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Money Back Policy – Overview & Key Details

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What is a Money Back Insurance policy?

A traditional insurance plan pays out a lump Sum Assured in the event of the death of the life insured. The beneficiaries / dependants / nominees of the life insured receive a benefit (called a death benefit) if the worst should come to pass for the insurance holder.

A money back insurance plan pays out the same maturity benefits in the form of several guaranteed “survival benefits" which are staggered evenly throughout the course of the policy. So, a money back insurance policy is an endowment plan with the benefit of regular liquidity.

Why You Need To Buy a Money back Policy?

A money back policy provides periodic pay-outs, ensuring a steady source of income to help policyholders meet expenses at different stages during the policy duration.

Money back policies provide the benefits of an insurance policy as well as an investment, ensuring that the policy earns the policyholder an income instead of just merely providing a lump sum in case of his/her demise.

These plans offer a guaranteed return on investment as well as periodic pay-outs and insurance cover, making it an ideal plan for individuals looking for both protection as well as a source of income.

In addition to the standard life insurance offered by regular policies, a money back policy offers a policyholder a maturity benefit as well as a regular income in the form of ‘survival benefits’ for the duration of the policy.

A Money Back Policy thus provides policyholders with a secure and assured return on investment in addition to providing them with an opportunity to grow their wealth through investment opportunities.

money back plans
money back plans

How Does Money Back Policy Work?

A Money back policy is a type of life insurance policy that offers policyholders Survival Benefits as well as investment opportunities in addition to Maturity Benefits.

An average money back policy with a 20 year tenure would thus pay the policyholder what is known as a ‘Survival Benefit’ a few years after the start of the policy. Around 20% of the Sum Assured would be paid out periodically, while the balance would be paid out at the time of policy maturity with a bonus, if any.

In the event the insured individual does not survive till the policy maturation, the nominee would receive the Death Benefit (the entire Sum Assured) and the policy would be terminated.

Features of Money Back Policy:

The money back policy has a number of distinct features that set it apart from other life insurance products, as mentioned below:

  • Money back plans provide policyholders with low risk investment options as well as insurance coverage.
  • The policies provide a regular source of income in the form of ‘Survival Benefits’ for the duration of the policy.
  • In the event of the policyholder’s demise during the policy term, the entire Sum Assured is paid out to the nominee irrespective of the amount already paid through the Survival Benefits.

Money Back Life Insurance Benefits:

  • Provides insurance cover during the policy term.
  • Pays out regular benefits throughout the term.
  • Works as an insurance policy as well as a long-term investment with good returns.
  • Provides tax benefits.
  • Less risky than other investments offering similar returns like mutual funds.
  • Enables long-term savings and regular income.
  • Ensures that amounts are disbursed regularly.
  • Some plans extend the insurance coverage guaranteed death benefits even after the maturity date and the last survival period, up to when the life insured attains the age of 100.
  • There are optional riders that cover things like specific illnesses, critical illnesses, disabilities, etc.

How to Choose a Money Back Policy:

Choosing the right money back policy is key to ensuring individuals receive the maximum benefits from a particular policy.

When choosing a money back plan, individuals should look at the policy tenure. The average tenure for a money back policy is around 20 years.

As money back policies pay policyholders a Survival Benefit, prospective policyholders should ascertain the percentage of the Sum Assured that will be paid out in instalments. The amount should be enough to cover any expenses the policyholder might have.

The type of investments available through the investment component of the policy should be looked over. Policyholders should also verify the duration of the pay-outs being made over the course of the policy term as Survival Benefits. Some plans pay policyholders every 5 years, others have a different timeline depending on the policy tenure.

Policyholders should also check to see if the money back policy offers tax benefits. Some plans do not offer a tax benefit if 20% of the Sum Assured is being provided as Survival Benefit.

Eligibility Criteria for Money Back Policy:

Prospective policyholders should meet certain criteria to qualify for a money back policy. The eligibility criteria are broadly listed below:

  • Policyholder should be above the minimum entry age and below the maximum entry age (varies from policy to policy).
  • Policyholder should be able to pay the Sum Assured as per the policy guidelines.

