What is Money Back Policy?

In a money back policy, the policyholder gets a part of the sum assured at periodic intervals rather than getting a lump sum amount once the policy has matured.

This policy is specially meant for those individuals who believe in risk-free investments and also want an insurance plan. A money back policy also lets them access the liquidity feature throughout the course of the policy.

In case of demise of the policyholder, the nominee or the beneficiary will get the entire sum insured along with the survival benefits.

Money Back Policy vs. Endowment Policy

Traditionally, the premium paid for endowment and money back plans was used to invest in savings or debts funds, depending on the risk appetite of the investor. However, for an investor who is looking for higher returns, most insurance companies offer ULIP versions of endowment policy. It provides customers with the option of investing in different variants depending on the level of risk they want to.

Even though both money back and endowment plans offer investment as well as life insurance features, there are many differences between the two.

Besides term insurance, all other types of insurance plans are actually hybrid insurance, consisting of investment or savings component. Money back and endowment plans are among the traditional insurance types and have been popular in India for many years.

Undoubtedly, the plans offered by Life Insurance Corporation of India (LIC) are the most popular money back plans in the Indian insurance market, despite the fact that there are other insurance providers too, that offer money back plans.

So, what are the main differences between endowment and money back policy?

Benefits of Money Back Policies

Life Cover Benefit

This plan offers the benefit of a life cover to the policyholder in the event of his untimely demise. His nominee or family members, consequently, will be given the sum assured.

Survival Benefit

With a money back policy, you get regular pay-outs at periodic intervals, which ensures a smooth flow of services at different stages of the insured’s life. In other words, it helps one meet their financial obligations with ease.

Bonus Benefit

Money back policies also have this feature of bonus benefits, wherein the insurers pay a bonus amount to their customers during and at the end of the policy period, which ultimately increases the policy pay-out.

Wealth Creation Benefit

All one needs to do is invest small amounts of money in the scheme and he will be able to reap a huge sum later.

Loan Benefit

Money back policies also offers a loan facility to help policyholders meet their financial needs. However, there might be certain conditions prescribed to avail this facility, like the policy must be at least 3 years old.

Surrender Value Benefit

Surrender value is the amount paid by the insurance company to the policyholder if he decides to terminate his policy before it completes its tenure.

However, to avail this facility, one should have already paid the premium of his policy for at least 3 years in continuation. Although, it is not advised to use for this feature, it can be very convenient in case of a cash emergency or any other important reason.

Maturity Benefits

With a money back policy, the policyholder gets a guaranteed lump sum at the end of the policy tenure, along with the incurred bonuses.

Rider Benefit

The insured has access to a series of riders that can be used to boost the protection, such as a critical illness rider, accidental death rider and disability rider.

Tax Benefit

The policyholder gets a tax exemption under section 80C for the premium paid towards a money back plan. Additionally, the regular pay-outs one receives from the money back policy are also tax free under section 10 (10d).

Types of Bonuses

The money back policy usually offers 3 bonus types:

Simple Reversionary Bonus

When we discuss the term ‘bonus’ for an money back plan, it mostly refers to a reversionary bonus. The bonus is accrued every year and is applicable on per hundred rupees of the total amount assured and accrued bonuses throughout the policy term. This amount is usually paid on maturity, claim or when a person surrenders the policy.

If a person decides to surrender the policy before the policy term is completed, he or she will not be eligible for a full bonus. The bonus amount is disclosed each year by insurance providers and the entire information can be viewed on their website. One crucial thing to know about simple reversionary bonus is that instead of compounding, it only accumulates over the same sum assured.

Final Additional Bonus (FAB)

This bonus is normally issued on policies that run for longer periods of time (mostly over 5 years). It is calculated when the policy has already matured or when processing a claim. Information about the insurance plan qualifying a person for FAB is usually available in the policy document. You can also check for information concerning the total amount and the sum insured in the same document.

Loyalty Additions

This is usually a loyalty bonus issued for specific policies by some providers. It is primarily issued to insurance holders who have been renewing for quite a long period. The loyalty additions are, in most of the cases, calculated at maturity. Considering that the new money back plan and new endowment plan are still a recent development, the bonus rates of both these plans have not yet been declared.

