Money-Back Policy - Eligibility, Terms And Conditions

As the name suggests, a money-back policy is a policy which gives money-back at regular intervals. This money-back is paid during the plan tenure and is a percentage of the Sum Assured. Money-back pay-outs are called Survival Benefits. These benefits are paid during the plan tenure and on maturity, the remaining Sum Assured is paid along with vested bonuses. However, if the insured dies during the plan tenure, the full Sum Assured is paid irrespective of the Survival Benefits already paid. This is what makes the plan unique. Some of the salient features of Money Back Policy are:

• The Survival Benefits are calculated as a percentage of the sum assured.
• Survival Benefits are paid at regular intervals during the plan tenure. There is a fixed interval when the benefits would be paid. Every plan has a different payout structure. Similarly, the percentage of Sum Assured paid as Survival Benefits is also not fixed and varies between different plans.
• If the plan matures, the remaining portion of the Sum Assured (actual Sum Assured less the Survival Benefits already paid) is paid as maturity benefit. However, in case of death, the entire Sum Assured is paid irrespective of the money-back benefits already paid.
• Money-back plans usually come as participating plans where bonuses are added. The accrued bonus is then paid on maturity or on death.
• Riders are also available under many money-back plans. Rider benefits are paid as a lump sum only when the contingency covered by the rider occurs during the plan tenure.

Eligibility Criteria for Buying Money Back Policy

The eligibility criteria to buy a money back plan is: One must meet the entry age criteria as mentioned in the policy wordings before purchase. One can’t extend the policy beyond the maximum age allowed under the money back plan. One must adhere to the plan’s premium payment term and mode.

Documents Required For Buying Money Back Policy

Mentioned below are the documents required for buying a money back plan:

• Income proof - Salary slips, income tax returns, bank statements, etc.
• Address proof - Driving License, Aadhaar card, voter’s id, passport, etc.
• Id proof- PAN card, Aadhaar card, voter’s id, etc.
• Age proof- Aadhaar card, voter’s id, passport, driving license, etc.

Terms And Conditions of a Money Back Policy

The best money back plan helps you achieve both your medium and long-term goals. It also gives you a life cover. Here are some terms and conditions of the best money-back policy:

Guaranteed Returns
A money back policy is an ideal investment if you want safe and secure returns. The returns are not driven by the fluctuation of the equity market. You receive guaranteed returns irrespective of how the market is behaving.

Income During the Policy Tenure
You receive regular income to take care of your large expenses. For example, you can use the money to pay off your existing loans, go on vacation, or redesign your house.

Income on Maturity
You get a guaranteed and secured income on maturity, which helps you plan your future in a much better way.

Financial Support upon Death of the Insured
If the policyholder passes away, the nominee receives the sum assured along with the bonus (if any). The policy acts as a standard insurance plan in this respect.

Bonus Additions
There are two types of bonus amounts in a money-back policy: a reversionary bonus and an additional bonus.

• The reversionary bonus is given as a percent of the sum assured by the company. The amount gets added to the overall payment you are supposed to receive at maturity or in the event of an unfortunate event.
• Sometimes, the company may also give you an additional bonus depending on the company's performance. The other instance when you receive additional bonuses is when you pay the entire premium on time.

Add-on Riders
The option to add different riders to your money back plan depends on the policy you are choosing. You may also get the option to add a hospitalisation rider to your money back policy that will help you manage the hospital expenses if the policyholder or life insured has been hospitalized.

A premium waiver is another rider that you may include if it is available in your money back plan. If the policyholder fails to make the premium payment, this rider protects the loss of the life insurance plan. The policies continue to protect the lives of those who are insured rather than expiring due to nonpayment of premiums.

Conclusion

Money back plan simply means that money comes back to the life insured after a specific interval of time as survival benefit. The money back is guaranteed on the survival of the policyholder. However, in case of death of the policyholder, the nominee gets the sum assured and accrued bonuses, if any.

Also read: What Is Money Back Plan Is And How It Works

Elements To Consider Before Purchasing A Money-back Policy