Have you heard of a money back policy? It is one of the most popular options for those who are averse to taking risks with their investments. These plans have a very simple premise- you will get the dual advantage of steady life coverage along with returns from investments. However, the difference from other plans is that you will get regular payouts at fixed intervals throughout the tenure.
This will help you build a secure income stream for the future. In case you pass away within the period, there will be financial coverage for your family members. Even if no claim is made, you will still gain from the payouts, making it a good option for any portfolio.
Knowing More About a Money Back Policy
A money back policy comes with several aspects that are highlighted below for your understanding.
- These plans are a life insurance variant where you can get a part of the sum assuredat fixed intervals (yearly, monthly, etc.).
- This is different from getting a lump sum amount at the time of maturity.
- This ensures an income stream and the payout amount that you get at the completion of the tenure is known as the survival benefit.
- These policies do not have higher risks, since they avoid investments in riskier market-linked options. They offer steady and guaranteed flow of income throughout the duration of the policy. This makes them ideal for those who have lower risk appetite.
- In case something happens to you within the policy period, your loved ones will get the lump sum payout as per the policy terms and conditions. This ensures adequate financial safety for your near and dear ones without any hassles.
- Several such policies have diverse bonuses and add-ons that can increase your returns over time. You can also select policies that are in complete sync with your specific financial objectives.
- Along with survival benefits, many policies offer a specific maturity benefit to their policyholders as well.
- Guaranteed surrender values are available for situations where you may decide to discontinue the plan within the given duration.
- You can integrate riders to your base policy, including those like critical/terminal illness and even accidental death or disability. This widens your coverage considerably for an additional premium amount.
- Your premium payments will also get you tax benefits as per Section 80C. You can also get an exemption on the maturity amount under Section 10 (10D).
Conclusion
To sum up, a money back policy is one that comes with lower risks in comparison to several other financial instruments in the market. You can choose it if you do not want to take higher market-linked risks with your investments. They offer a regular return and income stream, which means higher liquidity and that too, with full life coverage which works as a form of financial security for your family members in case of your unfortunate demise.