Different Factors that Influence the Premium of Money Back Policy:

  • Age is one of the most important factors that decides the applicant’s premium. Buying a money back policy at an early age will help one get this plan at a lower premium compared to buying it belatedly.
  • Smoking habits, too, come into the picture while calculating the premium amount. Intake of alcohol, tobacco or other intoxicants are a risk one’s health and life and hence, are taken into consideration while the premium is calculated.
  • The current status of the proposer’s health is also of significance for the premium calculation. If an individual has suffered from or suffering from some sort of serious ailments such as heart attack, cancer, diabetes, etc. his premium amount would definitely be higher than those who aren’t suffering from these major ailments.
  • One would have never thought about it but being a female gives the applicant an upper hand when it comes to the premium-calculation. This is because it’s been scientifically proven that women tend to have longer life span as compared to man and hence less prone to heart attacks or other risks. Therefore, the premium for a female policyholder is always less as compared to the male policyholders.
  • The proposer’s job profile also plays an important role while calculating the premium. If one is into a job profile which has high risk involved such as diving, fisheries, pilot, mining, etc., he will have to pay a higher premium amount.

Best Money Back Plans to Invest in 2018:

Money Back Plans Type of Plan Policy Tenure Minimum Entry Age Maximum Entry Age Maturity Age (Min & Max) Minimum Sum Assured
SBI Life- Smart Money Back Gold Savings plan with life cover 12 years (Option 1),
15 years (Option 2),
20years (Option 3),
25years (Option 4)
15 years (option 1 and 2),

14 years (option 3 and 4)

55 years (option 1 and 2),

50 years (option 3),

45 years (option 4)

27 & 70 years Rs.75,000/-
LIC Money Back Policy – 20 years Traditional participating endowment plan with money back 20 years 13 years 50 years 70 years Rs. 1,00,000/-
Bajaj Allianz cash Assure Traditional money back plan 16, 20, 24, 28 years 0 years 54 years 18 & 70 years Rs. 1,00,000
HDFC Life Super Income Plan Traditional participating plan with life cover 16 -27 years 30 years (for 18 to 27 years of policy term),

2 years (for 16 years of policy term)

48 years ( for policy term of 27 years),

51years (for policy term of 24years),

53years (for policy term of 22 years),

55years (for policy term of 20 years),

57years (for policy term of 18 years),

59years (for policy term of 16years)

18 – 75 years Rs.1,28,337/-
Aegon Life regular Money Back Insurance Plan Money back plan with life coverage 20 years 7 days 55 years (for 7-pay and 10-pay options),

60 years (single pay option)

Max: 75 years (7-pay and 10-pay option),

80 years (single pay option)

No Limit, Subject to underwriting
Reliance Super Money Back Plan Non-linked non-participating non-variable plan with life coverage 10, 20, 30, 40, 50 years 18 years 55 years 28 & 80 years Rs.1,00,000/-
Canara HSBC OBC Smart Stage Money Back Plan Traditional participating money-back life insurance plan 10, 15, 20 years 18 years 55 years 28 & 65 years Rs. 50,000
BSLI Bachat Money Back Plan Traditional non-participating money back  insurance plan 20 years 13 years 60 years N/A Up to 180 times your monthly base premium
LIC New Children Money Back Plan Child plan 25 years 0 years 12 years 25 years (min/max) Rs.1,00,000/-

Here are the details of above money back policies.

SBI Life- Smart Money Back Gold

It’s a participating money-back policy which offers periodic pay-outs along with an all-inclusive coverage to safeguard you against different adversities of life.

Key Features of SBI Life- Smart Money Back Gold Plan:

  • A participating money-back plan that comes with regular premium option
  • Option to choose between 4 different customized money-back solutions to meet every individual requirement
  • Survival benefits offered at 110% of the total sum insured

Benefits of SBI Life- Smart Money Back Gold Plan:

  • Survival Benefits
  • Death benefits with accrued bonus
  • Tax Benefits

Additional Riders

The policyholders have an option to get a comprehensive coverage with 4 different riders:

  1. SBI Life- Accidental Death Benefit Rider
  2. SBI Life – Preferred Term Rider
  • SBI Life – Accidental Total and Permanent Disability Benefit Rider
  1. SBI Life – Criti-Care 13 Non-Linked Rider

LIC New Money Back Policy – 20 years

LIC New Money Back Policy – 20 years is a participating, non-linked plan that offers the combination of periodic payment on survival at defined regular intervals along with death protection throughout the policy term. With these two combinational benefits, the plan provides financial security to the families on the death of the insured and maturity benefits to the surviving policyholders.

