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Benefits Of A Money Back Policy

Published On Jun 20, 2021

A Money Back Plan is a type of life insurance policy that allows the insured person to receive payouts periodically as part of the survival advantage during the policy term. As a reward for survival, the insurance companies also provide a survival benefit with it, making it a profitable investment plan. 

While most life insurance policies provide this benefit at the end of the policy term, the money-back policy has the unique feature of providing continuous payments to the beneficiary throughout the policy term. Rather than a single lump sum at the end of the policy period or at death, the policyholder will receive regular payouts for the rest of his or her life term. 

Benefits of A Money Back Policy

It is quite evident that a money-back policy is a popular choice amongst investors due to the luring advantages it provides. Here are some of the benefits A Money Back Policy provides to the policyholder-

Death Benefit

The policyholder's nominee will receive the death benefit if the policyholder dies. The death benefit amount is equal to the sum assured determined by the insured person at the point of purchase. Additional bonuses, if any, will also be provided to the nominee. A money-back policy's death benefit is a guaranteed income, which is paid to family members or a nominated beneficiary will definitely receive the amount promised from the insurer. 

Maturity Benefit

If the policyholder lives to the end of the term, he or she is authorised to the maturity benefit. The maturity benefit is typically counted as part of the sum assured amount evaluated by the policyholder at the outset. During the tenure, this amount may or may not have been upgraded. If the sum assured is upgraded, the enhanced sum assured will be provided with it. Also, survival benefits and the accumulated benefits are also provided upon maturity. 

Survival Benefit

The survival amount is paid as long as the policyholder is alive, well and paying the premium during the term of the policy. This benefit's frequent payments are spread out across the term and are usually a fixed amount of the sum assured as determined by the policyholder. Typically, payouts do not begin immediately after the policy is purchased, but rather after a few years. 

Bonus Benefits 

Reversionary bonus and terminal bonus benefits are available with most of the Money Back Policies. Most money-back policies include the reversionary bonus. A reversionary bonus is declared at the end of every financial year. The bonus sum is calculated as a percentage of the sum assured. There are two types of reversionary bonuses: simple and compounded bonuses. The compound reversionary bonus is added to the sum assured each year, whereas the simple reversionary bonus is not added to it.  

Rider And Tax Benefits

One of the major reasons for the popularity of money back plans is the flexibility in additional riders and tax benefits under the 80C of the Income Tax Act. Insurance providers include certain riders with their policies to supplement the basic policy type. The insured is charged an additional premium for the add-on riders, which cover him or her against a number of hazards. Money-back policies include riders for serious illness, accident or disability, hospitalization cash, waiver of premium, and sped up sum assured etc. 

Take Away

With benefits ranging from maturity to survival to death etc., money-back policies are great investment options. Check out these great advantages you can get your hands on, with a money plan, if you are willing to invest in a safe and profitable investment option and ensure a secure future for your loved ones’ future needs.

Also Read: 

How The Money Back Policy Works?

Key Components of 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.  

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