Money Back Policy is an ideal investment plan to secure the lives of your family members and yourself. Read on to know about the best Money Back Plans and their related information in this post.
Investing for the future is very important if you want to secure your life and the lives of your loved ones. There are several ways to secure yourself financially by investing money in different plans. A Money Back insurance policy is one such way to invest in a policy with guaranteed returns. Let us understand the overview and key features of a money back policy in this post as well as analyze the best money back plans available in the market.
What is a Money Back Policy?
A money-back insurance policy is a plan that allows the insured to avail the dual benefits of life cover as well as investment. It is an endowment plan that offers the advantage of regular returns at regular intervals during the tenure of the policy. Further, since money back plans also offer the benefit of insurance, the loved ones of the insured can have financial protection in the event of sudden demise of the policyholder.
How Does A Money-Back Policy Function?
Let us understand the working of a money back policy with the help of an example:
Suppose you bought a money back policy from a reputed insurer for a term of 20 years. Now, you would start receiving survival benefits a few years into the plan. 20% of the sum assured would be paid as regular income periodically. The balance is paid in the form of maturity at the end of the policy term. The benefit in the form of guaranteed cash can be availed either on a monthly or yearly basis, depending on your need.
In addition, you will also receive a guaranteed bonus amount. Besides, if you die anytime during the term of the policy, your nominee will receive a lump sum amount as death benefit. Overall, there are many advantages of a money-back policy.
3 Features of Money-Back Policy
- Assured returns – The best feature of a money back plan is that it allows guaranteed benefit in the form of assured returns periodically during the policy tenure. The returns are pre-decided at the time of policy purchase.
- Additional Income – With a money back plan, you receive a fixed pay out at regular intervals throughout the policy duration. This amount serves as an extra income to help the insured to fulfill financial goals.
- Bonus – In addition to the sum assured, money back plans also offer an extra pay out in the form of bonus at the end of the policy term.
5 Benefits of Money Back Plan
- Accrued returns – With money back policy, you would receive an accrued return in the form of maturity benefit at the end of the policy term. This benefit can be used to secure your future financially.
- Added Bonus – An extra income in the form of added bonus is also received by the policyholder at the end of the policy term.
- Second income source – The regular pay outs offered by money back policy serve the purpose of a second income source for the policyholder.
- Protection of Life – A money back policy serves the dual purpose of insurance and investment. Thus it allows financial security to your family in the event of your sudden demise during the policy term.
- Tax Benefits – Being a life insurance plan, the premiums paid under some money back policies are exempted from tax under section 80C of income tax. The benefits received by the insured are also tax free.
3 Eligibility for Money Back Plan
Policy seekers of money-back plan are required to meet certain eligibility criteria as listed below:
- Depending on the exact money back plan you want to buy, your age should match the minimum and maximum requirement to qualify for the plan
- The minimum and maximum entry age varies depending on policy
- Policyholder must make the premium payment as guided by the policy term
Best Money Back Plans Online
Below are some of the Money-Back Policies in India available online:
|Plan Name||Eligibility in Years||Policy Tenure in Years||Max. Maturity Age||Features|
|LIC Money Back Plan 20 Years||Min – 13
Max – 50
|20||70||– Death Benefit
– Survival Benefit
– Maturity Benefit
– Participation in Profits
LIC Bima Bachat
|Min – 15
Max – 65
|9, 12, 15||75||– Death Benefit
– Guaranteed Surrender value
– Maturity Benefit
– Loyalty Benefits
|HDFC Life Super Income Plan||Depends on the policy term||16, 18, 20, 22, 24, 27||75||– Death Benefit
– Maturity Benefit
|SBI Life-Smart Money Back Gold||Min – 15
Max – 55
|12, 15, 20, 25||70||– Participation bonus
– Death Benefit
– Survival Benefit
Read More: Money-Back Policy: All You Need to Know About a Money-Back Plan
How to Choose A Money Back Plan
To make sure that you receive the maximum benefit from your money back plan, it is important to choose the plan wisely.
- Identify your financial goals before choosing the best money back plan to suit your requirement. Similarly, choosing the tenure of the policy as per your financial goals is also important. You need to decide if you want to invest in a long or short duration money back plan. Generally, the average tenure of a money back plan is 20 years
- Another thing to look out for while buying a money back plan is the guaranteed pay outs received at regular intervals. You should receive an amount that should fulfill your future expenses
- Also, you must also check for the best money back policy to avail tax benefits on the premiums paid and on the maturity amount. Some money back plans do not offer tax benefits
To Sum Up
Now that you know the money back policy meaning and its importance to secure your future, you must select a plan wisely to ensure maximum benefits. You can even use a money back policy calculator to check the premium that you need to pay to receive the benefits you seek.
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Is there any penalty levied on policyholders if they do not make an on-time premium for their money back policy?
If a policyholder fails to pay the premium of money back policy within the grace period, the policy lapses. If that happens, you lose all the benefits associated with the policy. However, if you have been paying the premiums for 3 years, a paid up value can be created for a reduced sum.
It is possible to revive a money back policy?
Yes, you can revive a money back policy within 2 years from the date of the last paid premium.
Are money back policies transferable ?
No, it is not possible, as of now, to transfer a money back policy. However, it can be surrendered if desired.
How to surrender my money back policy?
To surrender a money back policy you have to wait till the policy attains cash value, which comes after 3 years of paying premiums for the policy. The surrender value of the policy depends on the tenure of the policy and the number of premiums paid.
Are money back policies good?
Money back policies are good because they are less risky as compared to investing in a mutual fund.