Why Go For Money Back Policies - HDFC Life

HDFC Life Money Back Plans are a traditional insurance plan with bonus facilities. Under these money back plans, the premium needs to be paid till the end of the policy term, and the survival benefit is paid at the end of every four years. The balance amount is payable on maturity along with the accrued bonus. If the policyholder dies within the policy tenure, the entire sum assured is payable as a death benefit along with an accumulated bonus, irrespective of the amount paid during the policy tenure.

Key Features of HDFC Money Back Insurance Plan

1. HDFC Money back insurance plan is a pure money back policy that provides death benefits as well as maturity and survival benefits.
2. The plan includes Terminal and Reversionary Bonus.
3. The policyholder is eligible to get a percentage of sum assured as survival benefit at the end of every four policy years.
4. The balance sum assured along with the bonus is paid as maturity benefit at the end of the policy term.
5. Sum assured with bonus is paid as a death benefit if the policyholder dies within the policy term.
6. The plan offers a high-sum assured discount of 5% on the sum assured of Rs. 5,00,000 or above.

Benefits of HDFC Money Back Policy

Death benefit

In the event of the death of the policyholder, the nominee receives the sum assured plus accrued bonuses specified under the plan. The death benefit is paid, irrespective of the amount already paid as survival benefit during the policy term.

Survival benefit

A percentage of sum assured is paid as survival benefit after every four policy years.

Maturity benefit

The remaining sum assured and accrued bonus is paid as maturity benefit which is paid to the policyholder on survival till the end of the policy term.

Income tax benefit

The premiums paid up to Rs. 1,50,000 towards the policy are allowed as a non-taxable income each year under Section 80C, and the maturity benefits are tax-free under Section 10(10D) of the Income Tax Act, 1961.

The tax benefits are subject to change as per the prevailing tax laws.

Conclusion

It can be stated that money back policies are ideally meant to generate returns on investment (in this case the payable premiums) that make the funds grow. However, when viewed in detail, this is not entirely so. Once you compare the whole volume of premiums paid by the subscriber over the term of the plan, you may find that the premium rates are in fact, much expensive. This, in essence, means that the generated returns of the money back policies in comparison to the paid premiums tend to be less cost efficient. After all, when the comparison between the premium rates of money back policies and those of traditional term plans is made, the term plans emerge as much economical. Therefore, a thorough analysis of your specific requirements must be done before investing in money back policies.

Also Read: Should I Invest In Money Market Funds Or Mutual Funds?