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How to increase the returns from your Money Back Life Insurance Plans

How to increase the returns from your Money Back Life Insurance Plans
March 19, 2019

Due to the increased financial literacy and the corresponding requirement for the growing customer centric policies and the focus on customer's satisfaction, many innovative schemes have been placed in the market for supporting the diverse requirements of customers. This has not only enriched the experience of a customer but has also placed the bulk of "customer-experience" on the insurance providers due to their tangible terms and conditions. Certain such schemes are available in the market that are traditionally referred to as "money-back" policies. These schemes are basically traditional insurance plans that offer coverage benefits like any other traditional insurance plans.

However, this is where money back policies are different. A money back policy offers the unique feature of regular payouts in a pre-decided time period over the complete term of the plan. In case of the policy subscriber's demise during the term of the plan, her/his nominee(s) are entitled to the main coverage benefit, which is the main sum assured and this amount is independent and beyond the amount that has been already paid by the insurer as regular payouts. In simple words, money back policies offer additional benefits in the due period of time as included in the conditions of the policy and as demanded by the pre-decided and documented limits of the plan.

The benefits are numerous and therefore, to a policy holder, the benefits may seem to be rather linked as the plan benefits that accrue from it also come with the main plan benefits. This means that money back policies are actually beneficial because the policy holder is entitled to additional pay outs and the sum assured remains as the payable main fund. However, the overall economic viability of money back policies must be carefully studied and analyzed before investing in one. The whole argument is that the money back policies are supposed to not only provide coverage benefits but also supposed to act as investment instruments for the overall financial growth of the policy holder. Therefore, it can be stated that money back policies are ideally meant to generate returns on investment (in this case the payable premiums) that make the funds grow.

However, when viewed in detail, this is not entirely so. Once you compare the whole volume of premiums paid by the subscriber over the term of the plan, you may find that the premium rates are in fact, much expensive. This, in essence, means that the generated returns of the money back policies in comparison to the paid premiums tend to be less cost efficient. After all, when the comparison between the premium rates of money back policies and those of traditional term plans is made, the term plans emerge as much economical. Therefore, a thorough analysis of your specific requirements must be done before investing in money back policies.

HDFC Life presents HDFC Life Super Income plan - a non-linked money back plan that allows you to fulfill your financial dreams at all times and comes with guaranteed benefits. For details, click on the mentioned link:https://www.hdfclife.com/savings-plans/super-income-plan.

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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We at HDFC Life are committed to offer innovative products and services that enable individuals live a ‘Life of Pride’. For over two decades we have been providing life insurance plans - protection, pension, savings, investment, annuity and health.