Money Back Policy

What is a Money Back Insurance policy?

A traditional insurance plan pays out a lump Sum Assured in the event of the death of the life insured. The beneficiaries / dependants / nominees of the life insured receive a benefit (called a death benefit) if the worst should come to pass for the insurance holder.

A money back insurance plan pays out the same maturity benefits in the form of several guaranteed “survival benefits" which are staggered evenly throughout the course of the policy. So, a money back insurance policy is an endowment plan with the benefit of regular liquidity.

Why You Need To Buy a Money back Policy?

A money back policy provides periodic pay-outs, ensuring a steady source of income to help policyholders meet expenses at different stages during the policy duration.

Moneyback policies provide the benefits of an insurance policy as well as an investment, ensuring that the policy earns the policyholder an income instead of just merely providing a lump sum in case of his/her demise.

These plans offer a guaranteed return on investment as well as periodic pay-outs and insurance cover, making it an ideal plan for individuals looking for both protection as well as a source of income.

In addition to the standard life insurance offered by regular policies, a money back policy offers a policyholder a maturity benefit as well as a regular income in the form of ‘survival benefits’ for the duration of the policy.

A Money Back Policy thus provides policyholders with a secure and assured return on investment in addition to providing them with an opportunity to grow their wealth through investment opportunities.

How Does Money Back Policy Work?

A Money back policy is a type of life insurance policy that offers policyholders Survival Benefits as well as investment opportunities in addition to Maturity Benefits.

An average money back policy with a 20 year tenure would thus pay the policyholder what is known as a ‘Survival Benefit’ a few years after the start of the policy. Around 20% of the Sum Assured would be paid out periodically, while the balance would be paid out at the time of policy maturity with a bonus, if any.

In the event the insured individual does not survive till the policy maturation, the nominee would receive the Death Benefit (the entire Sum Assured) and the policy would be terminated.

Features of Money Back Policy:

The money back policy has a number of distinct features that set it apart from other life insurance products, as mentioned below:

·         Money back plans provide policyholders with low risk investment options as well as insurance coverage.

·         The policies provide a regular source of income in the form of ‘Survival Benefits’ for the duration of the policy.

·         In the event of the policyholder’s demise during the policy term, the entire Sum Assured is paid out to the nominee irrespective of the amount already paid through the Survival Benefits.

Money Back Life Insurance Benefits:

·         Provides insurance cover during the policy term.

·         Pays out regular benefits throughout the term.

·         Works as an insurance policy as well as a long-term investment with good returns.

·         Provides tax benefits.

·         Less risky than other investments offering similar returns like mutual funds.

·         Enables long-term savings and regular income.

·         Ensures that amounts are disbursed regularly.

·         Some plans extend the insurance coverage guaranteed death benefits even after the maturity date and the last survival period, up to when the life insured attains the age of 100.

·         There are optional riders that cover things like specific illnesses, critical illnesses, disabilities, etc.