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What Makes a Money Back Plan the Ideal Investment Option?

Updated On Aug 14, 2021

Money-back plan is a type of life insurance policy that provides dual benefits of investment or protection. These plans give you money at regular intervals and provide you a lump sum amount in case of a misfortunate event. These policies provide you with guaranteed survival benefits through policy term as well as on maturity. 

Following are the reasons that make money-back policies one of the best investment options: 

Provides Insurance Cover

Many see a money back plan as an effective investment product, but it is also an insurance instrument. With a money back policy, you can opt for a suitable cover that can be used to meet the monetary requirements of your loved ones. These plans are reliable and offer a dignified life to your loved ones even when you are not there to provide for them. 

Low-Profile Risk

Unlike other investment instruments like stocks, bonds, mutual funds, etc., money back plans are not affected by the fluctuations of the market. Instead, they offer guaranteed returns at regular intervals, which make them dependable as well as hassle-free. Money back plans are most suggested if you are looking for a plan with a low-risk appetite. You can use these plans to diversify your investments and create a well-balanced pool of volatile as well as non-volatile instruments. 

Regular Source of Income

Money-back plans give you returns with a few years of investing and hence act as a regular source of income. As in case of traditional life insurance plans, these plans offer maturity benefits as well as continuous stream of money at regular intervals. A money back policy is similar to an endowment policy as it also provides returns shortly after investing.  

Additional Benefits

Money-back plans offer a reversionary bonus every year, which is paid out at the time of maturity. If covered under money-back plans, you can enjoy a final bonus at the end of term as a reward for staying invested in the policy. The bonuses increase your overall payout and help you manage funds more effectively. 

Tax Benefits

Premiums paid for money-back plans are eligible for tax benefits under Section 80C of the Income Tax Act, 1961. Kindly note that the premium should be paid in any mode other than cash to be able to avail tax benefits. But, the premium must be less than 10% of the sum assured under the policy. The sum assured is also paid out tax free under Section 10(10D) of the Income Tax Act, 1961, as per the terms and conditions. 

Lump Sum Amount Paid as Sum Assured

Money-back plans pay a lump sum amount as sum assured to the nominee in case of a misfortunate event. This amount can be used to cover a host of expenses by the loved ones of the life assured. Also, after the policy term is completed, the insurer pays the insured survival benefits. You can use this sum to achieve your goals in life such as buying a dream house, doing retirement planning, etc.


Money back plans are one of the best investment options that provide you several benefits such as assured returns, life cover to safeguard the future of your loved ones, as well as involve low risk. Also, it offers tax benefits on the premium paid, which makes it a preferred choice for many. But when choosing the best money-back policy online, you must not forget to opt for a reliable insurance company that offers plans with most benefits. 

Also read 

What are the Eligibility Criteria to Purchase a Money-Back Plan?

Are Money-Back Policies Productive?

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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