How Does Money Back Insurance Policy Work?

As compared to other Traditional Plans in the market that provide the pay-out at the Maturity of the Policy, a Money Back Plan as the name says it all, offers Guaranteed Money Back during the Tenure at Fixed Periods. We can understand this with a brief explanation and an example. The Money Back Plans offer you a Sum Assured which is meant to be paid at the Maturity of the Policy and at the same time it offers Monetary Benefits at regular intervals which is a small percentage of the total sum assured value.

An example to understand this in a better way - Mr. Rakesh has purchased a Money Back Policy. The Policy offers a Sum Assured of Rs. 2,00,000 for a Total Policy Term of 20 years. While discussing the details about the Policy with the Insurance advisor he was told that he will receive Money Back in the form of Survival Benefits in every 5th Policy Year. The Percentage of the Survival Benefit would be 15%. This means that during the 5th, 10th, and 15th Years, Mr. Rakesh will receive an amount of Rs. 30,000 as Survival Benefits. Now, at the end of the Maturity Period, Mr. Rakesh will receive the remaining amount of Rs. 1,10,000 as the Sum Assured or the Maturity Benefit. This means that Mr. Rakesh is not only securing the far future but as well as the near future.

The Money Back Plan comes with many Benefits that make life easier when the insured person is facing a financial crisis. In normal Endowment Plans the insured has to wait for the Maturity Period to receive any benefit in the form of Sum Assured, however with the Money Back Plan he or she will be able to meet the sudden financial needs that may arise anytime.

Key Benefits of a Money Back Plan

Following benefits are enjoyed by the investors of Money Back Plans - 

1. Survival Benefits

A secondary source of income. The Survival Benefit facility in a Money Back Plan is what makes it different from any other policy that is available in the market. Survival Benefits can help you in times of crisis. Sudden and urgent need of funds can arise at any point in time and in such situations, if you have a guaranteed source of secondary income then you will not have to worry in such situations of distress. 

2. Quick Conversion and Liquidity

In other types of Policies, the Liquidity Rate is not as good as it is in a Money Back policy. In other term or Endowment Plans, you are Guaranteed a Lump Sum Amount, however, that amount is paid at the time of Maturity, whereas in the case of Money Back Policies you do get an option of getting a few of the benefits in Monetary Value during the tenure of the Policy.

3. Lesser Risk

Most people follow the rule of Investment even in the case of Policies where they believe that if there are higher risks there will be higher returns. It does work out well for many of the risk-takers, however, if you are one of the many who want to stay on the safer side then a Money Back Plan is the best choice.

4. Death Benefits

In case of the sudden demise of the insured person the Money Back Policy offers an option of Death Benefit where the nominee of the insured person gets the Lump Sum Amount with the Accrued Bonuses. In such scenarios, the Survival Benefit is not paid. The calculation of the Death Benefit Amount is done after deduction of the Survival Benefits which have been already paid and then the Accrued Bonuses are added to it. The value of these benefits is calculated till the date of the death of the insured.

Apart from all these Benefits, you are also eligible to get some Additional Loyalty or Accrued Bonuses at the Maturity of the Policy or during the payment of the Lump Sum Amount in case of the sudden demise of the insured.

Conclusion

You will be getting the benefits in the form of Survival Benefits, Maturity Benefits, Death Benefits, Additional Riders, Accrued Bonuses. All these Benefits which come with the Money Back Plan make it the best choice for those who want to invest in some Policy in which very little risk is involved. Discuss the Money Back Policy with your insurance advisor and create a safe and secure future for yourself and your family.

Also read - How Do I Get My Insurance Premium Back Under Money-Back Plan?

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.