Fixed Deposits Or Money Back Policy - Which Is Better?
Published On Jan 23, 2022 11:00 AM By InsuranceDekho
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Have you been urged to invest in something worthwhile? Do you believe it is past time for you to think about it? If you've been looking for ways to invest, you've probably come across money-back programs and fixed deposits. If you're unsure about the differences between the two and can't decide which is best for you, keep reading to learn more about the differences between money-back plans and fixed deposits so you can make an informed decision. The most popular options are the Money Back plans. They both offer benefits and drawbacks, but the most important part of the process is determining which benefits the best suit your financial condition and requirements. Fixed Deposits are offered by banks and non-bank financial institutions (NBFIs). It is a financial product that pays the investor a higher rate of interest until the maturity date. Some banks may also offer loans backed by FD certificates to investors. It's possible that a fixed deposit will entail the opening of a new account. You can do so without having to create a new account.
What's the Difference Between Money Back Plans and Fixed Deposits?
Fixed deposits and Money Back programs are both necessary in and of themselves. Consider the following distinctions if you're having problems selecting which of the two is better for you:
1. Policy’s Duration
Fixed deposits, which have durations ranging from one to five years, are appropriate for both long and short-term investments. Fixed deposits are ideal for long-term and short-term investments, with terms ranging from 1 to 5 years. While Money Back policies provide life insurance as well as premium back options for a minimum policy term of 10 years, fixed deposits are ideal for long-term and short-term investments, with terms ranging from 1 to 5 years.
2. Make a Financial Investment
Premiums for Money Back insurance vary depending on the plan and are decided by factors such as age, length, and other factors. A fixed deposit, on the other hand, can be started with a minimum of Rs. 1,000 and has no maximum investment limit.
3. Investment Return
Money-back guarantees on investments are accompanied by a clearly stated return on investment. Fixed deposits, on the other hand, provide a return on investment that is assured. One can earn interest on a fixed deposit on a weekly, quarterly, or annual basis.
In Money Back policies, premature withdrawals are permitted after two years of the policy tenure, although partial withdrawals are permitted in fixed deposits.
5. Options for Payment
The money is received in the form of annual/monthly instalments under money back insurance over a long period of time. The policyholder could also choose to receive the entire corpus as a lump sum payment. Fixed deposits, on the other hand, allow you to withdraw the payout amount in one lump sum at the end of the policy period.
6. Tax Advantages
Under Sections 80C of the Income Tax Act 1961, a policyholder under a Money Back policy receives tax benefits for the premium paid and the maturity funds received from a life insurance policy. Fixed deposits, on the other hand, provide no tax benefits. It's worth mentioning that there are a few tax-advantaged fixed deposits that can be held for up to five years and provide tax benefits under Section 80C.
Two safe investment options for saving and developing your money are a Money Back plan and a fixed deposit. Each one has its own set of benefits. You must invest in a product that is suitable for your financial circumstances and requirements. Money-back plans, on the other hand, offer greater benefits, such as a guaranteed amount and other benefits.
You may also like: Popular Money Back Plans By Insurers
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.