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Money Back Policy - Features, Benefits & More

Updated On Jul 11, 2021

One of the popular life insurance policies, a money back policy is a policy type that provides the policyholder with a percentage of the sum insured. The key thing to note here is that the life assured gets the sum assured at regular intervals and not in the form of a lump sum amount. The payouts given in a money back policy are referred to as survival benefits. Money back policy is an ideal choice for people who wish to secure themselves through a life insurance plan while maintaining liquidity throughout. 

Features of Money Back Policy 

Some of the key features of money back policy include:

  • Survival benefits are calculated in the form of percentage of the sum assured.
  • Payment of survival benefits at regular intervals during the plan tenure at a fixed interval.
  • On maturity of a plan, the remaining portion of the sum assured is paid as a maturity benefit. In case of death, the entire sum assured is paid, regardless of the money-back benefits already paid.
  • Money back plans usually come in the form of a participating plan where a bonus is added. The accrued bonus is paid either on maturity or on death.
  • Money back plans also come with the feature of riders, which are paid as a lump sum only when the contingency covered takes place during the plan tenure. 

Benefits of Money Back Policy

Some of the key reasons why you should buy a money back policy include:

  • Helps you build funds over a period of time
  • Come with a life insurance cover
  • Provides survival benefits and maturity benefit 
  • Provides risk-free returns
  • Pay a certain sum assured amount at regular intervals during the policy duration

Things to Consider Before Purchasing a Money Back Policy

If you are planning to buy a money back policy in the near future, make sure you take note of the below mentioned things before going ahead with the purchase:

1. Cover Tenure: If you are looking for life-long cover, then money back policy would be an ideal option to go with. 

2. Policy Returns: It is highly important to have an understanding of what all your money back policy will give you in return and how. You must always keep the benefit associated with the money back policy in mind before you buy one. 

3. Policy Cost: Keep the policy cost in mind before you buy the plan. Remember, the best money back plan will offer the best cover with sufficient returns.

4. Tax Benefits: You can reduce your tax liability by purchasing a money back plan. Keep in mind that if the maturity amount is more than 5 times the premium paid, the sum assured is exempted from income tax deductions.

5. Policy Terms & Conditions: It is highly recommended to read the policy terms and conditions carefully. Remember, being aware of what your policy is all about would help you make the ultimate decision. 

Final Words

Anyone who wants to make an investment without taking much risk can buy a money back plan. Also, people who wish for good returns on their investment, who want to get paid during the policy term, and who want to secure themselves with insurance while ensuring wealth creation are the ideal customers for a money back policy. 

So, if you are one, go ahead with your money back policy purchase. Don’t forget to analyze your requirements regarding the number of years you want to stay invested, right sum assured and the number of pay-outs throughout the policy duration before making a final call. 

Also read - Money-Back Plan Vs Term Life Insurance

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. 

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