Aditya Birla Sun Life Insurance Company Limited

Money Back Policy

Your Financial shield for Uncertain Times

Guaranteed returns after a month^

What is Money Back Policy?

A money back policy (also refered to as a money return policy or cash back insurance policy) is a unique life insurance plan that not only provides life cover but also offers the benefit of periodic returns during the tenure of the policy. In such a policy, a certain percentage of the sum assured is returned to the policyholder at regular intervals. This is known as the 'Survival Benefit'. If the policyholder survives the entire policy term, he/she receives the balance sum assured. If the policyholder unfortunately passes away during the term of the policy, the full sum assured is paid to the nominee, regardless of the survival benefits already paid.

Features of Money Back Policy

Money back policies come with distinct features that differentiate them from other insurance plans. Here are the key features of a money back policy:

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Survival Benefits:

These are periodic payouts made during the policy term. They are usually a fixed percentage of the sum assured.

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Maturity Benefit:

If the policyholder survives the policy term, they receive the remaining sum assured (after deducting survival benefits already paid), along with bonuses or additional benefits, if any.

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Death Benefit:

In the event of the policyholder's demise within the policy term, the nominee is given the full sum assured, irrespective of the survival benefits that have already been paid.

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Bonus:

Some money back insurance plans may also accumulate bonuses, which are essentially a share of the profits made by the insurance company. These bonuses add to the total payout received by the policyholder.

Benefits of Money Back Insurance Policy

The main benefits of a money back policy are:

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Periodic Returns:

Money back plans provide periodic payouts, which can serve as a steady source of income at regular intervals. This is especially beneficial in managing short-term financial goals.

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Life Coverage:

Like other life insurance, policies money back plans provide life coverage, offering financial security to the policyholder's family in the event of the policyholder's untimely demise.

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Maturity Benefit:

In the event the policyholder outlives the policy term, they receive the balance sum assured along with accrued bonuses, if any.

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Tax Benefits*:

Policyholders can avail of tax benefits* on the premiums paid and the benefits received under Section 80C and Section 10(10D)** of the Income Tax Act, respectively.

How Does Money Back Policy Work?

A money back insurance policy is a type of life insurance plan that offers the dual benefit of insurance coverage and savings. It provides the policyholder with life cover during the policy term along with periodic returns as a percentage of the sum assured at regular intervals.

Here's a comprehensive look at how a money back insurance policy works:

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Choose the Policy and Pay Premiums

To begin with, you select a money back policy that fits your needs and start paying the premiums. The premiums can be paid annually, semi-annually, quarterly, or monthly, as per the policy terms and your convenience.

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Receive Survival Benefits

Once you've paid premiums for a specific number of years, the policy starts offering survival benefits. These are periodic payouts, which are a certain percentage of the sum assured. These payouts are made at regular intervals (such as every 5 years) during the policy term.

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Policy Continues

Even after the survival benefit is paid, the policy continues with the risk cover for the entire sum assured. Your premium payments also continue as before.

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Maturity Benefits

If you survive the entire policy term, you receive the maturity benefit. This typically includes the balance of the sum assured (total sum assured minus the survival benefits already paid) along with any bonuses declared by the insurer.

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Death Benefits

In case of the policyholder's unfortunate demise during the policy term, the nominee receives the full sum assured along with any accrued bonuses, irrespective of the survival benefits already paid out. The policy ends once the death benefit is paid.

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Optional Riders

Many insurers also offer optional riders like accidental death benefit, critical illness cover, etc., which you can opt for by paying an additional premium. These riders provide added protection and benefits over and above the standard policy benefits.

In summary, a money back insurance policy is a unique blend of insurance and investment that not only provides financial protection to your family in case of your untimely demise but also guarantees periodic returns during the policy term, ensuring liquidity.

Why Do You Need to Buy a Money Back Policy?

Money back policies are an excellent choice for individuals seeking a combination of savings, regular income, and life cover. These plans not only offer financial protection against unforeseen circumstances but also provide regular payouts at specified intervals that can be used to meet short-term financial goals.

