Money Back Plans
The Money Back policies come under the array of Insurance-cum-Investment Products. Money-back
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The Money Back policies come under the array of Insurance-cum-Investment Products. Money-back plans are a modified version of endowment plans with one basic difference that is the payout is staggered through the policy tenure. A certain part of the sum assured is given back to the policy holder at regular periodic intervals throughout the policy term.
In case of death, the entire sum assured is paid out to the nominee irrespective of the payouts already made. The bonus amount is also calculated on the complete sum assured and not the balance money left. Given these two reasons, premiums on money-back insurance plans are higher than endowment plans.
Now, if you are a conservative investor, this type of a plan serves as safe and secure investment choice, whereby you get good returns with an element of guarantee. You can start by investing small amounts year after year and can be assured of a large lump sum of money periodically, say every 5 years.
Let us understand this policy through this example:
Snehal Agarwal has opted for a Money Back Life Insurance Policy. His plan, for a policy term of 25 years, has a Sum Assured of 10 lakhs. He would be required to pay premiums for 25 years and under the plan he would get back a part of the Sum Assured at regular intervals. For example, for a policy term of 25 years, he would get 15% of Sum Assured after every 5th, 10th, 15th and 20th year of the policy tenure i.e. he gets 15 X 4 = 60% of the Sum Assured as Survival Benefit. On Maturity of the policy he would get the remaining 40% of the Sum assured.
Benefits of Money Back Plans:
- Survival Benefit: Under the Money Back Plans, a certain percentage of the Sum Assured money back to the Life Insured after a specific interval of time example at the end of each of 5th, 10th & 15th policy year or 5th ,10th ,15th ,20th ,25th year, depending on the policy tenure.
- Maturity Benefit: In case you, the Life Assured, survive the stipulated date of maturity, the balance pay out of the sum assured, which is usually 40% is paid to you as a lump sum at the end of the policy tenure.
- Death Benefit: In case you die during the policy term, then the Death Benefit would be paid to your nominee and the policy would be terminated. No further money would be paid on the intervals.
- Optional Benefit: You can opt for The Accidental Death and Disability Benefit Rider under an in-force policy at any time within the premium paying term by payment of additional premium. The cover will be available throughout the policy term provided the Policy hasn’t lapsed due to non-payment of premiums and is in-force for the full Sum Assured as on date of accident. In case of accidental death, the Accident Benefit Sum Assured will be payable as lump sum along with the death benefit under the basic plan. In case you suffer from a permanent disability arising due to an accident (within 180 days from the date of accident), an amount equal to the Accident Benefit Sum Assured will be paid in equal monthly instalments spread over 10 years and future premiums for Accident Benefit Sum Assured as well as premiums for the portion of Basic Sum Assured which is equal to Accident Benefit Sum Assured under the policy, shall be waived for you.
If you surrender an in-force basic policy (which has acquired Surrender Value, which is normally after a few years of the premium having been paid) to which this rider is attached, a proportion of additional premium charged in respect of cover after premium paying term shall be refunded to you.
Tip : A Money Back Policy is an endowment with a liquidity advantage. If you requirement of funds at a regular and specific intervals for events like children’s education, retirement holidays etc. you should invest in MONEY BACK POLICIES.