It is obvious that in India there is a hike going on to enrol in investment and insurance plans largely especially after the inflation rate crosses the average boundary and currently lies above 6%, which is almost double in the last 5 years.
A money back policy is one of the most popular investment types of insurance plans where the insured person gets the assured amount from the policy at regular payouts instead of getting a lump sum amount at the end of the policy tenure.
The traditional insurance plans where the payouts are done after the maturity period with a lump sum amount have some conditions for a withdrawal that are required for any particular need before the end of the maturity period.
Some insurance companies even provide loans on policy options but that is not favourable to give interest on an amount when the insured own funds are blocked in a policy. Hence, most individuals have inclined toward a money back policy that provides regular payouts is considered similar to additional income. Surely the payouts started after the grace period is over but this grease period has a tendency of a maximum of 3 years and can be manipulated on an individual basis and the type of money back policy insured is taking.
Let’s have a closer look at all the unique features and functionalities of a money back policy that provides it an upper hand over other schemes.
Primary Features of Money back plan
1. Guaranteed Returns and Protection
The main feature of a money back policy is to provide guaranteed returns on the investments the insured person has done. The insured person pays regular premium payments during their enrollment in a money back policy. In return, the insurance company provides the regular payouts to the insured with a promised additional service of insurance covers to policyholders and their families in case of any mishappenings and emergencies.
This plan is ideal for those who want a regular flow of liquidity, an example of this type is people planning to invest in retirement plans.
2. Low profile risk
All the other investment and insurance schemes are dependent on instruments like mutual funds, equity funds, stocks, bonds, etc. But in the case of a money back policy, it is not an issue as the insurance company promised you payouts at regular intervals. To fulfil this duty the insurance company in a money back policy invests over a broad region of balanced instruments that are the combination of both volatile and non-volatile aspects with the help of experts to draw regular returns.
3. Highly optimized returns
A money back policy must provide a regular promise out to the insured person. According to the age of the insured person and the need for the regular payout they demand, the plans are optimized in a money back policy to draw higher returns and paid to the insured by the insurer. In that way, a money back policy is largely optimized by the experts to take into account the needs of the insured and act accordingly for the sake of the growth of the insured.
4. Offer Additional Bonuses
All the money back policy holds two different types of bonuses that are a reversionary bonus and additional bonuses on the premium paid by the insured.
A reversionary bonus is declared by the insurance company as the percentage of sum assured every year. This amount is added to the total funds an individual gets on the maturity of the money back policy.
The additional bonuses are the ones that are dependent from company to company and are provided within aspects like returns from company profits as dividends, loyalty bonuses, etc.
Standard Benefits comes with a Money back Policy
Standard benefits are the ones that are mandatory to provide with the money back policy as per the regulations of IRDA. Some companies also add on the additional benefits within these terms but a minimum threshold is set by the IRDA and mandatory to follow by the insurance company.
1. Survival Benefits
Apart from the regular payouts, an insurance company is promised in our money back policy survival benefits are a mandatory aspect that also favours the income to the insured coming from a money back policy. In a Survival benefit the insured gets additional payouts of let say 20% of the sum assured provided at each 5th, 10th, and 15th policy year as a benefit of surviving the policy up to a specified duration.
2. Maturity Benefits
A Money back policy works as a normal dual benefit scheme that comprises both benefits of insurance and investment. Hence like a traditional insurance policy, in a money back policy the insured gets the accumulated benefits on the payments they made along with additional bonuses is provided as a wholesome amount with funds value at the maturity of the policy tenure.
3. Tax Benefits
Money back policy also comes under the tax savings circle on all three spans that are premium payments, investments and benefits, and payouts under Section 80C and claims under Section 10(10D) of the income tax act.
4. Death Benefits
On the death of an insured person within the policy tenure, the insurance company provides the additional percentage on the sum assured along with the funds’ value and additional bonuses amount supposed to grant on the maturity to the nominee or family of the insured person. Some companies also waived off the remaining premium payments partially or wholly as per the signed terms during the taking of the policy.
How does the claim settlement ratio help to choose the right insurance company?
Claim settlement ratio not only helps to choose the right Insurance Company but also helps to identify whether an insurance company is reliable, promising, or genuine or not. The insurance industry is one of the topmost demanded industries when it comes to the essential needs of any individual. That’s why the occurrence of fraud is also high as compared to any other industry. Hence claim settlement ratio is a vital need according to the customer’s side.
Claim settlement ratio specifically highlights the total number of claims that are settled by an insurance provider in comparison to the number of claims obtained by it in a specific time duration that is generally a complete financial year. According to the Insurance regulatory and development authority(IRDA), every insurance company must share these Claim settlement data with their policyholders.
IRDA also publishes this ratio by taking account of all the registered insurance companies in India to provide clear insight for the sake of transparency to the citizens of India who take insurance covers to protect themselves and their families.
A Money Back policy is a popular choice for Indian citizens when it comes to securing their future with enough funds to acquire the desired goals and protect the family from any mishappenings.
This guide helps you to understand how a money back policy works, what are its key features and what are the mandatory benefits it provides. Overall what makes a money back policy popular and most importantly how to select a genuine insurance company to get yourself and your family protected with the best money back policy.
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