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Money Back Plans Comparison

March 06, 2017


A traditional insurance plan pays an assured lump sum, in case of the insured's demise. A money back policy offers the same maturity benefits as guaranteed survival benefits that are paid evenly during the policy term. In other words, it is an endowment plan providing regular liquidity to the policyholders.

Most insurance providers offer money back plans. Individuals must compare money back policies available to make the right choice so that they can get the most beneficial plan to suit their requirements.

Term Coverage Against Death

When you compare money back plans, it is important to clearly understand the benefits received by the survivors in case the policyholder passes away during the plan duration. It is best to opt for a policy that provides a payout that includes the sum assured, as well as all the accrued bonuses without any deduction of survival benefits that have already been disbursed. This ensures your survivors receive higher death benefits, which is beneficial for their financial security.

Surrender Values

Surrender value is the amount paid by the insurance company if the policyholder voluntarily terminates the insurance policy before its maturity. Most insurers provide surrender values only after you have paid the annual premium for at least 3 years. Experts do not advise surrendering the policy before its maturity because the amount received is significantly lower, as compared to what it would be at the time of maturity. Only use this option if you have no other way to raise money. If faced with a liquidity crunch, it would make more sense to avail a loan against your insurance policy.

Available Riders

Riders provide extra protection to the insured that are over and above the basic terms and conditions included in your insurance policy. These riders provide individuals low-cost pure risk covers. However, you will need to include the riders by paying an extra amount at the time of purchasing the policy. Some of the available riders include accidental death benefits, critical illness coverage, permanent total disability benefits, and income benefits rider. Before you decide to choose a policy that offers maximum riders, you should if your lifestyle and circumstances make such riders necessary. Remember, riders come at a price and including all riders is not an efficient and prudent decision while you compare money back policy offerings from different insurers.

Tax Benefits

Insurance premium paid during a year qualifies for exemptions under Section 80C of the Income Tax Act. In most cases, the maturity proceeds and withdrawals are also exempt under Section 10 (10D). It is important for you to ensure that the survival benefits received at periodic intervals during the policy term qualify for these tax exemptions as well.

Money back plans are a beneficial tool for financial planning because they offer a periodic payout at regular intervals. In addition, these policies offer insurance coverage, tax benefits, and bonuses, making the plans a safe and secured investment avenue. These kinds of insurance policies are appropriate for conservative individuals who prefer lower, but guaranteed returns on their investments. It is advisable to use an online money back plans comparison tool to choose the best life insurance policy

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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