What is a Money Back Insurance Policy?

If you are seeking financial security, you may be torn between investments that will give you quick returns and securing your loved ones in the long run through Life Insurance. What if we told you could do both? Yes, with money-back Life Insurance, you can benefit from both life coverage as well as receiving investment returns during the policy period. Curious to learn more? Keep reading as we delve into everything you need to know about Money Back Term Life Insurance.

How Does a Money Back Policy Work?

Money Back Life Insurance is a type of Life Insurance Policy that provides both insurance and investment benefits. Similar to a Term Insurance Policy, it offers life coverage in exchange for a premium. Additionally, it also provides a percentage of the sum assured as returns periodically, and at maturity it provides a bulk settlement. Thus, those insured under this policy will be eligible for survival, death, and maturity benefits.

Why Do You Need to Buy a Money Back Policy?

You may have financial obligations and the responsibility to make sure your family is financially secure. That is exactly what a Money Back Policy helps you with- it offers a steady side income, Life Insurance, and a lump sum payout at the end of the policy term. It is therefore sensible to purchase a Money Back Policy if you have dependents that you must take care of or if you are trying to reach financial goals.

Key Features of Money Back Policy

The following are some of the salient features of a Money Back Policy.

1. Life Cover: In the event that the insured is no more, their nominees will receive a large sum of money to manage their monetary needs.
2. Assured Gains: You can select non-market-linked Money Back Plans if you are searching for a secure investment with guaranteed returns.
3. Regular Income: You can expect regular returns at intervals. Thus acting as a secondary source of income.
4. Terminal Bonus: In addition to the returns obtained from your funds, you will get a bonus amount at the end of the policy tenure.

Benefits of a Money Back Policy?

Below listed are the top benefits of a Money Back Policy.

1. Dual Benefit: A Money Back Policy offers the best of both worlds: periodic wealth creation during the policy term and death benefit that will benefit the insured's dependents.
2. Return on Investment: Apart from the periodic payouts, you will also receive a bulk amount at the time of policy maturity.
3. Life Insurance: Life Insurance is an important consideration for those with dependents. A Money Back Life Insurance Policy assures you that your family will be financially secure if the worst were to happen.
4. Wealth Generation: Looking to gather wealth for early retirement or a child’s education? Money Back Life Insurance offers instalment payouts for immediate needs, plus a lump sum at the end of the policy term.
5. Personalized Options: There are different Money Back Life Policies to choose from depending on your financial goals and needs.
6. Tax Benefits: With a Money Back Policy, you can claim tax exemptions for the maturity amount under Section 10(10D) and the policy premiums under Section 80C of the Income Tax Act of 1961.

Eligibility Criteria for Buying Money Back Policy

The following are the eligibility criteria for Buying Money Back Policy.

1. Age: Typically, there are minimum and maximum age limits for purchasing a Money Back Life Insurance Policy. These limits usually range from 18 to 65 years, although they can vary between different insurers.
2. Health Status: You might be required to disclose any pre-existing medical conditions and to meet a specific level of fitness.
3. Income Proof: Generally, insurers are expected to provide proof of income to show that they are capable of making premium payments.
4. Nationality: Life insurance offered by Indian insurers is only available to Indian citizens. Therefore, Indian citizenship is a requirement for obtaining a life policy in India.

Documents Required to Buy Money Back Policy

The following are the documents needed while purchasing a Money Back Policy.

1. PAN, Aadhaar, passport, or voter ID for age proof
2. Pay slips or bank statements for income proof
3. Voter ID, passport, or Aadhaar card for address proof
4. Medical certificates and doctor’s prescriptions for existing illnesses
5. A fully filled policy application form.

How to Choose the Best Money Back Policy?

Here are some insider tips on how to choose the best Money Back Policy.

Monetary Goals

Before looking for a policy, we suggest that you take a moment to consider your financial goals. Building a house? Child’s Education? Long Vacation? Make a list of these financial needs before buying a suitable policy.

Sum Assured

The sum assured is a fixed sum that the dependents of the insured will receive in the unfortunate event of the insured’s death. However, choosing a higher sum assured will increase the premium payable. Therefore, we suggest choosing a reasonable amount.

Duration of Policy

The longer your policy is in effect, the less you will have to pay in premiums. However, please note that there may be a cap on the policy tenure based on the insured’s age.

Policy Premium

Choose a policy that offers adequate coverage and returns for your financial requirements, all while keeping the policy premium in mind. Buying a Life Insurance policy shouldn't become another financial burden.

Riders

Life insurance companies usually provide Riders as a way to enhance their policies with additional coverage. Common Riders include Accidental Death Cover, Critical Illness Cover, and others. Select the necessary riders only, as the more riders you select, the greater the premium that must be paid.

FAQs

1. What is a Money Back Insurance Policy?

A Money Back Insurance Policy is a kind of Life Insurance that offers both the standard Life Insurance benefit and the chance to get periodic payouts for the premiums paid.

2. What are the features of a Money Back Policy?

The features of a Money Back Policy include Life Cover for the insured, along with period returns on the premiums paid. If the insured survives until policy maturity, they will also receive a bonus.

3. What are the advantages of a Money Back Policy?

The advantages of a Money Back Policy include Life Insurance, return on investment, maturity benefit, and tax exemption on the policy premium.

4. Is It risky to invest in Money Back Policy?

Investing in Money Back Policies that are linked to the market carry some risk. You can, however, opt for guaranteed returns by selecting risk-free, non-market-linked policies; the returns on these kinds of policies are usually lower.

5. What are the tax benefits with Money Back Plans?

The tax benefits of Money Back Plans include a tax exemption on the maturity amount and the policy premium paid as per Section 10(10D) and Section 80C of the Income Tax Act, 1961 respectively.

6. Is the amount received through Money Back Policy taxable?

The income received through a Money Back Policy is tax exempt as per Section 10(10D) of the Income Tax Act, 1961.