Money Back Life Insurance Policy : What is a Money-Back Plan in Life Insurance?


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Updated on Aug 11, 2023

Money back life insurance is a dual benefit product that allow both the advantages of investment as well as protection to the life insured. Let us know more about it in this post.

There are many factors to consider before you start investing in a life insurance policy if you are a logical investor. One such factor is the regular payouts that many investors seek from their investment.  And since a term life insurance plan do not offer regular payouts and maturity, many people prefer to go for money back life insurance plans.

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What is a Money Back Life Insurance Policy?

With money back plans, the investor can expect regular payouts along with securing their savings in a savings tool. The option of saving and increasing your wealth along with getting fixed payouts at specified intervals of time help the investor with the accumulated wealth at the end of the term. It also supports the investor in planning important life events at various stages to serve your liquidity needs.

How does a Money Back Life Insurance Plan in India Work?

Let us take an example to understand the money back life insurance:

Suppose, you buy amoney back life insurance at the age of 30 in the peak of your good health. You are levied with a yearly premium of INR 50,000 for the policy for a term of 20 years with a sum assured of INR 3,00,000.

Now, let’s see What you can Gain from a Money Back Life Insurance?

1. Sum Assured at Maturity :

Your money back life insurance would serve you with a sum assured at the end of your policy term if you outlive the policy tenure. However, it needs the policyholder to be prompt with all the premiums to receive maturity amount of INR 3,00,000 when the tenure of the policy ends

2. Survival Benefit:

In addition to the maturity benefit, you can also earn a survival benefit of over INR 90,000 every year from end of 10th to 19th year of the policy

3. Guaranteed returns:

Besides the above, the money back life insurance also guarantees you additional sum of money from 8th to the 20th year of the policy. So, you would gain guaranteed sum of over INR 12,000 every year. The total of the accumulated guaranteed sum would be paid to you at the end of the policy tenure which will add up to your total accumulated wealth at maturity.

4. Tax Deductions:

In addition to all the above, you can also get tax benefits on the premium(s) and maturity amount.

5. Options:

Further, you also get to choose from 2 options of plans – Option 1 and Option 2 that you can pick as per the financial milestones you have set. These options offer different survival benefits and different Sum Assured.

6. Death Benefit or Life Cover:

Also, in case you die suddenly during the 2nd year of the policy, your nominee will receive ten times of what the Premium you paid and 105% of the total premiums that were paid.

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5 Aspects of a Money-Back Plan that makes it Worth Buying

Below are some key elements of Money-back plan that makes it worthy:

1. Wealth Accumulation:

A Money-Back Plan guarantees the investor an accumulated sum of money as saving. This policy is a good way to create wealth and also serve as a secured investment plan.  Along with regular paybacks, the insured in a money-back plan can build a corpus through its maturity benefit.

2. Guaranteed Source of Income in the form of Regular Pay-Out:

The importance of a second income source is very pertinent and everyone realizes it. Thus, people have started investing in money-back plans to get financial support with the regular payouts to fulfill their financial needs.

3. Secured Avenue of Saving:

To have a balanced portfolio of savings and investment, investing in less risky avenues is important. A money back life insurance serves the purpose well with its guaranteed money-back plan options.

4. Death Benefit:

Besides others, money back life insurance also allow death benefit to the beneficiary of the insured in the event of the demise of the person during the policy term.

5. Tax Benefit:

Tax benefits on the paid premiums as well as on the maturity amount is guaranteed with a money back life insurance. However, these benefits are subject to change as per the tax laws.

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Hence, as you have seen in the above discussion the benefits of the money back life insurance, which serve as the best plan for the investor offering several benefits like guaranteed income, accumulated additions, sum assured at maturity, death benefit, tax benefits and much more. So, don’t miss the opportunity of availing these benefits by purchasing a money back life insurance.
Further, you can also ensure financial security for your family and for your retired life with a money-back policy.
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FAQs on money back life insurance policy

What is money back life insurance policy?

A money back insurance policy is a financial instrument that offers periodic payouts (known as survival benefits) at specified intervals, along with a payout in the event of the death of the policyholder (known as the sum assured). These survival benefits amount to a certain percentage of the sum assured.

Can you get money back from life insurance policy?

If you have a permanent life insurance policy, then yes, you can take cash out before your death. There are three main ways to do this. First, you can take out a loan against your policy (repaying it is optional).

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Oct 27, 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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