Plans allow systematic enhancement of wealth with insurance
Money back policies provide both Life insurance cover for a specified period and savings, which are paid out at fixed intervals. The Insured is eligible to receive fixed proportions of the sum Assured at pre-set intervals. If the Policyholder survives the complete term, the insured gets the balance Sum Assured on maturity. This payout would include the Bonus or guaranteed addition, if any.
You need not wait for the insurance Policy to mature. Instead, periodic payouts aid in fulfilling the financial commitments at different stages in your life. Cash inflows at regular intervals will help you to plan for expenses like children’s higher studies, marriage and acquisition of an asset etc. Generally, insurance companies like HDFC Bank, SBI or Kotak start giving out a percentage of the sum assured on completion of 3-5 years.
The unfortunate demise of the policyholder during Term of the plan will not leave the family void of its benefits. The family will be eligible for the complete sum assured along with the accrued bonus or profit till that time. The entire sum assured will not deduct the payouts already been given to the policyholder.
The number of Premium installments, percentage of the sum assured to be paid out and the period between installments for the term can be chosen by the policyholder. Based on the convenience, the premium payment mode could be yearly, half yearly, quarterly or monthly.
The policyholder will qualify for a deduction under Section 80 C of IT act on the premium paid.
In case you miss a premium payment, insurance companies provide a facility to allow the policy to remain active after a specific number of years Thus, in case you are unable to set aside funds the insurance companies give some leverage.
But for all these benefits, you need to pay a price. Unlike other insurance products, money back policies are priced on the higher side. With facilities like periodical payouts within the policy term and survival benefits, the insurance company has to bear some extra cost. Thus, for all the extra benefits you need to pay a little extra for such money back plans.
The annual premium net of charges paid towards the money back plan gets credited to the Accumulation Account. At the end of each year, the bonus on the investment part also gets deposited to the same account. This bonus accrued on a compounding basis each year would create a substantial corpus. On maturity, this bonus will be given out as Maturity benefit.
Overall, you need to secure the future of your loved ones by providing for their financial security. And when such an offering available out there in the market, you should surely consider it. With timely liquidity in hand and life insurance protection you wouldn’t need a reason to worry.