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Money Back Plan

What is Money Back Plan?

A Money Back Plan has both the insurance and investment component. With investment component, the life insured receives a specific percentage of the sum assured at regular intervals in terms of money backs or Survival benefits, if the insured is alive. In case of survival till end of the policy term, the remaining sum assured is paid as the Maturity Benefit. With insurance component, in case of the demise of the insured during the policy term, the entire sum assured is paid as the death benefit to the nominee and the policy gets terminated. It is a type of endowment plan with the benefit of liquidity and is best for those who want to get back money from an insurance plan in periodic installments.

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Why should I Buy Money Back Plan?

Following are the top reasons to buy a money back insurance plan.

Fulfill Financial Obligations

At different stages of your life, you need to fulfill financial obligations such as children’s education, marriage, loans, etc. A money back plan provides amount in regular intervals of time to assure you can easily meet those obligations.

Achieving Financial Protection

Life in uncertain and it’s quite essential to ensure the financial independence of your family when you are not there. A money back plan provides the death benefit to your family/nominee in the event of your demise.

Ensure Guaranteed Payouts

A guaranteed income in the form of money backs provides a robust financial standing and backs you in tough times. A money back plan provides provides a specific percentage of the sum assured at regular intervals of time and thus ensures guaranteed payouts.

For Fixed Returns

By investing in a money back plan, you are provided with assured returns. As it is not a market-linked plan, insurers can assure you to provide payouts on fixed intervals and a maturity amount as mentioned under the policy.

For Investment Safety

As it is not a market-linked product, the money back plan is considered as a safer investment option especially to risk-averse investors. Under this plan, a fixed amount is provided as the payouts and no market risk attached to the policy.

What are the Benefits of Buying a Money Back Plan?

Life Cover Benefit

This plan provides you the life cover and in the event of your untimely demise during the policy period, the insurer offers the Sum Assured amount to your family and thus ensures financial security to the family.

Survival Benefit

As a money back plan offers payouts at regular intervals of time, so you can easily meet expenses at different stages of your life. Money Back Policies thus, help you meet financial obligations with ease.

Bonus Benefit

A money back policy offers bonuses during and at the maturity of the policy. Insurers share some part of its profits to its customers in the form of bonus payments. Bonuses tend to increase the payouts of your policy.

Wealth Creation Benefit

You only need to invest small amounts that later on gives you back a huge sum. Money back policies are an attractive option for creating wealth that you can use to meet huge expenses such as child’s marriage, paying off loans, or use it as a corpus for post-retirement time.

Loan Benefit

Money back policies offer the option to avail the loan and to obtain a loan, you need to fulfill some conditions such as payment of premiums for at least 3 years’ policy period. The loan facility helps you meet the financial needs of your family.

Surrender Value Benefit

Surrender Value is paid by the insurer in case the policyholder wants to terminate the policy before its maturity. Several insurers offer surrender benefit only when you have paid all the due premiums in full for at least 3 policy years. It is not advisable to exercise this option, but you may opt for this benefit in case of any urgent need of cash.

Maturity Benefit

A money back plan offers a guaranteed lump sum plus bonuses at the maturity of the policy, as applicable under the policy.

Rider Benefit

Several riders such as accidental death benefit, critical illness rider, income benefits, and disability rider can be attached to your policy. It helps you enhance protection in the money back policy.

Tax Benefit

You can avail tax benefits under section 80 C for the premium paid towards running the money back insurance policy. The payouts of the insurance policy are tax free under section 10 (10) D of the Income Tax Act, 1961.

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How is my Money Back Plan Premium Calculated?

Following are the factors that help calculate the premium amount for a money back policy.

Age

Age plays an important role When it comes to calculating the premium amount. The age factor determines the premium amount charged towards the life cover for your money back plan. If you buy the plan at an early age, you will be charged with the lower premium amount than the one buying at an older age.

Smoking/Drinking Habit

Consumption of alcohol, tobacco, and other nicotine products also affect the premium amount for the life cover in the money back plan. Intake of these products is quite detrimental to health, and it increases the life risk of the policyholder and thus, insurers charge higher premiums to cover the risk.

