What is a Money Back Policy?
A Money Back Policy is a savings cum investment plan which gives you returns during the term of the policy. You also get a life insurance cover throughout the policy term. This is a smart way to stay invested for a longer period of time. It gives you returns, say every 5 years, and motivates you to save for a longer period of time of 15 to 20 years.
Benefits of a Money Back Policy
- Cash flows at regular intervals
- Long term investments
- Steady returns
- Tax Benefits
Best Money Back Policies in India 2023
How does a Money Back Policy work?
A Money Back Policy is a long term investment product. You will enjoy a life insurance cover throughout the policy term. For example, if a policyholder takes a money-back insurance policy with a 20-year term and pays a premium of Rs. 50,000, the insurer may agree to pay back a percentage of the premium paid at certain intervals, such as 5% of the premium at the end of the 5th year, 10% at the end of the 10th year, and so on, until the end of the policy term. At the end of the policy term, you will get the bonus which has accrued in the plan as maturity benefit along with any guaranteed returns which may have been agreed upon.
How to Choose a Money Back Policy
You will find a money back policy useful in case you like to be forced into savings and want to withdraw part of the money at regular intervals of say 3 or 5 years. It helps develop a systematic investment behaviour and provides liquidity and regular intervals. Best to check the returns which are being provided in the plan and choose based on it.
Comparison Between Fixed Deposit and Money Back Plans
| Fixed Deposit | Money Back Plans |
| Returns on Maturity | Returns at regular intervals |
| No life cover | Has life cover |
| Long term investment | Long term investment |
| No tax benefits on maturity amount | Offers tax benefits |
FAQs on Money Back Policy
What documents required for buying a Money Back Policy
- KYC Documents - like PAN, Aadhaar
- Income Documents - life Payslips, IT Returns or Bank Statements
- Address Proof - like Aadhaar
What is the eligibility criteria to buy a Money Back Policy
- Age - 18 years
- Cover amount between 1 lakh to 5 lakhs
- Income - 2 to 5 lakhs per annum