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Money back policies combine insurance with savings, enabling you to benefit from both life insurance and financial savings. Money back life insurance plans pay out a percentage of the amount promised on a regular basis after a few years from the commencement of the policy term, while typical life insurance policies pay out the whole sum assured at the plan’s maturity.
The money back policy is popular among those who wish to preserve at least a percentage of their investment returns and those with short-term or pre-planned objectives.
Money back policies have many features that distinguish them from other forms of life insurance. A money back policy provides regular payments, a survival benefit, a maturity benefit, a death benefit, a tax benefit, a long-life cover, extra riders, and other benefits.
Mira will not be able to get the paperwork done on the policy if she is not working with experts. Most financial experts point out that unless you are taking help from taxation and accounting services in Hong Kong, you will not be able to get the best knowhow and returns on your money back policy.
How does a money back policy work?
Exemplifications always provide a clear grasp of how an insurance plan operates. So, here’s a basic demonstration of how a money back policy works:
For example, Mira purchases a money back policy with a Sum Assured of Rs.10 lakhs. She selects a term of 25 years and pays monthly premiums for the duration of the coverage.
The plan guarantees survivor benefits of 20% of the Sum Assured for every five years of coverage. At maturity, 20% of the Sum Assured is paid, plus any earned incentives.
Mira, therefore, earns Rs.2 lakhs every five years, i.e. in the fifth policy year, the tenth policy year, the fifteenth policy year, and the twentieth policy year. Mira has already got Rs.8 lakhs at the conclusion of the 20th insurance year. At maturity, she would get Rs. 2 lakhs in addition to further incentives, and the plan would be terminated.
If Mira dies in the 18th year of the policy, the nominee will get Rs.10 lakhs in addition to the extra bonus, despite the fact that she has already collected Rs.6 lakhs in Survival Benefits.
Benefits of Money Back Policy
While all life insurance policies provide benefits to help you meet your expenditures, money back policies go a step further. Money-back is not just a life insurance policy but also a saving mechanism because of the following benefits:
1. Advantage of Maturity
When the plan reaches its maturity age and the life guaranteed survives the maturity age of the policy, the life assured will receive the amount assured plus any further incentives that may be offered.
2. Benefits of Survival
If the life guaranteed survives the whole policy duration, they will get the amount promised and any revisional and final additional bonuses that may be offered.
3. Benefits of Death
Suppose the life guaranteed dies accidentally before the end of the policy term, and all premiums have been paid. In that case, the nominee or beneficiary of the policy will receive the whole amount promised on death as well as any premiums paid previous to death.
This would help the life ensured family to meet essential expenses and acquire financial stability even after you die. This benefit guarantees that your family is not left out of pocket.
4. Benefit from Taxes
All contributions made in these programs are tax-deductible under section 80C of the Income Tax Act of 1961.
5. Additional Riders
If the life assured wants to cover elements of their life that are not currently covered by the plan, they would be provided with a list of extra riders or add-ons to make this possible. These extras are also tax-deductible.
6. Provides an insurance cover
A money back policy, although seen as an excellent financial tool, is also an insurance mechanism. You may choose an appropriate policy that can be utilised to satisfy the financial needs of your loved ones. Such arrangements provide dependability and allow your family members to live a dignified life even when you are not around.
7. Comes with a low-profile risk
Other financial products, such as mutual funds, stocks, bonds, equities, and so on, are influenced by market volatility. A money back policy provides you with assured returns at regular periods. Such programs are trustworthy and hassle-free due to the monthly income and insurance coverage.
If you like to retain a low-risk appetite, this might be a good option for you. Money back policies enable you to mitigate portfolio risk. They may be used to diversify your assets and build a well-balanced portfolio of volatile and non-volatile instruments.
8. Bonus amounts
The Money back policy also contributes to the insurer’s revenues through bonuses. Every year, the bonus is announced as a percentage of the money insured by the insurance provider and is accumulated.
When the policy matures, or the policyholder dies, the accumulated bonus is added to the total payout payable. The bonus portion of the money back policy is mostly determined by the insurance company’s performance and the customer’s ability to pay all premiums on time.
Reasons to Buy Money Back Policy
Unlike traditional insurance policies, which pay out the death benefit to the policyholder’s beneficiaries, money back policies pay the policyholder’s death benefit. On the other hand, the insurer pays survival benefits at various periods. The main difference between an endowment policy and a money back policy is that the latter provides regular liquidity.
A money back policy combines the benefits of an investing program with an insurance policy. The policyholder receives death and survivorship benefits. Because payouts are given in phases, money back policies may be a reliable source of income. A policyholder may use their coverage to fund their retirement goals.
If the policyholder lives out of the normal insurance term, they will not get a return on investment. On the other hand, money-back insurance provides assured returns and frequent payouts. Money return insurance provides periodic income as well as financial security to the beneficiaries of the policyholder.
The policy allows for the possibility of return on investment. In addition, the insurance provider provides the policyholder with a certain amount assured.
Wrapping It Up
Money back policy has a number of advantages that set it apart from other life insurance policies on the market. Among these are the maturity benefit, the survival benefit, the tax advantage, and many more. Because of the maturity advantage it gives, whole life insurance is also a saving tool.
By this point, it should be clear that whole life insurance is also the finest investment approach in every manner. With a Money Back policy, now is the time to start saving and investing.