Analysis Between Money Back and Term Insurance Plans
Updated On Aug 30, 2022
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Discovering the differences between a money-back and term insurance plan will help you decide which is the better choice if you are unsure whether to choose a money-back insurance or a term plan. Term insurance plans and money-back policies obviously have their own relevance.
When compared to a money-back policy, which is the ideal combination of insurance and investment, a term policy is a pure protection plan that, in the event of the policyholder's death, provides financial support to the latter's dependents. Having stated that, let's talk about the differences between term insurance and money-back policies.
What is the Meaning of a Money Back Plan?
A survival benefit sum is paid to the life assured at various times during the life insurance policy's term under a money back plan. Even when the policyholder has previously received periodic survival benefits, the sum assured is given to the nominee in the event that the life assured dies during the policy term.
What is the Meaning of Term Insurance Plan?
In the tragic event that the life assured passes away during the policy term, a term insurance program includes a sum insured to the nominated or the life assured's family. This kind of life insurance policy guarantees that your family will have enough money to live a good lifestyle in the event of your death.
Difference Between Money Back and Term Insurance Plan
The different factors that help differentiate the two policies are listed below.
· Profit from Investment
In the event that the life insured survives the specified policy term, term insurance plans do not reimburse the life insured. In other words, the insured individual forfeits the premiums he would have paid under a pure term life insurance policy if he survives.
A money-back plan, on the other hand, pays out a specific proportion of the selected sum assured as money-back payments if the insured lives past the defined term. Additionally eligible to collect bonuses as announced from point to point is the life insured. These bonuses are paid out along with the final payment under the money back plan after accruing over the course of the policy's duration.
· Life Coverage
When compared to Money Back Plans that charge the same premium, Term Insurance Plans offer you a far higher level of life insurance coverage. A healthy person, for instance, might pay the same amount for a life insurance cover of merely Rs. 20 Lakhs under a Money Back Plan as opposed to a life insurance cover of Rs.one Crore under a Term Insurance Plan for a trivial cost of only Rs.700 per month.
As a result, a term insurance plan would pay Rs.one crore to the beneficiary upon death. If he chooses a life insurance plan with a money-back guarantee, just Rs. 20 lakh plus all collected bonuses to that point become payable.
Conclusion
What are you still holding out for? You should pick the finest option for your needs now that you know about the key areas of contrast between money-back policies and term plans. You can select both insurances if necessary in order to profit from both.
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