What is Money Back Policy? Its Features and Benefits | SBI Life

We are on the constant lookout for ways to generate wealth and secure our future financially. With this goal in mind, we invest in a variety of plans and other financial instruments. Each of these has its benefit. One such tool is the Money Back Plan. Let us know more about this plan and how it can help in financial planning below-

What is a Money Back Plan?

A money back life insurance policy pays out the sum assured as ‘survival benefits’ evenly distributed throughout the term of the policy as long as the policyholder is surviving. The survival benefit becomes payable after a few years of the commencement of the money back policy and continues till the maturity if the insured is alive. Upon the death of the policyholder before the maturation of the plan, the nominee(s) receive the maturity amount, the whole sum assured, along with any bonus if accrued.  

To understand the mechanism of this plan, let’s see an example:

Your father purchases a money back policy in your name when you are 20 years old. The initial amount of survival benefit will be paid in the 5th year, with which you can clear your student loan or fulfil educational expenses. The second payment will be made in the 10th year, when you are 30 years old, to help you with your wedding expenditure or home loan. The third payment, when you are 35 years old, can help you prepare for your child’s educational expenses or any mid-life venture. The final payment shall be in the 20th year when you are 40 years old. The remainder of the sum assured will be paid to you with reversionary bonus. You can plan for some expedition and meet your child’s educational expenditure with this sum.  

Features of Money Back Plans

1. Income during the term of the policy- The survival benefit paid periodically facilitates to pay off debts, plan your education, trips, purchase a vehicle and fulfil several other life goals. This coverage is unlike any additional benefit provided by insurance policies, and further strengthens your financial security. These regular payouts are what make the money back policy features unique.

2. Investment and Insurance components- With the enhanced liquidity and maturity benefits, this plan clubs the benefits of insurance as well as an investment plan.

3. Death Benefit- Even though the survival benefit is paid in instalments throughout the term period, the death benefit is paid in whole to the nominee(s) in case of the demise of the policyholder before the maturation of the plan.

4. Rider Benefits- Like any other standard insurance plan, Money Back Plan, too, provides with add-on benefits for critical illnesses and death by accident.This makes the money back policy meaning even more significant for those who want protection along with periodic returns.

5. Tax Benefits- Under the Income Tax Act, Money Back Plan is exempt from taxation as any other insurance plan.

With a low-risk feature, money back insurance policies are a perfect choice for risk-averse people seeking for investment and insurance coverage with income and maturity benefits. Remember to check all the features and go through all the terms and conditions carefully before purchasing a Money Back Plan. If you're wondering which is best money back policy, it’s advisable to compare various options and choose the one that aligns with your financial goals.

Frequently Asked Questions (FAQs)

What is a money back policy?

A money back policy is a life insurance plan that provides periodic payouts during the policy term, known as survival benefits, along with maturity benefits and life cover, making it suitable for individuals seeking both protection and liquidity.

What are the key features of a money back policy?

Money back policy features include regular income during the policy term, insurance coverage, tax benefits, and rider options like critical illness or accidental death coverage. It’s ideal for people looking for guaranteed returns along with life cover.

Which is the best money back policy in India?

The best money back policy depends on your financial goals, premium affordability, and expected returns. Leading insurers like SBI Life offer various plans that balance investment and insurance benefits effectively.

What is the meaning of a money back insurance policy?

The money back insurance policy meaning refers to a life insurance product that gives a percentage of the sum assured at regular intervals and pays the remaining amount along with bonuses at maturity or in case of the policyholder’s death.