Money back or Mutual Funds Which is Better?

A money-back plan is a life insurance plan that comes along with a savings option. The sum assured is paid to the life assured at regular intervals of time in small portions throughout the term of the policy after reaching a certain age milestone. These plans provide the advantage of liquidity. They are stable plans for those who plan to save a lot of money through insurance plans and maintain financial stability. They provide many benefits through which the life assured can ensure stability and also be ready for future expenses.

It is a pooled fund. Money is collected by the AMC from various investors who share a common investment objective. They are provided different funds to choose from to invest in. These investors can invest in the funds in the form of stocks, equities, money market instruments, corporate and municipal bonds.  A certain unit is owned by an investor that represents a portion of their investment or holdings on the fund. The losses and profits are shared equally amongst all the investors after deducing additional expenses. This is done by calculating through the scheme’s Net Asset Value or NAV.

Types of Mutual Funds

There are different types of mutual funds one can choose from according to their necessity and ability to invest in. Read the following to know more about the types of mutual funds.

1. Equity

Equity is also known popularly as Growth Funds. They have a longer investment duration. They mostly invest in equities meaning in shares of a company. They aim to create wealth or growth capital. They have the capability to grow and save a large sum.

2. Income or Bond or Fixed Income Funds

These funds are invested in Fixed Income Securities such as Government Securities Commercial Papers and Debentures, as well as Money Market instruments like Treasury Bills and Paper. These are relatively safe investments that can be used to generate income. Short-term funds, gilt funds, liquid funds, and so on are some examples.

3. Hybrid Funds

These funds invest across both equities and structured finance and provide the perfect combination in terms of growth opportunity and income generation. Aggressive Balanced Funds, Pension Plans, and Monthly Income Plans are just a few examples.

Benefits Offered By Money-Back Plans

The benefits offered by money-back plans are many. Some important benefits that outweigh other plans and make this plan more opted for are listed down below.

1. Maturity Benefit

This benefit offered by money-back plans makes the plans more than just a life insurance plan. On survival of the life assured past the maturity age offered by the policy, the life assured is paid a sum of the sum assured along with simple reversionary bonuses and any other applicable bonuses.

2. Death Benefit

If an unpleasant occurrence such as occurs, death is almost certain. The sum assured and bonus are given to the policy's nominee. In such circumstances, the nominee receives the sum insured as well as any bonuses applicable to the insurance. Survival benefits are not included because they are paid as long as the insured is alive.

3. Regular Payouts

During the policy's term, you will receive a regular stream of income in the form of a 'Survival Benefit.'

Conclusion

To save and grow your money by investing, there are a lot of ways and instruments to invest in. You must consider all the variables and choose an instrument suitable for you to invest in comfortably.

You may also like to read - How does a money-back plan work and why should I purchase it?

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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.