A money back policy holds the popular position among several types of life insurance policies. The money-back policy is popular among investors looking for a life insurance plan along with investment opportunities. The money back policy offers several benefits such as life coverage, survival benefits, guaranteed returns, liquidity and many more. The significant features of money money-back policy include the flexibility to choose a payout type and the surety of receiving regular Returns after completing a defined duration of the policy. To analyse the suitability of money money-back policy, individuals may utilise an investment calculator to make a well-informed investment decision.
Meaning of Money Back Policy
Money-back policy also refers as the child money-back plan is a type of life insurance product that provides life coverage and insurance benefits throughout the tenure of the policy along with survival benefits after the policy term if the policyholder remains alive. It is a conventional type of life insurance policy that utilises survival incentives to help manage the financial needs of the future children such as educational requirements, marriage expenses, studying abroad, buying a house, etc. It is a combination of investment and Life Insurance that assists policyholders in securing a promising future for the child.
Features of Money Back Policy
Guaranteed returns: The money-back policy offers guaranteed returns on investment based on investment performance along with survival benefits after the completion of a specific period. If the policyholder dies during the policy term designated nominees are eligible to receive accumulated bonuses with a guaranteed amount.
Income during the policy term: Money-back policy ensures consistent earnings for the insured every few years by providing the promised amount. The survival benefits also accumulated and paid to the insured acting as a second source of income. Individuals can use that money for anything such as vacationing or saving it for an Unexpected future.
Riders to increase cover: The back policy comes with the opportunity for riders to increase coverage and benefits. Policyholders can get add-on riders to enjoy benefits such as reimbursement of medical bills, hospitalisation costs related to life-threatening illnesses, etc. The insurance Riders help policyholders endorse the insurance policy based on changing needs.
Bonus amount: The bonus amount is an important aspect of the money-back policy contributed by an insurance provider as a source of additional income for the insured. The incentive on policy is calculated based on the set percentage of the sum assured annually.
Benefits of Money Back Policy
Survival benefit: The money-back policyholder receives an amount every few years as a part of the offer of investment benefits throughout the policy term as long as the policyholder survives. The amount received by the policyholder varies depending on the growth of investment and the percentage set at the time of policy commencement.
Death benefit: in case of an unfortunate event such as the death of a policyholder, the designated enemy receives complete death benefits which include sum assured and accumulated bonuses throughout the policy. It is important to note that a survival bonus is not included in those benefits.
Maturity benefit: the insured in a moneyback policy receives maturity benefits when the policy methods after a fixed term as decided. One part of the maturity benefit is the sum assured which includes the complete coverage amount as selected at the start of the policy. Another part of the maturity benefit is the bonus which includes declared reversionary benefits of the insured accumulated over time.
Tax benefit: The money back policyholder is also eligible for tax deductions up to Rs. 150000 spent on Life Insurance Premiums from taxable income annually under section 80c of the Income Tax Act. Section 10(10) also provides tax-free maturity benefits of a money-back policy.
Why is the Money Back Policy suitable?
The money-back policy offers dual benefits with the combination of life insurance and an investment plan. This policy is suitable for investors looking for an insurance policy that provides health coverage along with guaranteed returns through the growth potential of investments in the market products. It is an efficient life insurance policy that provides an opportunity to increase the funds or coverage amount with emerging needs considering inflation.
How to choose a money back policy?
There are several types of money back policies available in India offered by reputed insurance companies and institutions. Individuals can select an appropriate money-back policy considering their features and benefits by determining their financial goals and needs for the future. It is recommended to consider the following factors before choosing a money-back policy-
- The financial objectives for future years
- The budget and preferred type of investment
- The duration of policy to be invested
- Expected payouts and benefits
- Use an Investment Calculator
Meaning of Investment Calculator
An online or digitally available tool that helps in estimating the required money or investment to achieve expected growth and funds over time is known as an investment calculator. It is a simple tool that helps potential investors in efficient financial planning and a financially stable future by making well-informed decisions regarding investment in different types of market products.
Importance of Investment Calculator
- An investment calculator is an appropriate tool to estimate the returns on investment to realise the potential of investment in particular life insurance like money money-back policy.
- It is very helpful in comparing different types of investment opportunities and analysing investment strategies to make valuable contributions.
- It helps in understanding the compounding period and its effect on the value and growth of investment over time.
- An investment calculator is an efficient tool for future financial planning and it helps in Breaking down your investment for better growth.
Conclusion
To conclude, the money-back policy is an efficient type of life insurance policy that provides a wide range of products with important features to plan a secure financial future. The money-back policy ensures the benefits of life insurance along with investment opportunities and extra earnings for the insured. By using an investment calculator, individuals can analyse potential returns considering the initial amount of investment duration and interest rate offered by insurance companies.
