What Factors Make Money Back Plans Different From Other Life Insurance Plans?
Life insurance covers your family in the case of a catastrophic catastrophe occurring during the term of the policy. You may buy the plan for a low monthly fee, and the money guaranteed will be sent to your family. The policy is designed to protect against the chance of death. If you outlive the policy's term, you will not get any maturity benefits. A Money-Back life insurance policy is an endowment policy that offers life insurance for a certain length of time. You will get returns at regular intervals during the insurance period. These advantages are known as survival advantages. If you die before reaching adulthood, your nominee will get the sum promised, regardless of the survival benefits you got earlier.
Life Insurance vs. Money Back Plans
To make an informed selection, you must first grasp the distinctions between the two forms of insurance coverage.
1. Coverage
Life Insurance is a form of life insurance that provides comprehensive coverage at a low cost. A Money Back insurance policy, on the other hand, guarantees a lower sum for the same premium amount. In the case of the insured's death, Life Insurance will pay a lump amount to protect the financial stability of the insured's family members, whereas a money return plan will pay the sum pledged plus any collected bonus.
2. Return on Investment
If you outlive the policy term under Life Insurance, the insurance company will not pay any survival benefits. The Money Back plan, on the other hand, will pay out a portion of the sum insured at regular intervals during the policy duration.
3. Tax Advantages
Both insurance programs provide tax advantages. Payments for term life insurance premiums and Money Back Section 80C of the Income Tax Act of 1961 exempt Money Back schemes from taxation. The maximum exemption amount is INR 1.5 lakh. The maturity, death, and survivor benefits are all tax-free.
4. Plan Advantages
The Money Return Plan includes benefits such as a death benefit, a maturity benefit, and a survival reward. Life Insurance, on the other hand, is a sort of insurance that pays out in the event of death. Some Life Insurance policies contain a maturity benefit. Under the Money Back Policy, a lump-sum payment is provided at regular times. In Life Insurance death benefits might be paid in one single payment or in monthly installments.
5. Bonus
Money Back plans are frequent participation plans, which allow for the claim of an insurance benefit. Life Insurance plans are non-participating, which means they do not include any incentives.
Conclusion
When choosing between the two, consider your co-objectives as well as your financial needs. A Life Insurance policy is a form of protection insurance with no investment component. If something horrible occurs to you, your loved ones will be financially secure. A Money-Back life insurance policy, on the other hand, is the way to go if you want to see a return on your investment. It serves as both an investment vehicle and a source of insurance. Those who have previously satisfied their protection needs and have extra funds may be able to use Money Back programs to meet their long-term financial objectives. Before making a choice, keep the investment's aim in mind.
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.
