Money Back Policy – Definition, How it Works, Riders, Features, Benefits, Best Quotes | Buy and Renew Online
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What is a Money Back Plan? - Definition
A Money Back Plan is an Investment Plan that offers life insurance coverage as well as regular payouts to the Policyholder during the Policy Period. The Policy combines the benefits of Insurance and Investment. A Money Back Plan is ideal for people who are seeking an Investment Plan which offers steady returns along with life insurance protection.
How does a Money Back Plan work?
A Money Back Plan offers regular payouts to the Policyholder during the Policy Term. In addition, the Money Back Policy also offers a lumpsum payout to the nominee in case of the Assured’s death. The working of a Money Back Plan is explained below
- Premium Payment: The Policyholder makes regular premium payments during the Policy Period
- Survival Benefit: The Policyholder receives Survival Benefits in the form of periodic payments during the Policy Period.
- Maturity Benefit: In case the Assured outlives the Policy Term, the balance Sum Assured along with any bonuses is paid out on the maturity of the Policy.
- Death Benefit: In case the Policyholder dies during the Policy Period, the nominee receives the entire Sum Assured even though the Assured has received Survival Benefits during the Policy Term. The regular periodic payments received from the Moneyback Plan helps you to take care of your short term or medium-term financial goals. A Money Back Plan an ideal option for people seeking life insurance protection along with regular income.
Let’s understand the working of a Money Back Plan with an example.
Mr. Vinay opted for a money back plan with a sum assured of Rs. 10 lakhs for a policy term of 25 years. Every 5 years, Mr. Ganesh receives a survival benefit of 20% of the sum assured. 5th Year: Rs2 Lakhs 10th Year: Rs2 Lakhs 15th Year: Rs2 Lakhs 20th Year: Rs2 Lakhs
And remaining Rs2 lakhs in the 25th year along with bonuses (if any) depending on the type of plan chosen. In case, Mr Vinay dies during the 12th year, the nominee is paid the entire Sum Assured of Rs10 lakhs even though the Policy has already paid out Rs4 Lakhs worth of Survival benefits.
What are the Riders available in a Money Back Plan?
A Money Back Plan offers the following Riders which increases the Policy Coverage:
- Accidental Death Benefit Rider: The Accidental Death Benefit Rider offers additional Sum Assured as a Lumpsum Amount in case of the Policyholder’s death due to an accident.
- Critical Illness Rider: A Critical Illness Rider offers additional Sum Assured in case the Policyholder is diagnosed with any of the critical illnesses mentioned in the Insurance Policy.
- Terminal Illness Rider: The Terminal Illness Rider accelerates the Death Benefit Payout in case the Policyholder is diagnosed with a Terminal Illness.
- Waiver of Premium Rider: A Waiver of Premium Rider waives off the Insurance Policy Premiums in case the Policyholder suffers from any Critical Illness or Disablement.
What are the Features of a Money Back Plan?
Money Back Plans offer a range of distinct features as follows:
- Death Benefit: A Money Back Plan makes a lumpsum payout of Sum Assured to the nominee in case of the policyholder’s demise during the policy term. Thus, the Policy provides financial protection in case of the Policyholder’s death.
- Survival benefits: A Moneyback Policy provides the benefit of Investment offering steady returns and periodic payouts (Survival Benefit) during the Policy Term.
- Maturity Benefits: Apart from Survival Benefits, the Policy also offers Maturity Benefits where the Policy pays an amount if the Assured survives the Policy Tenure.
- Bonus: Some Money Back Policies offer bonuses which are a share of profits made by the Insurance Company. These bonuses increase the returns to the Policyholder over time.
- Surrender Value: Moneyback Policies also offer a Surrender Value where the Policyholder gets a certain amount in case he decides to discontinue the Policy.
What are the Benefits of a Money Back Policy?
A Money Back Life Insurance Policy offers the following benefits:
- Periodic Payouts: A Money Back Policy offers regular periodic payouts helping you manage your short and mid-term financial goals. Some Plans also offer long term income for 15, 20 or lifetime income option.
