Compare & Buy Car, Bike and Health Insurance Online - InsuranceDekho
Claim, renew, manage & moreLogin
Hurry Up!
Save upto ₹54,600 in taxes under 80C & 80D. Buy a term insurance plan now!
View Plans

How Does Money Back Policy Work?

Updated On Jan 04, 2022

Money Back policies are savings plans that pay out at regular intervals after a certain amount of time until the policy term ends. Money Back policies, which provide survival benefits, resolve the issue of liquidity, and provide risk-free returns, have proven to be a reliable solution in the changing times in the world of unpredictability. They do not let you or your loved ones suffer financially while you try to achieve your life goals by providing survival benefits, resolving the issue of liquidity, and providing risk-free returns. Under a money return plan, you will continue to receive a percentage of the sum covered during the policy's duration. It is advisable to meet financial obligations as soon as possible rather than waiting until the end of the policy term to collect the proceeds. However, because they invest in asset categories that yield low but constant returns, the returns are not market-linked.

What Is a Money Back Insurance Policy and How Does It Work?

Let's use an example to better understand how Money Back insurance works:

  • Assume the Money Back insurance has a 20-year policy term and pays survivor benefits after 5 years, then every 5 years after that, with the balance paid at maturity. In this case, the insured party would get a survival benefit in the policy's fifth, tenth, and fifteenth years, as well as the remainder of the survival benefit at the policy's maturity in the twentieth year. This is in addition to the maturity amount and, if applicable, any bonuses.
  • Assume the insurance was obtained when the insured's child was around 10 years old. If the child is studying for engineering or medical examinations and has attended preparation classes, the first survivor benefit payment following the Money Back policy's five-year term can be used to pay off tuition fees.
  • When the child reaches the age of 20, the second instalment of the survival benefit can be used to cover any postgraduate education fees. If a large enough Money Back insurance is negotiated, the income can even be used to cover overseas school expenses.
  • When the insured reaches the age of 25, the third survival benefit, which accrues on the 15th year of membership in the plan, will be given to the insured. This money can be used to finance the costs of the child's wedding.
  • The fourth tranche of the survival benefit, as well as the maturity amount and the reversionary bonus, will be paid out in the 20th year of the Money Back plan. This money can be used to fund retirement years, or it can be used to buy a home or pay for a long vacation if the individual has previously saved for retirement.

When you buy a Money Back plan with enough coverage, the amount recovered by the employee at maturity is taken into account and can be used to cover a range of major expenses. These may include unavoidable costs like as relocating to one's country after retirement, restoring the ancestral property, renovating or remodeling one's existing house, repaying a vehicle loan, and so on. In most cases, the maturity amount is a one-time payment provided to the policyholder when the policy reaches its end date.

These payments would help the insured person pay off large expenses in the future. Most insurance companies or their financial advisers may tailor plans to an individual's needs and ensure that they obtain a Money Back policy that best matches their future requirements. A Money Back plan may be great for you if you're looking for a way to budget for future expenses without having to worry about the safety or security of your money.


Money Back programs are an easy and convenient method to save money. They give a number of benefits that help policyholders keep their present and future finances stable and secure. The Money Back insurance coverage allows you to make monthly payments during the duration of the policy. The bonus is calculated based on the total amount insured; however, some insurance companies provide additional optional benefits. If you die during the insurance period, you will be covered. The claim includes the whole sum insured, with no survivor benefits deducted. Before acquiring a Money Back policy or any form of insurance coverage, you should understand the terms and conditions.

Also read - When Should I Buy 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.

Popularly Opted Term Insurance Sum Assured

People Also Read

Must BuyMust Buy

Why to Buy Life Insurance Policy Online from InsuranceDekho

  • Tax benefit upto 1,50,000*
  • Claim support everyday 10AM-7PM
  • 50 Lacs+ happy customers