Advantages and Disadvantages of Buying Money Back Policy
Published On Oct 24, 2021 10:00 AM By InsuranceDekho
Table of Contents
- What Are the Advantages of a Money Back?
- The Disadvantages of Money Back Guarantees
You may want a service that brings the perfect blend together. As a consequence, the best self-improvement product is a Money Back guarantee. A money return plan not only provides coverage but also guarantees that you will receive a set amount of money each month to fulfill your needs. You might be able to acquire a Money Back plan for a specific length of time, but you'll have to pay monthly premiums. Your beneficiary will get a lump-sum payment known as the death benefit if you pass away.
What Are the Advantages of a Money Back?
A Money Back plan provides a number of advantages. As a result, these are the most popular insurance products among investors. The following are some of the benefits of a Money Back plan:
1. Offers A Sum That Is Guaranteed
The nominee of the insurance plan receives a lump sum payout known as the sum assured in the event of the policyholder's death. This money may be used to cover a range of expenses for the policyholder's family, allowing them to live a stress-free life.
2. Low-Risk Personality
Market volatility affects stocks, bonds, mutual funds, equities, and other investment vehicles. A Money Back policy, on the other hand, can guarantee a person's returns at certain intervals. Because of the insurance coverage and constant revenue, these systems are simple and reliable. If you want to keep your risk appetite low, it might be a suitable alternative for you.
3. Offers Insurance Coverage
Although considered as an outstanding financial instrument, a money return plan also serves as an insurance mechanism. You can select a policy that will assist you in meeting the financial demands of your family members. These insurance policies provide your loved ones peace of mind and help them live a dignified life even after you've passed away.
4. Premium Riders Get a Waiver
If the insured dies before the insurance term ends due to an unforeseen event, the remaining premiums are waived. This implies that the family or candidate will not have to worry about additional expenses at a time when they are already under a lot of emotional and financial strain.
The Disadvantages of Money Back Guarantees
Every firm would use the same method if the Money Back promise was perfect. Unfortunately, there is no such thing as a perfect business plan. Let's look at a few of the drawbacks that are frequently linked with this strategy.
1. Attracts Disgruntled Customers
Offering a Money Back guarantee, according to one school of thinking, encourages undesirable consumers. To put it another way, there are consumers who prey on these promises and exploit them for their own selfish gain. Only a small number of consumers will ever use a Money Back promise, and an even smaller percentage of these customers will be dishonest. This danger does exist, though, and firms should be aware of it before providing a guarantee.
2. Impossible To Meet Everyone's Expectations.
The second thing to keep in mind is that meeting all expectations are unrealistic. Even if your product delivers precisely what it promises, some users will misinterpret the findings or fail to extract the intended value. This might cause tension between your firm and its consumers, which can be harmful to your brand.
3. Accounting Is Complicated
Finally, if clients take advantage of Money Back promises, it might complicate your finances and bookkeeping. You may have to amend cost sheets and income papers for past months, depending on the length of the offer, which might affect your ability to manage your finances correctly. There's also the issue of credit card companies refusing to give refunds after a certain amount of time has passed (usually 90 days).
Most of us wish to invest for a long time in a typical life insurance policy to build a guaranteed corpus. However, there is an issue if we require money before the term is up. A financial catastrophe might happen at any time, and we'll need money to deal with it. A typical life insurance policy, on the other hand, is useless if the policy's term hasn't expired. We may be able to get a loan, but the amount may be limited. A Money Back plan addresses the issue of liquidity during the plan's duration by paying a percentage of the Sum Assured on a monthly basis.
Also read - Why Are Money Back Plans The Best Investment Options?
What Is A Money Back Plan And Its Benefits?
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.