Documents Required for Money Back Policy:

The documents required to apply for a money back policy are listed below:

  • Proof of age document.
  • Proof of address document.
  • Application form duly filled in.
  • Medical reports (if applicable).

Money Back Policy Calculator:

For the purpose of computing the premium amount as well as the benefits that will be accrued, a number of insurance companies provide individuals with policy calculators. These calculators can be used to approximate the returns as well as costs associated with the policy in question. The individual can then choose to apply for the policy after looking over the figures to see if they are in line with his/her requirements.

A money back policy calculator computes the average premium to be paid based on the policy tenure and the Sum Assured. Additional details such as the age of the policyholder are also factors considered for calculation.

On entering the figures, the calculator computes the maturity benefit payable at the time of policy maturity as well as the premium payable.

Money Back Policy Riders:

Money back policies provide policyholders with the option to add cover that is not included in the original policy document in the form of riders. These riders cover additional possibilities such as accidental death, hospitalization expenses, permanent disability and critical illness to name a few.

The riders provided along with a money back policy differ from insurer to insurer and also depend on other variables such as the policy tenure.

A general list of riders that can be purchased along with a money back policy are given below:

  • Accidental Death Rider: this rider provides coverage in case the policyholder meets with an accidental death as outlines in the rider guidelines. In such a scenario, the policyholder’s beneficiaries/nominees will receive a lump sum as additional benefit.
  • Term Rider: this rider provides the policyholder with a waiver from paying the premium amount under certain circumstances but still provides coverage to the policyholder.
  • Critical Illness Rider: this rider provides the policyholder with financial assistance in the event he/she contracts a critical illness as defined by the rider.
  • Hospitalization Rider: this rider provides the policyholder with assistance in paying hospital bills in the event the policyholder is hospitalized. A daily allowance is issued to the policyholder to cover expenses related to treatment.

Popular Money Back Plans by Insurers

  1. LIC Money Back With Profit

    Feature and Benefits:

    • Comprehensive life insurance cover against death.
    • The amount payable on death is the Sum Assured plus all bonuses, as a lump sum, irrespective of all survival benefits paid earlier.
    • With-profit plan which participates in the profits of LIC’s life insurance business.
    • Surrender Values are available.
  2. Popular LIC Money Back Plans

  3. HDFC Life Super Income Plan – Money Back policy

    Feature and Benefits:

    • Limited premium paying terms of 8, 10 or 12 years.
    • Guaranteed yearly income, for 8, 10, 12 or 15 years.
    • Coverage against death throughout premium paying term and pay out period.
    • No need for medical tests on the completion of a short medical questionnaire.
    • Regular income at the rate of 8.0% to 12.5% of the Sum Assured on Maturity, payable yearly.
  4. SBI Life – Smart Money Back Gold

    Feature and Benefits:

    • Survival benefits of 110% of the Sum Assured paid till maturity.
    • 4 term options – 12, 15, 20 and 25 years.
    • Monthly, quarterly, half yearly and yearly premium paying modes.
    • 4 riders available:
      • SBI Life – Accidental Death Benefit Rider.
      • SBI Life – Accidental Total and Permanent Disability Rider.
      • SBI Life – Preferred Term Rider.
      • SBI Life – Criti Care 13 Non-Linked Rider.
      • Tax benefits.
  5. Birla Sun Life Insurance Bachat Money Back Plan

    Feature and Benefits:

    • Monthly base premium amount can be chosen from these bands:

      • Band 1 – Rs.400 to Rs.599, per month.
      • Band 3 – Rs.600 to Rs.800, per month.
      • Band 4 – Rs.900 and above, per month.
    • Annual and semi-annual modes of premium payment entitles you to rebates of 2% and 4% respectively.
    • Survival benefit of 20% of the monthly base premium paid out on the 5th, 10th and 15th policy anniversaries.
    • Maturity benefit payable after 20 years of the policy term includes
      • All monthly base premiums paid, plus
      • All Bachat addition earned, plus
      • Loyalty additions, minus
      • All Survival Benefits paid.
    • Death benefit includes:

