Mutual Funds VS Money Back Policy
Published On Dec 29, 2021 10:00 AM By InsuranceDekho
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Mutual funds are well-known financial institutions that pool money from investors and invest it in a variety of securities, including stocks, bonds, and money market instruments. Investors benefit from competent investment management provided by mutual funds. Money Back insurance protects your family's financial interests in the case of death or catastrophic illness. Money Back plans, which mix insurance with investment, are one of the most popular types of life insurance in India. As a policyholder, you will be compensated every month for surviving. Consumers who want a guaranteed rate of return on their investments, as well as monthly payments and insurance coverage for themselves, might consider a Money Back plan.
What is a Money Back Policy?
In a Money Back plan, rather than receiving a lump-sum payment at the conclusion of the policy period, the policyholder receives a percentage of the sum insured at regular intervals during the policy term. It's similar to an endowment fund with the added benefit of liquidity.
They are ideal for people who want to save a lot of money while maintaining liquidity through an insurance plan. If a policyholder dies, the policy's nominee will receive the entire sum insured, with the survival benefits not being subtracted. The Components of a Money Back Guarantee.
Money Back Plan Advantages
A Money Back guarantee generally includes the following advantages:
- Payments on a regular basis
During the policy's term, you will receive a regular stream of income in the form of a 'Survival Benefit.'
- Advantages of Maturity
These benefits are paid to the policyholder as the sum guaranteed, including survivor benefits, at the conclusion of the policy term. These benefits cover all sums, which are made up of three parts: the sum assured, the bonus, and the remaining survival benefits.
- Benefits Upon Death
If an unpleasant occurrence such as occurs, death is almost certain. The sum guaranteed and bonus is given to the policy's nominee. In such circumstances, the nominee receives the sum insured as well as any bonuses applicable to the insurance. Survival benefits are not included because they are paid as long as the insured is alive.
In a Money Back policy, a bonus amount is an additional sum that helps you enhance your total payment. However, the bonus amount is mostly determined by the company's profitability and the policyholder's behaviour throughout the policy duration.
What is a Mutual Fund ?
A mutual fund is a pooled investment vehicle administered by an asset management firm. The AMC receives funds from a multitude of investors who all have the same investing goal. These fund insurers provide each investor the opportunity to invest in a number of possibilities. They put their money into stocks, shares, money market instruments, corporate bonds, and municipal bond issues, among other things. Each investor holds a unit, which represents a percentage of the fund's assets. After deducting some extra expenditures, the profits from this communal investment are dispersed equally among all participants.
Some of the Most Popular Mutual Funds
Certain mutual fund schemes are specifically intended to meet the needs of specific populations.
Growth funds, often known as equity funds, are a type of mutual fund. These funds invest for a longer period of time and mostly in equity or company stock. Their major goal is to profit or increase the value of their assets. They are great for long-term investments due to their larger profit potential.
- Mutual funds Include Income, Bond, And Fixed Income Funds
Fixed Income Securities such as Government Securities Commercial Papers and Debentures, as well as Money Market instruments such as Treasury Bills and Paper, are used to invest this money. These are investments that are both safe and potentially profitable. Examples include short-term funds, gilt funds, liquid funds, and so on.
- Mutual Funds With The Best Mix Of Assets
These funds invest in both stocks and bonds, allowing them to benefit from the best of both worlds in terms of growth and income. A few examples include aggressive balanced funds, pension plans, and monthly income programs.
If you can't decide between a Money Back plan and a mutual fund, you're not alone. While each financial instrument has its own set of benefits, it is vital to first get a comprehensive understanding of all of them. When choosing a financial product, it's vital to understand what each one has to offer and how it will benefit you during the time period you choose. After all, it's the money you're taking from your earnings and putting into a certain strategy.
How Can You Use Money Back Plan To Fulfil Your Financial Goals?
Understanding The Working Of A Money Back Plan
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.