Money back plans protect your family’s financial interests from circumstances such as death or critical illness of the policyholder. Periodic payouts create wealth for meeting financial commitments at key stages in life.
Get back the premiums you have paid for the insurance , Puzzled! The money-back plans provides life insurance cover for a specified period. The insured gets back fixed, tax-free proportions from the sum assured at fixed intervals.
The money-back plan provides life insurance cover for a specific period. During the term of the policy, the insured receives tax-free, fixed proportions of the sum assured at regular intervals. On maturity i.e. on surviving the entire term of the policy, the insured receives the balance portion of the sum assured, if any, plus the bonus/participating profit/ guaranteed addition for the term of the policy, if any, or the value of the investments.
In the event of death of the insured during the term of the policy, the nominee still receives the entire sum assured (even if the insured had received fixed portions of the sum assured), plus the bonus/participating profit/guaranteed addition, if any.
The premium for money back policies is higher in comparison to endowment and term plans. If one purchases money back plans with guaranteed addition, the premium is even higher. Some companies offer an option in choosing the premium paying term.
Money back policies are advisable if the insured wants a product that provides both – insurance cover and savings. Many people prefer to buy such policies to utilize the tax-free sum of money receivable to go on a holiday, re-furnish their homes or even re-invest the same amount.
However, there are other ways to utilize this income. A substantial part of the premium paid for money back plans is used by the insurance company to generate the bonus or profit paid to the insured or the nominee.
Money back plans combine the advantage of savings and also provide insurance cover. In such types of plans a certain amount of the sum assured is being given to the individual at regular intervals during the policy period. The balance amount is being paid during the maturity of the plan. If the policy holder dies during the policy period the nominee would get the sum assured as well as the bonus amount if any. Moreover the cash payout received at regular interval is exempted from tax. The amount of payout, terms of the policy, depends on the policy that one has opted. So one should compare money back policy and choose one that would best suit one’s needs.
Sometimes Money Back policies are considered similar to the endowment policies. However, the major difference between an endowment and money back policy is endowment policies do not provide returns at regular intervals. Only the survival benefits are paid at the time of maturity.
How does money back plan work?
Suppose a person takes a money back plan for 15 years with payouts of 25% of the total sum assured after every five years and rest of the sum assured at the end of the 15th year along with the additional bonus amount. So by the end of the 10th year the individual would have received 50% i.e. 25*2=50% of the total sum assured and on the completion of the policy term, the individual would have received 50% of the total sum assured plus any additional benefit if any announced by the insurance company at the time the policy was bought. The plan can also have higher term periods for ex: 20 or 25 years.
Features and benefits
These plans help an individual to plan expenses like a child’s education, purchase of cars, property or any other such financial requirement as an individual can receive cash payouts at regular interval of time.
Money back plans offer dual benefit of Insurance plus money at regular intervals to fulfill your periodic needs.
These Plans offer guaranteed returns at low risk.
The individuals opting for a money back plan can avail tax benefits under Section 80C and Section 10 D of the Income Tax Act, 1961.
The plan also helps to provide risk cover in times of the untimely death of an individual thus providing the dual benefits of insurance as well as investments.
