Everything about a Money Back Life Insurance Plan

What is a Money Back Policy?

Who Should Buy a Money Back Policy?

Types of Money Back Policies

Features of Money Back Policy

Benefits of Money Back Policy

The most common benefits of a money back policy are as follows:

1. Regular Income

The survival benefit in money back plans provide periodic payouts that can serve as regular source of income, particularly useful to meet short term financial goals.

2. Goal Based Savings

We all have some financial goals that fall at different stages of life like buying a house, child’s higher education, a dream vacation or a relaxing retirement. With a money back policy, you get payouts at regular intervals that can help you meet these goals.

3. Financial Protection for Family

In the unfortunate event of the death of the insured, a money back policy pays 100% sum assured to the beneficiary as death benefit, thus providing a crucial safety net. This ensures that loved ones are financially secure, even in the face of unexpected circumstances.

4. Guaranteed Returns

Money back plans offer guaranteed returns in the form of sum assured or the periodic payouts that are a fixed percentage of the sum assured. In addition, the non-guaranteed bonuses, in the case of participating plans, are an extra benefit. Thus, they are an appropriate choice for investors seeking a reliable and steady income flow.

5. Tax Benefits

Money-back plans offer tax benefits under Section 80C of the Income Tax Act for the premiums paid, up to a specified limit. The maturity amount, the survival benefits and the death benefit received, including bonuses, is tax-exempt under Section 10(10D) as per the prevailing tax laws.

How Does a Money Back Policy Work?

Types of Bonuses in Money Back Plans

Common Riders Available in a Money Back Policy

Factors to Consider While Buying a Money Back Policy

Frequently Asked Questions

How Risky is it to Invest in a Money Back Policy? up-arrow

Yes. Money back policy is a safe investment since it does not invest in market. It offers guaranteed sum assured and guaranteed survival benefits. Bonus is an addition over and above the guaranteed returns.

What if I Miss to Pay My Money Back Policy Premium in Time? up-arrow

If you miss to pay your premium in time, most companies provide a grace period of normally 30 days for annual premium paid policies. If you don’t pay your premium even during the grace period, the policy lapses. You can then reinstate the policy depending on your policy’s terms and conditions.

Can I Change the Nominee in My Money Back Policy? up-arrow

Yes, you can change the nominee in your money back policy by submitting the required documents.

How do I Decide if a Money Back Policy is Good Investment for Me? up-arrow

A money back policy is a good investment if:

  • You are looking for a dual advantage of insurance and investment.
  • You are a risk averse investor looking for guaranteed returns.
  • You want regular guaranteed payouts to meet certain financial goals.

If you fall in any of the above categories, a money back policy can be a good investment for you.

Can I nominate multiple individuals as beneficiaries in a Money Back Policy? up-arrow

Yes, you can nominate multiple individuals, specifying the percentage of the payout each should receive.

Can I Change the Nomination in my Money Back Policy? up-arrow

Yes. You can change the nomination by submitting the required documents.

What Happens if I Surrender my Money Back Policy Before Maturity? up-arrow

Surrendering a money back policy before maturity may result in reduced payouts or financial penalties.

Are Money Back Policies a good investment option? up-arrow

Money Back Policies offer life coverage with periodic payouts and guaranteed returns. Though they are a safe investment, they may not provide the same returns as pure investment instruments.