      • All monthly base premiums paid (or Sum Assured, whichever is higher), plus
      • All Bachat addition earned, plus
      • Loyalty additions, minus
      • All Survival Benefits paid.
  6. Reliance Super Money Back Plan

    • Money back benefits paid every 5 policy years, until maturity.
    • Increasing regular monthly income.
    • Loyalty addition payable at the end of the premium paying term.
    • Maturity addition payable at the end of the policy term.
    • Policy term options of 10, 20, 30, 40 and 50 years.
    • Premium paying term only half of the policy term.
    • Monthly, quarterly, semi-annual and yearly premium paying modes.
  7. Are Money Back Policies For You?

    The decision to take on a money back insurance policy must be well thought out and its benefits, returns on investment, etc. must be compared against those of similar investments.

    If you are a healthy individual in need of life insurance cover and an investment that helps you save on tax in addition to giving you regular returns, you may choose to opt for a combination of financial products, or opt for a single money back insurance policy which does the same thing (albeit at a lower rate of returns). It’s important to note that the risk involved in your investment is proportional to the returns you will receive.

    You may purchase a life insurance policy and invest in a separate mutual fund, etc. and expose yourself to the risks involved in a mutual fund investment. It’s ideal for those with a high risk appetite. For those who find that their life savings are too valuable to leave to chance, an endowment life insurance policy with a money back policy is ideal.

    A money back policy is far less risky than a mutual fund investment. In addition to being a tax saving investment with guaranteed returns during the course of the term, it also provides comprehensive life insurance cover – which is a win-win situation for the investor (and his dependents).

    There are arguments against money back plans because the regular returns on investment are not as high as those offered by mutual funds, equity and debt related investments of similar amounts for similar tenures. Investing in two separate financial products – one for a life insurance policy and one for a product directed to give you returns on investment – will pay off better with a higher percentage of returns. That being said, it must be noted that while there are better options for returns on investments, money back policies are first and foremost insurance policies. They just have the added benefit of giving you a return on the premium you’ve invested – at regular intervals during the plan tenure.

    Consider your risk appetite and requirement for life insurance cover before taking any major financial decision.

    Money Back Policy FAQ’s

    1. Is the amount received through a money back policy taxable?

    A. If the premium paid is more than 10% of the Sum Assured for policies purchased after April 1st, 2012, the amount received is taxable.

    2. Is there a penalty if I do not pay my premium for my money back policy on time?

    A. If the premium amount is not paid within the grace period allotted for the same, the policy lapses and benefits associated with the policy cease. If the premiums have been paid for a minimum of 3 years, a paid up value for a reduced sum is created.

    3. Can I revive a money back policy?

    A. Money back policies can be revived within 2 years from the date the last premium was paid.

    4. Can I transfer my money back policy?

    A. As of now, it is not possible to transfer a money back policy. The policy can be surrendered if desired.

    5. How do I surrender my money back policy?

    A. A money back policy can be surrendered on its attaining cash value (after payment of 3 years’ worth of premiums). The policy will have a surrender value based on the policy tenure and the number of premiums paid.

