What is a Money-Back Plan in Life Insurance?

As a logical investor, we often consider various factors before investing. Expecting regular payouts is one of them and a money-back plan in life insurance helps you achieve the same being a secure saving tool.

Saving money along with payouts at pre-defined intervals will help you handle accumulation and planned liquidity needs at various life stages.

How does a Money Back Plan work in Future Generali India Life Insurance Company Ltd.?

Let us understand money back plan with the example of Ravi:

Ravi is a 30-year old health male who has purchased Future Generali Money Back Super Plan – Option 2.

He has opted for the Silver Category.

Ravi pays a yearly premium of Rs 50,000 (excluding applicable taxes).

His policy term and premium paying term is 20 years.

His sum assured is Rs 3,00,000

What Ravi gets from this money back plan?

  1. Maturity Benefit – On Ravi’s survival till the end of the policy term, provided all the premiums are paid, Ravi will receive the sum assured of Rs 3,00,000 as maturity benefit.
  2. Survival Benefit – Starting from the end of 10th policy year till the end of 19th policy year – Ravi gets a survival benefit of Rs 90,000 every year.
  3. Guaranteed Additions – Starting from the end of 8th policy year till the end of 20th policy year – Ravi’s policy accrues a guaranteed addition of Rs 12,054 every year. All the accrued guaranteed additions of Rs. 1,56,702 will be paid to Ravi at the end of the policy term i.e. on maturity, the total benefit Ravi will get is Rs. 4,56,702 including the Sum Assured.
  4. Tax Benefits – Ravi shall be eligible for tax benefits on the premium(s) he pays and benefit proceeds, according to the provisions of Income Tax laws as amended from time to time. These benefits are subject to change as per the current tax laws. Please consult your tax advisor for more details.
  5. Two Plan Options – Ravi got the option to choose from two plan options i.e. Option 1 & Option 2, based on his planned financial milestones. These options vary by Sum Assured and the amount of survival benefit payable.
  6. Death Benefit also known as Life Cover – Let’s assume that Ravi’s death occurs at the end of 2nd policy year. The benefit payable under Option 1 to Ravi’s nominee(s) will be:1. 10 times the Annualized Premium i.e. Rs 5,00,000

    2. 105% of the total premiums paid i.e. Rs 1,05,000

To know more about this plan, please refer to the product brochure.

What Makes Money-Back Plans Worth Buying?

Referring to Ravi’s example here are some key elements served by Money-back plan that every wise investor shall consider:

Key Elements of Money-Back Plans

  • Corpus Accumulation: Investing for the long term helps to accumulate saving corpus. The creation of good wealth and secured investment can be done easily through money-back policies. Apart from giving regular paybacks to the policyholder, money-back policies help building a corpus through its maturity benefit.
  • Regular Payouts work as Guaranteed Source of Income: We live in times where having a second source of income is becoming necessary day-by-day. A money-back plan assists the life insured with its feature of regular payouts. It also helps to overcome short-term financial needs.
  • Secured Saving Avenue: The key to a sound portfolio is diversification to minimize risk. Hence, to balance a portfolio, it is essential to invest in less risky avenues, and guaranteed benefit money-back plans serve the purpose with ease.
  • Life Insurance Cover: As a life insurance product, money back plans provide death benefit payout to the nominee in case of death of the life insured during the policy term. This helps to safeguard the family’s future in case of the life insured’s untimely death.
  • Tax Benefit: The life insured shall be entitled for tax benefits on the premium(s) paid and benefit proceeds, according to the provisions of Income Tax laws as amended from time to time. These benefits are subject to change as per the current tax laws. Please consult the tax advisor for more details