How a Money Back Plan can Help you in Wealth Creation
Posted: Jun 27, 2017
A money back insurance policy is an insurance policy that offers the dual benefit of insurance and monetary returns at regular intervals. These money back plans are the perfect blend of insurance and savings elements that give assured returns. This makes this type of life insurance very popular among investors. All insurance companies have a variant of money back policy with varying premiums. Some plans return money every five years; some skewed towards the end of the term and some at other specified dates. All these options can confuse the customer a lot.
This insurance plan is also defined as an endowment policy/plan. The advantage of applying for a money back policy is that the plan returns a certain percentage of the sum assured over set period of time rather than waiting for the term to end. The periodic payouts are an added advantage since it helps the insured with a steady source of income to suffice their expenditures and other expenses during the policy’s duration.
A money back insurance policy can be used effectively to plan for your child's higher education or marriage, purchase a car or even to pay the down-payment for your dream house. By investing small amounts every year, you can be rest assured that you will receive a large sum of money every 5 years. It works like your small piggy bank in which you keep making small investments.
The money-back plan provides life insurance cover for a specific period. During the term of the policy, the insured receives tax-free, fixed proportions of the sum assured at regular intervals. On maturity i.e. on surviving the entire term of the policy, the insured receives the balance portion of the sum assured, if any, plus the bonus addition for the term of the policy, if any, or the value of the investments. 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 addition, if any.
Money back policies are the ideal insurance policies for people in their twenties and thirties, who are just starting out on their wealth creation track and need cash to build their lives and secure the lives of their families. It is advised to look out for advice from your bank or finance institution before applying for any kind of insurance plan.
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