Learn More About: Securing Your Income with Money Back Plans
It is a given that all your investment strategies are aimed at securing your income. If liquidity and returns are the two key factors which help you zero in on a financial instrument, then money back plans might just fit the bill. One of the most sought-after life insurance plans, money back plans help secure your income with no hassles.
What are money back plans?
Life insurance comes in many forms. Under money back plans, the insured person gets a percentage of the sum assured at regular intervals after completion of a certain period of time.
Who are these plans suitable for?
Owing to its scope for liquidity as well as saving and protection through insurance, money back plans are most suitable for individuals with a low-risk appetite seeking to create an income stream.
Benefits of money back insurance plans
These plans offer many attractive benefits. Depending on the company and its offering, plans are developed to suit varied needs of insurance-seekers based on their financial and protection requirements. Some of the key features have been listed below.
- Sum Assured plus all bonuses payable in a lump sum upon death
- Allows for planning children’s education or marriage
- Provides a cover for life
- Maturity benefits paid in installments by way of survival benefit at regular intervals.
- Guaranteed liquidity
- Bonus is calculated on the full sum assured.
- Most useful for businessmen
- Protects you and your family at every stage
What are the key features of a money back plan?
Under a money back plan, the entry age is usually set at a minimum of 13 years and a maximum of 50 years. These plans can be held by policyholders up to the age of 70 years in most cases. Often taken for the long-term, they feature varying tenures ranging up to 25 years.
Premium payments are usually flexible and payments can be made according to a policyholders comfort on a monthly, quarterly, half-yearly or annual basis.
In addition, reversionary bonuses are offered every year enhancing the payout due to a policyholder.
Are endowment insurance plans different from money back plans?
Under ordinary endowment insurance plans, survival benefits are paid at the end of the endowment period whereas money back schemes allow periodic payments of partial survival benefits, as long as the policyholder is alive.
What’s more, under money back plans, in the event of death of the insured person, the nominee gets the entire sum assured. Also, survival benefits are not deducted. Bonus payable is calculated on basis of the full sum assured.
Outlined below are examples of how endowment plans differ from money back plans.
Moneyback vs Endowment
As per money back policy, you will get 1.2 lakhs (20% of sum assured) every 5 years besides the maturity amount.
Besides coverage and costs, money back plans and endowment plans can differ in terms of other features as well. An example is outlined below.
The following is a comparison of the features and benefits provided by Reliance Super Money Back Plan and New Money Back - 25 Years (plan no. 821)
Features of a Reliance super money back plan are as follows:
- Benefits at the end of every five years
- Increasing regular monthly income payouts
- Maturity addition at the end of the policy term
- Life cover 10 times the annualised premium
- Policy terms of 10 to 50 years and pay for only half of the policy term
- Loyalty additions at the end of the premium payment term
- You can enjoy tax benefits on the premiums and benefits
Features of a new money back (plan no. 821) are as follows:
- Premium payment term is 20 years
- Survival benefits are paid periodically
- Double tax benefit (80C and 10 D)
- Balance of the sum assured plus accrued bonuses are paid at the end of policy term
- Additional accidental sum assured
- Death risk cover is 125% of the sum assured
- Availability of loans against this plan
If you are looking to save your income and want regular benefits to secure your family against the vicissitudes of life, money back plans may just be the right choice for you. However, due consideration will have to be given with regards to your personal financial savings, protection and liquidity goals when opting for these plans. Always note that the primary aim of a life insurance policy is to provide financial protection in the adverse event of death.