What is Money Back Plan?
A Money Back Plan has both the insurance and investment component. With investment component, the life insured receives a specific percentage of the sum assured at regular intervals in terms of money backs or Survival benefits, if the insured is alive. In case of survival till end of the policy term, the remaining sum assured is paid as the Maturity Benefit. With insurance component, in case of the demise of the insured during the policy term, the entire sum assured is paid as the death benefit to the nominee and the policy gets terminated. It is a type of endowment plan with the benefit of liquidity and is best for those who want to get back money from an insurance plan in periodic installments.
What are the Benefits of Buying a Money Back Plan?
Life Cover Benefit
This plan provides you the life cover and in the event of your untimely demise during the policy period, the insurer offers the Sum Assured amount to your family and thus ensures financial security to the family.
Survival Benefit
As a money back plan offers payouts at regular intervals of time, so you can easily meet expenses at different stages of your life. Money Back Policies thus, help you meet financial obligations with ease.
Bonus Benefit
A money back policy offers bonuses during and at the maturity of the policy. Insurers share some part of its profits to its customers in the form of bonus payments. Bonuses tend to increase the payouts of your policy.
Wealth Creation Benefit
You only need to invest small amounts that later on gives you back a huge sum. Money back policies are an attractive option for creating wealth that you can use to meet huge expenses such as child’s marriage, paying off loans, or use it as a corpus for post-retirement time.
Loan Benefit
Money back policies offer the option to avail the loan and to obtain a loan, you need to fulfill some conditions such as payment of premiums for at least 3 years’ policy period. The loan facility helps you meet the financial needs of your family.
Surrender Value Benefit
Surrender Value is paid by the insurer in case the policyholder wants to terminate the policy before its maturity. Several insurers offer surrender benefit only when you have paid all the due premiums in full for at least 3 policy years. It is not advisable to exercise this option, but you may opt for this benefit in case of any urgent need of cash.
Maturity Benefit
A money back plan offers a guaranteed lump sum plus bonuses at the maturity of the policy, as applicable under the policy.
Rider Benefit
Several riders such as accidental death benefit, critical illness rider, income benefits, and disability rider can be attached to your policy. It helps you enhance protection in the money back policy.
Tax Benefit
You can avail tax benefits under section 80 C for the premium paid towards running the money back insurance policy. The payouts of the insurance policy are tax free under section 10 (10) D of the Income Tax Act, 1961.