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How to Compare Money Back Policies?

Published On Jul 11, 2021

A money back policy is one of the life insurance policy types. It is basically a traditional, savings-oriented life insurance plan. The key thing here to note is that money back policies allow liquidity. Another prime feature of money back plans is that they pay regular pay-outs during the policy term and that’s what makes it different from the rest of the plans. But, how does a money back plan really work? Let’s find out!

How Does Money Back Plan Work?

Provided for a specific tenure, money back policy allows regular pay-outs. These payouts are made after calculation as a percentage of the sum assured. What’s noteworthy is that these pay-outs are done only on the condition that the life assured must be alive at that period. The remaining amount is paid on maturity. In case, the life assured dies during the term, the full sum assured is paid, regardless of the money back benefits already paid.

Is Money Back Policy Meant for You?

You may be interested in buying a money back policy, but is a money back policy really what you need? Before making any final decision regarding the policy purchase, it would be a must for you to consider all the benefits, returns on investment, and other aspects and compare them against those in investments of similar kinds. Also, find out whether or not you are the right person for an investment like money back. 

Make sure you choose a money back policy only if:

  • You are a healthy individual, who wants life insurance cover along with an investment to save on tax while receiving regular returns.
  • You do not want to take a high risk.

How to Compare Money Back Policies?

During your online search for money back policies, you will find many options. However, rather than going for a random policy, it would be significant for you to compare all so that you can pick the best one. 

Don’t know the factors to consider while comparing money back policies? Here’s a list for you.

Aspects to keep in mind while comparing money back policies include:

  • Sum Assured Allowed - You should always compare the maximum sum assured allowed to find whether or nor a specific plan provides coverage you are looking for.
  • Coverage Features - You should check whether or not the coverage features of the money back policies are suitable as per your needs. Moreover, whether there are any additional inbuilt covers that can enhance the scope of the coverage of the plan.
  • Riders Available - You should always compare riders available with different money. Make sure you pick the one that allows all popular riders to be included in the cover.
  • Premium Rate - Make sure you compare premiums of different money back plan options that you have. Remember, you should not pick a plan with a minimal premium rate as it may lead you to compromise with your plan coverage needs later on.  

Frequently Asked Questions Based on Money Back Policies

Here are a few key questions that often money back policy buyers ask:

1. Will my amount received through a money back policy be taxable?
Yes, only if the premium paid will be more than 10% of the sum assured for policies purchased after April 1st, 2012.

2. What if I am not able to pay my money back policy premium on time?
In case, you fail to pay your money back policy premium within the grace period allotted, your policy will lapse. Moreover, the associated benefits will also cease.

3. Can a money back policy be revived?
yes! Money back policies can be revived within a span of 2 years from the date of last premium paid.

4. Can a money back policy be transferred?
No! However, a money back policy can be surrendered, if desired.

5. I want to surrender my money back policy? How do I do it?
You can surrender a money back policy if the cash value has been attained. The policy will have a surrender value on the basis of policy tenure and the number of premiums paid.

Final Words

Now that you know how to compare money back policies, make sure you do the right comparison and pick a policy that suits you in every way.

Also read - Money Back Policy - Features, Benefits & More

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