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Why You Should Purchase a Money Back Plan?

Updated On Oct 10, 2021

Whenever we think of investment, usually the first thing that comes into our mind is mutual funds. However, there are several other financial instruments in the market that provide similar benefits as mutual funds. One such instrument is a money back plan. Listed below are a few reasons why you must invest in a money back insurance plan:

1. Offers Dual Benefit of Insurance and Investment

A money back insurance plan gives the dual benefit of insurance along with investment. Other than providing a life insurance cover, they invest a good portion of the premium in the market. Therefore, apart from protecting the future of your family, you can also make investment towards your long term goals with the help of a money back plan.

It must be noted that investment in a money back policy is less risky as here investment is made in securities and cash bonds, which are not affected much by market fluctuations. Thus, investing in a money back policy is comparatively safe.

2. Offers Waiver of Premium Benefit

In the event of the demise of the policyholder within the plan duration, the further premiums payable get waived off. However, the plan continues to remain active and the payments are done on a periodic basis or as decided. It is an important feature of a money back insurance policy.

3. Offers Regular Payouts

Under a money back insurance plan, a policyholder is entitled to receive a fixed percent of maturity benefit on a periodic basis. A policyholder can select the amount that they want and at what time in their life. They can also choose to invest their money in monthly income schemes to get a regular stream of income or can even opt for the payouts to help them through different phases in life.

For instance, a policyholder can opt for 10% of the sum assured, 5 years after purchasing the plan to support their child’s education. Then, after another 10 years they can opt for 10% of the sum assured for their child’s marriage and the leftover amount upon plan maturity for their retirement.

4. Tax Benefits

A policyholder who pays a regular premium towards their money back insurance plan can avail tax benefits. The benefits offered are as per section 80C of the Income tax act. Moreover, other benefits such as survival benefit, maturity benefit and the bonus obtained from monthly investment plans are free from tax.

5. Financial Safety of Your Family

The main purpose of purchasing a money back plan is to obtain life coverage. If something wrong happens to you during the plan tenure then your nominee would receive the entire sum assured as payout. With this you can ensure financial stability for your family members even in your absence. This sum can be used by them in meeting daily expenses, paying off their debts, etc.


It is always recommended to do proper research before buying a money back life insurance policy. Make use of online calculators to do proper comparison of various insurance plans. Moreover, do not forget to go through the policy document carefully to know fully about the coverage, benefits and exclusions under the plan before signing up for the plan.

You may also like to read - Key Features Of A Money Back Policy

4 Key Tips That Can Help You Buy the Perfect Money Back Policy

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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