A money back policy can secure your family financially under unavoidable circumstances, such as critical illness or your sudden death. This insurance plan will pay your dependants periodically to meet financial liabilities in various stages of life. It is not only an insurance policy but also an investment plan. We have listed five key benefits of it below. Let us take a look to understand why owning a money back policy is a wise choice.
- Survival Benefits
The policyholder gets an amount of money every couple of years until the policy ends. These payouts begin after a few years from the money back policy’s commencement until the plan matures. This survival benefit is a percentage of the total sum assured, which the insurance company splits over the policy term. The policyholder gets the remaining amount at the time of the plan’s maturity. However, if the insured meets an untimely death during the plan term, the survival benefit does not accrue.
- Death Benefits
A death benefit is a periodic payment that the nominees receive under the circumstances of the policyholder’s sudden death. This amount consists of the money back policy’s total sum assured and the bonus accumulated since the plan’s commencement. It helps the family of the insured to meet financial liabilities after he is no more. As mentioned earlier, the nominees do not get the survival benefit after the death of the insured.
- Maturity Benefits
The total amount of funds received at the maturity of a money back policy is known as maturity benefits. It is the combination of the sum assured, the remaining amount of the survival benefits, and the bonus accumulated over the years. The amount of compensation depends on the company’s performance. Also, some offer a terminal bonus too.
- Sum Assured
The sum assured is the amount of money determined upon while buying the money back policy. This amount also determines the premium that the insured party has to pay during the policy term. The sum assured is paid to the policyholder when the plan matures or nominees if the insured does not survive the period.
The bonus is paid to the insured party depending on the performance of the money back policy provider. It is either paid to the insurer or the nominees in case of the policyholder’s untimely demise. There are mainly two types of bonuses. They are:
- Reversionary Bonus
It is declared at every year-end and combined with the total amount paid to the insured or the nominees. Reversionary bonus is again classified into two types- simple and compound.
- Terminal Bonus
It is also popular as a persistency bonus and is paid at the end of the money back policy term or even as death benefits.
A money back policy offers much better benefits than several other insurance plans. The five mentioned above will help you determine why investing in such a policy can secure your family’s future financially if you happen to meet something unfortunate.