Investments are good to be made. They can help you save for the future. Most of us want to make an investment that would give us high returns. An investment is made to get better returns in the future. One can invest in any form like in a real estate, in finance, in business, in insurance so on and so forth. The returns from the same will help the investor in future with whatever they have invested for. It can be for their child’s education, or retirement plan, or to buy a home.
Investment is good to be made but we like to invest in policies that provide guaranteed returns. We have heard how people face problems to get back their funds when the tenure is over. We never know when the financial problem strikes and one has to be prepared in such situations. However, one can use the best life insurance policy only when the tenure ends and not in between. You can avail this loan but may not get the full amount that you would get on the maturity of the plan. In such situations, you can opt for the money back policies. To know more about the money back policy keeps reading the following article.
What is a money back policy?
Like the name suggests, money back policy helps with a regular money back with specific intervals and a limited sum of amount. It solves the problem that we have discussed above and is unlike the traditional insurance plans. Money back policy pays a specific tenure at regular intervals. The sum paid is assured in this policy. The sum is paid only through the planned tenure with assured sum. The money back policy pays are also called ‘Survival Benefits’. The survival benefits are paid during the planned tenure and the remaining amount is paid back when the policy matures with the bonuses availed.
In case of the death of the investor, there is the payment of full sum assured irrespective of the survival benefits that were already availed by the investor. There are some factors that make this plan a unique one. Some of the features of this money back policy are as follows;
- Survival Benefits are designed as a percent of the assured sum that is availed.
- As we know, the Survival Benefits are remunerated on regular intervals through the tenure. The interval is already fixed and discussed when you buy the plan. The payout structure of each plan varies from company to company and the Sum Assured paid and the Survival Benefits are not fixed. They vary between a plan to plan and insurance company to company.
- When the plan matures, the left out portion of Sum Assured, where the actual Sum Assured is less and the Survival Benefits are paid already; are paid on the maturity of the benefits.
- In case of the death of the policyholder, the entire Sum Assured is paid regardless of the money back benefits that were paid during the plan.
- The money back plan is usually seen as a participating plan under which the bonuses are already added. The bonus accrued will be paid during the maturity of the plan or on the death of the policyholder.
- There are rider benefits, they are available under money back policies and these are paid as a lump sum only with the contingency that is covered by the rider which occurs during the plan tenure.
Money back policies are helpful for people who are looking forward to regular cash flow with the investment. It can vary from people to people and type to type of investment made. Money back policies are very much different from traditional investments and policies.
How does money back policies work?
Here is an example for a better understanding of how the money back policy really works. This example will help you link with all the points we have discussed above.
A person named Jack invests in a money back policy with his Sum Assured to be Rs 5 lakh. The tenure of the plan Jack chooses is for 25 years and also pays regular tenures for the policy. The money back plan promises Jack Survival Benefits at 20 percent of the Sum Assured (money invested) after every 5 years of the plan. And on the maturity of the plan, 20 percent of Sum Assured is paid with accrued bonuses to Jack.
Hence Jack receives Rs 1 lakh on every 5 years of the plan, that being on the 5th year, 10th year, 15th year, 20th year. Now, at the end of the 20th year, Jack had already received Rs 4 lakh. This includes the Rs 1 lakh and also the bonuses Jack would receive when the plan would terminate.
Now, suppose Jack dies during the 18th year of the plan the Rs 5 lakh invested would be paid to the nominee mentioned in the policy with the added bonuses even if he had already received Rs 3 lakh of the Survival Benefits.
We hope you get a better idea of the same with this clear narration of the plan and benefits under money back policy. This is how a money back insurance policy works. The plan and percentages can change according to the insurance companies and the investments made. They can also depend on the sum the investor wants to invest.
5 Most Important benefits of money back policy.
5 most important benefits of a money back policy are:
1. Acts as a regular source of income.
The name itself suggests that a money back policy acts as a regular source of income. With an assured sum of Survival Benefits, the investor can avail benefits from the policy. There is frequent payout made in this policy for the policyholder. We have discussed in depth about the same in the example sighted above. The amount paid during the Survival Benefits is pre-decided by the policyholder and the insurance company. The amount can be used for any purpose the insurer needs it for. Survival Benefits are payable only till the policyholder survives. They are no more available after the death of the holder.
2. There is a lower exposure to risk.
Stocks and mutual funds are very much exposed risk. The high degree of risk is because of the volatility of the capital market. But money back policies come with the least amount of risk involved and if you are on the low appetite of risk the surely go for money back policy.
3. The coverage of insurance.
Under an unfortunate death of the policyholder, the family avails the benefits of the policy. The nominee gets the total sum invested by the policyholder. This is not the same in case of other insurance policies. The plan works even better if you are the caretaker of the family. It provides the family with financial benefits and money back insurance in case of emergency and difficulty. In case of your death, the nominee receives the entire amount irrespective of the amount that is paid through the Survival Benefits.
4. Assures returns on investment.
Not every policy assures returns on investment especially the traditional insurance policy. Under this policy, you need not really worry about the returns on the investment. Instead, you can grow with your wealth and keep receiving the benefits of the same during the years.
5. Others benefits under money back policies.
It provides the liquidity of the returns. By liquidity we mean there is a regular flow of income on timely bases. It provides with Survival Benefits that is the percentage of the sum which is assured and also provides with the risk-free returns. There is no fuss or risk involved in getting the timely returns.
Hence, money back policies can work really well if you want money regularly on your investments. It is no less than a saving plan. It provides the investor with Survival Benefits and also maturity bonuses at the time of maturity of the plan.
Investing in the right plan at the right time is important to avail the best benefits of all the included under this money back policy.
How to choose the best money back insurance policy for you?
Indian market is booming with insurers and policymakers. There are a lot of money back insurance policies in our country. It is important to choose the best plan according to the factors that would affect us in the future. It is important to look as to why are you buying the money back insurance policy and the benefits that you would avail from this policy. The factors that you must note down are as follows;
- What are your financial goals? Why do you want this policy for?
- The sum of the amount you can manage to invest to buy this money back policy
- The time to stay in this investment
- How do you want your payouts to be?
With these factors, you can plan and decide the policy you want to buy. Here is what you must keep in mind before you buy this policy;
- Decide the number of years you want to be invested in this policy.
- Invest the right sum to avail the best returns from the policy.
- Be sure on the number of payouts during the policy.
Once you have all of this clearly stated in mind you can go and oft for the specific money return or the money back policy. These policies can help you during emergencies or just to make a better living during the coming years. Money back policy will help you sort things in a better way.
Documents required for investing in money back policy.
To invest in this policy, the policyholder must have an:
- proof of income,
- proof of address,
- an official Indian government ID proof and
- an age proof like an Aadhaar card, driving license or anything that proves your age.
Conclusion.
It is good to invest your money as this will get you better returns for the future. As we all know future is unpredictable and very much uncertain, the invested money can be used by you to save up from the crisis or unwanted situations that might come forth. Other than this, investing your money at the right place during the right time is important to cut out the risk of losing it before time. The money back insurance policy is good or low-risk takers.
