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What are some of the limitations of a money-back Policy?

Updated On Mar 25, 2022

When compared to stock investments or mutual funds, Money Back programmes are considered low-risk investments. A money return plan not only offers coverage but also ensures that you will get a specific amount of money on a monthly basis to meet your needs. You can buy a Money-Back plan for a set period of time, but you will have to pay monthly costs. If you die, your beneficiary will receive a lump-sum payment. This is referred to as the death benefit. You will also get a regular monthly payment, and when your policy matures, you will receive the total sum guaranteed, plus any extras you may be eligible for. Riders or add-on policies are available with this sort of coverage, providing an additional layer of protection.

What are some of the limitations of a money-back Policy?

Limitations Of Money-Back Guarantees

If the Money Back Guarantee was perfect, every firm would do the same thing. A faultless business plan, on the other hand, does not exist. Let's look at some of the drawbacks that are frequently linked with this strategy.

1. Attracts unhappy customers

Offering a money-back guarantee, according to one school of thinking, encourages undesirable clients. To put it another way, some clients take advantage of these promises and use them to their own advantage. Only a small number of consumers will ever use a Money Back promise, and an even smaller percentage of these customers will be dishonest. However, this danger exists, and firms should be aware of it before providing a guarantee.

2. Meeting everyone's expectations is practically difficult

The second thing to keep in mind is that exceeding all expectations is impossible. Even if your product performs exactly as advertised, some customers will misinterpret the findings or fail to extract the desired value. This might result in a schism between your firm and its consumers, which could be damaging to your brand.

3. Accounting is a Difficult

Finally, if clients use money-back promises, it may complicate your finances and paperwork. Depending on the length of the offer, you may have to change past months' cost sheets and revenue papers, which may hamper your ability to manage your money properly.
There's also the issue of credit card issuers refusing to issue refunds after a certain amount of time has passed (usually 90 days).


Most of us prefer to invest in a standard life insurance policy for an extended length of time in order to build a guaranteed corpus. However, there is a difficulty if we require funds before the semester is over. A financial calamity might come at any time, and we will want funds to deal with it. A standard life insurance policy, on the other hand, is meaningless if the policy's term has not yet expired. We might be able to get a loan, but the amount will most certainly be limited. A Money-Back plan addresses the issue of liquidity during the period of the plan by paying a monthly percentage of the Sum Assured.

Also Read: Everything You Need to Know About ICICI Prudential Life Insurance's Money BackPlans

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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