Guaranteed Returns on Investment
One of the biggest benefits you can get from your money back plan is that you will get guaranteed returns. Thus, as the name suggests, it makes sure that you get your money back from the policy. This advantage makes the money-back policy a tension-free investment. You will not have to stress as to how your investment will do and whether you will be able to get money or not.
This is an ideal plan if you do not like to take risks and the safety of the corpus is your top-most priority.
Provides you with a Life Cover
Since a money-back plan gives you a payout at regular intervals, and that it comes with an insurance cover as well. So if anything unexpected happens and you lose your life, then your family will be given a lump-sum amount, i.e., the sum assured.
The sum assured that your family will receive will help keep them financially secure so that they do not have to struggle. Through this money, they can carry on with their expenses and can achieve their goals even if you are not there to provide for them.
Returns are Generated After a Few Years
In other variants of life insurance, there is only a death benefit involved. That is, your family will receive the sum assured if you die during the policy. While in other policies, you may have to wait a long time to receive a benefit. But with a money-back insurance policy, you receive the returns while your policy is still running.
You start receiving payouts just a few years after investing in the policy. In the Canara HSBC Life Insurance, Money Back Advantage Plan, for example, the payout begins at the end of the fifth year.
Helps Increase your Sum through Bonuses
Bonuses are an integral part of a money-back plan. You can get an additional amount in terms of bonuses, such as "reversionary bonus" and "terminal bonus". These bonuses are available if you have paid all your premiums.
A simple reversionary bonus is added to your policy at the end of the year. This gets accrued every year. This accrued amount is given to you at the time of maturity or at the time of your death, to your family.
There is another bonus known as a "terminal bonus" in the money-back plan. These are based on the profits earned by the insurance company.
As with other life insurance plans, a money-back plan is also eligible for tax deductions. These tax deductions are available under section 80C of the Income Tax Act 1961.
These tax-benefits help you reduce your tax liability. That is, you can lower your annual tax outflow if you invest in a money-back policy and save even more money.
Under Section 80C, you can avail a deduction of up to Rs 1.5 lakh towards the premium you pay for your money back plan. Also, the maturity benefit will be exempt from tax if your annual investments in the plan never exceed 10% of the policy life cover.