Investing in Fixed Deposit (FD) over a long period helps you build a large corpus. But if someone faces a need for funds before the maturity of the policy, what can they do? This is where you can take advantage of a money-back policy. As the name suggests, a money-back policy gives money back in the form of regular payouts during the course of the policy. predefined by the insurance company. At maturity, the life insured may get a lump sum amount. A money-back policy helps in solving the problem of liquidity.

## Features of Money-Back Policy

• The regular payouts received by the insured are called survival benefits.
• The payout intervals are fixed. However, they might differ with the payout structure of the respective product. Similarly, the percentage of survival benefits also varies depending upon the respective product.
• When the plan matures, the policy holder receives a maturity benefit which may include , ignoring the sum already paid as money-back .

### How Does A Money-Back Policy Work?

Let us understand the working of a non-participating money-back policy using the example of Future Generali Money Back Super Plan.

Ravi, a 30 year old healthy man has purchased the Future Generali Money Back Super Plan - Option 1. He has opted Silver Category with an

• Approximate annualized premium = Rs 50,000
• Policy term and premium paying term = 20 years
• Sum Assured = Rs 5,00,000

#### What Ravi Gets?

• Sum Assured of Rs 5,00,000 as maturity benefit
• Survival Benefit of Rs 55,000 every year starting from the end of 10th policy year till the end of 19th policy year.
• Guaranteed Addition of Rs 35,114 starting from the end of 8th policy year till the end of 20th policy year. (Note that these additions will get accrued in the policy and will be paid along with sum assured on maturity of the policy.)

It is assumed that Ravi's unfortunate death occurs at the end of the 2nd policy year. The benefit payable under Option 1 to Ravi's nominee(s) will be:

Let us go through the in-general advantages of money-back plans:

1. Provides liquidity with regular payouts - The biggest advantage of the Money-Back Policy is that it provides regular payouts called the survival benefits. In long-term policies like 15 to 20 years, liquidity. The remaining benefits are paid at the time of maturity.
2. Additional Benefit – Some money back policies may offer additional benefit in form of Guaranteed Additions to the policy or extra money backs.
3. Tax benefits - A person may be eligible for a tax deduction under 80C of the Income Tax Act, 1961 up to Rs 1.5 lakh for premiums paid towards Money-Back Policy.
4. Secured investment - These investments are secured because the returns never change, regardless of the government in power or market conditions. There are no re-investment risks; whatever the insurer has committed to you on paper will be paid out at maturity, guaranteed. Hence it acts as a shield for your money and keeps the overall risks of your portfolio reduced.
5. Low-risk instrument - Unlike mutual funds, bonds, and other instruments that are directly affected by the movements in stock markets. Money-Back Policy provides guaranteed returns at specified intervals during the tenure, making it a low-risk instrument.
6. Life coverage - It is a life cover that lets you choose from a wide range of options to meet the monetary requirements of the family. This plan lets your family live a dignified life in your absence.

#### Conclusion

The benefit of a Money-Back Policy is that it provides liquidity in the form of regular payouts throughout the policy’s tenure. Maturity benefit is paid at the maturity of the plan. It provides life cover and the Death Benefit is paid in full to the nominee in case of demise of the policyholder irrespective of the survival benefits already received.

The number of survival benefits and the intervals varies from policy to policy as many options are available. You can visit to check out the various