All you need to know about a money back life insurance plan

Securing the financial future of your family in your absence will be your utmost priority while you are still working and able to earn. Keeping aside smaller amounts as savings or investing in different schemes are some of the things that one would do to create a financial safety net for their loved ones. However, there are expenses at different life stages that require a bigger corpus for them to be managed.

To have sufficient funds for such situations, you can start investing and get good returns. One such type of life insurance policy is a money back plan. What is this plan? What are the benefits that you get to enjoy with this plan? Read on to find out. 

What is a money back plan?

Money back plan is a type of life insurance policy. Money back plans are considered to be endowment plans as they offer the same benefits as that of an endowment plan. In this plan, you get the dual benefit of insurance and investment in a single policy. While in ULIPs, these same benefits are provided, however, their returns get impacted due to market fluctuation. In endowment plans, specifically money back plans, the returns are guaranteed, as the money is invested in funds that are not subject to market fluctuations. Your loved ones are provided with a life insurance cover in this policy. If you were to pass away suddenly during the policy term, your family would receive death benefit from the insurer at several intervals in the form of pay outs.

What are the features of this plan?

The following are the benefits of this plan:

  1. Guaranteed returns

In money back plans, the money that you invest in the policy is returned to you as a survival benefit. This means that if you survive the term of the policy, your money is returned to you. This money is paid to you either after the maturity of the plan or after a time period which is pre-determined by the insurer.

  1. Income from the policy

As a policyholder, you get to enjoy income from your money back plan under 3 circumstances. The first is during the policy term. The sum assured gets accrued over the term of the policy. This means that you as a policyholder get to enjoy the benefit of payouts after every few years. These pay outs help you in managing vital expenses without having to worry about the finance.

The second circumstance is after the maturity of the plan. If you survive the policy term, you will receive maturity benefit in the form of a survival benefit. If there are any bonuses, those are also added to the maturity benefit. 

The third circumstance is in the event of the policyholder’s sudden demise. If the policyholder were to pass away during the policy term, their family would receive the sum assured in the form of a death benefit. Many times, the insurer also includes a bonus, either reversionary or additional, to this pay out, thus enhancing the amount your loved ones would receive. This bonus is not present in other plans, such as whole life insurance.

  1. Riders for enhanced coverage

You get to include riders in your money back policy to increase the coverage that you receive from the policy. Some of these riders include accidental death benefit rider, personal accident rider and critical illness rider. These riders can help you and your loved ones financially, especially if there is a sudden loss of income. 

What are the benefits of this plan?

The following are the benefits of this plan:

  1. Financial support

As mentioned earlier, the plan gives pay outs at different intervals depending on the time period set by the insurer. These pay outs can help you manage immediate or necessary expenses such as medical emergencies, managing loans or debts or other expenses. Do keep in mind that you will receive a specific portion of the sum assured only during the policy term.

  1. Tax benefits

The premiums for this plan are eligible for tax-deduction under Section 80C of the Income Tax Act. This eligibility is applicable only if the premium is 10% of the sum assured amount. Similarly, the maturity benefits that you receive from this plan is eligible for tax deduction under Section 10(10D) of the Income Tax Act.

  1. Bonus

In this plan, there are two types of bonuses: reversionary and terminal. While both the bonuses are either added to the maturity benefit or the death benefit of the plan, terminal bonus is totally at the discretion of the insurer, and they may or may not add it. 


If you are looking for a plan that provides the benefit of investment and insurance along with financial support at different intervals, you can consider investing in a money back plan. Before you invest in this plan, you can use the life insurance premium calculator to see how much the plan would cost you on the basis of your requirement.