What are Money Back Plans

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Money Back plans are all about getting insured, building good corpus over long period, getting periodic money, every thing under one plan.

Like endowment plans person needs to pay premium till a fixed period of time.
1) He will receive fixed amount after a fixed period till end of the term as Survival Benefit
2) If person dies any time between the term his Nominee will receives S.A + Bonus.
The death benefit is in addition of what the Survival benefit received earlier.
For eg: If the term of policy is 25 year, Survival benefits to be paid are after interval of every 5 year.
If he dies at the 13th year, his nominee will receive S.A + Bonus irrespective of Survival Benefit received earlier on 5th and 10th year.
Policy gets terminated.
3) If person survives till the maturity
He will receives S.A + Bonus
Policy will get terminated.

Most of the features of money back policies are same like endowment plans. They also encourage forced saving and hence there is high surrender charge.

As Money Back policies provides greater liquidity, the premium rates are quite high,
Maturity amount is less then what one receives in Endowment plans. Money back plans are entitled for bonus but compared to endowment plans they are low.

Money Back policies best suit those who need risk free money periodically to fulfill their needs.

Advantage:

  • Periodic money back and hence offers liquidity.
  • Risk free return.
  • Insurance cover.
  • Survival as well as maturity amount is tax free.
  • Tax benefit on premium paid.

Disadvantage:

  • High premium.
  • High surrender charges.
  • Moderate return.

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