Common Questions to Ask Before Buying Money Back Plans
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Among the most cost-effective methods to buy life insurance is through term plans. Unfortunately, term insurance policies rarely provide any rewards for survival. However, many people who wish to get life insurance expect something in exchange for the payments they faithfully spend on the insurance company, even if they live to see the policy's expiration. Plans for money back insurance have been created in reaction to this growing demand.
Questions to Ask Before Buying Money Back Plan
Here are a number of questions that you can ask before you start investing your hard-earned money in money back plans.
1. What Is The Reason Behind Investing In A Money Back Plan?
The fact that the recurring survival benefit received by the insurance can be utilized by the policyholders to pay their financial obligations at several significant periods of life is a fundamental factor in why individuals prefer money back life insurance plans. The plans give incentives in addition to the death benefit that clients receive with other kinds of life insurance products, in addition to the survival benefit
2. What Is A Money Back Plan?
In essence, money back policies are a kind of endowment insurance. Money back plans, however, divide the sum guaranteed and return the remainder to the insurer at regular intervals rather than awarding the insurer a lump sum amount at maturity. The survival benefit is the term for this consistent payment.
Additionally, the majority of these plans provide incentives that are paid upon policy maturity. The designee obtains the death benefit in the event of the policyholder's passing.
3. How Does A Money Back Plan Work?
Consider someone who buys a money back policy with a Rs.10 lakh death benefit and a 20-year term. A 20% survivor benefit is now guaranteed by the plan, and it will be given to the insured every five years. The insurer shall pay 40% of total maturity amount, plus any applicable incentives, at maturity.
He will therefore receive a survival benefit of Rs.2 lakh per five years. The person will be awarded an additional Rs.4 lakhs upon maturity, plus any relevant bonuses. The person would have already got Rs.6 lakhs as a survivor incentive on fulfillment of the 15th year if he passed away in the policy's 16th year. The insurance beneficiary will receive the full Rs.10 lakh death benefit, plus the extras, upon his passing.
4. What Should Be Considered While Acquiring A Money Back Plan?
Although the money back program is the most advantageous one on the market, you must take three important elements into account before purchasing the money back plan -
- How much do you plan to keep making investments?
- Examine your financial objectives.
- What is your tolerance for risk?
Conclusion
A money back plan can be a fantastic choice if you want to periodically receive a benefit from your life insurance coverage. To learn more about how such policies operate and determine whether they are the best choice for your insurance needs, look for a reputable insurer that offers this kind of coverage.
Also read: These are the Following Factors That Can Affect the Premium of Money Back Plans
HDFC Life Money Back Plan: Everything You Need to Know About
