Understanding the basics of Money back policy

Most of us want to invest for a long time in a traditional life insurance policy to build up a guaranteed corpus. However, we run into a problem if we require funds before the term ends. We may face a financial crisis at any time, and we will require funds to address it. A traditional life insurance policy, on the other hand, is useless if the term of the policy hasn’t expired.

Money back policy to safeguard the financial interests of your family in the event of the policyholder’s death or critical illness. Periodic payments build wealth, which can be used to meet financial obligations at different stages of life. In this post, you’ll learn about the Money Back Policy.

What is the Meaning of the Money-back Policy?

A money-back policy pays out money at predetermined periods. This money-back is paid throughout the plan’s life and is calculated as a percentage of the Sum Assured. Survival benefits are the main advantage of this policy. These benefits are paid over the plan’s duration, and the remaining Sum Assured is paid at maturity, together with any vested bonuses. If the insured dies within the plan’s term, the whole Sum Assured is paid, regardless of any Survival Benefits that have previously been paid.

Money back Policy is ideal for Which People?

A money-back plan is suitable for those who want a guaranteed return on their investments as well as monthly payments and insurance coverage for the same amount they pay in premiums. Unlike a traditional life insurance policy, which pays out only when the policy matures, the money-back plan pays out a ‘survival benefit’ during the policy’s lifespan. After a few years from the commencement of the money return plan, this survival benefit kicks in and lasts until the money-back insurance matures.

As the name implies, the survival benefit is a payment from the firm to the insured individual for surviving. This reward will only be paid if the covered person is still alive. These survival benefits are no longer available in the event of an unfortunate incident that leads to the insured party’s death. In such instances, the nominee(s) gets the whole maturity amount, including any accumulated bonus, regardless of how much survivor benefits have been paid. As a result, the money-back plan, like other life insurance plans, provides continuous income as well as a maturity benefit.

What are the Features of a Money Back Policy?

The following are some of the key aspects of Money Back Policy:

  • The Survival Benefits are computed as a proportion of the amount guaranteed.
  • During the plan’s duration, Survival Benefits are paid at regular periods. Benefits are paid at a set interval. Each plan has its payment structure. Similarly, the percentage of the Sum Assured paid as Survival Benefits is not fixed and varies by policy.
  • The remaining amount of the Sum Assured (actual Sum Assured less the Survival Benefits previously paid) is paid as maturity benefit if the plan matures. In the event of death, however, the whole Sum Assured is paid, regardless of any money-back benefits that have previously been paid.
  • Money-back plans are generally offered as participation plans with bonuses. The bonus is paid out at maturity or death.
  • Riders are also available as part of a variety of money-back options. Rider benefits are paid in one lump amount only if the contingency covered by the rider arises during the plan’s duration.