Money Back Policy

What is a Money Back Policy?

A money back policy is an investment plan offered by an insurance company. These plans pay you a predetermined percentage of the sum assured at specific intervals, which are also called "survival benefits." These survival benefits are paid out irrespective of whether you are alive or not.

A money back insurance policy offers you the dual benefits of life coverage and periodic payouts. You can utilize these payouts for various purposes such as education, marriage, purchasing a house, or meeting other financial goals.

How Does a Money Back Plan Work?

A Money Back Plan is an investment option that combines investment and insurance benefits. These plans provide you payouts at predefined intervals throughout the policy term. These payouts are a portion of the sum assured and act like a return on investment.

You can understand the further working from below:

• Premium Payment: You pay regular premiums to keep the policy active.

• Survival Benefits: At specific intervals, you receive a portion of the sum assured as survival benefits. These payouts are usually a fixed percentage of the total sum assured.

• Maturity Benefit: At the end of the policy term, you receive the remaining sum assured, along with any bonuses, if applicable.

• Death Benefit: If the policyholder dies during the policy term, the nominee receives the full sum assured, regardless of the survival benefits already paid. 

In essence, a Money Back Plan offers both insurance coverage and periodic returns, providing financial security and liquidity during the policy term.

Illustration of Money Back Policy

If Mr Ram buys a money back insurance policy that guarantees money back at different stages. Let us learn how it will work:

Policy Details:

• Policy Term (PT): 20 years

• Sum Assured: Rs. 20 lakhs

• Predetermined Survival Benefit: 20% of the Sum Assured every 5 years

1. Survival Benefits:

   • After 5th Policy Year: Rs. 4 lakhs

   • After the 10th Policy Year: Rs. 4 lakhs

   • After the 15th Policy Year: Rs. 4 lakhs

   If he completes the full 20-year term, he will receive maturity benefits-

2. Maturity Benefit:

   • At the End of 20th Policy Year: Rs. 6 lakhs + Bonus (if any)

   In case something happens to Mr. Ram during this time, his nominee will receive the full sum assured as a death benefit: 

3. Death Benefit:

   • Death Benefit to Nominee in Your Absence: Rs. 20 lakhs

Money Back Policy Benefits

Money back policies offer a combination of features that can be beneficial for many people. Some of the key advantages are listed below:

1. Annual Profits as Revisionary Bonus:

   Money back plans often share a portion of the investment profits with you each year. This increases your total payout over time and can be a great way to outpace inflation.

2. Terminal Bonus at Maturity:

   This is a bonus prize for staying invested throughout the policy term. The insurance company may offer an additional bonus on top of your maturity benefit, depending on the plan's performance and how long you have been enrolled.

3. Maturity Benefit:

   You will receive a lump sum payout at the end of the policy term, regardless of market conditions, as long as you survive the term. This provides peace of mind, knowing you will have a set amount of money to reach your goals.

4. Steady Income Throughout:

   Money back plans provide regular payouts throughout the policy term, acting like a reliable source of extra income. This can be helpful for managing monthly bills, funding vacations, or any other short-term financial needs.

5. Security Through Death Benefit:

   In case of your unfortunate passing, your beneficiary receives the sum assured in the policy. This can help secure their financial future and provide them with peace of mind during a difficult time.

6. Tax Benefits:

   The premiums you pay towards your money back plan can be deductible under Section 80C up to ₹1.5 lakhs. The sum assured you receive at the policy's maturity is generally tax-free under Section 10(10D) of the Income Tax Act, 1961.

Best Money Back Policies in India 2024

If you invest Rs. 10,000 per month at the age of 30 years for a period of 5 years with a policy term of 10 years, the maturity returns will be as follows:

1. For Maturity Benefit Payout in Lump Sum

   Money-Back Plans	Entry Age	Policy Term (PT)	Premium Payment Term (PPT)	Life Cover	Maturity Amount (on 10th Year)
   Max Life Smart Fixed Return Digital - Titanium	18 – 50 years	5/ 10 years	5 years	Rs. 12.8 lakhs	Rs. 10.2 lakhs
   Canara HSBC Life iSelect Guaranteed Future - iAchieve	18 – 65 years	10 / 12/ 14/ 15/ 20 years	5/ 7/ 10/ 12 years	Rs. 12.2 lakhs	Rs. 9.09 lakhs
   Bandhan Life iGuarantee Max Savings	18 – 50 years	10/ 12/ 14/ 15/ 20 years	5/ 7/ 10 years	Rs. 12.6 lakhs	Rs. 9.2 lakhs
   ABSLI Assured Savings Plan	18 – 65 years	10 – 35 years	5 – 12 years	Rs. 14.7 lakhs	Rs. 8.26 lakhs
   Edelweiss Tokio Life Guaranteed Growth Plan	18 – 60 years	10 – 30 years	5/ 7/ 10 years	Rs. 12 lakhs	Rs. 10.2 lakhs
   ICICI Pru Guarantee Income for Tomorrow	18 – 45 years	5/ 6/ 7/ 8/ 10/ 12 years	10/ 12/ 15/ 16/ 20 years	Rs. 12 lakhs	Rs. 8.16 lakhs
   Bajaj Allianz Life Assured Wealth Goal	18 – 50 years	99 years minus Entry Age	7/ 8/ 10/ 12 years	Rs. 15 lakhs	Rs. 8.32 lakhs
   Bharti AXA Guaranteed Wealth Pro	18 – 60 years	36/ 38 years	5/ 10/ 12 years	Rs. 12.1 lakhs	Rs. 8.04 lakhs
   TATA AIA Guaranteed Return Insurance Plan	18 – 65 years	6 – 40 years	Single Pay/ 5 – 12 years	Rs. 18.1 lakhs	Rs. 7.81 lakhs

