Money Back Policy

10 mins read

A money back policy is a type of life insurance policy that provides the policyholder with a regular income throughout the policy term, as well as a lump sum amount at maturity. The primary objective of a money back policy is to provide financial security and liquidity at various stages of life. It enables individuals to meet their financial obligations at different stages of life while also ensuring the well-being of their loved ones.

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Sameep Singh
Written By: Sameep Singh
Sameep Singh
Sameep Singh Business Unit Head - Domestic Savings
Mr. Sameep Singh is a Business Unit Head for the domestic Investment Business at policybazaar.com, holding a master's from Symbiosis School of Banking & Finance. He has played a pivotal role in crafting investment and term business strategies during his tenure at Policybazaar. His exceptional leadership has been instrumental in driving both product and business growth throughout his impressive career.
Vivek Jain
Reviewed By: Vivek Jain
Vivek Jain
Vivek Jain Head of Savings business
Mr. Vivek Jain is the Business Unit Head for Investment Business at Policybazaar.com. A graduate of the prestigious IIM Calcutta he brings over a decade of invaluable experience to his current role. In his capacity as Business Unit Head, he has been a driving force behind the success of Policybazaar's Investment business. Mr. Jain is recognized for his instrumental role in product innovation within the Savings/Investment domain. His leadership and expertise have been pivotal in scaling up the Investment business, underscoring his significant contributions to Policybazaar.com's growth and success.

Introduction to Money Back Policy

Money Back PolicyMoney Back Policy

A money back policy is an investment plan offered by an insurance company that pays a pre-determined percentage of the sum assured to the policyholder at specific intervals called "survival benefits." These survival benefits are paid out irrespective of whether the insured individual is alive or not.

It offers the policyholder the dual benefit of life coverage and regular cash inflows that can be utilized for various purposes such as education, marriage, purchasing a house, or meeting other financial goals.

Money back plans can be a good option for people who want to:

  • Get regular income during their lifetime rather than waiting until the end of the policy term

  • Save for a specific goal, such as retirement or a child's education.

  • Protect their family financially in the event of their death.

Illustration of Money Back Policy

If Mr Ram purchases a money back policy as per the following details:

  • Polity Term (PT): 20 years

  • Sum Assured: Rs. 20 lakhs

  • Pre-determined Survival Benefit: 20% of the Sum Assured every 5 years

Money Back Policy Benefits

Survival Benefits:

  • After 5th Policy Year: Rs. 4 lakhs

  • After the 10th Policy Year: Rs. 4 lakhs

  • After the 15th Policy Year: Rs. 4 lakhs

Maturity Benefit:

  • At the End of 20th Policy Year: Rs. 6 lakhs + Bonus (if any)

Death Benefit:

  • Death Benefit to Nominee in Your Absence: Rs. 20 lakhs

You can time your survival benefits with the following commitments in your life:

  • Pay tuition fee for your child

  • Buy a Child Plan or a Child Money Back Plan that suits the future needs of your child's career.

  • Plan your life goals, buy a car, or put a down payment on your new house

  • You can buy a pension plan to secure your post-retirement life financially

Best Money Back Policies in India 2023

If you invest Rs. 10,000 per month at the age of 30 years for a period of 5 years with the policy term of 10 years, the maturity returns will be as follows:

