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Should I Exit From Money-Back Insurance Plan?

Published On Aug 04, 2021

Money-back plans are a great way to invest to save and grow your money for your short-term plans and pre-planned expenditures. These plans provide us many benefits that help us save money for the future. To be able to financially support yourself to fulfill your short-term goals and save and grow your money, these plans offer benefits like survival benefit, death benefit, tax benefits, and maturity benefits along with a long life cover and additional add-ons or riders to cover the aspects of life that are not covered in the plan from the beginning.

However, if you want to surrender your plan, you must wait until the plan gains surrender value. Many plans gain surrender value after 3 premium payments but in recent times, there have been built where the plan gains a surrender value just after 2 premium payments. In case you stop paying your premiums after just one payment, the plan will lapse and the benefits you get to receive if you continue the plan will cease. 

To avoid situations like the latter, it is advised to consult a financial advisor and pick a portfolio that suits your income, stability, and elasticity before investing in a plan. It is widely suggested to compare various plans and your availability before you decide to invest in a plan.

Benefits Offered by Money-Back Plan

Money-back plans offer many benefits that help you save and grow your money for the short-term goals you have. Some of these benefits are -

1. Survival Benefit

The life assured is paid some amount of money as a bonus to celebrate the anniversary and the survival of the life assured through some age milestones.
If the life assured survives the whole duration of the policy term, they receive a bonus resembling the achievement named as survival benefit.

2. Maturity Benefit

On maturity of the policy, the life assured will receive a part of the sum assured and any other bonuses that are applicable to the plan at the maturity age. This helps the life assured to contribute to fulfilling the goals that they have set for themselves financially. 

3. Death Benefit

In case of the sudden death of the life assured, during the policy term, if all the premiums are paid successfully, the nominee of the policy will be paid an amount of the sum assured alongside all the bonuses they can receive from the plan. These bonuses do not comprise the survival benefit as the life assured did not survive the whole policy term.

4. Tax Benefits

Under section 80C of the Income Tax Act, 1961, tax benefits are applied to the policy. 

5. Riders

To cover additional aspects in life, the life assured can choose additional riders and add-ons with the traditional policy. 


In conclusion, money-back plans are opted by those with pre-planned short-term goals to financially support them. They are also opted by those who like to invest in stocks and the market to save at least a part of the money they receive. 

These plans provide many benefits like survival benefit, death benefit, maturity benefit, tax benefit, etc to ensure that your family is not left money-bound after your demise. If your needs are any different from these, you can step back from the plan. You must wait until your plan gains surrender value, otherwise, your plan will lapse and your benefits will cease.

Also read - All About LIC's New Children Money Back Plan

How to increase the returns from your money-back life insurance 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.

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