Money-Back Plan Vs Term Life Insurance
Table of Contents
What are Money Back Plans?
Money-back plans provide payouts at regular intervals during the policy term. Under money back plans, the life assured receives regular payouts during the policy term. In case of an unforeseen demise of the life assured during the policy term, the insurance company provides a death benefit irrespective of regular payouts made earlier during the policy term.
Money-back plans also offer maturity benefit which is provided by excluding the regular payouts from the sum assured and provided to the life assured after the policy term ends.
The payouts which are made at regular intervals during the policy term under money-back plans are calculated at a fixed percentage of the sum assured. Money-back plans also offer wealth appreciation.
What are Term Life Insurance Plans?
Term insurance plans are also known as pure protection plans. Under term insurance plans, the insurance company provides a death benefit in case of an unforeseen demise of the life assured during the policy term.
Term life insurance plans ensure financial security of the family of the life assured in their absence. These plans provide high coverage at affordable rates. These plans help the family of the life assured be financially independent and fulfill their financial needs even when the life assured is not around.
Money-back Vs. Term Life Insurance
Money back plans are very different from term insurance plans. Term insurance plans are pure protection plans, on the other money back plans are regular payout plans. Both of these plans have different benefits and fulfil different requirements. Following are the difference between Money-back and term life insurance plans:
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Money Back Vs. Term Life Insurance |
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Parameters |
Money-Back Plan |
Term Life Insurance |
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Benefits |
Mone Back provides survival benefits, i.e. payouts are regular intervals, maturity benefit and death benefit. |
Term life insurance offers a death benefit. Some term life insurance also offers maturity benefits. |
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Wealth Appreciation |
Money Back plans are participating plans and offer wealth appreciation. The insurance company declares bonuses on the money-back plan. |
Term life insurance does not offer wealth appreciation as it is a non-participating insurance plan. |
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Partial Withdrawal |
Partial withdrawals are allowed under money-back plans. |
Term life insurance does offer partial withdrawals. |
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Premium |
Money-back plans are rather expensive than term insurance plans. |
Term insurance plans are affordable. |
Conclusion
Term life insurance is ideal for people who want high coverage at an affordable price, while a money-back plan is ideal for people who have accomplished their protection requirements and have financial resources to invest their money to fulfil their short-term financial goals at different stages of life. If you are looking for a pure protection plan then you must choose term insurance and if you are looking for an insurance plan that will help you fulfill your financial requirements at different stages of life then you must choose a money back plan.
You may also like to read -Why Go For Money-Back Plan?
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.
