Money Back Policy
A money back policy is a type of life insurance plan that combines protection with regular payouts during the policy tenure. It not only provides life coverage but also ensures assured returns at specific intervals, making it a dependable savings and investment option for long-term objectives. This plan is particularly suitable for individuals who prefer periodic returns instead of a lump-sum payout at the end.
What is a Money Back Policy?
A money back policy is a special form of life insurance that combines security with liquidity. Unlike conventional plans that release the full benefit only at maturity or on the insured’s death, this policy distributes periodic payouts, called survival benefits, throughout the duration of the plan. These payments are intended to help meet significant life events or recurring financial requirements.
In the event of the policyholder’s untimely death during the term, the nominee is still entitled to receive the complete sum assured, irrespective of the payouts already made. This mix of regular income and insurance cover makes it an ideal option for those who want to align their long-term savings with short-term financial obligations.
How Does a Money Back Policy Work?
Consider a 25-year-old individual who opts for a 25-year money back plan with a sum assured of ₹15 lakhs. This policy is structured to provide 15% of the sum assured every five years as survival benefits.
Payout schedule:
- End of 5th year: ₹2.25 lakhs
- End of 10th year: ₹2.25 lakhs
- End of 15th year: ₹2.25 lakhs
- End of 20th year: ₹2.25 lakhs
At the end of the 25th year, the policyholder receives the balance amount of ₹6 lakhs, plus any bonuses, as the maturity benefit.
In case of the policyholder’s unfortunate demise during the policy term, the nominee will still receive the complete sum assured of ₹15 lakhs, irrespective of the survival benefits already paid. This ensures that the family’s financial security is not compromised.
Key Features of Money Back Policy
"Knowing the key features of a life insurance policy enables you to make smarter choices when it comes to financial planning and securing your future."
- Guaranteed Returns
- Life Coverage
- Flexibility
- Survival Benefit
- Maturity Benefit
- Death Benefit