What Is Not Covered Under The Money Back Policy?

If you purchase a Money Back Policy the plan offers a percentage of the sum assured at fixed intervals during the tenure of the Policy. These are known as Survival Benefits. Along with the Survival Benefits, the remaining sum assured is paid along with the vested bonuses after the Maturity of the Policy.

How Does A Money Back Policy Work?

We can understand this with an example -

Mr. Kumar is a working-class person. He decided to purchase a Money Back Policy under his name and chose his spouse to be his nominee. The Money Back Plans that he chose promises a sum assured of 2 lakh after a policy term of 20 years. The Insurance Company promised to provide 15% of the sum assured as Survival Benefits every 5th Policy Year.

Scenario 1- If Mr. Kumar survives till the end of the Policy Term then the insurer will pay Rs. 30, 000 in the 5th, 10th, and 15th year. These are the Survival Benefits that will be paid to the Policyholder.

Scenario 2- If Mr. Kumar survives till the end of the Policy Term, then he will be also eligible for the remaining value of the sum assured which will be calculated after the deductions of the Survival Benefit payouts. The sum assured that Mr. Kumar will receive will be Rs. 1,10,000 with Accrued Bonuses.

Scenario 3- If Mr. Kumar dies in between the Policy Term then his nominee will receive the Sum Assured amount which is left after the payouts of the Survival Benefits. This is called the Death Benefit which will be paid to Mrs. Kumar because of the untimely death of Mr. Kumar.  

Money Back Plans and their Benefits

A money back plan offers the following benefits - 

1. Survival Benefits
2. Death Benefit
3. Maturity Benefit
4. Additional Riders

In this Article, we will focus on what is not covered under Money Back Plans. 

Common Exclusions Under Money Back Plans

We have prepared a list of the common exclusions of the Money Back Plans.

Suicidal Death

Although this exclusion is common in every other Policy in the Market, the Money Back Plans do not offer any benefits in case the insured person dies within one year of the issuance of the Policy by suicide or attempted suicide. The policy does not take the sanity of the insured into consideration. In such circumstances the sum assured or the Survival Benefits will get forfeit by the insurer. There is one catch to this particular clause is that if the insurer is informed about such upcoming events at least one month before the death of the insured.

Surrender Value 

After the end of the third Policy Year and provided that 3 full regular premiums have been paid then only the Policy may be surrendered by the Policyholder and a Surrender Value shall be payable. 

 Death Risk Factor

Within the 12 months from the beginning date of risk under Policy (purchase or renewal), the Nominee of the Policy shall be entitled to receive a certain percentage of all the premiums paid or the Surrender Value whichever is higher.

Conclusion

The Money Back Policy Plan is a good alternative for the traditional Endowment Policies as during times of uncertainties it does guarantee a helping hand in Monetary Value. It is important to go through the terms and conditions of the Money Back Plan or any other policy before purchase. The exclusions under the Money Back Plans play an important role as they directly affect the flow of benefits and the Monetary Value attached with them.

Also read 

What is the Maturity Amount of Money Back Plans?

Understanding the Basics of a 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.