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Money-back plans are just like endowment plan with only a single difference that the payout can be staggered with the policy term period. In this, some part will be returned to the insured on time to time basis as per the policy tenure. In case of death full sum assured amount will be paid out. It also includes bonus. Because of these additional features, the premiums of this plan are higher than the normal life insurance plans online.

Why you need to buy a Money Back Policy?

Money back insurance policy is a good option from all who want to have an insurance based investment but they also want some liquidity in the same. With a money back plan or money back scheme, you will get life insurance cover along with the option of income profits. In case where you are a young individual, the policy will assist you at different stages of life.

Those who have investing in money back life insurance plan will get regular intervals for different financial needs that includes purchasing new vehicle or home, medical care needs, clearance of debts such as loans and other liabilities funding the wedding of yourself, siblings or children, etc.

Money back policies being endowment policies, the risk factor of money back plans is usually low and therefore you don't have to worry that your investment will not yield good results. Almost all money back policies gives guaranteed and fixed returns, that will allow you to plan your finances well.

How does Money Back Policy work?

When you invested your money in a money back policy, then the insurance company will tell you about the tenure for which you have to make premium to keep your money back plan active. Some policies require you to pay premiums throughout the tenure, while in some policies you need to pay for a limited number of years only.

If the insured meets his maker before the policy's maturity, the nominee/s will get the sum assured and death benefits as per the policy. Even if money back payouts have been made before the death of the insured person, it will not affect the sum guaranteed as death benefit. You can also add riders to the money back plans just to increase your protection levels and get higher death or maturity benefits.

For the same, you have to pay a slightly higher premium if you are adding riders to the policy. Maturity benefits, along with sum assured and accrued bonuses, are given to the policyholder if he or she outlives the plan.

Features and Benefits of a Money Back Policy:

A money back life insurance plan offer the required life cover along with the guaranteed returns on survival. It refers to be an ideal insurance product for all those people who want to offer the required financial assistance to his/her family in case of his/her unfortunate demise and it is also a good source of another income that would be beneficial for the long run.

• Death Benefit: In case of demise of the insured, the nominee as per the policy's document will receive the death benefit. The death benefit amount is equal to the sum assured and decided by the insured at the time of purchase of the policy. Additional bonuses accrued, if any, will also be provided to the nominee. The death benefit of a money back policy is a guaranteed income.

• Maturity Benefit: If the insured survives during the policy's tenure, then he/she will be liable to get the maturity benefit. The maturity benefit is equal to a percentage of the sum assured amount chosen by the insured. Also, any bonuses collected during the tenure of the policy will be included in the maturity benefit as well.

• Survival Benefit: The survival amount basically refers to the amount where the insured is alive and healthy. The regular payouts related to the same will be to spread through the term and it usually carry a fixed percentage of the sum assured which is decided by the insured. The installments can be utilized for expenditures at important stages of the insured's life like a wedding, children's education funds, down payment for a new house, etc. However, if the policyholder passes away during the policy term, the survival benefit payouts will cease, the death benefit and bonuses, if any, will be paid out and the policy will be terminated.

• Bonuses: Many moneyback polices come out with the option of reversionary bonus. A reversionary bonus is a bonus declared by the insurance company at the end of each year. The amount is equal to a certain percentage of the sum assured. The reversionary bonus is either simple or compounded. The simple reversionary bonus will not be assded in the sum assured every year, the compound reversionary bonus is. Apart from this, the bonus will be calculated with the assured amount, so the bonus increases over time. Money back policies also provides terminal bonus for the on-time and consistent payment of premiums by the policyholder. It is paid with the maturity benefit or the death benefit and is not fixed since it is at the discretion of the insurance company.

• Riders: Almost all life insurance companies offers certain riders with the life insurance policy to raise the basic policy type. The add-on riders charge an extra premium and cover the insured against several risk types. Money back policies also provides critical illness riders, accident/disability rider, term rider, hospital cash rider, waiver of premium rider, or accelerated sum assured rider. Each of the riders are designed to lend a hand to the policyholder in times of need.

• Tax benefits: Tax benefits can be enjoyed by policyholders who pay premiums towards the money back policy. The benefits are defined under section 80C of the Income Tax Act, 1961. Also, the survival benefit, maturity benefit, and bonuses are tax-free.

Money back policies is the best option for those who are looking for optimum life cover and assured returns.