Understand why Money Back Policy should be considered in your Financial Planning

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Most of us have goals that lead us to being financially free and securing the future needs of our loved ones. Money back policy is a type of insurance product offered to you by insurance service providers that comes with an added benefit of investment along with protection. Under a money back policy, you will receive funds at regular intervals and have peace of mind with having a life insurance cover. 

A money back policy works in the following way wherein once you choose a policy, you need to determine a tenure for which you will be paying a premium and once the premium payment period is over, you will start receiving the funds based on your requirement, i.e. monthly or annually. Once the tenure of the policy has ended, you will receive your sum assured and the bonus amount that you may be entitled to. 

Here are the top reasons that you should know in order to include a money back policy in your financial planning:

  1. You are entitled to receive a monthly or annual fixed income when your policy is still in force. If you stay with the plan, you are also entitled to insurance and maturity benefits as well. 
  2. In addition to the benefit mentioned above, you can also avail a deduction under section 80C of the Income Tax Act, 1961. Even your nominee may be entitled to some incentives or deductions in case of your unfortunate demise. 
  3. Money back policy has a distinctive advantage over other policies, as in, once your premium payment period is over, you start receiving returns from the policy. These returns can help you inflate your liquidity better and provide you with extra cash that can be reinvested or used as per your choice. 
  4. The primary goal of a money back policy is to provide your family with some sort of an umbrella to shield them from untimely weather catastrophes after your unfortunate demise. This is where money back policy shines through by providing your nominees with the same benefits that you would be provided on maturity. 
  5. Apart from this, you can also add a rider to your policy to get the most value out of the funds that you are investing in. 
  6. If you are someone, who is looking for a risk-free policy, then money back policy is curated for customers like you. 

Before you purchase a money back policy, you can look for the following factors, which will help you choose a policy better: 

  • You need to pick an amount for the sum assured. This amount has no upper limit so you can choose it in a way that meets your financial condition. 
  • You need to understand the policy, its features, and the terms and conditions that are attached to it and then purchase a money back policy because it is imperative to make a well-informed decision when making investments. 
  • The rate of premium should not only be suitable for your pocket but also should be compared with the returns that you are expecting.

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