Choose the best money-back policy from the top-ranking money-back schemes among the different money-back plan categories. The term money back was introduced to essentially differentiate the pure life cover plans without any maturity or survival benefits from the life cover plans that offered these benefits.
Since the latter plans offered several types of monetary benefits after a certain time or at the end of the policy tenure, these were named the money-back policies by the asset management companies.
The best money-back policy can provide you with total cover solutions for yourself and your family members as well as investment growth. Money-back policies are essentially life-cover policies with investment linkages.
Know the following aspects concerning the purchase of money-back policies before you decide upon the best money-back policy that is ideal to meet your investment and cover requirements.
1. Money Back Policy Objectives
Are you looking for essentially a retirement solution, pension solution child plan, or a total cover money back policy that grows your money as well? Comparing your objective preference set with the highlighted objectives of the money-back plans helps in arriving at a judicious choice. Though all money-back policies ensure the return of some monetary benefits at the end of the policy tenure or in periodic installments, they may essentially differ in structure and fund administration.
Also Read: Best Endowment Policy in India
2. Money Back Policy Life Cover Tenure
For people who seek a long life cover span, tenure money-back policies can be the best money-back policy option. Top insurance companies are offering money-back policies that ensure cover well above the age of 85 and offer good enough returns on investments.
3. Money Back Policy Additional Covers
You can pack all your cover requirements into one money-back policy or opt for only basic cover options. Money-back policies offer life cover to the policyholder as basic cover. In addition to the basic cover, a money return policy plan can be made to include life cover for other adult members and life eventualities cover that includes cover for health, accidents, serious illnesses, and disabilities for self and family members.
4. Money Back Policy Invested Portfolio
Money return schemes apportion a part of the premium into an investment portfolio that can comprise debt, equity, and mixed securities. Debt-based plans are typically low on risk and returns can be within 7% to 10 %. Increasing the equity proportion in the plan portfolio is said to move the viscometer needle towards a high scale, however astute and active management of equity-based folios can reduce risk by diversification.
Several equity-based plans are yielding returns above 17% with a moderate to high-risk profile. If you are a risk-averse investor you may choose among the debt-based money-back plans. If as an investor you want to explore flavors of equity investment through investments in different caps then choose your plan portfolio accordingly after making a note of the highlighted portfolio features.
5. Money Back Policy Returns
Returns of money-back schemes depend on the money-back plan portfolio category. Each portfolio category has a different risk profile. Compare the money-back plan returns for different types of money-back policies on the investment aggregator portal. Compare the returns of the top money-back policies vis a vis other plan features to arrive at the best money-back policy choice.
6. Money Back Policy Cost
The cost of the money-return plan is the amount charged by the insurance and investment company to manage the money-back plan structure. ULIPs which are unit-linked money-back plans have an intricate fund management structure that is displayed lucidly on the fund snapshots.
Money back policy cost includes the premium costs and the fund management cost includes mortality scaling costs, additional cover costs, and fund switch costs. The fund management cost also called the expense ratio, ranges between 4% to 2%, and decreases as the plan progresses due to the decrease in mortality factor ratio.
Best money-back policy plans indicate the fund structuring details in the costing plan. The most ideal money-back schemes can offer the most cost-effective plan structures with good enough returns.
Also Read: LIC Single Premium Policy Benefits
7. Money Back Policy Discount
Top asset management companies are offering discounts of up to 5% on premiums for purchasing online money-back policy schemes. The offline money-back policies are costlier as the agent commission gets included in the charges that the subscriber of the plan needs to pay.
The investor aggregator portal enables speedy comparison of the top money-back schemes on all essential parameters and investment choices can be made from among the top schemes that do not overcharge in terms of premiums. Purchases of online money-back schemes from the aggregator portal can enable investors to save up to 40% on the money-harvest schemes.
8. Money Back Policy Taxes
since money policies include life insurance and eventualities coverage they can be eligible for tax benefits under the sections of the Income Tax Act. Section 80 C provides up to Rs 1.5 lakh tax deduction benefit on income for life insurance-linked schemes which include the ULIP schemes.
If a back plan includes a health plan cover option besides the life cover option then tax deduction benefits up to Rs 60,000 can become applicable under section 80 D. Apart from the tax deduction benefits, ULIP money-back schemes also qualify for tax exemption benefits on the returns received from the money back plan any time during or after the plan tenure.
Section 10 D provides complete exemption on taxes on yields received from listed money-back schemes like the ULIPs.
9. Money Back Policy Terms and Conditions
the best money-back policy plans spell out the terms and conditions in clear terms in the policy plan brochure and documents which are under IRDA stipulations. The terms include the inclusions and exclusions, tenure, eligibility, yields, features and benefits, surrender value, and paid-up value.
Most money-back schemes acquire paid-up status after payment of three annual premium amounts. A paid-up plan has the option of being surrendered and benefits being thereby received as a pro rata of the total tenure. Best money-back policy plan terms include a cooling period of fifteen days in which the subscriber is given a choice to thoroughly go through the policy document reject the plan and get a premium refund if not satisfied with the plan.