GST of 18% is applicable on life insurance effective from the 1st of July, 2017

Money Back Plans Reviews

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  • Bajaj Allianz Life Life Insurance
    "Can do Better"
    0.5 4.0/5 "Great!"
    The coverage value is fine in Bajaj Allianz and benefits are good. I didn't interact much with the agent but at the time of purchasing the policy they have coordinated very well. The policy coverage is minimum, the tax benefits and financial security for unforeseen events is there.
    Was this review helpful? 0
    , hyderabad
    Reviewed on Jan 18, 2019
  • LIC Life Insurance
    "Must policy for every Indian"
    0.5 5.0/5 "Blown Away!"
    LIC is a very good policy in India. I cannot compared the LIC company with any other company in terms of best services and the claim ratio. After the maturity, in the same day the amount will be credited in my account and i don't need to contact anyone. They are providing all of kind of policy which suits for all kind of aged people thats the beauty of LIC.
    Was this review helpful? 0
    , hyderabad
    Reviewed on Jan 18, 2019
  • LIC Life Insurance
    "Excellent Service"
    0.5 5.0/5 "Blown Away!"
    I had taken this LIC Jeevan anand insurance policy a long time back and i had been paying the premium half yearly. I had been paying the premium online and the payment method has been convenient. It has been a good policy and it is suggestible to others.
    Was this review helpful? 0
    , navi mumbai
    Reviewed on Jan 18, 2019
  • LIC Life Insurance
    "Good Policy"
    0.5 4.0/5 "Great!"
    5 years back, i have purchased the life insurance policy with Life insurance corporation of India. The plan name is jeevan anand and its a good policy to take. I forgot to make the payment on time hence the policy got lapsed. The service of LIC is good. They have sent a regular notification regarding the premium payment.
    Was this review helpful? 0
    , new delhi
    Reviewed on Jan 18, 2019
  • LIC Life Insurance
    "Good Policy"
    0.5 4.0/5 "Great!"
    Based on the benefits and returns i have chosen this life insurance corporation of India . I am satisfied with the amount which am making for the policy . Am making the payment yearly through online with tenure period of 20 years . This policy cover accidental benefits and critical illness benefits . Overall am happy with it.
    Was this review helpful? 0
    , mumbai
    Reviewed on Jan 18, 2019
  • LIC Life Insurance
    "Benefits should be increased"
    0.5 4.0/5 "Great!"
    I have not much interacted with the customer support of LIC, but their agents are professional. In Jeevan anad policy the maturity value is lesser for 15 years. I make the premium of Rs. 30,000 per annum. After the tenure period I will amount around Rs 4 lakhs. LIC is providing financial security for unforeseen events but need to concernate on benefits.
    Was this review helpful? 0
    , chennai
    Reviewed on Jan 18, 2019
  • LIC Life Insurance
    "Excellent"
    0.5 5.0/5 "Blown Away!"
    Name of the LIC policy is Jeevan Ankpur and tenure is 16 years. The yearly premium is 5061 rupees which I pay through net banking or cheque. The customer service and response was excellent. The benefits are good, it includes accidental or incase of death they will provide sum assured of 10% every year up to 18years of my daughter.
    Was this review helpful? 0
    , indore
    Reviewed on Jan 18, 2019
  • LIC Life Insurance
    "Good benefit"
    0.5 5.0/5 "Blown Away!"
    My life insurance policy was taken with LIC. The payment option is very good. I can make the payment through online banking, credit card, cash and cheque. In 2017, i have purchased this policy. Total term period of the policy is 21 years. I'm satisfied with the sum assured amount. Since its a reputed company and claim process is easy hence i have selected Life Insurance Corporation of India.
    Was this review helpful? 0
    , chennai
    Reviewed on Jan 18, 2019
  • LIC Life Insurance
    "Trusted Policy with LIC"
    0.5 5.0/5 "Blown Away!"
    I have so many policy, the money back is good based on the policy I took the loan. LIC is good there is no issue Its a trusted one. They are very transparent, every 5 years they gave me money bonus and policy cover is good the payment option is very convenient.
    Was this review helpful? 0
    , chennai
    Reviewed on Jan 18, 2019
  • LIC Life Insurance
    "Trusted Policy with LIC"
    0.5 5.0/5 "Blown Away!"
    I have so many policy, the money back is good based on the policy I took the loan. LIC is good there is no issue Its a trusted one. They are very transparent, every 5 years they gave me money bonus and policy cover is good the payment option is very convenient.
    Was this review helpful? 0
    , chennai
    Reviewed on Jan 18, 2019
  • Max Life Insurance
    "Good for tax saving"
    0.5 4.0/5 "Great!"
