Money-back Life Insurance PlanGet back the premiums you have paid for the insurance , Puzzled! The money-back plans provides life insurance cover for a specified period. The insured gets back fixed, tax-free proportions from the sum assured at fixed intervals.
Apnainsurance.com Research Bureau
20 Dec 2007
The money-back plan provides life insurance cover for a specific period. During the term of the policy, the insured receives tax-free, fixed proportions of the sum assured at regular intervals. On maturity i.e. on surviving the entire term of the policy, the insured receives the balance portion of the sum assured, if any, plus the bonus/participating profit/ guaranteed addition for the term of the policy, if any, or the value of the investments.
In the event of death of the insured during the term of the policy, the nominee still receives the entire sum assured (even if the insured had received fixed portions of the sum assured), plus the bonus/participating profit/guaranteed addition, if any.
The premium for money back policies is higher in comparison to endowment and term plans. If one purchases money back plans with guaranteed addition, the premium is even higher. Some companies offer an option in choosing the premium paying term.
Money back policies are advisable if the insured wants a product that provides both - insurance cover and savings. Many people prefer to buy such policies to utilize the tax-free sum of money receivable to go on a holiday, re-furnish their homes or even re-invest the same amount.
However, there are other ways to utilize this income. A substantial part of the premium paid for money back plans is used by the insurance company to generate the bonus or profit paid to the insured or the nominee. If one chooses to impose self-discipline and invest regularly, other saving/investment avenues, such as mutual funds, offer higher returns. Click here to learn why your insurance plan is not a good investment avenue as well.
See also:FAQs on Life Insurance Basics
Life Insurance FAQs on Premiums
Life Insurance FAQs on Claims
Life Insurance FAQs on Insurance Company and Insurance Agent
Children's Life Insurance Policies
Endowment Insurance Plans
Term Life Insurance Plan
Whole Life Insurance Plans