Eligibility Criteria for Buying a Money-Back Plan

The eligibility criteria for buying a money-back plan typically depends on the terms and conditions set by the insurance company. Generally, the minimum age at entry is around 18 years, and the maximum age can go up to 55 or 65 years. The policy term can range between 10 to 25 years. It's essential to check the specific eligibility criteria with the insurer or read through the policy document carefully.

11 Factors to Consider Before Buying a Money Back Insurance Policy

Before buying a money-back policy, it's important to consider the following factors:

When buying a money back insurance policy, it's crucial to carefully consider various factors to ensure that the policy meets your unique needs and financial goals. Here are some important factors to consider:

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Financial Goals:

Understand what you want to achieve with the policy. Are you aiming for life cover, regular income, savings, or a combination of these? Knowing your financial goals will help you choose the right plan with the necessary features.

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Coverage:

Consider how much coverage you need. This will depend on your financial liabilities, family’s living expenses, income levels, and future financial goals like children's education or marriage.

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Policy Term:

Choose a policy term that aligns with your financial goals. For example, if you aim to fund your child's higher education, choose a policy term that matures around the time when the funds will be needed.

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Premium Amount:

Make sure that the premium amount is affordable for you. It should not strain your finances or disturb your budget. Remember, defaulting on premium payments can lead to policy lapse.

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Survival Benefit Payouts:

Check the frequency and the amount of survival benefit payouts. Choose a plan that offers payouts at intervals when you anticipate needing funds.

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Company’s Reputation:

Research the insurance company's claim settlement ratio, customer service, and reputation in the market. A higher claim settlement ratio indicates that the insurer is more likely to settle claims successfully.

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Policy Features and Benefits:

Examine the policy features, benefits, and the terms and conditions carefully. Look for any exclusions, limitations, or specific conditions that may apply.

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Riders:

Consider adding riders for added protection. Insurance riders like critical illness, accidental death, disability benefit, etc., can significantly enhance your coverage.

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Surrender Value:

Understand the surrender value of the policy, which is the amount you get if you decide to exit the policy before maturity. It’s important to know when your policy will acquire a surrender value and how much it will be.

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Tax Benefits*:

Evaluate the tax benefits* associated with the policy. Money back insurance policies typically offer tax benefits* under sections 80C and 10(10D)** of the Income Tax Act.

How to Buy a Money Back Investment Plan?

Buying a money-back investment plan can be done through offline or online channels.

  • Offline Method: You can approach the offices of insurance companies or consult with an insurance agent or broker. They can guide you through the process and help you understand the terms and conditions of the policy.

  • Online Method: Most insurance companies offer the facility to buy money back plans online directly from their website. It involves filling out the application form, choosing the sum assured, policy term, and premium payment term, and making the payment online.

Regardless of the method you choose, always make sure to read and understand the terms and conditions of the policy thoroughly before purchasing.

Riders Available in Money Back Policy

Riders are additional benefits that can be attached to your basic money back policy to enhance the coverage. These may include:

  • Accidental Death Benefit Rider: Provides an additional sum assured in case of the policyholder's death due to an accident.

  • Critical Illness Rider: Offers a lump sum amount on the diagnosis of any of the critical illnesses covered under the policy.

  • Accidental Disability Rider: In case the policyholder becomes disabled due to an accident, this rider provides a regular income or lump sum amount.

  • Waiver of Premium Rider: In the event of the policyholder’s permanent disability or critical illness, future premiums are waived off while the policy continues.

Remember, riders come with an additional cost and should be chosen based on your individual needs and circumstances.

Money Back Policy Example

Here are a few money back policy examples to consider:

Example 1: Let’s consider a money back policy with a sum assured of Rs. 2,00,000, policy term of 20 years, and survival benefits paid every 5 years. The policyholder would receive 20% of the sum assured every 5 years (Rs. 40,000 in this case). If the policyholder survives the entire term, they would receive the balance of the sum assured (Rs. 20,000), along with any accumulated bonus.

Example 2: In another scenario, if the policyholder unfortunately passes away during the policy term, the entire sum assured (Rs. 2,00,000) would be paid to the nominee, irrespective of the survival benefits already paid out.

