Money Back Policy
What is a Money Back Policy? Explain its features.
A variant of Endowment policy is money back policy. These policies are designed to provide sums required as anticipated expenses over a stipulated period of time. Mainly they are marketed by companies as products providing money at major milestones in the life of the assured.
These types of plans work by returning a certain percent of the sum assured to the insured person periodically as survival benefit. Usually, in a 25 year policy, you can expect survival benefit payment at an interval of every 5 years.
The premium is payable for the term chosen by the policyholder.
You can choose with bonus option or without bonus option right at the inception of the policy. Premium is higher in the case of a bonus option.
If the insured survives till the expiry of maturity date of the policy, the survival benefits are deducted from the maturity value,i.e, the balance amount is paid as maturity value.
The life of the policyholder is covered for the full sum assured during the term of the policy irrespective of the survival benefits paid.
Here also the premium is high and these plans return very low,i.e, 3 % to 5 % because they also combine insurance with investments and they invest your premium in the debt market.