Best Money Back Policies in India 2018
Money Back Plans
Min Entry Age
Maximum Entry Age
Minimum Sum Assured
LIC Money Back Policy – 20 years
Traditional participating anticipated endowment plan with money back facility
SBI Life- Smart Money Back Gold
Savings plan with life coverage
12 years (Option 1),
15 years ( option 1 and 2),
14 years (option 3 and 4)
55 years (option 1 and 2),
50 years (option 3),
45 years (option 4)
27 – 70 years
Bajaj Allianz cash Assure
Traditional money back plan
16, 20, 24, 28 years
18 – 70 years
HDFC Life Super Income Plan
Traditional participating plan with life coverage
16 -27 years
30 years (for 18 to 27 years of policy term),
2 years (for 16 years of policy term)
48 years ( for policy term of 27 years),
51years (for policy term of 24years),
53years (for policy term of 22 years),
55years (for policy term of 20 years),
57years (for policy term of 18 years),
59years (for policy term of 16years)
18 – 75 years
Reliance Super Money Back Plan
Non-linked non-participating non-variable plan with life coverage
10, 20, 30, 40, 50 years
28 – 80 years
Aegon Life regular Money Back Insurance Plan
Money back plan with life coverage
55 years (for 7-pay and 10-pay options),
60 years (single pay option)
Min/Max: 75 years (7-pay and 10-pay option),
80 years (single pay option)
Subject to underwriting
BSLI Bachat Money Back Plan
Traditional non-participating money back insurance plan
Up to 180 times your monthly base premium
Canara HSBC OBC Smart Stage Money Back Plan
Traditional participating money-back life insurance plan
LIC Money Back Policy for Children’s
25 years (min/max)
The money back plans are a good way to plan for a regular income and large expenses in the future. Let us illustrate this with the help of an example.
Let’s assume that the money back policy is of a 20-year policy term and it starts paying survival benefits after 5 years and pays the same every 5 years, and the rest on maturity. In such cases, the insured party would receive a survival benefit in the 5th, 10th and 15th year of the policy and the remainder of the survival benefit at the time of maturity of the policy in the 20th year. This would be in addition to the maturity amount and any bonus, if any. These payments would help the insured individual to pay off major expenses along the way.
Suppose the policy was bought at a time when the child of the insured is around 10 years old. In such a case, the first survival benefit payment at the end of 5 years of the money back policy can be used to pay off the tuition fees if the child is preparing for engineering or medical tests and has taken coaching for the same.
The second payment of the survival benefit received when the child is 20 years old can be used to pay off any fees for post graduation studies. If a suitably large money back policy is taken, then this amount can be used to pay for even foreign education expenses.
The third survival benefit that accrues on the 15th year of taking the plan will be paid to the insured when the child is 25 years old. This amount can be used to pay for wedding expenses of the child.
The fourth instalment of the survival benefit will accrue at the 20th year of the money back plan when the insured shall also receive the maturity amount and the revisionary bonus. This amount can be used to fund the retirement years or if the person has already covered himself or herself for retirement, then it can be used to buy a house or pay for an extended holiday. Buying a money back plan with an adequate cover will also mean that the amount received by the employee on maturity will be substantial and can be used to meet a myriad of large expenses. These may include unavoidable expenses like relocation expenses to move back to the hometown after retirement, renovation of the ancestral property, renovation or remodelling the existing house, paying off a car loan, and so on.
In most cases, the maturity amount is a lump sum amount and is paid to the policyholder at the maturity of the policy. The insured party can opt to receive annuities or regular payouts every quarter or every month. Most insurance companies or their financial experts can design policies that would suit the needs of the individual and ensure that they get a money back policy that best serves their future needs. If you are looking for a plan that helps you plan future expenses without you having to worry about the safety or the security of the money invested, then looking at a money back plan may make perfect sense for your needs.
Features of a Money Back Policy
A money back plan such as LIC money back policy or others has a host of benefits for the investor looking for a guaranteed return plan along with life insurance cover. The fact that a money back policy provides a payout after a few years and this continues through the life of the plan makes it a sure fire winner for any conservative individual who is looking for a safe and secure cover with guaranteed returns. Life insurance companies have come up with a host of benefits for people who are looking at money back plans as an investment cum insurance option. Additionally, most companies come up with new plans with various new features and benefits on a regular basis.
The guaranteed returns from a money back policy help it edge ahead of market-linked plans. A money back plan is an ideal investment for a person looking for a safe and secure investment. Since it also provides an insurance cover, a conservative buyer would find it the ideal go-to vehicle for definite returns. Most of the recommended plans for better returns are linked to the equity or debt market, which are not risk-free avenues of investment. Consequently, most of the plans are unable to deliver the high returns desired by the individual. The fluctuating market ensures the investor does not get any guarantee that his investments will give him any positive returns. In bear markets, these plans may not perform well and the insured party may end up losing money rather than gaining better returns.
