Would A Money Back Plan Really Work For You?

  Author: Naveen Kumar

Money back plans are among the more popular life insurance plans in India. While scouting around for life insurance policies, during the tax-saving investments seasons, typically near the end of every financial year, should you be seriously considering a money back plans. It would be first useful to venture into why money-back plans find favour among many Indians. 

3 Reasons Why Money Back Plans Are Popular

One of the reasons why many people like money back life policies is that they combine quite a few things they prefer.

Tax deduction Like most life insurance policies you get annual tax benefits of upto Rs 1.5 lakh under Section 80C. This takes care of the tax saving investments.

Life insurance coverage Second, money back plans like endowment policies provide life insurance coverage. In the event of untimely demise, the life insurance amount is paid to the nominee of the policyholder.

Periodic payouts A key and popular feature of money-back plans is that there are periodic payouts where a certain percentage of the sum assured is paid after regular periods say, every five years. This gives people a sense of liquidity from their investment which is essentially a long term one, typically spanning 15-25 years. The balance of the sum assured plus returns (guaranteed returns or bonuses) is received at the end of the policy term.