Reasons to Purchase a Money Back Life Insurance Plan
Updated On Apr 23, 2021
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A money-back plan is a type of life insurance plan which provides the life assured with regular payouts during its policy tenure. These regular payouts are payable as lump sum and are calculated as a pre-decided percentage of the sum assured. Under this type of plan the sum assured is provided to the nominee in case the life assured passes away during the policy term, even if the life assured may have already received the lump sum payouts at regular intervals during the policy term. Money-back policies participating plans wherein the life assured is entitled to receive some guaranteed bonuses which are declared upon the policy at the time maturity of the policy along total sum assured.
Also Read:- Is Money Back Policy Good Investment Option
Reasons to Purchase a Money Back Life Insurance Plan
Money-back plans are a unique type of life insurance plan. Here are some reasons why one should purchase a money back life insurance plan:
1. Offers Guaranteed Payouts Throughout the Policy Term
Money-back life insurance plans promise to provide regular payouts during the policy term, the regular payouts are equal to a pre-decided percentage of the total sum assured. These payouts are made in regular intervals during the policy term. The amount received as regular payouts can help the life assured overcome financial requirements at different stages of life.
2. Offers Maturity Benefits
Under money-back plans, total sum assured along with additional compensation known as bonus is paid to the life assured. The maturity benefit is provided after excluding the amount paid at regular intervals during the policy term. The maturity benefit consists of a sum assured along the accumulated bonus.
3. Offers Death Benefits
If the policy holder passes away during the policy tenure the nominee will receive the total sum assured, even if the policyholder has already received periodical amounts on fixed intervals. The death benefit is calculated as the total sum assured amount along with additional compensation known as bonus, no deductions of amounts paid earlier on fixed intervals is made on the total assured to be paid out to the nominee.
4. Offers Wealth Appreciation
Money Back Plans are participating plans where the insurance provider declares annual bonuses upon the insurance plan that is provided with the maturity benefit at the time of plan maturity.
5. Offers Tax Benefits
The premiums paid towards a life insurance policy qualifies for tax exemption under the Section 80C of the Income Tax Act, 1961. The maturity amount receivable also qualifies for tax exemption under Section 10(10D) of the Income Tax Act, 1961.
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