Learn how you can gather long-term savings with zero taxes

Investing in the correct financial products is critical to realising your goals. When you have several objectives, it might be difficult to plan. Fortunately, certain items may help you achieve two objectives at the same time. A money back policy is a great way to combine insurance with savings. It may provide twofold financial security while also allowing you to live a stress-free existence. Continue reading to learn more about a money back policy.

What is a Money Back Policy?

Money Back Plans, as the name implies, refund the policyholder's investment throughout the policy period. Instead of receiving a single payment at the conclusion of the term, a money back policy allows the policyholder to receive a set proportion of sums at regular intervals. It is known as an endowment plan with a liquidity option.

Aside from the money taken at regular intervals, the money back policy also gives an amount promised at the death of the policyholder or upon the maturity of the policy.

Under the money back policy, a set proportion of money is returned to the policyholder at regular periods. If the policyholder dies within the policy time, the whole amount insured is paid to the nominee, regardless of the benefits given throughout the policy period.

Features of Money Back Policy

1. Guaranteed Returns

After a specified period, money back policies provide guaranteed returns as survival benefits. If the policyholder dies, the nominee receives the guaranteed amount as well as any accumulated bonuses, if any.

2. Riders to Increase Cover

Every life insurance company in India provides the ability to add extra benefits to their policy. These benefits might be associated with medical situations such as life-threatening diseases, personal accidents, term benefits, and so on. Some money back insurance plans also allow you to keep the life insurance even after the policy has matured.

3. Income during the lifetime

The money back policy ensures that the insured will get returns of the amount promised every few years. The survivor benefit is accrued every few years and serves as the policyholders' secondary source of income.

4. Income on the maturity

A money back policy is an excellent solution for anybody seeking a safe and secure way to save. At the conclusion of the policy term, it pays the sum guaranteed or the maturity amount.

5. Income during the death of the insured person

In the event of the policyholder's death, the nominee receives the sum assured as well as any bonuses.

6. Bonus Amounts

Money back policy provides two sorts of bonus amounts: reversionary bonuses and supplementary bonuses. Every year, an insurer declares a reversionary bonus as a percentage of the total guaranteed. An extra incentive is contingent on the insurance company's performance and is based on the customer's loyalty in paying all premiums on time during the policy's term.

Benefits of Money Back Policy

1. Survival Benefit

Money from the survival benefit is given to the insured individual every few years throughout the duration of the insurance. These payments begin a few years after the policy's inception and continue until maturity.

As an example, Aditya has selected a money back policy with an amount insured of Rs. 5 lakhs over a period of 20 years. As a survivor benefit, he may get 15% of the amount insured after the 5th, 10th, and 15th years of the policy; this is 15 X 3 = 45% of the total assured.

2. Death Benefit

In the case of an insured person's untimely death, the nominee gets the death benefit. This covers both the cash promised and any bonuses accrued under the money back policy.

3. Maturity Benefit

When the money back policy matures, the insured individual gets a maturity benefit. Maturity benefits comprise the cash promised as well as any earned incentives.

4. Tax Benefit

Certain tax advantages are available for money back life insurance plans. Life insurance premiums paid are tax-free up to Rs.1.5 lac under section 80C of the Income-tax Act. The critical illness rider on your life insurance policy is tax deductible up to Rs.60000 under section 80D. The policyholder's death benefit is totally tax-free under Section 10(10D) of the Internal Revenue Code.

Who Should Purchase a Money Back Guarantee?

When compared to other types of life insurance policies, money back plans offer the greatest liquidity factor. People who are risk-averse yet want frequent payments at various times of the policy duration might benefit from money-back life insurance products.

The most significant advantage of a money back policy is that it offers term insurance with periodic survivor rewards in addition to the death payment. Other endowment plans offer the policyholder with the survival benefit only after the policy term; however, the money back policy provides the survival benefit on a regular basis.

In the event of an unfortunate occurrence, the death benefit is paid to the policyholder's nominee, regardless of the policyholder's survival benefit. As a result of the benefit of liquidity alternatives, money back term insurance policies are more expensive than other endowment plans.

For example, if you have a money back policy for 15 years, you can choose to receive periodic installments every five years, and if you die during the policy period, the death benefit will be paid regardless of the survival benefit. If the money back policy is Rs.50k and the death benefit is Rs.15Lacs, if the policyholder dies after the second payment, the policyholder and his/her nominee would get a total of Rs.1 Lac + Rs.15 Lacs.

Wrapping It Up

With a money back policy, you not only get periodical payments, but you also get life insurance. If you are searching for a long-term investment with survival advantages, such a plan may be suitable.

Looking for a money back policy that offers protection from a variety of life events? Look no further than iSelect Guaranteed Future Plan presented by Canara HSBC Life Insurance. With five options to choose from, the iSelect Guaranteed Future Plan offers you the perfect protection for your needs.

Whether you're looking to save for a down payment on a home or protect yourself and your loved ones in case of an unexpected death, our plan has you covered. Plus, with tax benefits and alternate savings options, you're sure to achieve your financial goals. Don't wait any longer; check out the iSelect Guaranteed Future Plan today!