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.

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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, such as the ICICI Pru Cash Advantage Plan, 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

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

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.

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

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.

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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.

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