Understanding the Basics of a Money Back Plan
Updated On Jul 14, 2021
Table of Contents
The Money Back Plan pays out the sum assured as ‘Survival Benefits’ which are distributed to the policyholder in case of survival during and till the end of the Policy Term. The Survival Benefit becomes payable after a few years of the initiation of the Policy and continues till maturity if the insured is alive. In case of the death of the insured, the sum assured along with the accrued bonuses is paid out to the nominee in the form of a Death Benefit.
In this article, we will discuss the Basics of Money Back Plan to make you have a better knowledge about the plan before purchasing it.
Understanding the Basics of the Money Back Plans
You purchase a Money Back Policy for a term of 20 Years under your name when you are 25 Years old. This will make you the Policyholder. The amount of Survival Benefit will start getting paid in the 5th year, with which you can either meet your emergency or general expenses or save them in case of any future emergency. The Second payment will be made in the 10th year when you are 35 years old, then the third payment, when you are 40 years old and the final payment shall be in the 20th year when you are 45 years old. This means that all these years you will have a secondary source of income to support you financially. The remainder of the Sum Assured will be paid to you with a Reversionary Bonus.
Features of Money Back Plans
There are certain Features of Money Back Policy as follows:
1. Income during Policy Term
The Survival Benefit paid periodically facilitates paying off debts, planning your education, trips, purchasing a vehicle and fulfilling several other life goals. These Regular Payouts will strengthen your financial stability and will help you be prepared for any uncertainty that may arise.
2. A Combination of Investment and Insurance
With the enhanced liquidity and Maturity Benefits, this plan clubs the benefits of Insurance as well as an Investment Plan. This means the Policy is giving you Guaranteed Returns in the form of Monetary Value, as well as the Policy, creates secure cover for you and your family.
3. Death Benefit
The Death Benefit is paid in whole to the nominee(s) in case of the demise of the policyholder before the maturation of the plan. If the policyholder dies in between the policy term then the Survival Benefits are not paid, however, the death benefit is paid to the nominee which is the complete value of the Sum Assured and the Accrued Bonuses.
4. Rider Benefits
Like any other standard insurance plan, a Money Back Plan, too, provides add-on benefits. These riders are used to enhance the cover of the existing Policy and convert the normal cover into a comprehensive cover.
5. Tax Benefits
Under the Income Tax Act, a Money Back Plan is exempt from taxation as any other Insurance Plan.
6. Low Risk
With a low-risk feature, Money Back Plans are a perfect choice for risk-averse people seeking Investment and Insurance Cover. The market fluctuation of the equity and bonds does not affect the payouts from the Money Back Plan.
Conclusion
With this, you can understand how exactly Money Back Plans work. Its features and the set of benefits that it provides makes it the best choice in the Policy Market. It is advisable to check and talk with an expert before you purchase such plans as these plans work as an investment. You need to make sure that you are aware of the pros and cons of any Money Back Plans offered by any Company.
You may also like to read:-
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.