    AXIS bank suggested Max life its good for the income tax benefits under 80c section, the premium amount is around Rs. 50,000 for 6 years term. On time I got the policy copy, the payment option is good, I need to wait for 20 years but pre closure option is available.
    Was this review helpful? 0
    , chennai
    Reviewed on Jan 18, 2019
  • LIC Life Insurance
    "Must Have"
    0.5 5.0/5 "Blown Away!"
    Its is feasible and I can get the loan based on the policy coverage. I took the Jeevan anand policy probably I make the premium around Rs. 15,000 per year it has term of 20 years, Almost I paid it for 15 years , remaining 5 years to go. LIC Is good for tax benefits.
    Was this review helpful? 0
    , bangalore
    Reviewed on Jan 17, 2019
  • SBI Life Life Insurance
    "Excellent Policy"
    0.5 5.0/5 "Blown Away!"
    I had taken this insurance policy a long time back, the services which they had been very good. The premium amount has been nominal and has not been high and the payment method has been simple. I can make the payments using my credit card and there has not been any hassle faced with the services of them.
    Was this review helpful? 0
    , chennai
    Reviewed on Jan 17, 2019
  • ICICI Prudential Life Insurance
    "worst policy ever"
    0.5 1.0/5 "Really Bad"
    I am not aware that i am opening insurance with icici while opening my salary Acc. But not they are not closing it . I just feel like i made a big mistake by considering icici for my salary account . Think again if you really think icici is a good choice .
    Was this review helpful? 0
    , hyderabad
    Reviewed on Jan 17, 2019
  • LIC Life Insurance
    "Excellent service"
    0.5 5.0/5 "Blown Away!"
    I have been holding my life insurance with Life insurance corporation of India, i took my life insurance as the agent of that and he had suggested me good policy explain me well about the coverage and the premium amount they have charged me was nominal they have given me up to 3,000 , it is in monthly basis, and the premium amount gets auto debited from my account.
    Was this review helpful? 0
    , mumbai
    Reviewed on Jan 17, 2019
  • LIC Life Insurance
    "Good service"
    0.5 4.0/5 "Great!"
    I have been holding my life insurance with Life insurance corporation of India from long time, and the agent of LIC was know person so he suggested me best policy and there premium amount they have given me was nominal , the premium amount i use pay on yearly basis,and there is no hidden charged , and i pay premium through auto debit .
    Was this review helpful? 0
    , new delhi
    Reviewed on Jan 17, 2019
  • LIC Life Insurance
    "Excellent service"
    0.5 5.0/5 "Blown Away!"
    I have been holding my life insurance with Life Insurance corporation of India,i took jeevan anand policy , and the agent is my brother , he had explained me clearly and advise me which insurance is good for me and i pay premium on half yearly basis and monthly basis as i have two policy, i use to pay through off line mode.
    Was this review helpful? 0
    , hyderabad
    Reviewed on Jan 17, 2019
  • LIC Life Insurance
    "Best service"
    0.5 5.0/5 "Blown Away!"
    I have been holding my life insurance with Life Insurance corporation of India,i took life endowment policy , and the agent had properly explain me out the plan benefits and policy coverage , he had explained me clearly and advise me which insurance is good for me and i pay premium on quarterly basis,i use to pay premium up to 14000 through on line, i have two policy second policy premium i use to pay 25,000 as an yearly basis,and there patrol is good,they use to update me if any policy they use to update me, i use to pay through on line mode, through neft transfer.
    Was this review helpful? 0
    , chennai
    Reviewed on Jan 17, 2019
  • LIC Life Insurance
    "Good service"
    0.5 4.0/5 "Great!"
    I have been using my life insurance with Life insurance corporation of India, i have taken policy for my family , i have paying premium on half yearly basis up to 65,000 they have charged me , it is nominal for me , i use to pay through off line or on line mode,it depends according to my time, it i want to pay in emergency purpose i need to pay through on line,if there is delay in paying premium they use to charged me up to 230 rupees.
    Was this review helpful? 0
    , lucknow
    Reviewed on Jan 17, 2019
  • Bharti Axa Life Life Insurance
    "Good for nominee savings"
    0.5 4.0/5 "Great!"
    Reason to chose Bharthi Axa, my friend working there hence I took the policy. I have taken term insurance with the coverage of Rs.23 lakhs , I can add multiple nominees, I make the premium of Rs.95,000 its for per annum. It has term of 10 years, now a days they have different options too.
    Was this review helpful? 0
    , bangalore
    Reviewed on Jan 17, 2019
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