For Maturity Benefit Payout in Lump Sum

Money-Back Plans Entry Age Policy Term (PT) Premium Payment Term (PPT) Life Cover Special Surrender Value (At the Ends of 5 Years) Maturity Amount (on 10th Year)
Max Life Smart Fixed Return Digital - Titanium 18 – 50 years 5/ 10 years 5 years Rs. 12.8 lakhs Rs. 6.52 lakhs Rs. 10.2 lakhs
Canara HSBC Life iSelect Guaranteed Future - iAchieve 18 – 65 years 10 / 12/ 14/ 15/ 20 years 5/ 7/ 10 years Rs. 12.2 lakhs Rs. 4.04 lakhs Rs. 9.52 lakhs
AEGON Life iGuarantee Max Savings 18 – 50 years 7 - 20 years Single Pay/ 5/ 7/ 10/ 15/ 20 years Rs. 12.6 lakhs Rs. 4.24 lakhs Rs. 9.34 lakhs
Edelweiss Tokio Life Premier Guaranteed Income 18 – 65 years 10 – 20 years 5/ 8/ 10/ 12 years Rs. 12 lakhs Rs. 5.24 lakhs Rs. 8.65 lakhs
ICICI Pru Life ASIP 18 – 57 years 10/ 15 years 5/ 7 years Rs. 12 lakhs Rs. 3.03 lakhs Rs. 8.38 lakhs
Bajaj Allianz Assured Wealth Goal 18 – 50 years 10/ 15/ 20/ 25/ 30 years 5/ 8/ 10/ 12 years Rs. 15 lakhs Rs. 2.81 lakhs Rs. 8.27 lakhs
Bharti AXA Guaranteed Wealth Pro 18 – 60 years 10/ 15/ 20 years Single Pay/ 5/ 7/ 10/ 15/ 20 years Rs. 12.1 lakhs Rs. 4.66 lakhs Rs. 8.04 lakhs
TATA AIA Guaranteed Return Insurance Plan 18 – 65 years 10 – 30 years Single Pay/ 5 – 12 years Rs. 18.1 lakhs Rs. 4.07 lakhs Rs. 7.95 lakhs
HDFC Life Sanchay Plus 5 – 60 years 10 – 20 years 5 – 10 years Rs. 14.7 lakhs Rs. 3.78 lakhs Rs. 7.94 lakhs
See More Plans

For Monthly Payouts as Long-Term Income

Money-Back Plans Entry Age Policy Term (PT) Premium Payment Term (PPT) Life Cover Total Sum of Monthly Payouts (Between 13th - 42st Policy Year) Lump Sum Payout (on 42nd Policy Year)
Max Life SWP- Long Term Income 18 – 60 years 7 - 11 years 6/ 10 years Rs. 12.8 lakhs Rs. 42.6 lakhs Rs. 11.7 lakhs
ICICI Pru Life GIFT- Assured Income with ROP 18 – 60 years 8 -11 years 7/ 10 years Rs. 12 lakhs Rs. 38.1 lakhs Rs. 13.2 lakhs
Assured Income Plus- Income with Lump Sum Benefit 18 – 60 years 5 - 17 years 5/ 6/ 8/ 10/ 12 years Rs. 15.1 lakhs Rs. 36.4 lakhs Rs. 14.4 lakhs
TATA AIA Fortune Guarantee Plus- Regular Income 18 – 60 years 5 - 17 years 5 - 12 years Rs. 14.2 lakhs Rs. 37.1 lakhs Rs. 11.3 lakhs
Bajaj Allianz AWG- Second Income with ROP 18 – 60 years 99 - Entry Age 7/ 8/ 10/ 12 years Rs. 15 lakhs Rs. 35.2 lakhs Rs. 12 lakhs

*Trad plans with a premium above 5 lakhs would be taxed as per applicable tax slabs post 31st march 2023
All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply

Features of a Money Back Policy

The key features of a Money Back Policy are as follows:

  1. Regular Payouts

    A key feature of a Money Back Policy is that it provides you with periodic payouts at specific intervals during the policy term. These payouts are pre-determined percentages of the sum assured and are usually paid out every few years.

  2. Survival Benefits 

    The periodic payouts mentioned above are known as survival benefits. You receive these benefits if you survive until the specified payout dates. 

  3. Maturity Benefit

    In addition to the survival benefits, a Money Back Policy also provides a lump sum payment as a maturity benefit. It is typically a lump sum payment that includes the remaining sum assured along with any accrued bonuses.

  4. Death Benefit

    A Money Back Policy also offers a death benefit to the nominee in the unfortunate event of your demise during the policy term.

  5. Bonus Additions

    Money Back Policies often come with the potential for bonus additions. These bonuses are declared by the insurance company based on the policy's performance and are added to the sum assured.

  6. Add-on riders

    Money Back Policies can be customized with add-on riders, such as critical illness cover or accidental death benefit. These riders can provide additional protection and benefits.

  7. Flexibility

    A Money Back Plan offers flexibility in terms of premium payment options. With limited premium payment option, you can complete premium payments within a shorter duration while enjoying the benefits for a more extended period.

  8. Guaranteed Surrender Value

    A Money Back Policy offers a surrender value in case you decide to discontinue the policy before maturity period. This means that you will be able to get back a portion of your premiums after payment of surrender charges, if you surrender the policy before maturity. 