Additional Features Of LIC New Money Back Policy – 20 years

  • Guaranteed maturity benefit is available
  • Protection enhancement by choosing the LIC’s Accidental Death and Disability Benefit Rider
  • Money back at defined regular intervals throughout the policy term
  • Life Cover is Available
  • Offering high sum assured discount
  • Loan facility is available
  • Guaranteed matured benefits
  • Rebate on choosing semi-annually and annually premium payment mode
  • The tax benefit is available

Benefits Of LIC New Money Back Policy – 20 years Plan

  1. Death Benefits
  2. Maturity Benefits
  3. Survival Benefits
  4. Surrender Value
  5. Loan Benefit
  6. Tax Benefits

Rider Availability With LIC New Money Back Policy – 20 years
You can always opt for LIC disability and accidental death rider, on the payment of additional rider premium.

Bajaj Allianz Cash Assure

It offers a traditional, non-linked, and participating money back plan that offers protection and ensures compulsory savings. You and your loved ones are ensured lump sum paybacks at specified regular intervals for the period of the policy term.

Key Features of the Bajaj Allianz Cash Assure

  • The plan offers money back pay-outs at the end of the 16th, 20th, 24th and 28th policy years.
  • The premium payments also offer flexibility of shorter period payments; monthly, quarterly, semi-annually, and annually. At every premium anniversary, one is allowed to change the premium payment mode.
  • Female policyholders are offered special rates.

Benefits of Bajaj Allianz cash Assure

  1. High Sum Assured Rebate (HSAR)
  2. Death Benefit
  3. Maturity Benefit
  4. Survival Benefit
  5. Loan
  6. Tax Benefits

Rider Benefits offered by Bajaj Allianz cash Assure

There are 5 rider benefits that policyholders can enjoy at minimal costs.

  1. Bajaj Allianz Accidental Permanent Total/ Partial Disability Benefit Rider
  2. Bajaj Allianz Accidental Death Benefit Rider
  3. Bajaj Allianz Critical Illness Benefit Rider
  4. Bajaj Allianz Waiver of Premium Benefit Rider
  5. Bajaj Allianz Family Income Benefit Rider

HDFC Life Super Income Plan

This is an endowment plan that is participating and non-linked and provides regular income for a period of 8 to 15 years. People uncertain of their future financial stability are advised to invest in this insurance plan to hedge against any uncertainties. Other than the sum assured payment, HDFC Life Super Income Plan has a bonus facility as well.

Key features of HDFC Life Super Income Plan

  • Guaranteed regular income in form of pay-outs for a continuous duration of 8-15 years.
  • Varied policy terms of 16, 18, 20, 22, 24, and 27 years.
  • Varied and flexible premium payment frequencies; Monthly, quarterly, semi-yearly and yearly.
  • The total corpus amount is enhanced with terminal, interim and Reversionary bonuses.

Benefits of HDFC Life Super Income Plan  

  1. Death Benefit
  2. 6 Plan Options
  3. Guaranteed Base Income: 100-1205 of the total sum assured
  4. Maturity Benefit
  5. Tax Benefit

Aegon Life Regular Money Back Insurance Plan

The Aegon Life Regular Money Back Insurance Plan provides double cushion as it guarantees pay-outs and life insurance plan.  It is a traditional, non-linked, participating plan with guaranteed money back in form of pay-outs for a period of 10 years. It caters to anyone who requires a large sum at regular intervals. The plan can be bought by anyone between 7 days and 55 years of age.

Key Features of Aegon Life Regular Money Back Insurance Plan

  • Flexibility offered in the premium payments options; monthly, semi-annual and yearly payment options are available.
  • Guaranteed pay-outs for a duration of 10 years.
  • The benefit amount increases annually because of the bonus accruals.
  • There is an add-on benefit facility in case of disability.

Benefits of Aegon Life Regular Money Back Insurance Plan

  1. Death Benefit
  2. Maturity Benefit
  3. Tax Benefit
  4. Bonus: Reversionary and Terminal
  5. Surrender Value
  6. Loan Benefit
  7. Guaranteed Pay-outs

Riders offered for Aegon Life Regular Money Back Insurance Plan

Aegon Life Premium Shield Rider is an option that a policyholder can pick to improve their protection. This rider option waives all future premiums in case of death/disability caused by an accident or sickness.

Reliance Super Money Back Plan

Reliance Super Money Back Plan is a traditional, non-participating money back policy that provides regular income and financial security to the policyholder and his dependents. It offers guaranteed regular income that increase annually and a lump sum amount paid is at certain interval periods.

Key Features of Reliance Super Money Back Plan

  • Flexible premium payment options; monthly, quarterly, semi-annually, yearly.
  • It offers varied policy terms 10, 20, 30, 40, and 50 years
  • It offers a limited premium payment plan such that one only pays the premiums for half the policy tenure.

