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Pros And Cons Of Purchasing A Money Back Policy

Updated On Dec 26, 2021

People who want a monthly reimbursement and a guaranteed return on their investment might choose a Money Back plan. The money of the people is treated as a premium, comparable to an insurance policy. Simply put, a Money Back plan, unlike typical life insurance, pays money at regular intervals during the policy term, calculated as a percentage of the sum insured. You could be on the lookout for a service that will assist you in finding the ideal mix. As a result, the best self-improvement product is one that has a Money Back guarantee. There are several benefits to a Money Back plan. As a consequence, investors choose these insurance products.

Pros of a Money Back Policy 

A Money Back plan has a boatload of advantages. The following are some of the benefits of a Money Back plan:

1. Provides a Guaranteed Amount

In the case of the policyholder's death, the nominee of the insurance plan receives a lump sum payment known as the sum promised. This money can be utilised to help the policyholder's family with a variety of costs, helping them to live a stress-free life.

2. Personality with Low Risk

Stocks, bonds, mutual funds, equities, and other investment vehicles are all affected by market volatility. A Money Back policy, on the other hand, can ensure that a person's returns are guaranteed at regular intervals. These systems are easy and dependable due to the insurance coverage and consistent earnings. It can be a good option for you if you want to keep your risk appetite low.

3. Provides Insurance Protection

A money return plan, although regarded as an excellent financial instrument, also functions as an insurance mechanism. You can choose the insurance coverage that will help you fulfil the financial needs of your family. These policies provide your loved ones peace of mind and enable them to live a dignified life even after you're gone.

4. Waiver for Premium Riders

The remaining payments are waived if the insured dies before the insurance term finishes owing to an unforeseen occurrence. This means the family or candidate won't have to worry about additional costs at a time when they're already dealing with a lot of emotional and financial stress.

Cons of Money Back Policy

If the Money Back Guarantee worked perfectly, every firm would use it. Unfortunately, there is no such thing as a perfect company plan. Let's look at some of the drawbacks that this strategy is frequently connected with.

1. Attracts Customers Who Are Dissatisfied

Offering a Money Back Guarantee, according to one school of thinking, attracts undesirable clients. To put it another way, some clients take advantage of these promises and benefit as a result of them. Only a small percentage of buyers will use a Money Back Guarantee, and even fewer will be deceitful. This danger does exist, though, and firms should be aware of it before providing a guarantee.

2. Meeting Everyone's Expectations Is Impossible

The second thing to keep in mind is that exceeding all expectations is impossible. Even if your product accomplishes precisely what it claims, some customers will misinterpret the findings or fail to reap the benefits you intended. This might cause a schism between your firm and its consumers, which could harm your brand.

3. Accounting Is Challenging

Finally, if clients take advantage of Money Back assurances, it may complicate your finances and accounting. You may need to change cost sheets and revenue papers from prior months, depending on the length of the offer, which might jeopardise your capacity to manage your money properly. There's also the issue of credit card companies refusing to refund purchases once a certain time period has passed (usually 90 days).


Most of us wish to build a guaranteed corpus by investing in a standard life insurance policy for a long time. However, if we require funds before the period finishes, there will be an issue. We might face a financial calamity at any time, and we'll need money to recover. A traditional life insurance policy, on the other hand, is useless if the term has not yet expired. We might be able to get a loan, but the amount will almost certainly be limited.

Also read - Understanding The Key Features Of A Money Back Policy

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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