Money back plans are one of the most popular life insurance policies in India since they provide a lump sum payment in return. There are other excellent life insurance policies available, but they serve different objectives. In insurance terminology, these plans are frequently classified as endowment plans. In this article, we will discuss money back plans and whether they are beneficial or not.
What exactly is a money back plan?
In a money-back insurance plan, a policyholder is entitled to both regular payouts and a death benefit against a premium paid to the insurance company. If you invest in these plans, you will continue to receive a fixed amount at regular intervals.
- This insurance coverage is ideal for people seeking a guaranteed return on investment with the possibility of receiving a regular payout.
- When purchasing a money back policy, you can receive all of this in addition to insurance coverage for the same premium amount.
- Furthermore, the best aspect about money-back plans is that these plans pay out lump sums upon maturity or in the case of the policyholder’s death.
- Money-back plans begin paying survival benefits during the tenure of the policy.
- The survival benefit is only paid out if the policyholder survives the term, and it begins after a few years after the policy’s inception. After that, the policyholder will continue to receive survivor benefits until the money-back plan achieves maturity.
Key Features of a Money-Back Policy
There are various benefits of buying the best savings plan. For starters, investors can earn a guaranteed return on their investment while also receiving life insurance coverage. Let’s look at the main benefits of investing in money-back policies:
Provides guaranteed returns: The money-back plan is an excellent choice for those seeking a completely safe and secure investment. It is because this insurance plan provides guaranteed profits as well as insurance coverage, it is ideal for buyers who want to choose low-risk investments with high returns.
Acts as a secondary source of income: Money back plans pay out income after a certain period of the policy term. This benefit is referred to as the survival benefit. What is a survival advantage, though? Let us explain with an example.
Survival benefits are provided by insurance policies with varying premium payments and policy terms. Assume you purchased a 25-year money-back policy. However, the premium payment period for this policy is 18 years. In this case, you will be paid a survival benefit after 18 years.
Maturity Payment: Money back policies provide both insurance and guaranteed returns, where the returns at maturity are secured and guaranteed. The policyholder gets the amount they were promised at the beginning of the policy. If the policyholder lives out the policy term, he or she receives a maturity payment.
Payment in the event of death: A money back policy works similarly to the traditional insurance plan. Thus, in the event of the policyholder’s untimely death, the nominee receives the sum assured in addition to any other bonuses (if any) paid by the company to the nominee’s family members. The nominee/spouse receives the death benefit as a lump sum payout.
What to know Before You Purchase a Money-Back Policy?
Although a money-back policy might seem to be an ideal plan, there are some factors you should think about first.
A money back policy’s policy duration could vary from ten to twenty-five years. Selecting an insurance term that fits your financial objectives and desires is really essential.
Premium: If compared with a traditional life insurance policy, the premium of a money back policy is usually on the higher end. You ought to assess your financial status and make sure you can pay the premiums for the whole policy period.
Payouts: A money-back policy’s payouts are not guaranteed; they depend on the performance of the insurance provider. Before buying, it is crucial to know the terms and conditions of the insurance as well as the payout process.
How to Purchase a Money Back Policy?
To get the best savings plan, follow the following steps:
1. Research. Research: Compare the features, advantages, premium prices, and claim settlement ratios of several money back plans available on the market by doing thorough research. You can also explore online platforms that provide digital solutions for local business, as many insurance agents and companies now operate digitally, helping small businesses and individuals evaluate their financial options more easily.
2. Select a Dependable Insurer: To ensure a smooth and trouble-free experience, choose an insurance provider with a good reputation, a high claim payout ratio, and outstanding customer service.
3. Assess your financial needs: Understand your tolerance for risk, and premium payment capacity to determine the right kind of insurance for your needs.
4. If required, consult a Financial advisor: Based on your particular needs, get advice from a financial counsellor or insurance agent to help you select an appropriate money-back policy.
5. Fill out the application form: Submit the policy application form with accurate personal and financial information and the required papers.
6. Pay the premium: According to the payment conditions of the selected policy—single premium, annual, semi-annual, quarterly, or monthly—make the premium payment.
Finally
Money back policies and other best saving plans have a lot of benefits to offer to the policyholder. These policies help policyholders who are looking for insurance coverage as well as guaranteed returns, while also acting as long-term productivity tools for maintaining financial discipline and peace of mind. Before you begin investing in them, know your long-term financial needs. Especially if you invest in them early, money back plans can be a solid source of income. For those looking for financial protection and a second income source, they are an attractive investment choice since they provide life insurance coverage and periodic payouts. You may choose the appropriate policy for your needs and make an informed decision by knowing the different facets of money-back policies and evaluating your financial objectives. Proper planning and a best savings plan can help you guarantee your financial future and meet your short- and long-term financial objectives.
