Money Back Policy - Compare Money back Policy Plans online in India

Traditional insurance policies pay an assured lump sum in the event of the policyholder's death to the beneficiaries or dependents or nominees.  This is called a death benefit. Money back insurance plans, instead, pay out the same benefits in the form of numerous guaranteed “survival benefits" which are scheduled out evenly throughout the policy duration. It is like an endowment plan with the benefit of regular liquidity.

Importance of Money back Policies

Money back policies provide periodic paybacks, which ensure a steady source of income and help policyholders meet expenses during different stages of life within the policy term.

These policies offer the benefits of an insurance policy and an investment. They ensure a steady income instead of merely providing a lump sum in case of the policyholder's unfortunate demise.

These policies offer a guaranteed return on investment over and above the periodic pay-outs and insurance cover. Thus, these are ideal plans for individuals looking for protection as well as a source of income.

Besides the basic standard life insurance offered by regular insurance plans, a money back plan offers a maturity benefit and a regular income in the form of ‘survival benefits.’

Therefore, a Money Back Policy provides the policyholders with a secure and assured return on investment apart from providing them with an opportunity to expand their wealth through investment opportunities.

How Do Money Back Policies Work?

Money back policies are a type of life insurance policies that offer Survival Benefits as well as investment opportunities to the policyholders in addition to Maturity Benefits. Therefore, an average money back policy with a 20-year tenure would pay the ‘Survival Benefit’ a few years after the commencement of the policy. This periodic payout is typically around 20% of the Sum Assured, while the remaining balance is paid out along with a bonus when the policy matures. If the insured individual expires before the policy expires, the nominee receives the Death Benefit which comprises the entire Sum Assured and the policy is terminated.

Features of Money Back Policy

A few distinct features of the money back policies set it apart from other life insurance products.

• These plans provide low-risk investment options to the policyholders apart from insurance coverage.

• These policies provide a regular source of income to the policyholders in the form of ‘Survival Benefits’ during the policy term.

• If the policyholder expires during the policy term, the nominee receives the entire Sum Assured irrespective of the amount that was already paid through the Survival Benefits.

Money Back Life Insurance Benefits

• Insurance cover during the policy term

• Regular payouts throughout the policy term

• Functions as an insurance policy and a long-term investment with good returns

• Tax benefits

• Less risky than conventional investments like mutual funds that offer similar returns

• Helps in making long-term savings and provides regular income.

• Disburses amounts regularly

• Certain plans extend the insurance coverage of guaranteed death benefits up to when the policyholder attains the age of 100, even after the maturity date of the policy and the last survival period.

• Optional riders providing cover for specific illnesses, critical illnesses, disabilities, etc.

Choosing a Money Back Policy

One must be careful while choosing a money back policy so that they receive the maximum benefits. While choosing a money back plan, people should focus on the following:

• Check the policy tenure - the average tenure is typically around 20 years.

• Check the terms and conditions of the Survival Benefit - ascertain the percentage of the Sum Assured to be paid out in installments so that it is enough to cover the necessary expenses.

• Check the type of investments available through the policy - verify the timeline of the pay-outs; some plans pay every five years, others may have a different timeline for payouts.

• Check the tax benefits - these policies typically offer tax benefits if 20% of the Sum Assured is paid out as Survival Benefit.

Eligibility Criteria for Money Back Policy

Potential policyholders need to meet the following criteria to be eligible for a money back policy:

• Should be capable of paying the Sum Assured as per the policy guidelines

• Should be within the qualifying age bracket as required by the particular policy

Documents Required for Money Back Policy

The following documents are required for a money back policy:

• Age proof

• Address proof

• Duly filled up application form

• Medical reports if applicable

Money Back Policy Calculator

In order to compute the premium amount and the benefits to be accrued by a money back policy, some insurance companies provide policy calculators. The calculators can be used to calculate the approximate returns and the costs associated with the policy. Potential policyholders can accordingly apply for a policy after going through the figures to check if their requirements are being met. These calculators compute the average premium that has to be paid, based on the tenure of the policy and the Sum Assured. A few additional details like the age of the policyholder may also be considered for calculation. Upon entering the necessary figures, the tool calculates the premium to be paid and the maturity benefit payable.

