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Why Go for Money Back Policies

November 08, 2016
One big question in the minds of every insurance buyer is choosing the type of policy. This confusion arises due to a lack of knowing the differences between the different types of life insurance policies.

Endowment, term, and money back policies
Firstly, all these three types of insurance policies are traditional insurance plans. All these provide life cover along with tax benefits. 
Money back plans are types of endowment policies that regularly return a given percentage of the total sum assured. Here are two differences between term and endowment plans.

1. Premium amount
Term plans have a higher coverage for a lower premium. 
If you opt for the same coverage under an endowment plan, you will have to pay a significantly higher premium amount. 
The premium amount increases further if you choose a money back policy.

2. Insurance and investment
Term plans are pure life covers and offer the policy benefits to your nominees in case of your demise during the duration. 
While endowment plans combine the benefits of life coverage and investment. Your nominees receive death benefits in case of your demise or you are entitled to survival benefits.
Money back policies offer periodic returnsduring the policy duration.

Why should you buy money back plans?

1. Survival benefits
Term plans offer the benefits to your nominees only if you pass away during the policy duration. On the other hand, a money back plan provides survival benefits that include the balance corpus (after paying periodic installments) and accrued bonus.

2. Liquidity
Money back insurance plans pay a certain amount of the sum assured at regular intervals during the policy duration. This provides you liquidity and you may plan your finances better to meet different goals during your life.

3. Risk-free returns
The amount you receive under a <a href="https://www.hdfclife.com/savings-investment-plans/super-income-plan" title="Best Money Back Policy">money back policy</a>is fixed. The maturity benefits received also provide you funds that may be used to meet different financial objectives. 
Choosing between money back and term plans depend on your personal needs and financial situation. If you want to use insurance as an investment product, opting for the best money back policy is recommended.

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