Money Back Policy
If you want to secure the future of your loved ones and yourself, a money back policy can be the ideal insurance product for you. Read on to know why.
What is a money back policy?
A money back policy is a type of life insurance product that provides the dual benefit of investment and protection. With a money back policy, you can receive returns at regular intervals during the policy term. A money back policy also provides a life cover that keeps your loved ones financially protected in case of an unfortunate event.
COMP/DOC/Apr/2022/294/0155
How does a money back policy work?
Here’s an example to understand how a money back policy works:
- Suppose you purchase a money back policy, you will receive a regular income right after the end of the premium payment term. The guaranteed1 cash benefit* can be received monthly or yearly, as per your requirements
- At the end of the policy term, you will receive a guaranteed1 amount along with bonuses^
- The life cover in a money back policy will provide your loved ones with a lump sum amount in case of an unfortunate event
1 Terms & Conditions apply
Why do you need to buy a money back policy?
Below are some reasons you need to buy a money back policy:
Blend of insurance and investment
Money back policies offer a unique combination of insurance and investment. They allow you to enjoy the benefits of both financial protection and wealth creation.
Guaranteed returns
Money-back policies provide guaranteed4 returns on your investment. They also offer periodic payouts on an annual basis. They can be ideal if you are seeking a stable and predictable source of income.
4 T&Cs apply
Insurance coverage
In addition to the guaranteed4 returns, money back policies offer life insurance coverage#. This ensures the financial protection of your loved ones in case of an unfortunate event during the policy term.
Wealth creation
A money back policy can help with wealth creation through guaranteed4 returns. They can help you achieve different financial goals and be financially secure.
Personalised features
Money back plans come in various types and can be tailored to different life stages. You can use them to save for your child’s higher education or your retirement. They are flexible and can be customised as per your requirements.
COMP/DOC/Apr/2024/154/5863
Features of money back policy
Below are some of the key features offered by a money back policy:
Guaranteed1 returns
Money back policies are low-risk policies that are not market-linked. They provide you with assured returns at regular intervals during the policy term. The returns are fixed at the time of the purchase of the policy.
1T&Cs apply
Flexibility
A money back insurance policy offers flexibility in the payment of premiums. You can choose to pay the premium monthly, half-yearly or yearly. Additionally, the plan lets you choose from monthly or yearly withdrawals, allowing you to align the plan to your financial needs.
Income3 during the policy term
Money back policies provide you with periodic payments at regular intervals throughout the policy term. These payments can be used as a secondary source of income3 to meet your financial goals.
Bonus2 amounts
A money back policy also offers extra payouts in the form of bonuses2 at the end of the policy term. These bonuses increase the overall returns from the policy.
Tax saving
A money back insurance policy qualifies for tax benefits under the Income Tax Act, 1961. You can claim an annual deduction of up to ₹ 1.5 lakh subject to conditions prescribed under Section 80C~ of The Income Tax Act, 1961. Moreover, the maturity and death benefits are exempt subject to the conditions prescribed under Section 10(10D)~ of the Income Tax Act, 1961.
Benefits of a money back policy
Accumulated returns:
Once the policy term ends, you receive a guaranteed amount as maturity benefit. This can be used to fulfil your financial goals like buying a house, child’s education, retirement goals, and much more.
Added bonus:
You receive higher returns in the form of bonuses, such as a revisionary bonus, or terminal bonus that are added to your policy over time.
Secondary source of income:
A money back policy offers a regular income. You start receiving this income either monthly or yearly, right after your premium payment term ends. It offers a continuous stream of money at regular intervals which can act as a secondary source of income.
Life cover#:
Along with the investment, the life cover offered in the plan provides financial security to your loved ones in case of an unfavourable event.
Maturity Benefits
Upon reaching the end of the policy term, a money back life insurance policy offers maturity benefits. These are provided as a lump sum to the policyholder and can be used to fulfil long-term financial goals and provide financial security.
Death Benefits
In the unfortunate event of the life insured's passing, a money back insurance policy provides death benefits to the nominee. This ensures financial support and stability for the family during a difficult time.
Tax benefits:
A money back policy is primarily a life insurance plan. Hence, the premium paid is tax-exempt~ up to ₹ 1.5 lakh annually under Section 80C of the Income Tax Act of 1961. The benefits received are also tax-free~ under Section 10(10D) of the Income Tax Act of 1961.
Eligibility criteria for buying a money-back plan
Some money-back plans may have many eligibility criteria such as minimum and maximum age to purchase the plan, minimum and maximum age at maturity, and more. These can differ basis the plan you choose. Look for a plan that meets your requirements.
How to choose a money back policy
Below are some of the factors that you can consider while choosing the right money back policy for yourself:
Your financial goals
The first step to choosing the right policy is identifying your financial goals. You may have goals such as buying a house, traveling, your child’s education and marriage, and more. Identifying your goals helps you calculate the amount you would require to meet them. Hence, it is important that you identify your financial goals and pick a suitable money back policy accordingly.
Time horizon of investment
Depending on your financial goal, you would need to invest for a shorter or a longer duration. Investing for a longer duration allows more time for your money to grow, thereby providing you with better returns. Additionally, with a longer time horizon of investment, you can consider investing small amounts over time, thereby making it easy on your pocket.
Premium amount
Basis the amount you would require to meet your financial goals and the time horizon of investment, you can calculate the premium amount you would need to invest regularly. Money back policies provide you the flexibility to choose the premiums you want to invest as per your requirements. You can also consider your income, liabilities, other financial goals, and more such factors while deciding the premium amount you want to invest towards your money back policy.
COMP/DOC/Jul/2022/117/0743
Things to know before buying a money back policy
Understand the features
Understand how a money back policy works so you can fully benefit from investing in such a plan. It helps to get a clear view of the plan you wish to invest in, including the kind of bonuses the company offers, the maximum and minimum life cover available under the plan, the credibility of the insurer, rate of return, among other things
Stay informed of the exclusions
A money back policy may not offer riders, such as critical illness cover, personal accident cover, or any such add-ons. Make sure you check the exclusions before purchasing a policy
Premium
It is essential to pick a money-back insurance policy with a premium that fits your budget. In addition to this, you should look for options such as flexibility to pay your premiums monthly, half-yearly, yearly or all at once as per your requirements. You may also want to pay the premiums till the end of the policy term or for a limited period chosen by you. Check if your policy provides you with these options.
Assured amount
A money-back plan is primarily a savings plan. Therefore, you may want a plan that provides you with assured returns. In such a case, you may want to look for a plan that provides you with returns that are fixed at the time of the purchase of the plan. The returns from such plans do not get affected by market fluctuations.
COMP/DOC/Oct/2022/2510/1368
People like you also read ...
