Money Back Policy: All Need to Know


Many individuals prefer to invest in life insurance policies. It not only secures their future but is also a great option for getting good returns. However, the financial crisis can occur at any time and we might immediately need funds. But this is not possible if the tenure of the insurance policy is not over.

Even a loan can’t be really helpful at this point in time. In such a case, the money-back policy comes to the rescue.

What do you mean by Money Back Policy?

The money back policy is a type of plan, which provides money at regular intervals. This amount is paid during the tenure as a percentage of the total sum assured. These are quite beneficial as it comes as a regular income and one the tenure ends, the rest of the assured sum is received along with additional bonuses. What makes it stand out from other products is that even if the person insured passes away while the plan is active, the nominee will receive the sum assured as well as the survival benefits already received.

Why should one consider investing in a Money Back Policy?

Just like any other saving plan, money back policy is also this kind of tool. In this type of policy, one receives the survival benefits as well as maturity benefits.

The reason why it has attained so much attention from the investors is that it provides sum regularly after a certain point in time until the end of the policy term.

It is an essential tool when a person is already in a financial distress and needs some financial backup for steady growth and prosperity.

Sometimes, we set life-enhancing goals as they are basic needs of life. Goals such as a family vacation to a foreign country or renovation of the house involves huge costs. At this time, money-back policy proves itself worthy.

As children grow, their needs increases. They need money to fulfill their dreams. This policy helps in fulfilling those milestones. One can plan financial goals like fees of college, costs of marriage etc in advance by investing in such plans. This type of policy is one of its kind. It’s like an additional benefit as it also comes with life insurance coverage.

Survival Benefits

The money back policy provides survival benefits. This means that the policyholder gets a certain percentage of the assured sum at regular intervals. It is paid every year until the maturity of the policy. Other than that, one is also eligible to receive maturity benefits and bonus if any.

The survival benefits start after few years from the start of the policy and continue until the maturity of the policy.

Liquidity Benefits

Financial crunch due to uncertainties of life is the biggest problem that one faces. Unavailability of money when we seriously need it can lead to some major problems and keep the future in dark.

This is where money back policy provides liquidity at regular intervals keeping the balance intact and plan the future accordingly.

The Benefit of Risk-Free Returns

The money-back policy is one of the best tools for those who want to invest in risk-free plans. There is hardly any risk involved and gives the best benefits.

Assured sum on the maturity of the policy, death benefits, regular payouts, and other protective layers of this scheme makes it a lucrative option among investors.

Family Protection

This type of plan provides family protection for over a decade or more through payouts at regular intervals.

Easy Premium Payment Methods

There are various modes of payments available for paying premiums. Premiums can be paid on a yearly, half-yearly, quarterly, or monthly basis. In case of delay in paying premiums, there is a grace period which acts as an extension for the payment of premiums.

In case of not paying the premiums, the policy will get lapsed and revival of the policy may take subdue charges.

The revival of the policy can be done within two years. Revival process involves payment of the previous premiums, interest charges as well as other charges involved.

Rebate on Premiums

If the policyholder decides to invest in a lump sum which involves higher sum assured, then a rebate is also paid on the premium involved.

Tax Benefits

One can also invest in money-back policy by keeping in mind tax benefits that one get. There are tax benefits involved on the premium paid and the benefits received as per income tax rules under section 80C and section 10(10D) of the Income Tax Act, 1961.

Maturity Benefits

The money-back policy is an ideal choice. Especially for those who want to live a stress-free, secured and planned life. It gives benefits just like an insurance plan. In case of death of the person insured, just like the life insurance policy, one is eligible to receive the assured sum and other returns.

The sum includes the amount declared by the company at the start of the policy. The bonuses amount includes the total sum accrued which has been declared by the company. It mainly depends on the company’s performance year after year.

What if the person dies during the tenure of the money-back policy?

Just like the benefits of the life insurance policy, the money-back policy provides with the assured sum to the nominee mentioned by them in the proposal form.

It is a guaranteed sum that your loved ones will definitely receive without worrying about the financial crisis or their future. However, one should understand that they will not be eligible to receive the survival benefits. This is because the sum is only provided when the policyholder is alive.

Bonus amount benefits

This bonus actually depends on the profits made by the company in a particular financial year. It also depends on the customer’s relationship with the insurance company.

So after the end of a financial year, the company declares a bonus as a percentage of the sum assured. This bonus is added to the assured sum and can be received by the policyholder after the maturity of the policy or in case of the death of the policyholder.

If the customer is quite careful with the timely payment of the premiums, then they are eligible for the bonuses.

Rider Benefits also available with the Money-back Policy Rider benefits are offered by the insurance company as an additional benefit in order to provide all-around coverage to the person insured.

In the same way, the money-back policy also comes with such riders like an accidental rider, critical illness or term rider.

What kind of a money-back policy to opt for?

There is a huge market of money-back policy in the country. There is cut-throat competition among competitors and they are offering policies with a number of features.

But with so much competition, it becomes difficult to choose the policy which is suitable as per your needs. So what are the factors that one should consider before buying a money-back policy?

  • Long-term financial goals
  • Funds available in excess at present for investing in the money-back plan
  • Tenure of term interested in investing
  • Type of payouts interested in
  • Sum assured you think will fulfill your financial needs

Claim Process

The claim process of the money-back policy is also hassle-free and easy. It involves three easy steps of registration, document verification and calculation of the assured sum with bonus and term bonuses.

What is the eligibility criteria for the money-back policy?

There are an entry age criteria to invest in this policy. Also, there is a maximum age limit for the policy which cannot be extended under any circumstances. There are strict regulations regarding payment of premiums and the mode of payment.

What are the documents required to invest in money-back policy?

Here’s a list of the number of documents that are essential for investing in money-back policy.

  • Income proof is needed for buying this policy. For providing income proof, documents such as salary slips, income tax returns, bank statements can be given.
  • Address proof us another essential document that is needed. Basic identity proofs like aadhaar card, voter id, driving license etc can be used.
  • For identity proof, one can easily use PAN card, aadhaar card, voter id or any other government recognized document.
  • For age proof, the above-mentioned documents can be used as well.


Looking at these benefits, it is needless to say that the benefits received are tremendous. It helps in meeting the long-term as well as short-term financial goals. One can easily plan their family’s financial needs in advance keeping their future safe and secured.

The regular payment feature is what makes it different from other schemes. One remains secured from the immediate financial stress and the regular payout come handy. Unlike mutual funds and other risky tools, it involves low risk and promises high returns.

The money-back policy is a good combination of a life insurance plan as well as regular income plan and this makes it quite a popular investment plan considered by investors to invest in.