A money back policy guarantees that the insured party will receive a sum every few years to take care of any large expenses in the future. The survival benefits accrue every few years and forms a second source of income for the policyholders. These funds can be used to pay off loans, make a deposit for a house or an apartment, pay off the children’s tuition fees, or simply take a holiday. The survival benefit of a money back plan makes it a life insurance policy that is a notch above the other covers in the market. Other life insurance policies do not provide this cover. People looking for a life insurance policy must note, however, that the survival benefits only accrue if the insured party is alive and well. In case of the insured party passing away during the tenure of the policy, the sum that will be paid to the nominees will be the sum assured and the bonus if any. This feature is the reason people call survival benefits a reward from the insurance company to the assured for taking proper care of himself or herself.
A money back policy also works like a normal insurance cover and pays the sum assured or the maturity amount at the end of the policy tenure. The returns are guaranteed and secure and investors get the amount they were promised at the start of the policy. Most of the life insurance companies offer a range of sum assured amounts, sometimes starting from as low as Rs. 50,000. These low sum assured are perfect for the rural population who have lesser expenses and still need an insurance cover. A smaller cover can be easily purchased by blue collar workers who need a money back policy that will safeguard their money and also provide payout amounts along the lifetime of the plans in addition to the maturity amount. A lot of life insurance companies offer ‘no limit’ sum assured amounts also. This means that the insured can get themselves covered for as much amount as they deem feasible.
The nominees also receive the sum assured in case the unfortunate happens to the policyholder. This is in addition to any bonus – reversionary or additional – that the insured company may pay to the family members (nominees). The money back policy acts like a standard insurance plan in such cases and helps the insured to plan for the future well-being of their families even if they are not there anymore. The guaranteed nature of the sum assured means that the family or nominees would definitely receive the money. The guaranteed nature of the sum assured makes a money back plan a better option than riskier life insurance policies such as endowment plans.
A money back plan comes with two types of bonus amounts – a reversionary bonus and an additional bonus. The reversionary bonus is the bonus declared as a percentage of the sum assured every year by an insurance company. This sum is added to the overall payment receivable on maturity of the policy or the worst happens. The bonus amounts get added every year to the previous years and at the end works out to be a tidy sum. Insurance companies may sometimes also offer an additional bonus. This bonus is generally dependent on the performance of the insurance company and based on the loyalty shown by the customer by paying all premium on time during the tenure of the policy.
All insurance companies offer optional add-on riders that the insured can, as the name suggests, ‘add-on’ to their money back policy. These riders may relate to specific medical conditions such as critical illnesses, personal accident or a term rider. Some money back insurance policies also give the option to continue the life cover even after the policy has matured.
Research, compare, and purchase your money back policy using our booking engine. A well-chosen insurance policy gives you benefits, such as lower risk, additional tax benefits, and assured returns. It is recommended to choose your money back life insurance plan with adequate care while paying sufficient attention to the premiums. Ensure that the time and amount of the payout suits to your financial plans and anticipated needs.
If you are considering buying money back life insurance policy, keep in mind they provide a death claim of the full amount insured at any time during the policy, regardless of any periodic payouts that have been given. The bonus amount is also calculated on the full amount insured. By bringing together information and features of the available money back insurance plans in one place, rupaiyavasool.com provides a convenient way to make the wisest insurance choice.
A money back plan is one of the best life insurance policies for an individual looking for a guaranteed money return policy. These policies also work out well as the backup policy for aggressive investors who prefer to use the stock and commodities market to increase their wealth. Moreover, the fact that these policies also offer a guaranteed payout after a few years of investment means that they are offering much better returns than the standard life insurance policies which only pay when the policy matures. These policies also work well as a standard insurance cover. The nominees receive the money from the sum assured in case the unfortunate comes to pass.
