Money Back plans are popular investment cum insurance plans that protect the family financially in case of death or any critical illness of the policyholder. Having a money back plan assures guaranteed returns with regular payouts over the lifetime of the policy.

Let’s understand what is money back policy with the help of an example.

Suppose you invest in a money back policy with a policy term of 20 years. After 5 years, you receive an amount known as survival benefit, which you keep receiving at an interval of 5 years, that is, 5th, 10th, and 15th year.

The remaining survival benefit is received at the 20th year along with the maturity amount and the bonus. Such payouts help the policyholder meet any major expenses during the policy term. A huge investment in money back plans assures that you receive a substantial amount to meet a lot of your expenses.

The maturity amount is paid in a lump sum in most scenarios, but the policyholder can opt to receive payouts quarterly or monthly. These money back policies are designed to cater to all your future needs so that you do not have to worry about financial security or the invested amount.

Here are a few features of the money back policy:

Guaranteed returns: These money back plans are ideal for safe investors looking for risk-free investment schemes yet aim for a good corpus. As these plans also provide insurance coverage, it is a go-to investment option for conservative investors aiming for guaranteed returns.

Income during the Policy Tenure: A money back plan also ensures regular payouts during the policy tenure that helps meet any financial requirements that may arise. The accumulated survival benefit is paid to the policyholder if he/she survives the policy period. In case the policyholder dies during the period, the nominee receives the maturity amount along with a bonus, if any.

Income on the maturity amount:  At the end of the policy tenure, the insured receives the amount guaranteed at the plan’s start. The assured amount can be as low as ₹50000, while a few insurance companies do not have any cap on the upper limit, meaning the insured can cover themselves for any amount they deem feasible.

Income when the policyholder expires: In case the policyholder passes away during the tenure of the plan, the nominee receives the death benefit. In this case, the money back plan works like a standard insurance plan, where the family receives the death benefit to meet any financial needs in the absence of the insured.

Increase in Payouts due to bonus: There are 2 kinds of bonuses with money back plans- a reversionary bonus and an additional bonus. A percentage of the sum assured is declared as a reversionary bonus every year. It gets accumulated and paid along with the maturity amount. Insurance companies also sometimes offer an additional bonus. It is based on the performance of the insurance company or the basis of the loyalty of the customer.

Read more to know about the different between Term Life Insurance Vs Money back Life Insurance.

Final word:

Anyone who wants assured returns along with insurance coverage can invest in money back plans. These plans are a go-to option for investors who have just started investment or women who have a family to look after in their absence. 

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