What is Money Back Policy? Its Needs and Benefits


As the name itself hints, a money back policy is one which ensures money back at a period of regular intervals. More specifically, the amount of the concerned money back is shelled out during the course of the tenure of the plan and is a percentage of the sum assured.As far as money back benefits are concerned, they are also known as survival benefits.

The survival benefits are disbursed during the course of the term plan and on maturity whereas the vested bonuses are disbursed along with the remaining sum assured. The following points help to sum up some of the basic features of a money back policy:

  • The survival benefits are essentially computed as a percentage of the sum assured.
  • The benefits are disbursed at regular intervals. There is generally a fixed period when the said benefits are paid out.
  • Generally speaking, money back policies are participating plans in which bonuses are added. The accrued bonus is then disbursed either on the date of maturity or on the date of death.
  • Apart from the aforementioned features, there are several riders available. Under a host of money back plans, it is important to note that rider benefits are essentially shelled out lump sums.

Why Should One Buy a Money Back Policy?

Naturally, before procuring a money back policy it is significant to properly comprehend the necessity behind a fundamental money back policy. Therefore, in order to understand the need of a proper money back plan, the following points may be considered:

  • First and foremost, it is important to underscore the fundamental point that a money back plan is essentially a kind of saving plan. In other words, in money back policy the concerned policyholder is essentially entitled to receiving survival benefits along with maturity benefits, not to mention bonuses.
  • One of the most crucial reasons why such a policy is undeniably important is that it provides funds on rather regular intervals after a fixed period of time till the end of the concerned policy.
  • Given the unpredictability of life and the apparent volatility of an individual’s financial corpus, money back policy is certainly one of the best saving plans to count on.
  • Additionally, as far as money back plans are concerned, they come equipped with a life insurance cover. This in itself makes them one of the most elementary aspects when it comes to insurance.
  • A very important facet of the plan is that it provides the concerned policyholder sufficient liquidity which eventually helps one to better arrange the financial goals.
  • Perhaps the most significant aspect of a money back plan is that it ensures risk free returns. Most of the times people tend to avoid the risk factor. For such people, a money back plan is certainly one of the most ideal choices.
  • In the form of survival benefits, it is important to note that a money back plan also offers regular income.
  • One of the most endearing aspects of a money back policy is that in case the concerned policyholder dies, the entire amount of the respective sum assured is disbursed to the concerned nominee.
  • As far as the aspect of bonuses is concerned, it includes the accrued revisionary bonuses as announced by the concerned insurer. It is equally important to keep in mind that one should also factor in the performance ratio of the company in question.
  • As far as the death benefit under the policy is concerned, it is important to note that in case of the decease of the concerned policyholder, the survival benefit is not included.
  • It is crucial to understand the distinction when a survival benefit is furnished and when it is not. Also, the survival benefits are disbursed along with the amount of the sum assured.
  • As far as the sum assured is concerned, it is essentially defined as the total amount of the cover as selected by the concerned insured at the beginning of the policy.

How to Buy Money Back Policy?

In order to buy a money back plan, it is of foremost significance to comprehend the subjective preferences and needs. One should note that there a string of infinite money back plans available in the market. However, to choose the most apposite plan needs both a cautious approach and a judicious vigilance.

There a generally a number of factors on which whether one would buy a policy or not depends. Some of them include:

  • The financial goals of the prospective policyholder.
  • The amount of funds that one can invest in order to buy a money back plan needs to be factored in.
  • The time period for which the concerned insured would want to invest is a crucial factor.
  • The characteristic of the payouts as chosen by the concerned insured.

The aforementioned factors are some of the most essential ones to consider before buying a money back plan. Still, with the number of plans provided in the market, it might be a little strenuous to actually find out the best policy.

Generally speaking, in order to pick the most appropriate money back policy it is essential to do a thorough comparative research. In other words, one should make it a point to try to navigate across quite a number of policies from different outlets and websites in order to arrive at a favourable conclusion.

Generally speaking, with the Internet at almost everyone’s disposal, one can easily compare plans in order to better comprehend the subjective goals. Features such as inclusions, exclusions, rider benefits, amount of premiums, payout options, features of a plan etc. are some of the essential criteria to factor in while considering picking on a money back plan. Summarily, three crucial things to keep in mind may include:

  • Deciding the exact number of years one wishes to stay invested in a particular policy.
  • The appropriate amount of the sum assured in order to cover one’s financial goals.
  • The number of payouts during the tenure of the policy.

