A money back policy is a more complex life insurance policy than a term plan or a standard life insurance cover that pays the sum assured to the insured party on maturity. It provides certain amounts called survival benefits in addition to the sum assured and a bonus from the insurance company based on its performance. To understand a money back plan better, it makes sense to have a look at the various components that make up a life insurance policy and their various particulars.
These moneys are paid to the policyholder every few years over the lifetime of the policy. These payments start after some years from the start of the money back plan and continue until maturity. The insurance companies break-up these payments as a percentage of the sum assured and spread them across the policy period. For instance, a 20 years policy may start the payments from the fifth year onwards and pay a certain part of the survival benefit every five years and the rest on maturity. This means that the policyholder will receive a survival benefit in the fifth, tenth and fifteenth years of the policy period and the rest on maturity at the end of 20 years.
The death benefits are what are given to the nominees of the insured in case of the death of the insured party. These include the sum assured of the money back policy and the bonus accrued on the policy since it was taken by the insured. This does not include the survival benefits as they are paid only if the insured is alive and well.
This is a common term used to denote all amounts received by the insured party on the maturity of the money back plan. The amount includes three components:
o This is the total cover chosen by the policyholder at the
start of the policy or upgraded later during the term of the policy
o The remaining survival benefits: These are the remaining amount of the
survival benefits that are due to be paid to the policyholder
o The bonus: This includes the reversionary bonus that the life insurance c
ompany declares at the end of each year and which is added for each of
these years to arrive at the total sum. The bonus declared by the company
generally depends on the performance of the company. Most companies
also pay an additional terminal bonus
The sum assured is the amount for which the policy is taken. It is the amount that determines the premium the insured party will have to pay the money back policy. The sum assured is paid to the policyholder on the maturity of the policy or given to the nominees if the unfortunate happens and the insured does not survive the policy period
The sum assured is the amount for which the policy is taken. It is the amount that determines the premium the insured party will have to pay the money back policy. The sum assured is paid to the policyholder on the maturity of the policy or given to the nominees if the unfortunate happens and the insured does not survive the policy period