Money Back Policy Riders

Most money back policies provide the additional option to add an extra cover which is not included in the original policy terms. These add-on benefits are known as riders. The riders cover additional events, such as accidental death, hospitalization costs, permanent disability, critical illness, etc.

The riders provided with money back policies usually differ from one insurer to another. It may also depend on several other variables like the policy tenure. These are the general list of riders available with money back policies:

Accidental Death or Permanent Disability Benefit Rider: it provides the policyholder with a cover in case he/she is permanently disabled. It also covers for the policy holder's accidental death in which the nominees receive the additional benefit.

Critical Illness Rider: it provides financial assistance to the policyholder if he/she is diagnosed with any of the critical illnesses as defined by the rider.

Term Rider: it provides a monthly income to the beneficiary or nominee in the event of the policyholder’s death.

Hospitalization Rider: it provides the policyholder with financial aid in paying hospital bills in case policyholder is hospitalized. Usually, a daily allowance is assigned to the policyholder to cover the expenses for the concerned treatment.

Who are Money Back Policies for?

The decision to purchase a money back insurance policy should be well thought out. One must consider the associated benefits, the returns on investment, etc. and compare them against those provided by similar investments.

A healthy individual looking to purchase a life insurance cover along with an investment to help save tax as well as receive regular returns can choose to purchase a combination of financial products. Alternatively, they may opt for a single money back insurance which does the same thing but at a lower rate of returns. before taking a decision, one must note that the risk involved in the investment and check if it is proportional to the returns they will receive.

Risk-takers may choose to purchase a life insurance policy and separately invest in mutual funds, etc. and expose themselves to the associated risks. However, risk-averse individuals, who consider their life savings to be too valuable to leave to chance, must go for an endowment life insurance plan with a money back policy.

A money back plan is much less risky than a mutual fund investment. It is not only a tax saving investment with guaranteed returns but also provides comprehensive life insurance cover. A money back plan is basically a win-win situation for the investor and his dependents/nominees.

However, the returns on investment from a money back insurance plan are not as high as the returns offered by mutual funds, equity funds, debt funds, etc. Subscribing to two separate financial products – a life insurance policy as well as a product directed to give handsome returns on investment – will undoubtedly pay off better. However, one must note that money back policies are basically insurance policies providing an added benefit of giving a return on the premium paid. They must not be compared to high return investments in the first place. Individuals must consider their risk appetite and their requirements before taking a major financial decision.
 

Popular Money Back Plans

LIC Money Back With Profit

• Offers comprehensive life insurance cover against death.

• Sum Assured plus all bonuses are payable at death as a lump sum

• Survival benefits

• Surrender values available.

• Popular policies - LIC Money Back Plan 20 Years, LIC Bima Bachat.

HDFC Life Super Income Plan

• Limited premium paying terms - 8, 10 or 12 years.

• Guaranteed yearly income - 8, 10, 12 or 15 years.

• Death benefit - coverage against policyholder's death throughout the premium paying term and the payout period.

• Medical tests not required; a short medical questionnaire is to be completed.

• Regular income, payable yearly, at 8.0% - 12.5% of the Sum Assured on Maturity

SBI Life – Smart Money Back Gold

• Survival benefits - 110% of the Sum Assured paid until maturity.

• Options for four terms – 12, 15, 20, 25 years.

• Options for premium paying modes - Monthly, quarterly, half-yearly, yearly.

• Four riders - Accidental Death Benefit Rider, Accidental Total and Permanent Disability Rider, Preferred Term Rider, Critical Care 13 Non-Linked Rider.

• Tax benefits.

Reliance Super Money Back Plan

• Money back benefits - paid every five years until maturity.

• Increasing regular monthly income.

• Five policy term options - 10, 20, 30, 40, 50 years.

• Premium paying term is half of the policy term.

• Options for premium paying modes - Monthly, quarterly, half-yearly, yearly.

• Maturity addition - payable at the end of the policy term.

• Loyalty addition - payable at the end of the premium paying term.