Why You Need a Money Back Policy? Benefits

There are many kinds of life insurance plans that are available nowadays. Do you know about the money back policy? It is one that has diverse advantages for policyholders. Let us take a closer look at the policy and what it actually means. 

Money Back Policy- What It Means 

When you talk about a money back policy, knowing about its type and nature is essential. It is a plan where you get both investment and insurance coverage options. The policy itself offers monetary payouts periodically, while the insurance company also pays the lump sum to the nominee of the policyholder upon the latter’s demise within the term of the policy. 

There are several policies that also come with survival benefits at maturity and also across the term of the policy. It will ensure high liquidity for investors as compared to various other kinds of life insurance policies. 

Main Benefits of Money Back Policies

If you’re thinking of deploying investments in a money back policy, here are some of the benefits you should know more about. 

• • Sum Assured Payout- A fixed sum assured is paid by the insurer in case of any unfortunate event like the demise of the policyholder within the policy tenure. This sum helps the individual’s family members take care of diverse expenditures and financially secure themselves even when he/she is not around. Yet, if the policyholder survives the tenure of the plan, then survival benefits are also given by the insurer. These amounts can be used to take care of specific financial goals, i.e. home purchases, higher education costs, and more. 
  • Insurance Coverage- When you buy a money back policy, it comes with suitable life coverage for the nominees of the policyholder. This automatically gives him/her mental peace, since the family will remain financially secure even when he/she passes away. 
  • Low-Risk Investment- As you already know, there are various types of investments with a direct link to market fluctuations.  Money back plans are different, since they come with returns at periodic intervals that are guaranteed. This makes them a low-risk option in your portfolio for diversifying and balancing between non-volatile and volatile investment options. 
  • Returns Within a Few Years- With periodic returns, money back policies function as a regular income source. As opposed to regular life insurance policies, they have maturity benefits and a continuous income stream at intervals. 

• Bonuses-Several policies have bonuses or rewards that the insurance company pays at maturity. These are essentially rewards for those who stay invested in these plans throughout their tenure. 

• Tax Benefits- Your policy premiums will get you tax deductions under Section 80C. The sum assured is also tax-exempted as per Section 10 (10D). These are tax benefits that are major advantages for policyholders. 

Thus, a money back policy is a great option to enable both guaranteed returns and lower risks. It offers adequate coverage and financial safety for your family as well, thereby giving you higher peace of mind in turn.