  9. Tax Benefits

    The premium paid towards the policy is eligible for tax deductions under Section 80C of the Income Tax Act, 1961. In addition, the proceeds received on maturity or death provide tax beneifts under Section 10(10D) of the IT Act. 

Working of a Money Back Plan

Let us understand the working of a Money Back Policy from the steps mentioned below:

Step 1: You pay a monthly premium for the policy.

Step 2: The insurance company invests your premiums.

Step 3: The insurance company pays you a portion of your premiums back at regular intervals, as specified by you.

Step 4: At the end of the policy term, you receive the remaining balance of your premiums, plus any bonuses through the investment growth.

Step 5: The two forms of bonuses that can be associated with a Money Back Plan:

Revisionary Bonus:

  • Declared annually or periodically during your policy term by the insurance company

  • Its a share of the profits made by the insurance company from investments

  • It is distributed among the eligible policy holders regularly

  • The revisionary bonus, once declared, becomes a part of the guaranteed benefits of the policy

  • It is usually expressed as a percentage of the sum assured

Terminal Bonus:

  • A terminal bonus is also known as a final bonus or a maturity bonus

  • This is an additional bonus that may be paid out at the time of maturity of the Money Back Plan at the discretion of the insurance company

  • The factors for deciding are the company's financial performance, investment returns, and overall experience with the policyholder's group

  • It serves as an additional reward for the policyholder's loyalty and participation in the policy for the entire duration

Step 6: In case of your untimely demise, a Money Back Plan also provides your nominee with a death benefit that helps create a financial net for your family

Therefore, a Money Back Plan combines the benefits of life insurance coverage, periodic money back benefits, and a lump sum maturity benefit. 

It provides financial security to the policyholder's family in case of unfortunate events while offering periodic returns to meet financial goals throughout the policy term.

*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply

Benefits of a Money Back Policy

Some of the major benefits of a Money Back Plan are listed below:

  1. Regular Income During Your Lifetime

    Money Back Plans offer regular payouts during the policy term, which can help you to meet your financial goals.

  2. Savings for a Specific Goal

    If you have a specific goal in mind, such as saving for a down payment on a house or a child's education, a Money Back Plan with its regular payouts can help you to reach your goal on time.

  3. Financial Protection for Your Family

    A Money Back Policy also provides you with a death benefit. This can help to provide your family with financial security in the event of your death.

  4. Guaranteed Returns

    Money Back Plans typically offer guaranteed returns, which means that you can be sure that you will receive a certain amount of money back, even if the investment market performs poorly.

  5. Tax Benefits

    Money Back Plans can offer tax benefits, which can help to reduce your overall tax liability. For example, you can avail of deductions of up to Rs. 1.5 lakhs from your taxable income on the premiums paid for a money back policy under Section 80C of the Income Tax Act, 1961. There are tax benefits on the maturity benefit and death benefit under Section 10(10D) of the IT Act.

Comparison Between
Fixed Deposits, Guaranteed Return Plans & Debt Mutual Fund
Guaranteed Return Plans, Fixed Deposits &
Debt Mutual Fund
Guaranteed Return Plans
Returns Before Tax
7.5% (TAX-FREE)
Returns After Tax
7.5%
Guaranteed Returns
Yes
Life Cover
Yes
Tax on Profit
Tax Free*
Risk
No Risk
awards
Still Better than FD’s and Debt Mutual Fund
Fixed Deposits
Returns Before Tax
7% (TAXABLE)
Returns After Tax
4.8%
Guaranteed Returns
Yes
Life Cover
No
Tax on Profit
Taxable
Risk
Low Risk
Debt Mutual Fund
Returns Before Tax
8% (TAXABLE)
Returns After Tax
5.5%
Guaranteed Returns
No
Life Cover
No
Tax on Profit
Taxable
Risk
High Risk
VIEW PLANS
*For annual premium upto ₹5 Lacs

Fixed Deposits Vs. 100% Guaranteed Return Plans

A quick comparison of Fixed Deposit (FD) schemes against the best money back policy is as follows:

Feature Fixed Deposits Money Back Plans
Risk Low Medium
Returns on Investment Fixed-rate of interest for a fixed term Periodic money back benefits and maturity benefit
Returns Low High
Maturity Value Guaranteed Upfront Guaranteed Upfront
Liquidity -- Limited flexibility
-- Premature withdrawals may attract penalties
-- Liquidity through periodic money back benefits
-- surrendering may have restrictions
Insurance Coverage No life insurance coverage Life insurance coverage provided
Tax benefits* -- Interest earned is taxable
-- Tax benefits only on Tax Saver FDs u/Section 80C
-- Tax deductions on premiums paid under Section 80C of the IT Act, 1961
-- Tax benefits on maturity and death benefit under Section 10(10D)*
Flexibility Low High
Term 1-5 years 10-30 years
Payouts Lump sum at maturity -- Regular payouts during the policy term
-- Lump sum payout at maturity
Death benefit No Yes
*As per prevailing tax laws

Benefits of Buying a Money Back Plan from Policybazaar

You will get the guaranteed following benefits on a purchase of the best money back plans from Policybazaar:

  • Zero Commission Charges

  • No Hidden Charges and Complete Transparency 

  • Free Expert Advice

  • Honest Selling with No Spam Calling, and 100% Calls are Recorded

Frequently Asked Questions

  • What is a money back policy?

    A money back policy, also known as a money-back plan, is a type of traditional non-participating life insurance plan. It provides both life insurance coverage and periodic payouts to the policyholder during the policy term. If the policyholder survives till the end of the policy term, they also receive a lump sum maturity benefit.
  • What are the features of a money back Insurance policy?

    The essential features of a money back policy are as follows:
    • You get regular payouts during the policy term

    • You can use the payouts to save for a specific goal, such as retirement or a child's education

    • Your beneficiaries will get the full sum assured in case of your demise during the policy term

    • You will receive a 100% guaranteed money back of a certain amount, even if the investment market performs poorly

    • You can avail of tax benefits under the IT Act 1961, which can help to reduce your overall tax liability

  • What are the riders available with Money Back Policy?

    Here are some of the riders available with money back plans:
    • Critical Illness Rider: This rider provides a lump sum benefit if you are diagnosed with a critical illness, such as cancer, heart attack, or stroke. 

    • Accidental Death or Disability Rider: This rider provides a lump sum benefit if you die or become disabled in an accident. 

    • Waiver of Premium Rider: This rider allows you to waive your premiums if you become disabled or terminally ill.

    • Term Rider: This rider allows you to add a term life insurance policy to your money back plan. 

    • Hospital Cash Rider: This rider provides a daily cash benefit if you are hospitalized. 

  • Since Money back policy involves investment, is it risky?

    Money back policies do involve an element of investment, as they combine insurance coverage with a savings component. However, the level of risk associated with money back policies can vary depending on the specific policy and the performance of the underlying investments. 

    Here are some factors to consider:

    • Money back policies provide life insurance coverage

    • Money back policies invest a portion of the premiums paid in various investment instruments such as bonds, stocks, or other assets

    • The returns and benefits of a money back policy depend on the performance of the insurance company's investment portfolio

    • Money back policies offer revisionary bonuses or terminal bonuses based on the financial performance of the insurance company

    • Economic conditions, interest rates, and market volatility can impact the returns and benefits of the policy

    • Money back policies have certain guaranteed features, such as the sum assured and the minimum guaranteed money back benefits

  • What is the tax benefit of this plan?

    Money back plans offer tax deductions of up to Rs. 1.5 lakhs for the premiums paid annually under Section 80C of the Income Tax Act, 1961. The death benefit received by the nominee is tax-exempt under Section 10(10D) of the Income Tax Act.
  • Who is most suitable to buy a Money Back policy?

    Money back plans can be a good option for people who want to get both financial protection and investment returns.

    Some of the people who may be most suitable to buy a money back plan are mentioned below:

    • People who want to get regular income

    • People who want to save for a specific goal

    • People who want financial protection for their family

    • People who want tax benefits

  • What if I fail to pay my regular premiums?

    If you fail to pay your regular premiums in a money back policy, the following scenarios are possible:
    • Grace Period: Most insurance companies provide a grace period for premium payment

    • Policy Lapse: If you fail to pay the premium within the grace period, the policy may lapse

    • Reinstatement: Depending on the policy terms, you may have the option to reinstate the lapsed policy

    • Reduced Benefits: In some cases, if you fail to pay the premiums for a certain period, the money back benefits or the sum assured may be reduced

    • Surrender Value: If you decide not to reinstate a lapsed policy or if the policy does not have a reinstatement provision, you may have the option to surrender the policy

  • What is the premium payment frequency of Money Back plan?

