How is a Money Back Plan different from a Whole Life Plan?
Updated On Nov 08, 2021
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If something catastrophic happens during the policy's Whole life, Whole life insurance protects your family. You may get the plan for a little monthly fee, and the money promised will be sent to your family. The policy's goal is to cover the possibility of death. You will not get any maturity benefits if you outlast the policy's Whole life. A Money Back life insurance policy is an endowment policy that provides coverage for a certain period of time. Throughout the insurance period, you will get returns at regular intervals. These benefits are referred to as survival advantages. If you die before reaching age, your nominee will get the guaranteed cash, regardless of any previous survival bonuses.
Whole Life Insurance Plans vs. Money Back Plans
You must first grasp the differences between the two types of insurance policies in order to make an informed decision
Whole life life insurance is a type of policy that provides complete coverage at a low cost. In contrast, a moneyback insurance coverage guarantees a reduced payout for the same price. A Whole life plan will provide a lump sum payout to family members in the event of the insured's death, but a Money Back plan will pay the cash promised plus any earned bonus.
R.O.I. (Return on Investment)
If you survive the policy for the Whole life of a Whole life plan, the insurance company will not offer any survival benefits. The Money Back plan, on the other hand, pays out a certain proportion of the insured amount at specified intervals over the policy duration.
Taxation Provides a Benefit
Both insurance plans provide tax advantages. Premium payments for Whole life life insurance and Money Back Money Back plans are free from taxes under Section 80C of the Income Tax Act of 1961. The maximum amount of tax relief is INR 1.5 lakh. There are no taxes on the maturity, death, or survivor benefits.
The money return plan provides benefits such as death benefits, maturity benefits, and survival benefits. Whole life insurance, on the other hand, pays out a lump sum in the case of a death. Maturity benefits are available in certain Whole life insurance contracts.
Payment Method for Benefits
Under the Money Back Policy, a lump-sum payment is provided at regular times. Death benefits from Whole life insurance might be paid in one single sum or in monthly instalments.
Money Back plans are commonly participation plans, which means that a bonus might be declared on the policy. Whole life insurance policies are non-participating, which implies they don't have any incentives.
Consider your co-objectives as well as your financial needs while deciding between the two. Whole life insurance is a type of protection insurance that does not have an investment component. It will provide financial stability for your loved ones if something horrible happens to you. However, you should choose a Money Back life insurance policy if you want to see a return on your investment. In addition to providing insurance, it also serves as an investment vehicle. Those who have already satisfied their protection needs and have surplus income may be able to employ Money Back programmes to attain their long-Whole life financial objectives. Keep the investment's purpose in mind before making a selection.
Also Read: Pros And Cons Of Buying A Money Back Plan