The aforementioned factors are some of the more essential ones to consider before buying a money back plan. In fact, what is even more fundamental is the fact that one should make it a point to thoroughly undergo a considerable comparative study before buying a plan.

It is generally recommended to go through the policies online. Agents can be noisome. Moreover, a particular agent will always tend to provide a rather exaggerated picture of a particular insurance outlet. Allure is naturally one of their rudimentary regimens. In that case, a prospective policyholder might be lured into falling for a rather prejudiced vision and eventually pick the wrong plan.

Therefore, it is always better to take up the reins and follow as many policies as possible in order to arrive at an apposite conclusion. Moreover, there is the freedom of patiently probing through each and every feature of each and every policy and then arrive at a decision. Additionally, online methods are more guaranteed and there is relatively a lesser chance of getting hoodwinked to buy a wrong plan.

Money Back Policy – Eligibility Criteria

Naturally, it is of utmost significance to thoroughly note the eligibility criteria before buying a money back plan. In order to purchase a money back plan, the following points must be kept in mind:

  • One must meet the age criterion before buying a money back plan. Also, one cannot extend the policy beyond the maximum limit of the age as provisioned under the plan.
  • Most importantly, one must adhere to the policy’s premium payment mode and the term of the plan.
  • Generally speaking, in most of the insurance outlets the minimum basic sum assured is Rs. 100000. There is no limit on the amount of the maximum sum assured.
  • Generally speaking, the minimum age limit is thirteen years while the maximum age limit is not more than fifty years.
  • The maximum maturity age of the concerned assured is on an average seventy years. Although tidbits might vary across insurance companies, the picture as cited is more or less constant.

In order for a prospective policyholder to buy money back plan certain documents are required. The following points need to be kept in mind:

  • First and foremost, the prospective insured needs to furnish his or her income roof. In other words, one needs to furnish salary slips, income tax returns, bank statements among other things.
  • Secondly, one needs to furnish an address proof. In other words, one needs to present the driving license, the Aadhar card, voter’s ID, passport among other things.
  • ID proof is important. Specifically, PAN card, Aadhar card, voter ID among other things, if any.
  • Age proof is mandatory. Specifically, Aadhar card, voter’s ID, driving license among other things.

The aforementioned documents need to be furnished in order to purchase a money back plan. The documents are more or less constant across a majority of insurance outlets.

Additional Points

There certain points, summarily speaking, that need to be kept in mind before buying money back plan. They include:

  • It is significant to keep in mind that as far as taxation is concerned, the amount received through the money back plan is essentially exempt from tax as per Section 10D of the Income Tax Act of India.
  • Most of the times people are not sure about the penalty prospects of money back policy. As far as penalties are concerned, in case a policyholder somehow fails to shell out premium at the right time the policy enters a grace period. If the premium is still not paid within the grace period the policy lapses.
  • As far as a lapsed policy is concerned, it can be revived by paying the due premium couple with interest and also the revival charges, if any.
  • One of the most important points to underscore is that as far as money back policy is concerned it is formally not transferable. However, it is equally important to remember that one can obviously make an assignment in another person’s name.
  • It should be noted that a particular money back plan can be revived. Within a period of two years from the lapse of the policy one can revive the plan. However, one should also note that one must adhere to the revival conditions as would be set by the concerned insurance company.
  • Most of the times people are not sure as to whether one can actually surrender a money back plan. In that case, it must be noted that money back policy cannot be surrendered online. However, one may surrender it by contacting the concerned insurance company’s branch office.

The aforementioned points need to be kept in mind while procuring money back policy. Apart from those, it is equally significant to note that in some cases if the concerned assured ends life within a year from the date of commencement of the policy, the concerned insurance outlet will not accept any claims except eighty per cent of the premiums paid.

The aforementioned condition may not be equal in all insurance outlets. The said situation is essentially indicative of a general scenario. However, most of the times what is most important is the one year period from the date of the commencement of the policy. Generally speaking, a majority of inclusions and exclusions are especially rampant during this one year period.

Therefore, a prospective policyholder should always make it a point to thoroughly read the fine print before actually buying a particular money back plan. Also, what is equally significant to keep in mind is that in cases of procuring insurance, one should not fall for hearsay or the advice of laymen.

Comparative research is best done through online methods. Moreover, it is of foremost importance to consider whether one actually needs money back policy or not. Most of the times people tend to get swayed by societal allures and end up buying a policy when actually there is no need. Therefore, it is important to thoroughly comprehend one’s own financial needs, if any.

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