    The premium payment frequency of a money back plan can vary depending on the insurer and the policy. However, the best money back policies offer the following premium payment frequencies:
    • Monthly: This is the most common premium payment frequency.

    • Quarterly: This is a less common premium payment frequency.

    • Half-yearly: This is also a less common premium payment frequency.

    • Annually: This is the least common premium payment frequency.

  • What are the advantages of money back policy?

    Some of the advantages of a Money Back Policy are listed below:
    • Regular income: Get regular payouts during the policy term to meet your financial goals.

    • Savings for a goal: Save up for a specific goal, such as a down payment on a house or your child's education.

    • Financial protection for your family: Get a death benefit for your beneficiaries in case of your death.

    • Guaranteed returns: Get a certain amount of money back, even if the investment market performs poorly.

    • Tax benefits: Get tax benefits under Section 80C of the Income Tax Act, 1961.

  • Is the money back policy a good investment?

    Money back policy as the best investment option for you depends on your financial goals, risk appetite, and investment preferences. If you are looking for a higher return on investment, life coverage, and regular payouts during your lifetime, then a money back plan may be a better option.

*All savings are provided by the insurer as per the IRDAI approved insurance plan.
+ Trad plans with a premium above 5 lakhs would be taxed as per applicable tax slabs post 31st march 2023
#Discount offered by insurance company. Standard T&C Apply
~Source - Google Review Rating available on:- http://bit.ly/3J20bXZ

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Money Back Policy Insurance Reviews & Ratings
4.5 / 5 (Based on 55 Reviews)
(Showing Newest 10 reviews)
Seema
Agra, August 06, 2021
Multiple benefits
Money back plan solves all my concerns and I do not have to invest in extra plans. It gives me survival benefits, maturity and death benefits along with bonus. I think this is one of the best investment plans policybazaar has, by far.
Vishal
Mathura, August 06, 2021
Get online discount
Last week I invested in money back plan through policybazaar and I got discount for making online purchase. This plan has so many benefits like life cover, maturity benefits, and money growth.
Ankit
Patiala, August 06, 2021
Good Product
Money back plans are the best investment anyone can have as they offer multiple benefits under one roof. I am glad I could buy this plan four years ago from policybazaar. I recommend this product to everyone reading this review. Save some money for your future, it helps
Vishal
Mathura, June 13, 2021
No market linked risks
Money back plans counter market-linked risks that every investment faces in its lifetime. It guarantees good returns along with a decent insurance coverage. Policybazaar is offering this plan at cheap premium rates as you get to compare every little thing.
Ankit
Patiala, June 13, 2021
Good source of income
Two years ago I invested in money money back plan through Policybazaar as it was giving me survival, death, anmaturity benefits, along with investment option. I think this is the best type of plan so far in both insurance and investment. It offers everything that a person can look for when thinking of parking money safely.
Seema
Agra, June 13, 2021
Customer satisfaction
I recently bought money back plan from policybazaar and I must tell you I have zero knowledge of finance. But I wanted to invest, so ended up contacting policybazaar customer service. They made me understand all aspects of the plan and helped navigate the website to make the purchase. Thanks team.
Aamar
Daman, June 13, 2021
Good returns
I have been investing in money back plans since three years and I have got good returns till date. Out of 10 plans I shortlisted on policybazaar, I chose the one that perfectly fit my requirements.
Renu
Faridabad, June 13, 2021
Time Saving
I recently bought money back plan from policybazaar and overall process took only a few minutes. Also, they are helping me save money every month.
Surbhi
Faridabad, June 05, 2021
Additional benefits
While buying endowment plan, I had the options of selecting rider options to enhance the cover. I chose two of them that fit the best. I recommend you buy this plan from policybazaar as you can compare before buying.
Vishal
Kullu, June 05, 2021
Claim process
Recently I had to claim my policy as I got diagnosed with one of the critical illnesses. Treatment bills were huge for me as I belong to middle class family. Thankfully, endowment plan that I bought six years ago came to my rescue. I feel it was the best decision to buy this plan. Claim process of policybazaar is quick and easy.
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