Returns Accrue Only After a Few Years
The best thing about a money back plan is that the returns accrue only after a few years of investment. In case of long term policies of say 15 or 20 years, the amount is paid every few years and adds up to a tidy sum. In addition, the rest of the benefits are paid on the maturity of the policy. The insurance companies provide this benefit in a two stage process. The first stage comprises of the amounts that are paid every few years. The first and the last payout periods are generally spread evenly over the life of the policy. This means that if you buy a policy of say 18 years, the survival benefits may be paid to you every three years starting from the sixth year to the fifteenth.
The second stage comprises of the final payout that is larger than each of the previous payouts and given at the time of maturity of the policy with the maturity amount. Investors should note that survival benefits are paid only if the insured party continues to live. In the case of any unfortunate event that leads to the passing away of the insured party whether by accident or otherwise, then the survival benefits do not accrue and the nominees only receive the sum assured plus any bonus amount.
Value of Money Higher with a Money Back Policy
Many sceptics counter that money back plans do not offer nearly as good returns as investment plans. However, they are generally missing the point of a money back policy. The thing to remember for people is that it is an insurance cover (one that pays back money over the lifetime of the policy but an insurance cover, nonetheless) and is not a pure play investment plan. The insured party receives three-way payouts – the survival benefits, the sum assured on maturity and the bonus. Leaving all things aside the real value of the survival benefits are likely to tilt the scales in favour of money back plans. If you are wondering why, it’s because the value of money decreases over time. This means that what Rs. 100 will buy you today, it will not do so 2-3 years down the line. Let’s try to clarify this further with an example.
Suppose you are having a meal at a restaurant or watching a movie at a place where you are regular over the last 4-5 years. If you think back, you will remember that your favourite dish in the restaurant or the bag of popcorn you are munching on used to cost less two years back. It may have been Rs. 10-20 cheaper but it was definitely less costly than before. This means that if you are paying Rs. 100 now for the meal or popcorn, you probably paid Rs. 80, Rs. 90 or even less two years ago. Approaching it from a different perspective, what this means is that Rs. 80 or 90 is now no longer paying for the same amount of food as it used to two years ago. You will receive a lesser amount of food if you pay Rs. 80 or Rs. 90.This is commonly known as reducing value of money. Applying this logic to a money back policy of say 20 years means that the payout you receive in the fifth, tenth or fifteenth year (say) is worth more than if you have received it at the end of the policy tenure.
Insured Receives the Full Sum Assured on Maturity
A money back plan provides the full sum assured on maturity. This is irrespective of the survival benefits and the amount paid under the same. This works just like any standard life insurance policy where the insured party gets a final assured sum at the end of the policy term. The money back policy is a good way to get more than just the maturity amount as in addition to it, the insured also keep receiving the survival benefits over the term of the policy. This is in addition to the bonus they receive at the end of the plan period.
If you are contemplating whether to go for an endowment plan, a money back policy or a term plan, it may be best for you to understand what you are looking for. If you only want a cover and are fine with not receiving any money back at the end of the period, then the term plans may be best for you. If you are looking for a plan that only pays at the end of the policy period and you do not need any money back during the term of the policy, then the endowment plans work well. If you need a cover, sum assured at the end of the policy and returns after every few years, then the money back plans are what you should put your money in.
Insurance Cover at the Same Time as Investment Returns
Though there are many other investment plans in the market that give returns at the end of the investment period or in some cases, over the lifetime of the policy, only a money back plan offers the triple advantage of maturity benefits, survival benefits and insurance cover. In fact, with these policies, the advantage is actually four-fold as you also receive a bonus that results in a significant increase in the overall payouts received from the money back plan. Most plans offer insurance benefits only and a limited return, while others like ULIP – Unit Linked Insurance Plans offer a smaller cover and larger (and riskier) market linked returns. In between these two options, money back plans provide an ideal platform for the risk adverse investor to get an insurance cover and also receive significant guaranteed returns.
Bonus at Maturity Significantly Increases the Overall Payout
The revisionary bonus at the maturity of a money back policy helps to increase the payout from the policy by a significant amount. The reversionary bonus is declared every year on the sum assured. Most money back plans offer a simple reversionary bonus that is declared at the end of a year and gets added to the overall bonus that the insured receives at the end of the policy period. In addition to the simple bonus, there is another form of reversionary bonus called compound reversionary bonus wherein the bonus of the previous year is added to the sum assured and the bonus in the next year is given on this new increased sum assured amount.
Another form of bonus that may be declared and given by the company to the policyholder at the end of the policy period is the final additional bonus. This money is more in the form of a reward to the insured for sticking with the policy for such a long period. Both these types of bonuses help to increase the overall payout received by the policyholder of the money back plan.
Counters Vitality of Market-Linked Investments
The returns from the stock and commodities markets are highly volatile with even the best investments not being safe from the vagaries of the market. Any person who uses the stock market, whether directly buying the equities and commodities by themselves or relying on mutual funds, will be able to safeguard at least a part of their money using a money back plan or two.
A money back policy should be a part of the portfolio of any individual. It guards against loss of income from other investments due to the guaranteed nature of the returns. The insured party receives not only a definite return of the investment amount but also an insurance cover that ensures his nominees receive the sum assured to carry on with their lives in case the unfortunate happens. In addition, the survival benefit is the true plus point for money back plans. These benefit can be used to pay off expenses in various stages of life or even make investments. The money can be used to pay off loans, buy a house or real estate, invest in fixed deposits and so on.
Secure Investments with a Money Back Plan
A money back policy is a good way to plan secure investments. Since the returns are guaranteed, they make an ideal investment vehicle and ensure the investor gets his or her money back in a worry free manner. If used in tandem with stock market investments, like mutual funds, a money back policy can help reduce the risks of the investor’s overall portfolio. Moreover, the money back plan helps to guard against any risk to certain funds that are definitely needed in the future.
For instance, it is a fact that children after passing out from school need to go to a good college to get a shot at a secure career. College education is costly and can make quite a dent in the parent’s savings. In fact, the burden is more if the child opts for engineering, medicine or business administration, among others. A foreign education further increases this need for funds. All this can be taken care of easily if the parents opt for a money back policy when the child is still young. The survival benefit payments after every few years will take care of all these fund requirements without any significant impact on the parents’ savings, if at all.
Tax Savings with a Money Back Plan
All life insurance premium paid under a money back policy qualifies for tax deductions under section 80C of the Indian Income Tax Act, up to the specified limit, as long as the premium is less than 10% of the sum assured. This means that policyholders can reduce their tax liability by opting for a money back plan. Moreover, the maturity amount is exempt from tax deduction at source as long as the sum assured is more than five times the premium paid for the policies. People who are looking for safe guaranteed returns can use this tax benefit to further increase their money as they will now also save on tax in addition to getting the survival benefits, sum assured on maturity as well the bonus from the insurance company.
A money back policy is a more complex life insurance policy than a term plan or a standard life insurance cover that pays the sum assured to the insured party on maturity. It provides certain amounts called survival benefits in addition to the sum assured and a bonus from the insurance company based on its performance. To understand a money back plan better, it makes sense to have a look at the various components that make up a life insurance policy and their various particulars.
These moneys are paid to the policyholder every few years over the lifetime of the policy. These payments start after some years from the start of the money back plan and continue until maturity. The insurance companies break-up these payments as a percentage of the sum assured and spread them across the policy period.
For instance, a 20 years policy may start the payments from the fifth year onwards and pay a certain part of the survival benefit every five years and the rest on maturity. This means that the policyholder will receive a survival benefit in the fifth, tenth and fifteenth years of the policy period and the rest on maturity at the end of 20 years.
Suppose the insurance company breaks up the survival benefit amount as 20% (say) of the sum assured for each payout year during the policy term and 40% (say) at maturity. Then the policyholder with a policy of Rs. 10 lakh (say) will receive Rs. 2 lakh each in the fifth, tenth and fifteenth years, and Rs. 4 lakh at the maturity of the policy at the twentieth year. The survival benefit does not accrue if the worst comes to pass and the insured does not survive the policy term.
