Money-Back Policy: All You Need to Know About a Money-Back Plan


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If you are willing to invest in a money back policy, you are up for dual benefits of savings and insurance. Read on to know the money back policy meaning  and all the interesting aspects of the policy in this post.

The best thing about a money back plan is that it pays out the entire sum insured to the policy holder evenly all through the policy duration as long as the insured person is alive. So, the sum assured is dispersed as a survival benefit to the policyholder after a particular period of the policy initiation. This regular payout as survival benefit goes on till the policy matures if the policyholder is alive. You can use the money back policy calculator to calculate how much payout you will receive and at what duration.

However, if the policyholder dies before the maturity of the policy, the nominee will continue to receive the payouts and later will also receive the entire sum assured along with bonuses (if any).

What is a Money Back Policy and How a Money Back Policy Works?

Let us understand what is money back policy and the way it functions with the help of a simple example:

Let’s assume that you bought a money back policy at the age of 23 when you got your first job. In the fifth year of your policy, you receive the first survival benefit at the age of 28. You used that money to buy your first car. You received the second survival benefit payment at the age of 33 on the completion of 10 years of the money back policy. You used that money to pay off your father’s loan that he had taken during marriage to take care of the expenses. The third payout is offered on the 15th year of the policy when you have turned 38. You helped your husband with clearing the home loan with that lump sum amount. And the final payout is offered by the policy provider on the completion of the 20 years of the policy when you turned 43. You used that money along with the rest of the sum assured and bonus amount to start your own business or to meet your child’s higher education aspirations.

With the above example we hope you now know how best money back policy works and how and when you get the payout in such a policy.

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Features of Money Back Policy – ?

  • Guaranteed income throughout the policy period – As the name suggests, the money back insurance policy offers capital as survival benefit which is paid every so often to facilitate the insured to pay for the numerous life goals like education/home loans, debts, higher education requirements, and so on. This coverage helps to strengthen your financial security further.
  • Dual components of Investment and Insurance – The double benefits of maturity and liquidity makes the money back policy act as the best plan of insurance and investment.
  • Benefit received at death – Money-back policy pays the survival benefit all through the policy period. However, it also pays death benefit to the beneficiary of the insured in lump sum if the policyholder dies before reaching the maturity of the policy.
  • Benefits of Riders – Money-back policy provides add-on benefits of riders including the rider of accidental death as well as critical illness.
  • Tax deductions – Money-back policy allows the insured to enjoy tax benefits as the plan is exempted from taxes.
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Benefits of Money Back Policy –

Here are some of the benefits offered by money-back policy:

  • The policy protects your life with life insurance during the term of the policy
  • It offers payments periodically as survival benefit all through the term of the policy
  • Money-back policy acts as both insurance plan along with serving the purpose of investment for long-term with high returns
  • The policy offers tax benefits
  • Money back is low in terms of risk as compared to many other investments
  • It facilitates savings in the long-run and regularizes income
  • It also ensures regular disbursal of funds
  • It allows the benefit of procuring optional riders to cover specific illnesses and  disabilities

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To Conclude

The benefits offered with money back policy despite being a low-risk plan is enormous. And this makes it the best choice for people who are reluctant to take risks but who want to enjoy the perks of regular income and maturity benefit. Further, you also get a survival benefit with your best money back policy after every 5 years.

However, a policy seeker should keep note of all the features and understand all the terms and conditions of the policy carefully before buying a money back policy to serve their financial needs.

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Aug 09, 2022
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PayBima Team
PayBima is an Indian insurance aggregator on a mission to make insurance simple for people. PayBima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 17 years of experience. PayBima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.

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