Difference between Money Back Plan And Whole Life Plan
Updated On Jan 05, 2024
If something catastrophic happens during the policy's Whole life, Whole life insurance protects your family. You may get the plan for a small 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 age, your nominee will get the guaranteed cash, regardless of any previous survival bonuses.
Table of Contents
Whole Life Insurance Plans vs. Money Back Plans
You must first grasp the differences between the two types of insurance policies to make an informed decision
1. Extensive Coverage
Whole life insurance is a type of policy that provides complete coverage at a low cost. In contrast, 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.
2. 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.
Must Read: Money Back Policy: Features, Benefits and How to Choose
3. Taxation Provides a Benefit
Both insurance plans provide tax advantages. Premium payments for Whole life insurance and 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.
4. Advantages
The money return plan provides benefits such as death benefits, maturity benefits, and survival benefits. On the other hand, whole life insurance pays out a lump sum in case of a death. Maturity benefits are available in certain Whole life insurance contracts.
5. 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 monthly instalments.
Bonus
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.
Conclusion
Consider your co-objectives and 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.
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