIC IS THE BEST"
      0.5 5.0/5 "Blown Away!"
      LIC is the best and the major reason for choosing LIC is because of saving. I am holding this LIC Policy for a period of 12 to 15 years I normally pay to the LIC agent as cash and he makes the payment on my behalf.
      Was this review helpful? 0
      , kumbakonam
      Reviewed on Oct 19, 2017
    • HDFC Life Life Insurance
      "Life insurance"
      0.5 5.0/5 "Blown Away!"
      HDFC life insurance service are fine. I am holding this life insurance for a period of 3 years. It was set actually for achieving certain goals . This was taken for a period of 15 to 20 years., I am getting some tax benefits and it is aimed for good returns too
      Was this review helpful? 0
      , lucknow
      Reviewed on Oct 19, 2017
    • LIC Life Insurance
      "Good policies"
      0.5 5.0/5 "Blown Away!"
      I have started 2 policies with LIC very long back. Yearly once I will visit the LIC office to collect the statements. I pay premium of Rs.1663 and Rs.1034 as every month through ECS. The documentation process was easier. Both are long term policies with tenure of 15 years.
      Was this review helpful? 0
      , pune
      Reviewed on Oct 19, 2017
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