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Understand How A Money Back Policy Works And What It Can Do For You

Updated On Mar 21, 2022

A money back policy is a form of life insurance plan that allows the insured to earn recurring returns or a lump payment at a specified time throughout the policy duration. A money-back policy's returns might be guaranteed, contingent on investment success, or a mix of the two. This enables you to choose a money-back coverage that is most suited to your specific financial objectives.

How Do Money-Back Guarantees Work?

Let us use an example to better understand how a money-back policy works.
For example, Aman acquires a money back plan with a sum insured of Rs. 10 lakh for a policy duration of 25 years. Throughout the policy's term, he pays regular premiums. The plan offers to provide survival benefits of 20% of the sum promised every 5 years, and at plan maturity, 20% of the money assured will be paid along with any accrued bonuses. Every five years, Aman receives Rs. 2 lakh. Aman has already received Rs. 8 lakh at the end of the 20th policy year. When the insurance matures, he will receive Rs. 2 lakh in addition to the earned incentives. Following that, the policy will be terminated. However, if Aman dies on the 18th policy year, his nominee would get Rs. 10 Lakh in addition to the increased bonus, despite the fact that Aman will earn Rs. 6 Lakh as a survival benefit.

Why Do You Need a Money-Back Guarantee?

Money return policies are savings plans that provide a significant supply of cash on a regular basis after a certain period until the conclusion of the policy term. Money back policies, in the changing world of unpredictability, show to be a trustworthy option that does not allow you or your loved ones suffer financially while you attempt to realise your life objectives by offering survival advantages, fixing the issue of liquidity, and delivering risk-free profits.

Benefits of a Money-Back Guarantee

A money-back policy includes a number of advantages as well as perks. While the benefits are determined by the policyholder, the bonuses are determined by the insurance provider. Let's find out how by looking over the list of advantages, which includes:

1. Survival Advantages

The policyholder receives money in the form of survivor benefits on a regular basis. The survivor benefits are paid out at regular periods throughout the policy's term. Survival benefits are paid out after a few years after the policy's inception. The payout will continue until the policy matures.

2. Death Allowances

The policy's nominee receives the insured person's death benefit. The death benefit includes both the sum assured of the money back policy and any bonus collected on the policy. The death benefit, however, does not include the survival benefit.

3. Maturity Advantage

On the maturity of the money back plan, the insured individual receives the maturity benefit. The maturity benefit consists of the sum guaranteed plus a bonus depending on the insurance company's performance.


Money-back programmes are an easy and convenient method to save. They provide many benefits that help policyholders maintain their present and future lives stable and secure. The money-back insurance coverage allows you to make monthly payments throughout the duration of the policy. The bonus is calculated on the entire sum assured; however, some insurance companies offer additional optional benefits.

Also Read: What Is The Best Way To Buy Money Back Online

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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