The death benefits are what are given to the nominees of the insured in case of the death of the insured party. These include the sum assured of the money back policy and the bonus accrued on the policy since it was taken by the insured. This does not include the survival benefits as they are paid only if the insured is alive and well.
To illustrate with an example, suppose an insured party passes away in the 18th year after taking a policy, then the nominees will receive the sum assured and the bonus that would have been added on to the policy in the 18 years since it was taken. Any remaining survival benefits that may have been paid if the insured party had survived the policy term will not be paid in such cases.
This is a common term used to denote all amounts received by the insured party on the maturity of the money back plan. The amount includes three components:
- The sum assured: This is the total cover chosen by the policyholder at the start of the policy or upgraded later during the term of the policy
- The remaining survival benefits: These are the remaining amount of the survival benefits that are due to be paid to the policyholder
- The bonus: This includes the reversionary bonus that the life insurance company declares at the end of each year and which is added for each of these years to arrive at the total sum. The bonus declared by the company generally depends on the performance of the company. Most companies also pay an additional terminal bonus
The sum assured is the amount for which the policy is taken. It is the amount that determines the premium the insured party will have to pay the money back policy. The sum assured is paid to the policyholder on the maturity of the policy or given to the nominees if the unfortunate happens and the insured does not survive the policy period
The bonus is the sum paid by the insurance company depending upon its performance to the insured party or their nominees. The most common forms of bonus are:
Reversionary Bonus: This bonus is declared at the end of each year by a life insurance company for its various policies and added on to the total sum payable to the insured party on the maturity of the policy or to his or her nominees in case the insured does not survive the term of the policy. The bonus is declared as a percentage of the sum assured and is generally of two types: simple revisionary bonus and compound revisionary bonus. In the former case, the bonus is not added to the sum assured and it does not increase the total sum assured. In the latter case, the bonus for each year is added to the sum assured. This has two consequences: firstly the sum assured increases, and secondly, the bonus figure for the succeeding years is more as the sum assured has increased from the previous year’s amount
Terminal Bonus: This bonus is also known as persistency bonus, and is paid at the end of the term of the money back plan or as a death benefit. It is generally paid to acknowledge the consistent payment of the premium by the insured over the term of the money back policy. Unlike reversionary bonus that has to be paid once declared, the terminal bonus is paid at the discretion of the insurance company, and is hence, not certain.
A money back plan has a large number of riders that the insured can easily add on their cover for a small additional premium. These riders help to increase the width of the insurance and guard against risks from various possible problems in life. Life insurance companies offer covers against various life and non-life risks including critical illnesses, accident and disability, hospital cash, etc.
Critical Illness: The critical illness rider guards against a host of critical illnesses that may arise during the life of the insured party. The rider enables the insured to get a guaranteed cash sum if they are diagnosed with any of the critical illnesses. The money may be used by the insured to pay off medical bills, renovate the house for critical illness patients, or for any other reason. Some common critical illnesses against which these riders provide protection include:
- Coronary problems such as heart attacks and bypass surgery
- Different types of cancer
- Paralysis or strokes that may be of a temporary or permanent nature
- Major organ transplants such as heart transplant, liver transplant, etc.
- Renal / kidney failure
Accident or Disability Benefit Rider: This rider helps to tide over any expenses that may arise from an accident that results in a disability or even death. The type of injuries suffered generally determines the amount paid by the insurance company to the insured or nominees. The insurance company will pay a part of the sum assured for something like temporary or partial disability while it will pay the whole sum assured amount for total or permanent disability or if the worst comes to pass.
Waiver of Premium: The waiver of premium rider guards against loss of the insurance cover of the money back plan if the insured is unable to pay the premium for any reason. The rider is extremely helpful for the person who is unwell or is unable to pay the premium due to some reason.
