Are Money Back Plans Better Than PPF Accounts?
Published On Jan 08, 2022 10:00 AM By InsuranceDekho
Table of Contents
- Are Money Back Plans better Than PPF Accounts?
- What Are the Advantages of a Money Back Guarantee?
- The Benefits of a PPF Account
Are Money Back Plans better Than PPF Accounts?
A Money Back policy is a type of life insurance that allows the policyholder to receive monthly payments or a lump-sum payout at a preset point throughout the policy's term. The returns on Money Back insurance might be guaranteed, conditional on investment performance, or a combination of both. This allows you to get Money Back insurance that is customized to your individual financial goals.
The PPF was formed in 1968 as a government-sponsored savings scheme. It is also recognized as one of the most dependable and preferred savings solutions by Indian investors. The purpose of this program was to instill in Indians the habit of saving. The yearly interest rate is established by the government because this is a government-backed plan. The current rate is 8% for the fiscal year 2018-19.
What Are the Advantages of a Money Back Guarantee?
There are several advantages to purchasing a Money Back package. The following are some of the reasons why a Money Back plan can be beneficial to you:
1. Offers Insurance Coverage
A Money Back plan can be used as both an insurance and an investment vehicle. A policyholder can choose the right insurance coverage to help them fulfill their family's financial obligations. These arrangements provide continuity and enable your loved ones to live happily even if you are not around.
2. Provides a Sum That Is Guaranteed
If an unforeseeable event occurs, the insurance company gives the beneficiary a lump sum payment equal to the whole amount covered. This is the maximum amount your family members may utilize to meet their financial commitments while maintaining a decent and acceptable lifestyle.
3. Low-key risk
Market fluctuations affect stocks, mutual funds, equities, bonds, stocks, and other investment vehicles. A Money Back Guarantee assures that you will get your funds on a consistent basis. Because they provide insurance coverage and monthly payouts, these plans are simple and reliable. If you want to minimize your risk appetite, it might be a great option for you. These tactics can help you lower your portfolio's risk.
4. Take Advantage of Taxes
Section 80 C of the Internal Revenue Code exempts premiums paid for money back programmes from taxation. It is, however, subject to the condition that premiums do not exceed 10% of the entire sum assured by the plan.
The Benefits of a PPF Account
The following are some of the advantages of a PPF account:
1. Returns That Are Secure And Predictable
The National Savings Institute founded the fund, suggesting that it is a government-backed plan, making it one of the safest investment alternatives accessible. The government calculates its interest rate quarterly based on the securities rate established by the RBI, making it straightforward to assess your returns and prepare appropriately.
2. Stacking Advantage
Compounding is beneficial to a PPF account since it is a long-term investment. Compounding on one's deposits has the advantage of allowing the investor to earn interest on interest.
3. Investment Requirement
Individuals interested in investing can begin with as low as 100 rupees, and the minimum amount that must be put down within a year is 500 rupees, making it a straightforward and appealing alternative for novice investors.
4. Investing Flexibility
The Public Provident Fund allows investors to make regular contributions or a series of instalments totaling up to 1.5 lakh per year, making it easier to invest wisely and flexibly.
5. Benefits from Taxes
The Exemption category applies to the Public Provident Fund, which implies it is eligible for tax exemptions on investments, interest earned, and fund redemption. Furthermore, investments in PPF up to 1.5 lakh Rupees per year are eligible for deductions under Section 80C of the Income Tax Act, thus investing in PPF is always a smart option if you want to save money on taxes.
The decision between PPF and Money Back Plan is based on the investors' investing objectives or ambitions. The first is a market-linked product, while the second is a savings plan. PPF offers consistent earnings and is best suited for risk-averse investors. The reasons for investing vary from person to person, based on their financial goals. There is a range of investment solutions available in the Indian market that may help individuals build wealth over time and secure their family's financial future. So, study the material above before making any judgments.
D read - Aspects To Know Before Buying A Money Back Policy
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.