Reasons to Buy Reliance Super Money Back Plan:

  1. Manage your monthly expenses
  2. Get your house repaired every five years
  • Plan a holiday every five years
  1. Go forward with your retirement planning
  2. Take care of your children’s monthly school fees

Benefits of Reliance Super Money Back Plan

  1. Death Benefit
  2. Money back Benefit
  3. Loyalty and Maturity additions
  4. Guaranteed Monthly Pay-outs
  5. Tax Benefit
  6. Maturity benefit
  7. Loan Benefit

The policyholder can get a loan facility that is up to 80% of the surrender value.

Canara HSBC OBC Smart Stage Money Back Plan

A traditional, participating, savings-oriented plan, Canara HSBC OBC Smart Stage Money Back Plan provides a bonus facility to its users. This money back guarantee enables policyholders to plan their finances and investments.

Key Features of Canara HSBC OBC Smart Stage Money Back Plan

  • Varied policy terms of 10 years, 15 years and 20 years
  • Flexible premium payment options, yearly, bi-annually, and monthly
  • The Maturity benefit consists of the total premium paid (which includes modal loading but excludes applicable cess(es)/levy & Goods and Services Tax, if applicable) provided the policy is still working.
  • High sum assured option available

Benefits of Canara HSBC OBC Smart Stage Money Back Plan

  1. Maturity Benefits
  2. Death Benefits
  3. Tax Benefits

BSLI Bachat Money Back Plan

Also known as Birla Sun Life Insurance (BSLI), Bachat Money Back Plan is a traditional, non-participating plan that offers money back plan guarantee. The policy term is 20 years and all premium payments have to be made.

Key Features of BSLI Bachat Money Back Plan

  • The plan offers Loyalty Additions to its loyal customers
  • Flexible premium payment frequency of monthly, quarterly, semi-annually, and  annually
  • Monthly base premiums of Rs. 400 and maximum of Rs. 5000 are to be paid.
  • The Sum Assured can go up to 180 times the Monthly Base Premium

Benefits of BSLI Bachat Money Back Plan

  • Survival Benefits
  • Death Benefit
  • Maturity Benefit
  • Income Tax Benefit

Rider Options Available

Accidental Death Rider Benefit offers additional sum to the beneficiary in case the policyholder dies under accidental circumstances.

LIC New Children Money Back Plan 

LIC New Children Money Back Plan doubles as insurance and investment that covers your children from risks and provides for them financially when the need arises. The plan is a traditional participating money back plan with a bonus facility.

Key Features of LIC New Children Money Back Plan 

  • Premiums are payable for a limited time of the policy tenure.
  • Once the child whose life is insured turns 18 years, he/she gets the possession of the policy and becomes a policyholder.
  • Survival benefits are paid at 18, 20 and 22 years of age @ 20% of the sum assured.
  • Survival benefits may be deferred by the policyholder to another date during the policy tenure.

Benefits of LIC New Children Money Back Plan 

  1. Maturity Benefit
  2. Death Benefit
  3. Survival Benefits
  4. Rebates
  5. Corporation profits
  6. Tax Benefit modes of payments.

Rider Benefit

The LIC New Children Money Back Plan offers additional cover under Premium Waiver Rider Benefit. This option waives all the premium payments in the case of demise of the Subscriber.

What You Need to Know Before Buying Money Back Policy

1. Policy Document: The most important task while buying a money back policy is to go through the finely printed terms & conditions.

Understand their each and every clause well. Also, make sure that the amount you are supposed to receive at the periodic intervals is sound enough to support you in the need of hour.

2. Claim Settlement Ratio: You should also pay attention to the past performance of the insurance provider. Even though you can’t rely solely on a company’s past performance to judge its performance, it will give you a fair idea of the commitment level of the particular insurance company.

3. Policy Tenure: You should also check for the number of years you need to pay the premium for. Although tax rebate is one of the most attractive features of this policy, there might be certain circumstances where you won’t be able to get any tax benefits. It’s always better to keep an eye on these downsides before signing up for the policy as tax benefits are the key element of money back policies.

Online Process to Buy Money Back Policy

Buying a Money Back policy online is a simple process that saves your time and money at the same time. While the process of buying a Money Back policy may vary across different insurance companies, it will majorly include the following steps:

  • You can directly log on to an insurer’s website and click on ‘online insurance’ option. Or else, you can also approach an aggregator website to compare and buy the best money back policy for you.
  • The next step is to enter the sum assured amount you are looking for.
  • Following this, choose the policy term and premium paying term.
  • The premium amount given to you will be calculated based on the inputs shared by you.
  • Choose the bank you wish to make your premium payment from.
  • You will receive an acknowledgement if your transaction is successful.
  • The respective insurance company will get back to you within a stipulated time limit to confirm whether your application has been approved or not. 8. Once your application is approved, you will be sent a soft copy of your chosen Money Back policy, followed by a hard copy.

