Why Should I Invest in Money Back Plans?
Updated On Jun 22, 2021
Table of Contents
- Reasons to Invest in a Money Back Plan
- Key Benefits of a Money Back Plan
- Take Away
Money Back Plans can be classified as life insurance policies which allow the policyholder to be entitled to regular payouts periodically as part of the survival benefit while the policy term is going on. The insurance companies also give survival benefits as a reward.
The money back policy has the advantage of providing continuous payments to the policyholder during the policy term. Rather than a single lump sum at the end of the policy period or at death, the policyholder will receive regular payouts for the rest of his or her life term.
Reasons to Invest in a Money Back Plan
In the current scenario, having a money back plan is a necessity, here’s why it is important-
1. Guaranteed Returns
A money back plan comes with guaranteed returns with the frequent payouts, the regular bonus' and the payment of the full assured sum of maturity. All these make it a reliable source of income.
2. Regular Income Source
As mentioned earlier, you get monthly or quarterly returns, as per your plan. You are also entitled to a yearly bonus which acts as a regular income source.
3. Bonus Increases The Payouts
Every subsequent pay increases as you're also entitled to the bonus amount, this is one of the most lucrative things that a money back plan carries.
4. Riders Help You Increase The Coverage
Money back plans are very flexible and come with the facility of add on riders which might not be available with other policies such as endowment plans. Many money back plans also provide riders to continue the option of life cover after the maturity as well.
5. Acts As Both Investment and Insurance
Last but not the least, what's better than having an investment and an insurance both. You get to save money for the future and get the best frequent as well as maturity returns out of it according to your plan. It provides you with future protection as well as a source of income.
6. You Save A Lot On Taxes
All premiums paid for your money back plan policy are exempted from tax deductions with some terms and conditions under 80C section of the Income Tax Act of India. Therefore you're not only saving your money by investing but also saving a lot on your taxes too.
Key Benefits of a Money Back Plan
A Money Back Plan comes with great benefits which make a profitable and reliable option amongst investors and here are some of them:
1. Death Benefit
If the policyholder dies, the death benefit will be paid to the nominee. The death benefit is equal to the amount assured as ascertained by the insured at the date of acquisition of the policy.
2. Maturity Benefit
The policyholder is entitled to the maturity benefit if he or she lives to the end of the term. The maturity benefit is usually included in the sum assured amount determined at the outset by the policyholder.
3. Survival Benefit
The survival benefit is provided as long as the policyholder is alive, healthy, and paying the premiums during the policy's term.
4. Bonus Benefits
The reversionary incentive is included in most money-back policies. At the end of each fiscal year, a reversionary bonus is announced. The bonus amount is computed as a percentage of the guaranteed amount.
5. Tax and Rider Benefits
The flexibility of extra riders and tax incentives under Section 80C of the Income Tax Act are two of the main reasons for the popularity of money back plans. Certain riders are included with insurance policies to augment the base policy type.
A money back plan should be your go to investment plan if you're looking for a long term investment goal without regular income and of course the many other incentives and benefits that come along.
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.