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Money Back Policy
Provides Insurance
Low-profile risk investment
Provides good return on investment
Allows Tax Benefits
Money back policies are like life insurance plans which help a family to stay secure and fulfill their monetary goals throughout their different life stages. Like in the case of life insurance cover, these plans allow life protection along with regular payouts at intervals. Further, these plans allow death benefit if the policyholder dies suddenly. The policy also offers payouts called 'survival benefits’ at intervals. Let us understand the money back policy meaning in detail.
What Do You Mean By A Money Back Insurance Plan?
In simple terms it is a kind of insurance plan wherein the insured receives a particular fraction of the money at regular intervals as compared to getting lump sum money at the time of maturity.
This plan serves appropriately to people who do not want to take any risk and at the same time want to create wealth or savings while maintaining liquidity.
The maturity benefits received under money back policy are offered to the insured in the form of “survival benefits", which are evenly paid during the policy tenure at fixed intervals.
How The Money Back Policy Functions?
Money back policies allow Maturity Benefits along with offering the insured a Survival Benefit. The best money back policy also works as an investment option wherein the insured can use it as an investment to get good returns.
Once the policyholder buys a 20-year old money back policy, they start getting a payout in the form of 'Survival Benefit' just after a few years of the start of the policy. This way, the insured gets over 20% of the total sum assured in the form of survival benefit regularly at intervals. The rest of the amount is paid at the time of the end of the policy along with a bonus.
However, if there is a sudden demise of the policyholder during the tenure of the policy, the benefit of maturity is paid to the nominee.
Best Money Back Policies in India 2022
| Insurer | Plan Name | Plan Type | Policy Duration | Entry Age (Min.) | Entry Age (Max.) |
|---|---|---|---|---|---|
| Bajaj Allianz General Insurance | Bajaj Allianz cash Assure | Traditional | 16, 20, 24, 28 Yrs. | Zero Yrs. | 54 Yrs. |
| Bharti AXA Life Insurance | Bharti AXA Life Child Advantage | Traditional/Participating/Saving | 11, 21 Yrs. | 18 Yrs. | 55 Yrs. |
| Edelweiss Tokio Life Insurance | Edelweiss Tokio Life Cashflow Protection Plan | Non-linked, participating money back plan | 10, 15, 20, 25 Yrs. | 91 days | 55 Yrs. |
| Exide Life Insurance | Exide Life New Fulfilling Life Plan | Traditional, Money back | 85 Yrs. | 15 Yrs. | 50 Yrs. |
| ICICI Prudential Life Insurance | ICICI Pru Cash Advantage | Non-linked, participating money back plan | 15, 17, 20 Yrs. | 0 | 60 Yrs. |
Money Back Policy - Features
There are many interesting features of the money back policy. Some of them are listed below:
- These plans allow investment options with low-risk along with providing insurance coverage to the insured.
- Under such policies, the plans allow a steady income coming to the policyholder in the form of 'Survival Benefits' on a regular basis at intervals.
- Further, under these plans if the policyholder dies during the tenure of the policy, the entire amount of Sum Assured is paid to the nominee of the insured.
Money Back Policy - Advantages
Below are some of the advantages of Money back policy:
Insurance coverage
The best part of money back policies is that they serve as an insurance instrument. The insured under such plans can pick a cover amount as per their requirement to fulfill their financial needs and to adequately cover the needs of the family members
Sum Assured to Nominee
Under such plans, the nominee receives a lump sum amount as sum assured in the event of sudden death of the insured during the policy term. This amount can be used by the nominee to fulfill their financial requirements. However, if the insured outlives the policy term, they get survival payments during maturity.
Low-Risk Policy
Under this policy, guaranteed return is offered to the insured via money back plans during regular intervals. Since these plans are not affected by market movements, they serve as ideal for investment.
Allow to gain returns within a short span
Under money back policies, the insured can receive regular income. As compared to many other plans, these policies allow regular money at normal intervals to the insured.
Extra Bonus
Under such plans, the policyholder receives a yearly bonus which keeps accumulating and is received by the insured at the time of maturity. This bonus helps one in fulfilling their financial needs.
