What Are Some Limitations Of A Money Back Plan
Updated On Mar 09, 2022
Money Back plans are considered low-risk investments when compared to stock investments or mutual funds. A money return plan not only provides coverage but also guarantees that you will get a set amount of money on a monthly basis to suit your needs. You can purchase a Money-Back plan for a specific amount of time, but you'll have to pay monthly fees. Your beneficiary will get a lump-sum payout if you die. This is known as the death benefit. You will also be paid a regular monthly sum of money, and when your policy matures, you will be paid the entire sum guaranteed, plus any bonuses you may be qualified for. With this type of coverage, riders or add-on policies are available, offering an extra layer of protection.
The Limitations of Money-Back Guarantees
If the Money Back guarantee was ideal, every company would employ the same way. There is, however, no such thing as a flawless business strategy. Let's take a look at some of the disadvantages that are commonly associated with this method.
1. Entices Customers who are dissatisfied
According to one school of thought, offering a money-back guarantee invites unwanted customers. To put it another way, some customers take advantage of these promises and exploit them for their own selfish benefit. Only a small fraction of customers will ever take advantage of a Money Back guarantee, and an even smaller percentage of these customers will be dishonest. This risk does exist, though, and businesses should be aware of it before giving a guarantee.
2. It's nearly impossible to meet everyone's expectations.
The second thing to remember is that achieving all expectations is unattainable. Even if your product does exactly what it says it would, some consumers will misinterpret the results or fail to extract the intended value. This might lead to conflict between your company and its customers, which could be detrimental to your brand.
3. Accounting Is Difficult
Finally, if customers take advantage of Money Back guarantees, it may complicate your finances and paperwork. Depending on the length of the offer, you may have to adjust cost sheets and revenue papers for previous months, which may impair your capacity to manage your money appropriately. There's also the problem of credit card companies refusing to grant refunds after a certain period of time has passed (usually 90 days).
Most of us want to invest in a traditional life insurance policy for a long period in order to develop a guaranteed corpus. However, there is a problem if we need money before the semester is through. A financial disaster might occur at any time, and we'll need money to deal with it. A normal life insurance policy, on the other hand, is useless if the policy's term hasn't ended. We might be able to acquire a loan, but the amount is likely to be limited. A Money-Back plan tackles the issue of liquidity during the plan's term by paying a monthly proportion of the Sum Assured.
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.