2. For Monthly Payouts as Long-Term Income

   Money-Back Plans	Entry Age	Policy Term (PT)	Premium Payment Term (PPT)	Life Cover	Total Sum of Monthly Payouts (Between 13th - 42nd Policy Year)	Lump Sum Payout (on 42nd Policy Year)
   Max Life SWP- Long Term Income	18 – 60 years	7 - 11 years	6/ 10 years	Rs. 12.8 lakhs	Rs. 51.5 lakhs	Rs. 11.7 lakhs
   ICICI Pru Life GIFT- Pro Increasing Income with ROP	18 – 60 years	8 -17 years	5 – 12 years	Rs. 12.3 lakhs	Rs. 54.7 lakhs	Rs. 11.8 lakhs
   ABSLI Assured Income Plus- Income with Lump Sum Benefit	18 – 60 years	5 - 17 years	5/ 6/ 8/ 10/ 12 years	Rs. 15.1 lakhs	Rs. 49.2 lakhs	Rs. 15.1 lakhs
   TATA AIA Fortune Guarantee Plus- Regular Income	18 – 60 years	5 - 17 years	5 - 12 years	Rs. 14.2 lakhs	Rs. 44.7 lakhs	Rs. 11.3 lakhs
   Bajaj Allianz AWG- Second Income with ROP	18 – 60 years	99 - Entry Age	7/ 8/ 10/ 12 years	Rs. 15 lakhs	Rs. 46.5 lakhs	Rs. 12 lakhs

*Traditional plans with a premium above ₹5 lakhs would be taxed as per applicable tax slabs post 31st March 2023.
**All savings are provided by the insurer as per the IRDAI-approved insurance plan. Standard T&C Apply.

*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply

Features of a Money Back Policy

The key features of a Money Back Policy are as follows:

• Life Cover: Provides financial security to your loved ones in case of your death during the policy term. The full sum assured is paid to the nominee.

• Regular Payouts: Periodic payments at set intervals during the policy term, based on a percentage of the sum assured.

• Riders: You can customize your policy with additional riders for benefits like accidental death coverage, critical illness cover, or waiver of premium payment in case of disability.

• Flexibility: Various premium payment options, including limited payment, allow for shorter durations with extended benefits.

• Savings for Specific Goals: Plan for a house down payment or child's education with structured payouts.

• Guaranteed Returns and Stability: Assured returns regardless of market fluctuations.

• Comprehensive Financial Security: Life insurance, periodic benefits, and maturity lump sum for financial stability.

• Tax Benefits: Premiums eligible for tax deductions under Section 80C. Maturity and death benefits are tax-exempt under Section 10(10D) of the Income Tax Act, enhancing savings.

Who Should Buy a Money Back Plan?

• Young Families: Ensure financial security for loved ones in case of unexpected events.

• Savers & Investors: Seek guaranteed returns with added life cover benefits.

• Risk-Averse Individuals: Prefer low-risk investments with assured returns.

• Retirees: Secure steady income post-retirement without market fluctuations.

• Long-term Planners: Ensure financial goals are met with disciplined savings.

• Tax Savers: Enjoy tax benefits under applicable sections of the Income Tax Act.

• Peace of Mind Seekers: Protect against financial uncertainties with a safety net.

Comparison Between

Fixed Deposits, Guaranteed Return Plans & Debt Mutual Fund

Guaranteed Return Plans, Fixed Deposits &
Debt Mutual Fund

Guaranteed Return Plans

Returns Before Tax

7.5% ^(TAX-FREE)

Returns After Tax

7.5%

Guaranteed Returns

Yes

Life Cover

Yes

Tax on Profit

Tax Free*

Risk

No Risk

Still Better than FD’s and Debt Mutual Fund

Fixed Deposits

Returns Before Tax

7% ^(TAXABLE)

Returns After Tax

4.8%

Guaranteed Returns

Yes

Life Cover

No

Tax on Profit

Taxable

Risk

Low Risk

Debt Mutual Fund

Returns Before Tax

8% ^(TAXABLE)

Returns After Tax

5.5%

Guaranteed Returns

No

Life Cover

No

Tax on Profit

Taxable

Risk

High Risk

VIEW PLANS

*For annual premium upto ₹5 Lacs

How to Choose the Right Money Back Policy for You?

Choosing the right money back policy involves understanding your needs and the features of the policy. Read below the key points for consideration:

• Assess Financial Goals: Define your financial objectives like savings or income generation.

• Understand Policy Terms: Read and comprehend policy details, including tenure and payouts.

• Compare Benefits: Compare various policies for features like payout frequency and maturity benefits.

• Evaluate Risk Factors: Assess the insurer's reputation and financial stability.

• Consider Premiums: Analyze affordability and ensure premiums fit your budget.

• Check Flexibility: Look for options to alter policy terms if needed.

• Review Claim Settlement: Research claim settlement ratio and customer reviews.

Fixed Deposits Vs. Money Back Policy

A quick comparison of Fixed Deposit (FD) schemes against the best money back policy is as follows:

*As per prevailing tax laws.

Steps to Buy a Money Back Plan from Policybazaar

• Visit Policybazaar Website: Go to Policybazaar homepage.

• Select Money Back Plan: Find and choose Money Back Plans under the investment section and fill in the basic information like place, age, and salary range.

• Compare Plans: Compare different money back plans based on premiums, coverage, and benefits.

• Choose a Plan: Select the best money back policy that best suits your needs.

• Fill Details and Purchase: Enter personal information, pay online, and complete the purchase.

• Review Policy Documents: Check and download your policy documents for accuracy and clarity.