Key Concepts of Money Back Policy You Should Be Aware of
Table of Contents
One of the most well-liked insurance products in India is the Money Back Policy. Benefits from both a life insurance plan and an investment plan are included in this policy. This plan, like some other life insurance policies, provides regular income in addition to maturity benefits. It's a smart approach to prepare for future significant costs as well as a consistent source of income.
Under these policies, in addition to survivor benefits, the policyholder also receives a bonus sum and other benefits. However, the survival benefits are not paid out in the event of a policyholder's death or demise. In circumstances of death, the candidate is given the full maturity sum.
Key Concepts You Should Be Aware Of
The following are the main ideas for a money-back guarantee:
1. Maturity Advantage
It is a phrase used to describe all of the payments made to the policyholder at the money back plan's maturity. The sum promised, the remaining survivor benefits, and the accumulated bonus, if any, are all included in these sums.
2. Survival Advantage
After a specific number of years have passed across various time periods up until the conclusion of the policy term, the life guaranteed will get this benefit. This strategy enables you to support your family's financial needs. Depending on the plan and the insurance provider, the payout formula for the survivor benefit may differ.
3. Death Benefit
In the event of the death or downfall of the life guaranteed, death benefits are given to the nominee. Because they are only paid while the insured is still alive, survival benefits are not included in this.
4. Bonus
It is the sum that the insurance company pays to the nominee or policyholder in accordance with how well it performs, as well as if the insurer paid all premiums on time. Reversionary bonuses and terminal bonuses are the two primary categories of bonuses.
5. Assured Sum
It is the sum for which the insurance is purchased. On the policy's maturity, policyholders get payment. If terrible circumstances arise and the insurer does not live to see the conclusion of the policy term, it may also be awarded to the nominee. It is also referred to as entire coverage because the policyholder first selected it and later increased it.
6. Terminal Bonus
It is given at the conclusion of the money-back plan's term or in the form of a death benefit and is also known as a perseverance bonus. As opposed to a reversionary bonus, which must be provided once declared but is not guaranteed, the terminal bonus is paid at the insurance company's discretion.
7. Reversionary Bonus
It is reported by the insurance provider for a number of policies at the end of each year. In the event of the policyholder's passing or death, it is added to the amount due to the policyholder at maturity or to his or her nominees. Simple and Complex Reversionary Bonuses are the two forms of reversionary bonuses.
The Simple Reversionary Bonus does not raise the sum insured or contribute to the overall amount due. In the case of the Complex Reversionary Bonus, a reward is periodically added to the payment amount. It has a couple of effects: first, it raises the amount promised, and second, the sum assured has grown from the prior year's sum for the coming years.
Conclusion
Money back policies combine the advantages of a life insurance policy with a guaranteed return. At various points during the policy's term, it aids policyholders in covering family expenditures. Therefore, it makes sense to put money into these programmes in order to gain two advantages.
Also Read:
