Everything One Should Know About Money Back Plans

Financial goals can vary, depending on an individual's needs and life stage. Some people may want to buy a home, some may want to plan their retirement or fund their child’s future education, and others may wish to travel the world, get a vehicle or upgrade their existing one. The list can be endless.

Investing in the right financial products is key, to achieving your dreams. can be a bit tricky to plan in the case of multiple goals. Fortunately, some products can help you target two goals at once. A money back life insurance policy is one ideal combination of insurance and savings. It can offer dual financial protection and help you live a stress-free life. Keep reading to find out more about a money back policy.

What is a money back policy?

A money back insurance policy is a savings plan that lets you safeguard your loved ones with insurance coverage. At the same time, it can help you prepare for your future goals with the savings component of this plan. A money back insurance plan offers life protection in the form of death benefit against an untimely death during the policy term and fixed money back, in the form of specified amount per annum, for a specified period of time as chosen during the inception of the policy.

How does a money back plan work?

As the name suggests, a money back plan pays back your money at regular intervals. On surviving the term, your money is given back to you in a series of instalments in the form of survival and/or maturity benefits. The insurance company may also give bonuses, if applicable under the terms and conditions. Additionally, in the unfortunate event of the policyholder’s demise, the sum assured on death is paid to the nominee to ensure the family’s financial protection.

Why do you need to buy a money back policy?

Here are some reasons to invest in a money back plan:

• Liquidity:

  A guaranteed money back policy  gives you money in the form of regular payouts during the policy term and on surviving it. So, you can create a pool of money for a time when you may need it or for your retirement by investing in these plans.

• Life protection:

  No matter what, the insurance covers your loved ones in the case of an unfortunate event during the policy term. So, you can be rest assured that your family members will have adequate financial resources for their well-being, even in your absence.

• Low-risk savings:

  Money back policies are usually considered as low to medium risk plans that are not market-linked. So, if you as a individual want to avoid high risk, you can rely on these plans, since they are usually not impacted by market volatility.

Features and benefits of a money back plan

Here are some features and benefits of a money back plan:

• Life protection in the unfortunate event of death during the policy term
• The option to add riders to enhance the plan’s protection
• Sum Assured and maturity benefits
• Fixed payouts at regular intervals for financial liquidity
• Tax benefits under Section 80C and Section 10(10D)

Eligibility criteria and documents required to buy a money saving plan

Eligibility: You must be between the ages of 18 and 58 years

Documents required:

• Address and identity proofs like PAN Card, Aadhaar Card, Passport, etc.
• Age proofs like Defence ID card, Valid passport, Driving License, Pan Card, class tenth passing certificate
• Bank account details with proof like cancelled cheque or Passbook copy
• Recent medical or health reports

Closing note

A super money back plan can be a helpful financial asset if you want to save for your future needs and keep your family financially safe at the same time. It offers the perfect blend of insurance and savings and caters to multiple needs at once.   

Frequently Asked Questions (FAQs)

• Is a fixed money back plan risky?

A money back plan is considered as one of the low to medium-risk savings options that can offer financial security for your family. It is not market-linked and can provide you with regular payout, in the form of a lump sum or a selected payout option, as long as you pay all the premiums.

• What is better between a money back insurance policy and a term insurance plan?

Both plans have their unique relevance and benefits respectively. A money back plan offers two components – insurance and savings. In a money back plan, the protection of insurance tends to be lower while savings tends to be higher. On the other hand, a basic term insurance plan offers higher insurance protection at affordable premiums but no savings as such. However, a term insuance plan with a return of premium term option, offers insurance protection along with some savings in the form of maturity benefits but at a relatively higher premium. There are no better or worse options, and you can take your pick as per your needs and goals.

• Are money back plans expensive?

The premium for a money back plan can depend on the policy term, sum assured, riders, etc. While these plans are not necessarily expensive, you can compare different policies and insurers to get an idea of the costs and pick the one that fits your pocket.

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Mktg/Blog_MoneyBackPlans/V1/Oct2022

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