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Money Back Plan

Money Back Plan

You must have invested in different types of policies. Most of those policies you invest in are for long-term goals. They are either for your retirement or for your child's education. However, there could be a situation where you may need the funds before your policy matures. A financial crisis can come to anyone, at any time, and you should be prepared for it.

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What is Money Back Plan?

What is Money Back Plan?

A money-back policy gives you money back at regular intervals. When you invest in a money-back policy, you receive money during the policy tenure as a percentage of the sum assured. The payout you receive is called Survival Benefits.

You continue to receive regular payments throughout the tenure of the policy. The remaining sum assured is paid on maturity along with vested bonuses if any.

In case of demise of the insured, the beneficiary receives the sum assured along with bonus amount. The amount is given even if the insured has received payment during the policy tenure. This is one of the unique features of a money-back plan.

Most traditional life insurance plans do not allow you to withdraw funds before the tenure. You always have an option to take a loan, but the amount may be limited, and you have to start thinking about the repayment as soon as you avail of the loan.

To be prepared for unexpected events in life, you should have a plan that pays you lump sum amounts during the tenure. A money-back plan is an excellent option that solves your liquidity problem.

How Does a Money Back Policy Work?

A money-back policy offers you Survival Benefits, investment opportunities, and maturity benefits. Let us see how money back plan works.

Using a money-back policy, you can plan your financial goals like your child's education and your retirement.

Suppose you want to buy a child money back plan. Assume the current age of your child is 10 years. You buy money back plan for a sum assured of Rs 20 Lakhs in 2021. The tenure of your policy is 25 years, and you pay a premium throughout the policy tenure. As per the policy term, you will receive survival benefits of 20% of the sum assured (Rs 4 lakhs) every five years.

On maturity, you will receive your last 20% along with the bonus, if any. You can use the pay outs as follows:

  • a) 2026: You receive Rs 4 lakhs in the 5th year. You can use these funds for the tuition fee of your child.
  • b) 2031: The next payment of Rs 4 lakhs will come in the 10th year of the policy. Your child will be 20 years old by this time. The money received can be used for the higher education of your child.
  • c) 2036: You will receive the third payment in the 15th policy year when your child will be 25 years. You can use the amount for his/her marriage expenses.
  • d) 2041: The fourth payment you can keep for your retirement. It will come in the 20th policy year.
  • e) 2046: You will receive the remaining Rs. 4 lakhs plus applicable bonuses from the policy, and the policy will terminate.
  • f) In the case of your death within Policy Term, your nominees will receive the Sum Assured Rs 20 Lakhs plus accrued bonuses to date, and the policy will terminate.

By 2041, you would have received 16 lakhs. In 2046 (maturity), you will receive the remaining Rs 4 lakh along with the bonuses, and the policy will terminate once you have received the final payment.

In case of an unfortunate event, if you die in the 18th year of the policy, the beneficiary will receive Rs 20 lakh (sum assured) along with bonuses. The nominee receives the complete sum assured even though you have received Rs 12 lakh by then.

Features of a Money Back Policy

The best money back plan helps you achieve both your medium and long-term goals. It also gives you a life cover. Here are some features of the best money-back policy:

Guaranteed Returns

A money back policy is an ideal investment if you want safe and secured returns. The returns are not driven by the fluctuation of the equity market. You receive guaranteed returns irrespective of how the market is behaving.

Income During the Policy Tenure

You receive regular income to take care of your large expenses. For example, you can use the money to pay off your existing loans or for a holiday or redesigning your house.

Income on Maturity

You get a guaranteed and secured income on maturity that helps you plan your future in a much better way.

Financial Support upon Death of the Insured

If the policyholder passes away, the nominee receives the sum assured along with the bonus (if any). The policy acts as a standard insurance plan in this respect.

Bonus Additions

There are two types of bonuses amounts in a money-back policy - a reversionary bonus and an additional bonus.

  • The reversionary bonus is given as a per cent of the sum assured by the company. The amount gets added to the overall payment you are supposed to receive at maturity or in the event of an unfortunate event.
  • Sometimes, the company may also give you an additional bonus depending on the performance of the company. The other instance when you receive additional bonuses is when you pay the entire premium on time.

Add-on Riders

The option to add different riders to your money back plan depends on the policy you are choosing. You may also get the option to add hospitalization rider to your money back policy that will help you in managing the hospital expenses if the policyholder or life insured has been hospitalized.

Waiver of premium is another rider that you may add, if available in your money back plan. If the policyholder fails to make the premium payment, this rider protects the loss of life insurance plan. The covers continue to protect the lives insured rather than lapsing due to non-payment of premium.

Riders Available in Money Back Policy

A money-back policy provides you with an option to add covers that are not included in the original policy document in the form of riders. Riders give you cover in cases like accidental death, hospitalization expenses, terminal illness, permanent disability, and many more.

Hospitalization Rider

This rider aids by paying your hospital bills when hospitalized. You receive a daily allowance under this rider to cover your expenses related to treatment.

Accelerated Sum Assured

This rider helps you get a sum assured on being diagnosed with any of the specified critical illnesses. The rider is helpful as it gives you the sum assured without even having to pay the premium or wait for the policy term to end to receive the sum assured.