Present Health Condition

Your health condition also determines the premium to be paid by you for buying the life cover. If you suffer from any severe illnesses such as cancer, diabetes, or heart attack, you will be charged with the higher premiums.

Gender

According to the recent statistics, men have lower life expectancy than women and thus have higher life risk. In order to provide the male policyholder a life cover, insurers charge higher premiums.

Nature of Profession

The nature of your profession also makes a major impact towards deciding the premium amount for the life cover in the policy. In case you are involved in a high risk job such as driver, stuntman or working in an industry that carries high risk, such as the mining industry, Oil & gas, and fisheries, you are charged with the higher premiums for the life cover.

What are Some Smart Buyings Tips?

Following are the key tips you may refer before buying a money back plan.

Check on Financial Goals

Prior investing in a money back plan, it is important to assess your financial goals and then invest accordingly that would ensure that you will get payouts at different stages of life that can help meet huge expenses such as children’s education, marriage, debts, etc. Assessing the financial goals wisely help you choose the amount that you should invest to obtain huge payouts later on.

Choose Right Life Cover

A money back plan also provides the life cover to ensure financial protection for your family in case of your untimely demise during the policy period. When choosing the life cover, you firstly need to assess your financial obligations such as children’s education, marriage, or other day to day expenses of your family, so they can easily maintain the similar lifestyle in case of your absence.

Invest Early

Buying a money back plan early in your life helps you build a huge corpus at the maturity of the policy or your family will receive in case of your death during the policy period. Investing in the plan in the younger age also helps you get the life cover at the lower premium amount.

Assess Plans Online

Before buying a money back plan, it is recommended to compare the plans from different insurers and choose the one as per your and your family needs. You can grab discounts on premium amount when buying the plan online.

Choose Riders/Add-on Covers Wisely

Riders increase protection for your money back plan and all these are available at an additional cost. It would be thus a prudent decision to assess the benefits available with the riders/add-ons and choose.

Read the Fine Print

Knowing all about the policy terms & conditions, its benefits & exclusions are quite important. It is advisable to read through the policy wordings, assess what the policy is all about, and then decide to buy the policy.

Is there any Add-on Cover/Rider with Money Back Plan?

Following are the rider options to attach to your money back insurance policy.

Accidental Death Benefit Rider

This rider provides extra financial benefits to the nominee in case of death of the insured arising from an accident. The insurer pays the accidental death sum assured to the nominee, which is over & above the base sum assured of the policy.

Term Rider

This rider provides the death benefit to the nominee, which is additional to the base policy sum assured in the event of death of the life insured.

Critical Illness Rider

This optional rider covers the medical costs incurred due to severe illnesses such as a Heart attack, Cancer, and Major organ transplant, which may disable an individual that result in loss of earnings. Typically, the covered provided under this rider is the sum assured and paid additional to the sum assured in the base policy. The benefit under this rider is paid upon diagnosis of the illness.

Waiver of Premium Rider

This rider waives off all the future premiums in the event of death or disability of the life insured. The policy continues till its maturity. It enables the policyholder to enjoy benefits of the insurance policy, even when they cannot work.

Income Benefit Rider

By choosing this rider, the assigned nominee/family of the life insured is provided with the monthly income apart from the lump sum payout they get upon the death of the insured. The payout and other benefits are subject to the terms mentioned under the rider benefits.

Disability Rider

This rider provides monthly income to the life insured in case of permanent or temporary total or partial disability arising due to an accident or illness. The payout differs and it depends on the kind of disability occurred.

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What is Not included in my Money Back Plan?

Your money back life insurance plan has the following exclusion.

Suicide

When occurred within 12 months, from the date of commencement of the policy, the nominee is entitled to receive 80% of the premiums paid only when the policy is in-force.When occurred within 12 months, from the date of revival of the policy, the nominee is entitled to receive an amount which is higher of surrender value (on the date of death) or 80% of the premiums paid.