A Money Back Policy is an investment option that allows you to gain a guaranteed return on your investment while also providing comprehensive life insurance coverage. It is a type of guaranteed return plan that provides dual benefits of protection and investment.
The money back policy pays out the sum assured as ‘survival benefits’ at regular intervals during the policy term, calculated as a percentage of the sum insured. The amount received through a guaranteed return plan is tax-free under Section 10(10D) of the Income Tax Act, 1961.
By the end of this post, you’ll have a better understanding of money back policies and how they can fit into your financial planning.
What is a Money Back Policy?
A money back policy is a type of life insurance policy that provides policyholders with periodic payments of a portion of their premiums during the policy term, in addition to a death benefit upon the policyholder’s death. These periodic payments, known as “survival benefits,” are typically paid out at specific intervals, such as every five years or at the policy’s maturity.
Money back policies are an attractive option for policyholders who want the security and protection of a traditional life insurance policy, but who also want to receive some of their premiums back during the policy term. The survival benefits paid out under a money back policy can be used for any purpose, such as paying for education, saving for retirement, or covering unexpected expenses.
How does a money back policy lead toward guaranteed returns?
One of the key benefits of a money back policy is that it provides policyholders with the potential for guaranteed returns through its thorough structure. This structure includes the following key features:
- Death benefit
A guaranteed return plan provides a death benefit to the policyholder’s named beneficiaries upon the policyholder’s death. This death benefit can provide financial protection and security to the policyholder’s loved ones in the event of an unexpected death.
- Survival benefits
In addition to the death benefit, a money back policy also provides policyholders with periodic survival benefits during the policy term. These survival benefits are paid out at specific intervals, such as every five years or at the policy’s maturity, and can be used for any purpose, such as paying for education, saving for retirement, or covering unexpected expenses.
- Maturity benefit
A money back policy also provides a maturity benefit upon the policy’s expiration. This maturity benefit is a lump sum payment that is paid out to the policyholder upon the policy’s maturity, providing an additional source of financial security.
Factors to Consider While Choosing a Money Back Policy
When choosing a money back policy, there are several factors to consider in order to find a policy that meets your coverage needs and fits your budget. These factors include:
- Policy term
Money back policies typically have longer policy terms than other types of life insurance policies, such as term life insurance. It’s important to choose a policy term that meets your coverage needs and aligns with your financial goals.
Money back policies are typically more expensive than other types of life insurance policies, due to the additional feature of survival benefits. It’s important to choose a policy with premiums that fit your budget and are sustainable over the long term.
- Coverage amount
The coverage amount of a guaranteed return plan is the death benefit paid out to the policyholder’s named beneficiaries upon the policyholder’s death. It’s important to choose a coverage amount that meets your financial protection needs and aligns with your financial goals.
- Policy riders
Policy riders are additional coverage options that can be added to a money back policy for an additional cost. These riders can provide additional protection or benefits, such as accidental death coverage or long-term care coverage. It’s important to consider whether any policy riders are necessary or desirable for your coverage needs.
It’s important to choose a reputable and financially stable insurer for your money back policy. Researching the insurer’s financial strength and customer satisfaction ratings can help ensure that you are choosing a reliable and trustworthy provider.
Wrapping It Up
When choosing a money back policy, it’s important to consider factors such as the policy term, premiums, coverage amount, policy riders, and the insurer. By carefully considering these factors, you can find a policy that meets your coverage needs and fits your budget. So, a money back policy can be a suitable choice for those who want to ensure the financial protection of their loved ones while also receiving some of their premiums back during the policy term.
If you are considering a guaranteed return plan, it’s important to choose a reputable and financially stable insurer. Canara HSBC Life Insurance is an insurance company that offers money back policies and has a strong reputation for financial stability and customer satisfaction. By choosing Canara HSBC Life Insurance for your money back policy, you can have confidence that you are working with a reliable and trustworthy provider.
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