Comparing Money Back Plans with Life Insurance Plans

Money back plans are life investment and insurance plans where the life assured receives a percentage of the whole amount over time rather than all at once at the conclusion of the term. These plans are most suitable for those who want to keep liquidity throughout while also saving money on insurance. Contrarily, life insurance policies are purely protective plans that provide the person insured and his family with financial security in the event of an unforeseen disaster. 

Whenever a life insurance policy is bought, the person assured receives the promised sum in the event that they pass away while the policy is still in effect, or the life covered, as the case may be. A brief summary of the comparison between life insurance policies and money back schemes is provided here.

Comparison Between Money Back Plan and Life Insurance Policy

To make an informed choice, you must first be aware of the distinctions between both types of insurance protection.

Profit from Investment

In a life insurance approach, the insurance provider won't provide any survival benefits if you live past the policy term. In contrast, the Money Back plan will make periodic payments of a percentage of the total insured during the duration of the policy.

Rewards

Plans with a high frequency of participation, known as money back plans, permit the use of an assurance benefit. Plans for life insurance are non-participating, that means they don't offer any bonuses.

Tax Benefit

Both insurance plans come with tax benefits. According to Section 80C of the Income Tax Act of 1961, contributions for life insurance costs and Money Back are not subject to taxes. The highest exemption is 1.5 lakh Indian rupees. All of the benefits, maturity, death, and survivor are tax-free. 

Coverage

The term plan is a kind of insurance coverage that offers thorough protection at a reasonable price. On the other hand, a money back plan coverage guarantees a reduced amount for the same premium. A life plan will provide a lump payment to ensure the financial stability of the insured's family, as opposed to a money back plan, which will return the amount guaranteed plus any accrued bonus in the case of the insured's death. 

Conclusion

You must weigh your necessities in terms of money and your personal goals while choosing between the two. Life insurance is a form of protection that excludes investing elements. If something unlucky happens to you, it will guarantee your loved ones' financial security. However, you should pick a Money Back life insurance coverage if you want to receive a positive return on your investment.

 It performs the functions of both insurance and a means of investment. Money back programs can help people who have already met their security needs and have spare money reach their long-term financial goals. Consider the investment's purpose while making a decision.

Also read: HDFC Life Money Back Plan: Everything You Need to Know About

Key Concepts of Money Back Policy You Should Be Aware of