Allow Tax Deductions
Under these plans, tax benefits under Section 80C of Income tax are allowed. Even the sum assured is tax free under such plans.
Benefits & Components of a Money Back Policy
Various benefits and components received under the Money back policy are:
Survival Benefits
Survival benefit is the money received by the insured at regular intervals throughout the policy duration. The payment of this benefit starts after a few years of the policy initiation and lasts till maturity. For example, if you buy the best money back policy for 20 years, you might start getting the survival benefit from the 5th year onwards. You will receive this benefit every five years until the maturity of the plan.
Death Benefits
Death benefits are received by the nominee of the insured under the money back insurance plan if there is a sudden demise of the policyholder. Under the death benefit, they get the sum assured of the policy as well as the bonus accrued.
Maturity Benefits
This includes all amounts paid to the insured at maturity of the policy, such as sum assured, remaining amount of survival benefits, and bonus.
Bonus
It is the sum paid to the insured by the insurer under the money return term policy as per the performance of the policy. They might include Reversionary Bonus and Terminal Bonus.
Common Optional Covers or Riders Available in a Money Back Policy
Some common riders under return money plans include:
- Critical Illness Rider - This rider serves as a guard against several critical illnesses, such as heart attack, cancer, stroke etc.
- Accident/Disability Rider - This rider covers the cost that may arise due to any accident causing death or disability of the insured.
- Premium Waiver Rider - This rider protects the policy from getting lapsed if the insured person is unable to make payment of the premium due to any reason
- Accelerated Sum Assured Rider - Under this rider, the policyholder can get the sum assured if he/she is diagnosed with a critical disease.
- Term Rider - Under this term plan with money back rider, the insured can plan to pay the nominee a term insurance payment in case the person does not survive the period of the money back policy.
- Hospital Cash Rider - Under this rider, the insured can get daily cash if he/she has to incur hospital costs during the policy term.
Frequently Asked Question
A money back insurance policy is a kind of traditional life insurance plan that offers returns in the form of regular payment at intervals to the insured. This policy comes with double benefits since it offers both investment and insurance. Also, under this policy, the insured gets a lump sum amount at the end of the policy. Further, if there is any unforeseen situation like death of the policy holder, the nominee gets the lump sum amount.
The main features of a money back insurance policy are as follows:
- The policy offers guaranteed returns.
- It offers insurance cover together with investment option.
- It offers guaranteed returns on the maturity of the plan.
- Under this plan, the sum assured is available at the end of the term.
- The plan also ensures regular income through the policy lifetime.
- Also, the policy allows beneficiaries of the plan to receive a lump sum amount in case of the sudden demise of the insured.
Yes, riders are available with a Money Back Policy. They are namely:
- Critical Illness rider
- Accident rider
- Disability benefit rider
- Hospital cash rider
- Term rider
- Waiver of premium rider
- Accelerated sum assured rider
No, a money back policy doesn't pose much of a risk. Generally almost all kinds of investment products have some or the other risks involved. However, with a Money Back Policy, which is a kind of endowment plan, there is very low risk involved, while the returns are good.
Money back policies offer varied tax benefits which allows the policyholder to reduce tax liability. Under this policy, if the insured pays five times or more premium than the maturity amount he/she receives, then the amount gets exempted from tax.
Anyone can buy a money back policy. If you are interested in investing in a policy that poses low risk and offers insurance coverage, money back is the best policy for you. Hence, you can create wealth and cover life under a money back policy.
If someone misses paying their premium for the policy, they can pay the amount during Grace period. However, if the person misses the grace period and doesn't make the payment of the premium then the policy is likely to get lapsed. However, if the insured buys the rider called premium waiver, in that case the policy will be saved.
As such, there is no premium payment frequency of the Money Back plan. It can be on a quarterly, semi-annual or annual basis depending on the insurer.
Advantages of a money back insurance policy are:
- It provides a triple benefit of maturity, survival and life coverage.
- The policy offers regular payouts during the term of the plan.
- It serves the dual purpose of insurance and investment.
- The plan offers guaranteed returns.
- It allows Tax benefits.
- It is a low risk plan.
- Several riders are available with this plan.
