How Is Money Back Different From Term Life Insurance?

Term insurance protects your family in the event of a catastrophic incident occurring within the policy's term. You can purchase the plan for a small monthly payment, and the money promised will be paid to your family. The policy is intended to cover the possibility of death. You will not receive any maturity benefits if you outlast the policy's term. A Money Back life insurance policy is an endowment policy that provides you with life insurance for a set period of time. Throughout the insurance term, you will get returns at regular intervals. These benefits are referred to as survival benefits. If something occurs to you before you reach maturity, your nominee will receive the sum assured, regardless of the survival advantages you received previously.

Money Back Plans vs. Term Life Insurance Plans

You must first understand the differences between the two types of insurance coverage in order to make an informed decision.

1. Coverage

The term plan is a type of life insurance that offers high coverage for a cheap price. A Money Back insurance policy, on the other hand, offers a reduced sum assured for the same premium amount. A term plan will pay a lump payment to ensure the financial security of the insured's family members in the event of the insured's death, whereas a money back plan will pay the sum promised plus any accrued bonus.

2. Investment Return

The insurance company will not pay any survival benefits if you survive the policy term under a term plan. The Money Back plan, on the other hand, will pay out a certain percentage of the sum assured at predetermined intervals throughout the policy period.

3. Tax Benefits

Both insurance plans offer tax benefits. Premium payments for term life insurance and Money Back. Money Back plans are tax-free under Section 80C of the Income Tax Act of 1961. The highest amount of exemption is INR 1.5 lakh. The maturity benefit, death benefit, and survival benefit are all tax-free.

4. Plan Benefits

Benefits such as death benefit, maturity benefit, and survival benefit are provided under the Money Return Plan. Term insurance, on the other hand, is a type of insurance that provides a death benefit. A maturity benefit is included in some term insurance plans. A lump-sum payment is made at regular intervals under the Money Back Policy. The death benefit from term insurance might be paid in one lump sum or in monthly installments.

5. Bonus 

Money Back plans are frequent participation plans, which means that a bonus on the insurance may be claimed. Term insurance plans are non-participating, which means they don't have any incentives listed on them.

Conclusion

Consider your co-objectives as well as your budgetary requirements while picking between the two. A term insurance policy is a type of protection insurance that does not include an investing component. If something bad happens to you, it will give financial security to your loved ones. If you want to see a return on your investment, though, a Money Back life insurance policy is the way to go. It functions as an investment vehicle as well as a source of insurance. Those who have already met their protection needs and have spare cash may be able to use Money Back programs to achieve their long-term financial goals. Keep the investment's goal in mind before making a decision.

Also read - Are Money Back Plans worth Buying?

Money Back Plan V/S Endowment Plan: Which is Better

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.