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All You Need To Know About Money Back Plans

Updated On Jul 20, 2021

A traditional insurance policy tends to provide the sum assured in case of the death of the policyholder during the policy term. The nominees or claimants of the insured person used to be eligible to receive the benefit, also known as a death benefit. 

However, in the case of the Moneyback insurance policy, the insurance company is liable to payout maturity benefits in the form of survival benefits at regular intervals throughout the policy tenure. Also, in case of the policyholder’s death during the plan term, the sum assured amount will also be paid out to the beneficiary irrespective of the amount already paid in the form of survival Benefit. So, we can consider a money back plan as an endowment policy with the advantage of regular liquidity. It is a scheme with a blend of insurance and investment instruments.

Why Do You Need To Purchase a Money Back Policy?

The money back policy is the most suitable for people who wish for a guaranteed return on their investments. It is ideal for those as well who desire to receive some payouts regularly along with an insurance cover. Unlike a basic life insurance plan that pays only after maturity, the money back policy starts paying you with an amount in the form of survival benefit in addition to maturity benefits, with some bonuses, if applicable. However, if the insured person could not survive till the maturity of the policy, the beneficiary will be entitled to get the death benefit, which is the entire sum assured amount, and the money back policy shall be terminated.

With such facilities, a money back insurance policy promises to deliver regular payouts that ensures policyholders find a stable income source that ultimately helps them meet their future goals and expenses at different stages of life. With the offering of guaranteed returns on investment through periodic pay-outs and life insurance cover, this policy becomes an ideal one for individuals who look for a source of income as well as protection. In short, it can provide you with an assured return on investment that can assist you to grow your wealth securely and swiftly.

Benefits of Money Back Insurance Plans

Here are some advantages of buying a money back insurance policy:

  • Releases regular payout benefits throughout the policy term
  • Functions as an insurance plan along with long-term investment
  • Provides tax benefits on both the returns either survival or maturity 
  • Less risky scheme when compared to investments like mutual funds 
  • Provides optional riders to cover critical illnesses, disabilities, and so on.

How to Select a Money Back Policy?

Selecting a perfect money back plan can ensure you get the maximum benefits. While choosing this policy, you must check its policy term as the average duration of a money back plan is almost 20 years. Since money back insurance plans pay their policyholders a survival benefit, prospective customers must check the percentage of the sum assured that is given through regular payouts and should select the sum assured that is enough to cover their expenses. 

Different types of investments through this single scheme should be thoroughly looked over. Policyholders must try to verify the period of the payouts that are provided over the course of the policy term in the form of survival benefits as some policies are designed to pay policyholders at an interval of 5 years while others have a different timeline based on the policy term. Policyholders must also see if the money back plan provides any tax benefits as some policies could not offer any tax benefit if 20% of the sum assured is given as the survival benefit.

Also Read: 

Are Money Back Plans Worth Investing In?

Eligibility Criteria to Buy Money Back Insurance Plans

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.

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