Money back plan also known as a term plan as it provides life insurance cover for a specified time span. During the term of the plan the insured receives fixed amount of the sum assured on regular intervals, these amount are tax exempted.
Money back life insurance policies rank high on the popularity chart. And for good reason: they offer dual benefits of insurance and redemption of money at regular intervals.But little do people realise that they pay more towards premium amount in comparison to a term policy. Here's a lowdown on what it takes to buy a money back policy and the issues involved
According to life insurers, money back policies fit perfectly in the scheme of things of traditional investors who seek financial instruments that provide insurance and investment, with a low risk element and guaranteed returns
In other words, the plan is meant for individuals who require money at certain intervals in their lifetime to meet fixed long and short-term financial needs (buying a house or car, vacations abroad).
The best thing you can buy from an insurance company is an 'insurance policy'. However, the sad truth is, most of us look at insurance products as investments, on which we will get back some money when the policy matures
Along with this amount the balance keeps increasing to cater their long term saving needs and the plan is covered till its maturity. Once the term is completed the insured is entitled for a sum assured, if any, along with the bonus amount. In case of the death of the insured, the nominees receive the sum amount plus participating bonus.
Though one enjoys the benefits of money back plan, they keep in mind that the premium amount of this plan is quite high in comparison to other plans. In addition to this, if you opt for added benefits like getting the invested amount plus participating bonuses then the premium amount is even higher.
Endowment insurance is a type of a life insurance policy through which you can get a lump sum amount after you reach the specific period of maturity. The benefits are also applicable if one dies before the maturity period.
These insurance policies are profits or units linked and are more or less similar to the traditional investment plans. The endowments that you are entitled are allowed to be cashed in early. In this case, the amount of the surrendered value that you will receive is based on the insurance company and the type of the insurance policy which you have opted for and the type of contributions that you have made.
The endowment policy, you are guaranteed the payment of a fixed amount of money. This guaranteed amount is referred to as the sum assured. The sum of the money can be increased on the basis of the performance of the investment methods. In addition, annual bonuses can also be added on a period basis. In case of the regular bonuses, they are paid after the money matures and an extra non-guaranteed bonus can be paid. This is referred to as the terminal bonus.
Types of endowments
Unit Linked endowments
The premium can be invested in the units of the unitized insurance funds. The units are enchased in order to cover the life assurance costs. The prices of the units are regularly published and the value of the encashment is the present value of the units
In case of a full endowment policy, the basis sum that is assured is similar to the death benefit that is applicable at the beginning of the policy. This means that the final pay will be higher than the sum that is assured
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