Money Back Policy, India

Money back policy provides for periodic payments of partial survival benefits during the term of the policy, as long as the policyholder is alive. They differ from endowment policy in the sense that in endowment policy survival benefits are payable only at the end of the endowment period.

An important feature of money back policies is that in the event of death at any time within the policy term, the death claim comprises full sum assured without deducting any of the survival benefit amounts, which may have already been paid as money-back components. The bonus is also calculated on the full sum assured.

Money back life insurance policies are very popular among traditional investors who seek financial instruments that provide insurance and investment, with a low risk element and guaranteed returns. This type of policy is perfect for individuals who are in their late 30s or early 40s and are looking at significant payouts after 10-15 years to fund their children's higher education, marriage and other expenses. Money back policies create a long-term savings opportunity with a reasonable rate of return, especially since the payout is considered exempt from tax except under specified situations. One negative aspect of money back policies is that they have higher premium as compared to other insurance polices.

Things to Consider Before Buying Money Back Policy