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Why are Money-Back Plans the Best Investment Option?

Updated On Apr 22, 2021

A money-back life insurance plan provides its policyholder with periodical payouts during its policy tenure. The money-back amount is calculated as a certain percentage of the sum assured. The policyholder of a money-back policy is paid a survival benefit amount equal to a certain percentage of sum assured at different phases of life. In case the policyholder passes away during the policy term, the sum assured will be paid to the nominee even if the policyholder may have already received periodical survival benefits.

Money-back policies are generally participating plans where the policyholder receives some guaranteed bonuses upon the maturity of the policy along with the total sum assured. There can be regular bonuses and interim bonuses too. 

You May Also Like To Read:- Is Money Back Policy Good Investment Option?

Why are Money-Back Plans the Best Investment Option?

Money-back plans have a lot of features to offer. These plans are one of the best plans to consider as an investment option. Following are the reason why money-back plans are the best investment option:

1. Provides Income During the Policy Tenure

Money-back life insurance plans are known to provide a pre-decided percentage of the total sum assured during the policy term in regular intervals. The amount received on the regular intervals can act as an income source for the policyholder and his/her family members.

2. Provides Maturity Benefits

On the maturity of the money-back policy, the policyholder is paid the total sum assured along with additional compensation known as bonus provided by the insurance provider, after excluding the amount received as survival benefit on regular intervals during the policy term. The maturity benefit consists of the sum assured along with the accumulated bonus.

3. Provides Death Benefits

If the policy holder passes away during the policy tenure the nominee will receive the total sum assured, even if the policyholder has already received periodical amounts on fixed intervals. The death benefit is calculated as the total sum assured amount along with additional compensation known as bonus, no deductions of amounts paid earlier on fixed intervals is made on the total assured to be paid out to the nominee.

4. Offers Wealth Appreciation

Money-back plans are participating life insurance plans where the insurance provider offers a bonus amount as a pre-decided percentage of the total sum assured amount, to the policyholder. 

5. Enhance the Coverage through Riders

The policyholder can choose to opt for additional riders such as critical illness rider, accidental death rider etc. to increase the coverage of their money-back policy.

Also Read:- Money Back Plans V/S Other Life Insurance Plans

Tips to Choose Best Money Back Plan


Money-back plans are considered low-risk investment options and these plans ensure that the policyholder has a regular income flow throughout his/her life. These plans have become one of the most preferred investments options because these plans provide life coverage and act as an investment option as well.

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