Documents Required to Buying Money Back Policy

Below enlisted is the list of documents you will need to buy a money back policy:

  • Your latest photographs

Valid Photo Identity Proof:

  • Only the photo ID issued by the Government of India is valid such as Passport, Driving License, Voter ID, PAN Card, Aadhaar, MNREGA Job Card, etc.

Residential Proof:

  • Besides the aforementioned ID proofs, you may also need to provide a proof of your current address such as utility bills (water & electricity bills), rent agreement (if you live in a rented house), receipt of your property tax or Municipal Tax, statement/passbook of your bank account or post office savings account, etc.

Proof of Age:

  • Any valid government ID proof with your Date of Birth

Proof of Income:

  • For this, you need to submit your latest salary slips and employment certificate.

Money Back Policy FAQ’s

How is maturity benefit different from survival benefit?

Ans- Maturity benefit is paid at the time once the plan matures. Whereas, survival benefits are paid if the life assured survives until the policy mature date.

What are the different premium payment modes that are available under Money Back plans?

Ans- The premium payment mode may vary policy to policy. However, the most common payment modes offered by the various insurers include- annual, bi-annual, quarterly and monthly mode.

There might also be certain policies that come with a single-payment option. With such a plan,  the policyholder needs to pay the entire premium amount in one go while buying the plan.

What are the common exclusions in a Money Back policy?

Ans- One of the most common exclusions of a Money Back policy is suicide or attempt to suicide. However, you should refer the policy brochure for the complete list of exclusions.

What to do if I am not satisfied with the terms & conditions of Money Back policy that I bought?

Ans- If you are unsatisfied with the recently bought Money Back policy, you can return this plan within the free-look period. The free-look period comes for 15 to 30 days, within which you need to cancel the policy. You will also get your premium refunded by the insurance company after deducting the stamp duty charges and other costs.

What are the different tax benefits that are offered under Money Back plans?

Ans- You will receive tax benefits on the premiums paid under Section 80C of the Income Tax Act. Additionally, you can also claim tax deductions on the payouts offered on the plan under Section 10(10D) of the Income Tax Act.

What is the minimum eligibility for Money Back plans?

Ans- The minimum entry age usually varies from plan to plan and provider to provider. However, you can refer the policy brochure to find the eligibility criterion.

Is it required to undergo a pre-medical test before buying a Money Back policy?

Ans- Even though, pre-medical tests are not mandatory for every buyer; there are certain plans that may require a medical test. This is to ensure that you don’t suffer from any adverse medical condition. In case you are opting for a plan with a higher sum assured or after a certain age, you might need to undergo pre-medical tests. Furthermore, irrespective of whether you are required to undergo a pre-medical test or not, you are still required to provide a health certificate at the time of buying the policy.

What is ‘Surrender Value’?

Ans- The certain amount of money that you receive from the insurance provider after surrendering or terminating your plan (before it completes its tenure) is known as the ‘surrender value’.

Is there an option to nominate more than one individual for a single policy?

Ans- Yes, you can nominate more than one person for your Money Back policy. However, you will need to mention the sum assured percentage assigned to each nominee.

Is age a primary factor that affects my premium?

Ans- Yes, age is a major factor in deciding your premium rate. The older you get, the more premium you will need to pay.

Is there any grace period given by the insurance company to pay your premiums?

Ans- Yes, most of the insurance companies provide 15-30 days of grace period after the due date to pay your premiums. In case you still don’t pay the due amount, your policy will lapse after a certain period. However, you can revive the policy later by paying the due amount with a late fee imposed by the insurer.

What do you mean by ‘policy lapse’?

Ans- A Money Back policy is a long-term contract wherein you are required to pay the premiums on a regular basis to remain covered. If you are unable to pay your due premium by the end of the grace period, your insurance policy might lapse.

Here, it’s important to remember that a lapsed policy will not offer the coverage benefits to the policyholder. You have the option to revive your policy within 2-5 years from the date it lapses, based on your insurance provider’s terms & conditions.

Can I transfer my Money Back policy to my partner’s name?

Ans- No Money Back policy allows the transfer of policy under any circumstances.

What to do in case I have lost my policy document?

Ans- Inform your insurer on immediate basis about the loss of your document. You will be provided with a duplicate copy of your policy on payment of a nominal fee.

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