What Makes Money Back Plan The Best Investment Option?

Investment is the key to creating a secure future for you as well as your family. There are certain plans that focus, exclusively, on the investment part, while few of them purely offer insurance coverage service. Each and every investment product is different from another and offers a different set of benefits individually. However, there are also certain plans where you can find the dual benefit of insurance coverage as well as good returns.

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7.7 Crore

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Disclaimer: #The investment risk in the portfolio is borne by the policyholder. Life insurance is available in this product. The maturity amount of Rs 1 Cr. is for a 30 year old healthy individual investing Rs 10,000/- per month for 30 years, with assumed rates of returns @ 8% p.a. that is not guaranteed and is not the upper or lower limits as the value of your policy depends on a number of factors including future investment performance. In Unit Linked Insurance Plans, the investment risk in the investment portfolio is borne by the policyholder and the returns are not guaranteed. Maturity Value: ₹1,05,02,174 @ CAGR 8%; ₹50,45,591 @ CAGR 4%. *Tax benefits and savings are subject to changes in tax laws. All plans listed here are of insurance companies’ funds.

A LIC Money Back Policy is one such plan, where you get an insurance cover but also receive good returns at regular intervals. This is a good investment option for individuals who are risk-averse and are looking for a policy where they can manage their savings as well as maintain liquidity. Even if the policy holder passes away during the policy, the sum assured along with the benefits will be transferred to the nominee appointed by the insured.

Deciding factors for Money Back Plan Premium Calculation:

Your age is an important factor that decides the amount of premium you will pay in a money back policy. Buying this plan at an early age will cost you a lower premium as compared to buying it later.
You’ll be quite surprised to know that the habit of smoking affects your premium amount too, as it is among the major deciding factors when calculating your premium amount. Intake of tobacco, alcohol and other intoxicants highly affect one’s health and correspondingly increase the risk to one’s life, eventually leading to higher premium charges to cover the life risk.
Your current health condition is also a determinant for your premium-amount calculation. In case, you have any serious illnesses such as cancer, heart attack, diabetes, etc., your premium is going to be higher as compared to the individuals who are not suffering from such major health issues.
You would have never guessed but even your gender plays an important role in deciding the premium to be paid in a money back policy. According to statistics, women have a higher life expectancy than men and that’s why insurance companies charge higher premiums for male policyholders.
Your profession, too, can make a major impact on the premium amount you will pay. For instance, if the nature of your profession involves high risks such as pilot, driving, mining, fisheries, etc., you will be charged with a higher premium-amount for covering your life.

Below enlisted are few of the key points that make these plans the most popular investment instruments:

Regular flow of Income:

Justifying its name, money back plans offer a regular pay-out during the policy term. This pay-out is also known as ‘survival benefit’, and is a pre-defined percentage of the assured sum. This amount is paid at regular intervals till the term completion (maturity) of the plan.

The benefit of this feature is that you are able to fulfil your periodic financial requirements without waiting for the plan’s maturity. However, it’s important to note that this benefit is only applicable for the policy holder (till the time s/ he is alive) and isn’t transferrable to the nominee.

Note: Make sure that the regular pay-outs provided in a specific money back plan, should be enough to meet your expected financial costs. It would also be smart to analyze the past performance of a particular plan before investing in it, as it will give you a fair idea about the way an insurance provider deals with its customers.

Low-risk Investment:

Money back plans are a low-risk investment unlike mutual funds or stock investments. Financial investments like stock market and mutual funds generally involve high risks due to volatile capital market conditions, which is, thankfully, not the case with money back plans. Hence, people with low-risk appetite can certainly go for these insurance cum return products.

Insurance Coverage:

What’s better than getting both, assured returns and insurance coverage feature, in a single plan? If anything happens to you and you are not able to be with your loved ones to look after them, a money back plan, under your name, will provide your family with insurance coverage and help your family take care of their financial obligations when you are not around. The best part is that your nominee will get the complete sum assured regardless of the amount you receive in the regular pay-outs.

To Sum Up

Owing to these benefits, money-back policies have become one of the most favoured investment options amongst investors. In short, money back plans give you the chance to help your family meet their financial goals in unfortunate circumstances when you won’t be with them anymore. Also, the regular pay-outs feature in a money back plan helps you meet your financial commitments at various stages of life.

†Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. The sorting is based on past 10 years’ fund performance (Fund Data Source: Value Research). For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in

Past 10 Years' annualised returns as on 01-12-2024

^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.

*All savings are provided by the insurer as per the IRDAI approved insurance plan.

Tax benefit is subject to changes in tax laws. Standard T&C Apply
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^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.

#The investment risk in the portfolio is borne by the policyholder. Life insurance is available in this product. The maturity amount of Rs 1 Cr. is for a 30 year old healthy individual investing Rs 10,000/- per month for 30 years, with assumed rates of returns @ 8% p.a. that is not guaranteed and is not the upper or lower limits as the value of your policy depends on a number of factors including future investment performance. In Unit Linked Insurance Plans, the investment risk in the investment portfolio is borne by the policyholder and the returns are not guaranteed. Maturity Value: ₹1,05,02,174 @ CARG 8%; ₹50,45,591 @ CAGR 4%

¶Long-term capital gains (LTCG) tax (12.5%) is exempted on annual premiums up to 2.5 lacs.

**Returns are based on past 10 years’ fund performance data (Fund Data Source: Value Research).