Are Money Back Plans Preferable Than PPFs?

What is a Money Back Policy?

Here, a part of the premium paid is utilized for providing an insurance cover while the rest of the premium portion is invested. The fundamental difference between an Endowment and a Money Back policy is that, the insured get survival benefits at regular intervals in addition to the maturity value. Survival Benefits are generally 20-25% of Sum Assured (SA) which is paid after every 4-5 years.

What is a Public Provident Fund?

The PPF is a government introduced savings scheme launched in 1968. It is also considered as one of the most stable and preferred saving instruments among Indian investors. The purpose of this scheme was to inculcate the habit of savings among Indians. Being a government backed scheme, the rate of interest is decided by the government itself on an annual basis. The existing rate for FY 2018-19 stands at 8%.

Earlier PPF could only be opened via post office, but recently, they can be opened at all public and private sector banks. You can even open one online and link it directly to your salary account. The tenure of investment is for 15 years with an option to extend it for 5 more years. You can begin with a minimum investment of ₹500 or more, but no more than ₹1,50,000 per annum.

Why Invest in PPF?

• Option of a partial withdrawal post completion of 7 policy years. The maximum amount is 50% of the balance amount at the end of the 4th year.
• A PPF account can be continued even after the maturity date, with or without any further contribution.
• Option to extend the maturity account post 15 years.
• Loan facility is available post 3rd year of the policy.
• The balance accumulated is exempted from wealth tax.
• The interest received is tax free.
• Start with as little as ₹500 as the amount of investment.

Why Invest In Money Back Plans?

• Returns Accrue Only After a Few Years
• Value of Money Higher with a Money Back Policy
• Insured Receives the Full Sum Assured on Maturity 
• Insurance Cover at the Same Time as Investment Returns
• Bonus at Maturity Significantly Increases the Overall Payout 
• Counters Vitality of Market-Linked Investments 
• Add on Riders Available for the Insured to Increase Their Cover
• Secure Investments with a Money Back Plan 
• Tax Savings with a Money Back Plan 

Conclusion

The difference between the PPF and money back plan is that in the PPF one gets the sum assured and the bonus at the completion of the maturity period. Whereas in a money-back plan the policyholder gets a percentage of sum assured at regular intervals.

Also read: Learn About the Net Promoter Score (NPS) Calculator Used by the US Postal Service.

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