Term Insurance Plan or Money Back Policy Plan: Which Is Better
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Money back plans are life insurance cum investment plans under which the life assured gets a quarter of the entire sum at every regular interval and not a payment amount at the end of the term. These sorts of plans are best fitted to those that want to save lots of their money through insurance and at an equivalent time want to take care of liquidity throughout.
Term plans, on the opposite hand, are pure protection plans which give life assured and his family with financial coverage just in case the life assured meets an unfortunate event. On purchasing an insurance plan the life assured gets the life coverage or the sum assured just in case the life assured dies while the policy remains active.
The advantages of money back plans and term insurance plans are discussed briefly.
Benefits Of Buying Money Back Plan
Here are some benefits listed that one gets on buying a a refund plan:
Provides Survival Benefits
As a refund plan gives the life assured a neighborhood of the sum assured at regular intervals. These payouts are known as survival benefis. Along with that regular sum, the money back plan also gives the life assured with maturity benefits as well as bonus (if any) at the time of maturity of the plan.
Provides An Insurance Cover
Although seen as an efficient investment product, a refund plan is additionally an insurance instrument. You can choose an appropriate cover which will be wont to meet the monetary requirements of your loved ones in your absence. Such plans usher in reliability and let your relations live a dignified life even once you aren't around them.
Risk-Free Return
These types of plans are ideally for those who do not want any form of risk in their return policy. As there's no risk involved in these plans one can freely choose a refund plan.
Provides tax benefits
The premiums that are paid under this plan are free under Section 80C of the Income Act 1961. However, the cost of the premium must be less than 10% of the total sum assured of the plan. The sum assured receivable under the plan is tax-free under Section 10 (10D) of the tax Act 1961.
Benefits Of Buying A Term Insurance Plan
The benefits of buying a insurance plan are listed below:
Life Cover
Incase of an unfortunate demise of the life assured, the family gets a payment amount because of the benefit to remain financially sound. The family can prefer to choose what form they need the payout, either payment amount all directly or an income annually or monthly.
Affordable Premiums
One can get a high valued life coverage from term plans by paying a really low premium. Premiums are often paid yearly or mid yearly or monthly, counting on the policyholder. The earlier one buys a term plan the lower he or she has got to pay the premium.
Critical Illness Coverage
In case of great illness coverage included within the buy one buys, he or she is assured to urge a payment amount during the treatment of a critical illness under almost every term plan either by default or by the way of a rider. This makes it more advantageous for the acquisition to get it.
Tax Benefits
You can get tax benefits on premiums paid under Section 80C alongside premium paid towards critical illness benefit under Section 80D of the IT Act. The lump-sum amount received by nominees because the sum assured/death benefit is additionally exempted from taxes under Section 10 (10D).
Conclusion
An insurance plan gives death benefits, maturity benefits, optional death and disability benefits on purchasing. A refund back plan helps one to satisfy the need for normal flow of cash over a period of your time . Both are beneficial in their own ways. This article clearly has stated all the advantages one gets on purchasing either an insurance plan or a refund plan .
