Are Money Back Plans Worth Investing Your Money In?

Money-Back Plans are far less risky than any other form of plan. It is an excellent option for anyone looking for both life insurance and investing options in one place. If the insured dies, the insurance pays the nominee the whole amount guaranteed, with no deduction from the survivor benefits. A money-back plan solves the problem of liquidity during the plan's lifetime by paying a percentage of the Sum Assured monthly. Money-Back Guarantees are unrivaled in their way.

Top Advantages of Money Back Plans

Money-back plans are among the most reliable savings options. The following are some of the reasons why they are worthwhile to invest in:

1. Money-Back Plans with Guaranteed Returns

The guaranteed returns of a money-back policy allow it to beat market-linked plans. A money-back guarantee is a fantastic investment for anyone looking for a low-risk investment. The offer of a money-back guarantee is conditional on the policyholder's survival. In the case of the policyholder's death, however, the nominee receives the guaranteed sum as well as any accrued bonuses.

2. Provide Survival Benefits

Unlike traditional life insurance policies, which pay benefits solely upon maturity, a money-back plan provides a ‘survival benefit' throughout the policy period. The survival benefit is paid out a few years after the insurance term begins and continues until the policy matures. As the name implies, a survival benefit is a monetary incentive paid by an insurance company to an insured person for 
surviving. Aside from that, the maturity benefit is supplied, as well as the accumulated bonus.

3. Liquidity

During the policy term, the insurance pays a set amount of the sum insured at regular intervals. This allows you to obtain the necessary cash, allowing you to better organize your money to fulfill various life goals.

4. Returns are risk-free.

If you are afraid of taking chances, a money-back plan is an excellent option for you because it does not entail any risk. If the policyholder survives, the insurance provides assured returns. However, if the policyholder dies, the nominee receives the sum assured as well as any earned bonuses.

5. Bonuses assist to improve the payment.

The Money return policy also adds to the insurer's revenues in the form of a bonus. The bonus is announced and accumulates each year as a percentage of the money covered by the insurance provider. The cumulative bonus is added to the total payout receivable when the insurance matures or the policyholder dies. The bonus component of the money return plan is mostly decided by the success of the insurance business and the customer's ability to pay all premiums on time.

6. Tax Breaks

Section 80C of the Income Tax Act of 1961 allows you to claim tax breaks on premiums paid for money-back plans. It should be noted that the advantages are available up to a certain level if the premium is less than 10% of the total assured.

Conclusion

A money-back policy is appropriate for risk-averse individuals who desire the added advantage of saving through an insurance plan while still retaining high liquidity. In the unfortunate case of the insured's death, the policy pays the nominee the whole sum promised, with no deduction from the survivor payments.

Also read - Money back policy: Concept, Working, Need & Benefits Explained

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Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.