Exploring Key Features of a Money Back Policy
Updated On Jul 31, 2021
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Have you been planning to invest in a traditional life insurance policy for a long period of time? Do you want to build a massive corpus? Are you hesitant to do so because you fear you would face a major financial instability if you require funds before the policy period is over? If so, stop worrying! Choose a money back policy to solve the problem of liquidity during the policy period. Confused? Let us help you understand what money back insurance policy is all about.
What is a Money Back Policy?
A money back policy is a life insurance policy type. This policy type, true to its name, gives money back to the policyholder at regular intervals. This amount, a specific percentage of the sum assured, is paid during the plan tenure. It must be noted that pay-outs given under money back plans are called survival benefits.
Features of a Money Back Plan
Some of the key features of a money back policy that make the life insurance policy type unique include:
- Calculation of survival benefits is done as a percentage of the sum assured.
- Survival benefits are paid at regular intervals throughout the policy tenure.
- The benefits are paid at a fixed interval.
- Every money back policy comes with a different pay-out structure.
- The percentage of sum assured paid in the form of survival benefits is not fixed. It can vary according to the plan.
- On plan maturity, the remaining portion of the sum assured is paid as maturity benefit.
- In case of the death of the policyholder, the complete sum assured is paid to the nominee regardless of the money back benefits paid already.
- Money back plans usually come in the form of participating plans where bonuses are added. It must be noted that the accrued bonus is paid on maturity or on death.
- One can avail riders under their money back policy. It must be noted that the rider benefits are paid as a lump sum only when the event covered by the rider takes place during the policy tenure.
How to Choose a Money Back Policy?
If you want to buy the best money back policy, it is advisable to consider:
Your financial goals in the first place. Also, learn that it would be important for you to know how many funds you can invest at present to buy a money back plan. The period you want to stay invested along with how you would want your pay-outs to be are also a subject of serious consideration.
Once you know the answers to the above questions, perform a comparison of the different features of different money plans available. Needless to say, you will find many insurance companies offering money back policies that may look suitable as per your needs. But remember, you will have to be very careful with your selection. In this process, comparing premiums, features of the plan, plan inclusions, plan exclusions, plan payouts options, and other significant details would be a must for you to reach an informed decision.
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.