Accelerated Sum Assured: This rider is helpful as it allows the policyholder to get the sum assured on being diagnosed with any of the specified critical illnesses. The primary policy is terminated when the insurance company pays the sum assured. This rider is helpful as it helps the insured to get the sum assured without having to keep paying the premium or having to wait for the whole term of the money back plan to get the insurance amount. The critical illnesses generally include the six covered above under the critical illness rider, viz.,
- Coronary problems such as heart attacks and bypass surgery
- Different types of cancer
- Paralysis or strokes that may be of a temporary or permanent nature
- Major organ transplants such as heart transplant, liver transplant, etc.
- Renal / kidney failure
Term Rider: This is similar to a term life insurance policy and allows the insured to plan a term insurance payment to the nominees in the event of him or her not surviving the money back policy period. The insured or their nominees don’t receive any amount if the policyholder survives the period of insurance, just like a term policy
Hospital Cash Benefit Rider: This rider helps the insured to get daily cash for any hospital expenses incurred during the term of the policy. Most of the insurance companies require that the insured be hospitalised for a minimum period (generally 48 days). It also offers benefits for surgeries, intensive care unit stay, etc. The insurance companies generally provide certain exclusions such as a waiting for 1 or 2 years for certain conditions to be diagnosed for the first time and so on.
What do You Need to Understand Before You Buy a Money Back Policy
A money back policy is one of the smarter ways to plan your life investment cover. You not only receive money back over frequent intervals of the policy tenure, a sum assured at the end of the policy term, bonus amounts as declared by the insurer but also an adequate insurance cover for the whole of the policy period. In addition, some companies provide the benefit of extending the cover over the whole life of the insured, subject to certain limitations. Buying a money back plan makes sense for an investor who is looking for a cover that gives him guaranteed returns and also returns at certain stages of life to pay for large expenses that may occur in the future. An individual must consider and understand a few things before they opt for a money back plan.
A money back policy is an endowment plan with guaranteed return options over the period of the policy. The maturity benefit of the money back plan may be slightly less than what an endowment plan offers. However, if you consider the money value terms of both the pure-play endowment plans and money back policies, you will realise that the latter might actually offer better returns, considering factors such as inflation and CPI/WPI.
Understand what a money back plan offers As mentioned in other areas of this page, a money back policy offers a four-fold benefit:
- It offers a secure guaranteed way of getting returns before the plan matures (called survival benefits). The total survival benefit may be equal or sometimes slightly more than the sum assured. A part of the survival benefit is generally paid at the end of the policy term
- It provides a sum assured amount that accrues at the end of the policy period. This is a guaranteed amount that you will receive.
- You are likely to get two types of bonuses: a reversionary bonus that is declared by the insurance company each year as a percentage of the sum assured, and a terminal bonus that the company pays you for paying the premiums in a consistent manner
- It provides you with an insurance cover for the sum assured just like a standard life insurance cover
This is important as most people end up comparing a money back plan with a pure play investment option. A money back plan is an endowment life insurance policy that offers guaranteed returns after a few years of starting the plan in addition to the maturity value of the sum assured and the bonus, if any. Being an insurance policy, it also provides a cover for the whole amount of the sum assured in case the worst comes to pass and the insured does not survive the policy period. It is not a full-fledged investment option that will put your money in the securities market and get you good but risky returns. If you are looking for investment plans, then the best option would be to search for such products and not an insurance product.
Market investments are subject to risk and have high degrees of volatility. The best investment are those that balance the risks and the returns so that some of your investments are safe from the vagaries of the market. Experts agree that the best way to invest is to have a judicious mix of market investments with secure non-market linked ones that keep a part of your money safe. For such instances, customised endowment policies such as money back plans are the best as they provide safe and secure returns without you having to worry about your money.
Some Popular Money Back policies in India are:
• LIC Money Back Policy
• HDFC Money Back Policy
• Reliance Super Money Back Policy
• SBI Money Back Policy
• Birla Sun Life Insurance Bachat Money Back Plan
• AEGON Religare Flexi Money Back Policy
Compare benefits, features, premium and reviews with us and buy online.
