Published On: Tue, Jan 5th, 2016

Understanding Money Back Plans- The Beginner’s Guidebook

Financial security is one of the significant life goals for which people work hard. Without ample amount of money, it is not possible to fulfill even your basic needs. A man has countlessresponsibilities like his kid’s education; buying & running a house, family’s medical expenses, and the other small needsofhis loved ones. For everything, you need a regular cash flow that enables you to fulfill your recurring expenses. However, apart from a regular flow of money, you also need a big accumulated corpus for the future or for a long-term financial goal. Money back plan is a good policy that is quite popular among the people. It is a unique plan that saves your money and provides you protection against an absence of regular cash flow.

Money back plans:

Anticipated endowment plan or famously known as Money back policies are particular saving plus protection life insurance policies. As the name suggests, in a “Money Back Plan,” a life insured gets money at a regular intervals. In a layman language, you get some amount of your money at a regular interval to maintain your cash flow till the term of the policy or till your death, whichever comes first. After your demise, your beneficiary will get the death benefits also.

Therefore, the two important traits of money back policy are:

Understanding Money Back Plans- The Beginner's Guidebook

How Money Back Policy works:

SaranyaSahaibought the ICICI Pru Cash Advantage Money back plan with a policy term 10 years. She was blessed with a son 6 years ago and as a responsible mother, she wants to protect her son’s future should any mishap befallher. The policy that she bought has an annual premium of 100,000. What are her policy benefits?

• She will get assured cash benefits per month i.e. 5,307 to meet her kid’s various needs.

• After the maturity period, in this case after 10 years, she will get the maturity benefits amount plus bonuses that accumulated as approximately 9.31 lakh. That time her son may be old enough for higher education. The money will help her son to precede his desired education without any financial constraints.

• She will also get a life cover of around 10 lakhs for the next 20 years.

*Let’s assume the vested reversionary bonus and terminal bonus @ 8%return. At the rate of 4% return, the total bonus is calculated as 1.60 lakh.

More details about Money back policy:

more details about moneyback policy

Let’s consider one more example. Avishi Srivastava is 35 years old woman. She bought a money back plan with the payment term 10 years. She chooses annual premium of 50,000 INR. The total policy term is 20 years. With 8% return, how will be she be benefited with the plan if her cash benefits mode is monthly payment. Let’s check out

Other benefits:

Loan: In the case of emergency or in sudden need of money, you can even avail the facility ofa loan under money back plan as 80% amount of the surrender value.

Tax exemption: Under Section 80 C of Income tax act, the tax benefits subjects to change as per the government policies and it is amended from time to time.

What if you discontinue the policy due to some unexpected reasons?

• If you chose to discontinue your policy and your policy has already acquired the surrender value, then you will get the surrender value plus the vested bonus accumulated from your previous premiums.
• If your policy has not acquired the surrender value, then you will not get the surrender value or any bonus.

Surrender value: It is the amount you will receive if you decide to discontinue your policy i.e. stop paying any further premiums. Your surrender value depends on the policy terms and conditions.

The money back plans are good for people who are looking for following financial advantages from their policy:

 Liquidity: You get your monthly cash benefits immediately after the completion of premium payment term or PPT
 Guarantee of money: You will get the guaranteed cash benefit that is equal to 1% of the guaranteed maturity benefits throughout the payout terms i.e. for 10 or more years at the monthly mode.
 Maturity Benefit: At the end of the policy terms, you will get the guaranteed maturity benefits.
 Protection: You will get the life cover for the entire term of the policy.
 Limited premium: You have to pay the premium for certain periods as per your choice or offered by the insurance company.
 Tax benefit: The premiums you have paid are exempted from Tax under section 80 C of Income tax act. However, the tax benefits depend upon the prevailing tax law.

Money back plan provides you multiple facilities and makes your life relaxed. You know that after purchasing the money back policy, you get the survival benefits if you live throughout the policy term but in the case of your death, your family’s financial condition is protected to some extent, and they don’t have to go through the tough time without money. You can plan a lot of activities like your children’s education, marriages of your kids, take care of your loved ones in case of medical emergencies, etc.

Buying a money back policy is always a smart move and your family will definitely appreciate you for your wise decision in future. Click here and choose a money back plan now and secure financial future of your family.

About the Author

- Paul Linus is an eminent online journalist who has been writing news, features and editorials on different websites from across the world for about a decade.