Money-back Life Insurance Plan

In the event of death of the insured during the term of the policy, the nominee still receives the entire sum assured (even if the insured had received fixed portions of the sum assured), plus the bonus/participating profit/guaranteed addition, if any.

The premium for money back policies is higher in comparison to endowment and term plans. If one purchases money back plans with guaranteed addition, the premium is even higher. Some companies offer an option in choosing the premium paying term.

Money back policies are advisable if the insured wants a product that provides both - insurance cover and savings. Many people prefer to buy such policies to utilize the tax-free sum of money receivable to go on a holiday, re-furnish their homes or even re-invest the same amount.

However, there are other ways to utilize this income. A substantial part of the premium paid for money back plans is used by the insurance company to generate the bonus or profit paid to the insured or the nominee. If one chooses to impose self-discipline and invest regularly, other saving/investment avenues, such as mutual funds, offer higher returns. Click here to learn why your insurance plan is not a good investment avenue as well.

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