What is Money Back insurance Policy?
Money back policy is a type of traditional life insurance plan. It provides the dual benefit of insurance and investment. It offers the lump sum assured at the maturity of the policy or in case of early death of the policy holder.
What are the features of money back Insurance policy?
The key features of money back insurance policy are as follows:
• Guaranteed returns: Since money back policy provides insurance cover along with safe investment option, there are guaranteed returns from this plan.
• Income on the maturity: Like traditional life insurance, money back insurance policy provides the sum assured at the end of the policy term.
• Income during lifetime: Money back policy ensures that the insured party receives a sum every few years (usually 5 years) after the completion of the policy tenure.
• Income on death: In case of the policy holder’s death the beneficiary will receive the sum assured as death benefit.
• Availability of add-ons: The policy holder can add on riders with the basic policy. Money back insurance policy riders include term rider, personal accident rider, disability rider, critical illness rider etc..
• Bonus amounts: There are two types of bonus amounts with this policy , namely, reversionary bonus and additional bonus.
What are the riders available with Money Back Policy?
The riders available of money back policy are as follows:
• Critical Illness rider: This rider offers a guaranteed sum if the Insured is diagnosed with some critical illness including major organ failure, coronary diseases, different types of cancer etc.
• Accident rider: In case the policy holder’s unexpected death due to accident the nominee receives a sum assured
• Disability benefit rider: This type is rider helps in case the policy holder is left paralyzed due to some major accident in his life.
• Hospital cash rider: The policy holder receives daily cash for hospital expenses in case of any medical emergencies.
• Term rider: This rider is a kind of death benefit. It is the sum assured handed over to the nominee only in case of premature death of the policy holder before the completion of the policy tenure.
• Waiver of premium rider: This rider prevents the policy from getting lapsed in case the policy holder fails to pay regular premiums due to some reason.
• Accelerated sum assured rider: This is a type of critical illness rider. This rider offers the sum assured to the policy holder immediately if a critical illness is diagnosed. The policy holder doesn’t have to pay the premiums any longer. The policy terminates but the total sum assured is received.
since Money back policy involves investment, is it risky?
All investment products involve some amount of risk. Only Money Back Policy is a type of endowment plan that is less risky and guarantees good return.
What is the tax benefit with this plan?
There are tax benefits with this plan. By opting for money back plan you can reduce your tax liability. If the maturity amount is more than five times the premium paid during policy tenure, the sum assured gets exempted from Income Tax deduction.
Who is most suitable to buy Money Back policy?
Anyone who wants to make investment through low risk instruments, one who wants both wealth creation and life insurance, one who expects good returns from his investments, and also who wants to get paid during the term of the policy to meet different requirements in life, can buy Money back policy.
What if I fail to pay my regular premiums?
If you fail to pay your premium on time the policy will enter Grace period. If you again fail to pay your due premium during this period your policy will be lapsed. But if you already have the Waiver of premium rider added to your basic policy, the policy will be saved from being lapsed.
What is the premium payment frequency of Money Back plan?
There is no fixed premium Payment frequency of money back plan. The frequency is generally of quarterly, half yearly or yearly basis. However, it completely depends on the decision of the Insurance Company.
What are the popular Money Back Policies in India?
The most popular Money Back policies are as follows:
1) LIC Money back with profit
2) SBI Life – Smart Money back gold
3) HDFC Life Super Income Plan – Money Back policy
4) Reliance Super Money Back Plan
5) Birla Sun Life Insurance Bachat Money Back Plan
6) AEGON Religare Flexi Money Back Policy
What are the advantages of Money back policy?
Here are a few advantages of a money back insurance policy:
• Money back policy is the only insurance policy that provides the triple privilege of survival benefit, maturity benefit and insurance cover.
• It provides regular payouts during policy term.
• It is an insurance policy cum a long term investment plan with guaranteed returns
• It ensures regular income and long term savings
• It provides income Tax benefits
• It is less risky
• Death benefits are available with this plan
• A number of riders are also available with this plan