What exactly is a Money-Back Policy ?

Money-back plans are life insurance cum investment plans that act as a guarantee that the insured person and his/her family will receive a sum at regular intervals  based on the policy taken up and these will in then take care of the expenses of the family in the future that are heavy expenses such as the higher education of a child, a big event to be celebrated etc. 

In a nutshell, these are amounts that will receive benefits till a certain period and then give out benefits and payouts at regular intervals along with survival and death benefits. It also takes care of the family in cases when the premium payer dies before the entire premium is paid by him/her so can act as a boon if chosen wisely.

How Can Money-Back Policies Prove To Be Useful?

Some of the ways by which money-back policies can prove to be useful are:

 Provides Liquidity At Regular Intervals - The biggest advantage of the Money-Back Policy is that according to this policy ,regular payouts called the survival benefits are provided to the insurer. The remaining benefits are paid at the time of maturity and in case if the insurer dies before paying the entire investment amount , the policy provider takes care of the family and provides death benefits to the family of the insurer.

Additional Benefit – Some money back policies may  also offer additional benefits in form of Guaranteed Additions to the policy or extra money backs.
 
Tax Benefits - Money-Back policy enjoys tax advantages for the premium paid and the maturity funds received from a life insurance policy under Sections 80C of the Income Tax Act of 1961 .
 
Secured Investment - These investments are secured because the returns are guaranteed and are not subjected to any kinds of change,regardless of any government infringement or market conditions. There are no re-investment risks; whatever the insurer might have committed to you on paper will be paid out at maturity, guaranteed. Hence it protects your money and reduces the overall risks of your portfolio.
 
 Low-Risk Instrument - Unlike investment strategies and plans such as mutual funds, bonds, and other instruments that are directly influenced by the movements in stock markets, Money-Back Policy provides guaranteed returns at specified intervals during the tenure, making it a low-risk instrument .
 
Life Coverage - It is a kind of life cover that lets you choose from a wide range of options to meet the monetary requirements of the family even in case of death of the insurer before paying the full amount before maturity. This plan lets the family live a dignified life even in your absence.

Conclusion

It is highly essential to invest money in the right way and money-back policies is the best way to secure your savings of today and also insure the future of the insurer and his family . By the above mentioned ways the money -back plans can prove to be helpful and gives us many reasons for us to take up money-back policies.

Also Read: Pros and Cons of a Money-Back Plan