Last updated on July 2nd, 2024 at 09:55 am
If there is anything that makes me love life insurance, it is the money-back aspect of it. You may not know how it feels when you get regular payouts, maturity benefits, and death benefits in addition to the bonus.
Meaning
So, what is a money-back insurance policy and how does it work?
A money-back insurance plan is a form of life insurance that provides regular returns to the policyholder at an agreed time during the policy tenure. The policyholder can also opt for a lump-sum payout if they desire, but the major feature of a money-back policy is the guaranteed returns the insured will receive from the policy, although this can be influenced by the performance of the investment.
When you purchase a money-back insurance policy, you will get some percentage of the money invested during the policy tenure, which is known as “Survival Benefits.” Based on the agreement with the insurer, you will keep getting regular payments through the tenure of the policy.
Incredibly, money-back insurance plans also offer life insurance coverage to protect your loved ones financially in the case of untimely death. If you die, your beneficiary is paid not only the sum assured but also a bonus amount. Even if you have gotten payment as the policyholder during the policy tenure, it doesn’t affect the payouts to be received by your beneficiary.
Here are its features
Guaranteed returns
A money-back policy is both an insurance strategy as well as an investment vehicle that is safe and yields secured returns that are not influenced by the fluctuation of the equity market. You can be rest assured of getting guaranteed returns irrespective of the directions of the market
Income during the policy tenure
The policyholder gets regular income they can utilize to take care of their major expenses, such as vacation, education expenses, etc.
Income on maturity
As a policyholder, you will get a guaranteed and secured income on maturity with their money-back plan. You can have a good measure of control over your future financially.
Financial support upon the death of the policyholder
In a case where the insured dies, their beneficiaries get the money assured as well as any other bonus. This is not something every insurance policy can offer.
Bonus additions
Here, we have a reversionary bonus as well as an additional bonus. A reversionary bonus is offered as a per cent of the amount assured by the insurance provider. On the other hand, the policyholder can also get an additional bonus that is dependent on the performance of the firm. In other words, if the company performs very well financially with the resources of their policyholders, they can grant some additional bonuses accordingly.
Add-on riders
This is only available based on the policy you are working with. For instance, a person can get the option of adding a hospitalization rider which helps ease the burdens of hospital expenses if they are hospitalized.
What are its benefits?
Preservation of savings
There is a guarantee over the safety of your savings while you utilize them for useful things anytime you want to. Interestingly, whenever you are ready to make use of your money, it would have grown.
Simplification of investments
Not everyone has the fortitude for complicated investment opportunities, particularly if they only have the aim of earning money as quickly as possible without big commitments of their time. A money-back plan can help hedge your resources from inflation and taxes, while you get a return on your investment.
Take care of crucial family goals
The good thing is that even if you are no longer on the scene, the investment can still help provide the resources needed to carry out your family goals. Also, let’s say there is a family member in need of lifelong financial support for whatever reason (such as a disability), you will discover that money-back plans are very useful long-term cash flow strategies.