- Guaranteed Benefit Payouts: Moneyback Plans also offer guaranteed returns on your investments thus offering a great deal of certainty.
- Death Benefits: Money Back Plans offer Insurance coverage as well where they pay a lumpsum benefit to the nominee in case of the Assured’s demise. Thus, Money back plans offer financial security to the Assured’s family.
- Bonus Payments: Moneyback Policies offer Reversionary Bonus, Terminal Bonus over the Policy Term which increases the effective Return on the Policy.
- Maturity benefit: A Money Back Policy offers Maturity Benefits where the Policy pays a Lumpsum amount if the Assured survives the Policy Tenure.
- Tax benefits: Premiums paid towards a Money Back Policy are eligible for tax benefits under section 80C and 10(10D) of the Income Tax Act, 1961.
What are the factors to consider before you invest in a Money Back Plan?
You need to consider the following factors before purchasing a Money Back Policy:
- Financial Goals: Money Back Plans offer periodic payouts and it is necessary to ensure that the payouts align with your short term and medium-term goals such as Children’s Education Expenses, Children’s Wedding Expenses, Travel Expenses.
- Riders: You should carefully consider the various riders available in the Money Back Life Insurance Policy which enhance Policy coverage to ensure that you are comprehensively covered.
- Claim Settlement Ratio: You should compare the claim settlement ratio of various Life Insurance Companies to judge their effectiveness in settling claims.
- Premiums: Finally, you must compare the Policy Premiums between different Insurance Companies to get the best quotes.
What is the Difference between Money Back Policy and Fixed Deposit?
The main difference between a Money Back Policy and Fixed Deposit is that a Money Back Plan also offers Life Insurance Coverage along with steady returns while a Fixed Deposit only offers steady returns. The other differences between a Money Back Policy and a Fixed Deposit are mentioned below:
Criteria | Fixed Deposit | Money Back Policy |
---|---|---|
Investment type | A Fixed Deposit is an investment option offered by banks wherein you have to deposit a lump sum amount and get regular, periodic payouts. | This type of life insurance plan is offered by insurance companies. You can choose to invest either on a lumpsum basis or yearly/monthly basis. |
Returns | A Fixed Deposit offers a fixed Rate of Interest | A Money Back Policy offers assured returns, and interest rates are not involved |
Term | 7 days-10 years | Can range from 5-25 years |
Death Benefit | No | Yes |
Minimum Investment Amount | Rs1,000 with no upper limit | Rs. 2000 or more depending on the sum assured chosen |
Payout | Interest Payments are made at periodic intervals and the Principal Amount is received back on maturity. | Payout is made at regular intervals, and you also receive a lumpsum amount on maturity. |
Tax Benefits | Tax benefits are applicable only on Tax-Saver FDs | All plans are eligible for tax benefits under Section 80C and 10(10D) of the IT Act. |
What are the Documents Required to Buy a Money Back Policy in India?
Following Documents are required to purchase a Money Back Policy:
- Proof of Address like Passport, Aadhaar Card, Driving License etc.
- Proof of Identity like PAN Card, Aadhaar Card
- Income Proof
- Medical Reports
- Policy Proposal Form
Get Best Quotes for your Moneyback Policy with Qian!
Money Back Plans offer financial security with regular payouts and steady returns. It is important to take the advice of an experienced Insurance Broker when choosing a Money Back Plan. If you wish to purchase a Money Back Plan with Qian, go to Qian’s website – <www.qian.co.in> or email us at insurance@qian.co.in or call us on 022-35134695 for a Money Back Plan and provide the required details. Our representative will get in touch with you and assist you with different money back plans based on Premiums, Features and Benefits. You can select the Policy which best suits your budget and requirements, make the premium payment and purchase the Policy. If you wish to know more about Money Back Policy, you can you can email us at insurance@qian.co.in or call us on 022-35134695. We would be glad to assist you.
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