Why Would You Buy A Money-Back Policy?
Published On Mar 18, 2022 10:00 AM By InsuranceDekho
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Many of us would want to invest in a long-term traditional life insurance plan in order to build a guaranteed corpus. However, this may provide an issue if funds are required before the policy's expiration date. A financial problem can happen at any time, but it can be resolved if you have sufficient finances on hand. This is not often the case with standard life insurance plans, as they are only useful once the term has expired. Taking out a loan is a possibility, but the amount may be limited. So, what else is there? Is there any plan that provides you with advantages when you are enrolled in it? Yes, there are Money Back Guarantees.
Benefits of Purchasing a Money-Back Guarantee
Some convincing reasons to consider obtaining a money-back guarantee are as follows:
1. Money-back guarantee with return options
Because of its guaranteed returns, money-back insurance can outperform market-linked policies. A money-back guarantee should be considered if you're looking for a low-risk investment. In order to receive a money-back guarantee, the insured must live. In the event that the policyholder dies, the nominee receives the pledged money as well as any earned bonuses.
2. Survival Benefit
While your insurance is active, a money return plan will pay you a percentage of the covered sum on a regular basis. If you complete the whole insurance term, you will be entitled for maturity benefits and any applicable incentives.
3. Availability of liquidity
The insurer pays a fixed fraction of the sum insured at regular intervals over the policy's duration. This enables you to gather the necessary funds and better organise your finances in order to fulfil a range of life goals.
4. Returns with No Risk
If you are apprehensive of taking risks, a money-back plan is an excellent choice because it involves no risk. The insurance firm will benefit if the insured individual lives. If the policyholder passes away, the nominee receives the set sum plus any earned incentives.
5. Bonuses May Allow You to Earn More Money.
Money return insurance also pays out money in the form of a bonus to the insurer. The incentive is well publicised, and it is calculated as a percentage of the amount of money reimbursed by the insurance carrier each year. When the policy ends or the insured passes away, the cumulative bonus is applied to the entire amount owed. The money return plan's incentive component is mostly decided by the insurance company's profitability and the customer's ability to pay all its premiums on time.
6. Taking A Tax Break
Section 80C of the Income Tax Act of 1961 may offer you incentives and tax breaks, in addition to other benefits such as the death benefit to which your nominee has entitled in the case of your unexpected or accidental death and the maturity benefit to which you may be entitled if you complete the term.
7. Riders With Additional Features
The life guaranteed can choose from a variety of extra riders or add-ons to cover aspects of their life not already covered by the plan. These additional rides may be deducted from your taxes.
Money-Back Plans may be useful if you are in a pinch. Because of the decreased risk and assured returns, you may be confident that your family will be cared for whether or not you are present. To summarise, a money-back plan is the best investment choice since it provides a range of benefits such as survival, maturity, tax benefits, death benefits, and other riders that may be useful in the future.
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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.