The riders' availability varies from insurer to insurer and also depends on your policy tenure. In general, you can purchase below riders along with the best money back policy -

Waiver of Premium

This rider provides you with a waiver from paying the premium amount under certain circumstances. Even though you don't pay a premium, you will be eligible for life cover.

Accidental Death Rider

In this rider, if the policyholder meets an accidental death, the beneficiary will receive a lump sum amount.

Terminal Illness Rider

If you contract a terminal illness (as defined by the rider), this rider will provide you guaranteed cash. So, in a way, it acts as a guaranteed money back plan. You can use the money to pay off your medical bills or for any other reason. Some of the major terminal illnesses covered are:

  • Heart attacks and bypass surgery
  • Paralysis or strokes
  • Different types of cancer
  • Renal or kidney failure

4 Benefits of Money Back Policy

High Liquidity with Survival Benefits

You receive the money every few years over the tenure of the policy.

Family’s Financial Safety with Death Benefits

If the policyholder passes away, the nominee receives the death benefits of the insured person.

Maturity Benefit

Once your policy matures, you receive the sum assured and the bonus amount.

Tax Benefit

Some of the money-back policy offers tax benefits.

How to Choose the Best Money Back Policy?

Out of all the money-back policies available, how will you choose the best money-back policy? Let us see how you can find the best money back policy. Your choice of money back policy will depend on the below factors:

Your financial goals

You will have to see your medium and long-term goals and accordingly choose a plan. Assess your current financial goals and situation. Choose the term of your money back policy as per your financial goals and milestones to easily achieve them.

Your current income

Your current income and the percentage of it, you can pay as a premium. Based on the premium you pay, your sum assured will be calculated. You will have to work out the best combination of the premium amount you can pay, and the sum assured you want to receive.

When are you buying it

At what stage you are buying the plan, and for how many years you want to stay invested? Ask yourself these questions when you are buying the best money back plan. It will help you to understand your financial goals. Pay attention to the term of your money back policy and assess the need for cover accordingly.

Payout Structure

What kind of pay out structure do you want? Most of the money-back plan pay every five years. If this is not in line with your goals, you can look for a plan offering pay out as per your requirement.

Eligibility Criteria to Buy a Money Back Plan

To buy a money-back policy, you need to satisfy below two eligibility criteria:

  • The minimum age at the time of buying the policy should be 8 years or above
  • The maximum age to start a new policy is 55 years. If you are paying premiums in monthly mode maximum entry age would be 45 years.
  • The maximum age for the policy to mature is 71 years
  • You should be financially sound to pay the premiums for the policy

Documents Required to Buy Money Back Plan

If you are planning to buy a money-back plan, you will have to provide the below documents to the insurance company:

  • Proof of your age document
  • Proof of your address document
  • Proof of your income
  • Application form duly filled in
  • Medical reports, if required

Why Buy Money Back Plan from Canara HSBC Oriental Bank of Commerce Life Insurance?

Canara HSBC Oriental Bank of Commerce Life Insurance is offering you a wide range of life insurance plans. You should buy money back policy from Canara HSBC Oriental Bank of Commerce Life Insurance for the following reasons:

A huge network of branches


A huge network of branches

The company has over 20,000 branches backed by Canara Bank, Punjab National Bank, and HSBC bank.

Huge AUM


Huge AUM

The company has Rs 20,586 crores in Assets Under Management (AUM) as of 31st December 2020.

High Claim Settlement Ratio


High Claim Settlement Ratio

The insurance plan is useful if the claims are not only settled after the demise of the policyholder but are settled fast. We have a claim settlement ratio of 97.1% in FY 2019-2020 for individual death claims.

Are money-back policies a good investment for you?

Money-back policies are a perfect investment option for you if you want the safety of capital. Money-back policies are safe long-term investment plans, which invest money in government bonds and top-rated corporate debt.

Money-back policies are also more liquid than other long-term insurance policies, due to the regular cashback feature. You can use the money back plans to create a secure stream of tax-free income for your family. Thus, money-back policies are a perfect wealth transfer instrument as well.

For example, you can start five money back advantage plans over the next five years and invest in such a way that the money-back arrives every year from a different policy.


Is the amount received from money back policy taxable?

The amount you receive from your policy is taxable only if the invested premium in a policy year is more than 10% of the base life cover sum assured of the policy.

Can I transfer my money back policy?

No, you are not allowed to transfer your money back policy. However, there is an option to make an assignment in another person's name. Or you can buy a new money back policy for the other person.

Is money back policy risky?

All investment instruments have a certain amount of risk. Money back policy is less risky compared to other investment products.

What are the tax benefits of a money-back policy?

The amount you pay as a premium helps you reduce your tax liability under section 80C. Thus, you can claim a deduction for up to Rs. 1.5 lakhs of invested premium every financial year. The money backs and maturity value received from the policy is also tax-free if the annual premium of the policy had been less than 10% of the life cover amount.

How can I surrender the money-back policy?

If you want to surrender your money back policy, you will have to visit the branch office of the insurance company. Or you cannot do it online.

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