Comparison Between Fixed Deposit and Guaranteed# Money Back Plan

Fixed Deposits and Guaranteed# Money Back Plans are both popular financial products, but they serve different purposes and offer different features. Here's a comparison between the two to help you make an informed decision:

Nature of the Product

  • Fixed Deposit: Fixed deposits are a type of term deposit offered by banks and other financial institutions. They are a traditional form of saving where you deposit a certain sum of money for a fixed period, and earn interest on it.
  • Guaranteed# Money Back Plan: A money back policy meaning is type of life insurance policy where a portion of the sum assured is returned to the policyholder at regular intervals. This plan offers a blend of insurance and investment.

Risk

  • Fixed Deposit: Fixed deposits are one of the safest investment options as they offer guaranteed returns and are not linked to the market.
  • Guaranteed# Money Back Plan: These plans are also considered relatively safe as the returns are guaranteed# and not directly linked to the market. However, the performance of the insurance company can influence the bonus declared.

Returns

  • Fixed Deposit: The returns from fixed deposits are assured and the interest rate is fixed at the time of investment.
  • Guaranteed# Money Back Plan: The returns consist of the survival benefits paid out at regular intervals and the maturity benefit, if the policyholder survives the policy term. The returns also include bonuses, if any, declared by the insurance company.

Liquidity

  • Fixed Deposit: Fixed Deposits have low liquidity until the end of the term. While you can withdraw the deposit prematurely, it usually involves a penalty.
  • Guaranteed# Money Back Plan: These plans offer periodic payouts, enhancing liquidity. However, surrendering the policy prematurely may lead to losses.

Coverage

  • Fixed Deposit: Fixed Deposits do not offer any life insurance coverage. They are purely an investment product.
  • Guaranteed# Money Back Plan: This plan provides life insurance coverage. In the event of the policyholder's untimely death, the nominee will receive the full sum assured, irrespective of the payouts already made.

Tax Benefits*

  • Fixed Deposit: The interest earned on fixed deposits is taxable. However, tax-saving fixed deposits offer tax deductions under Section 80C of the Income Tax Act.
  • Guaranteed# Money Back Plan: The premiums paid towards a Guaranteed# Money Back Plan are eligible for tax deductions under Section 80C. The maturity proceeds and death benefit are tax-free under Section 10(10D)**, subject to certain conditions.

What to choose?

While both Fixed Deposits and Guaranteed# Money Back Plans have their own advantages, your choice should depend on your financial goals, risk tolerance, and investment horizon. Always consider consulting with a financial advisor for personalised advice based on your unique needs.

Frequently Asked Questions on Money Back Insurance Policy

Money back policies are considered relatively low-risk investments as they offer guaranteed# returns and the bonus, if any, is not directly linked to volatile markets. However, as with any financial product, the performance of the insurance company can influence the returns.

The premiums paid towards a money back policy are eligible for tax deductions under Section 80C of the Income Tax Act, up to a limit of Rs. 1.5 lakhs per annum. Moreover, the survival benefits, maturity proceeds, and death benefits are generally tax-free under Section 10(10D)**, subject to certain conditions.

Money back policies are suitable for individuals seeking a combination of investment and insurance, with the added advantage of liquidity through regular payouts. They are particularly beneficial for risk-averse investors who want guaranteed# returns.

If you fail to pay the premium within the grace period, your policy may lapse, and you may lose the benefits of the policy. However, many insurers provide a revival period (typically 2-3 years from the first unpaid premium), during which you can pay the due premiums along with interest to reinstate the policy.

Insurance policies, including money back policies, are usually non-transferable. However, you can change the nominee of the policy by submitting the necessary form to your insurer.

Tax benefits are subject to changes in tax laws. Kindly consult your financial advisor for more details
# Provided all due premiums are paid.
**Sec 10(10D) benefit is available subject to fulfilment of conditions specified thereinz
1 Healthy male age 21 years investing in ABSLI Assured Income Plus Plan, premium paying term 12 years, policy term 13 years, benefit payout period 25 years, payment frequency annually, Assured Benefit Option: Income with Lumpsum Benefit, Sum Assured Rs.16.68 lakhs, Premium Rs.1.2 lakhs/year excluding GST), you get Rs. 55.18 lakhs (Rs. 1.52 Lakhs p.a. for 25 years and Rs. 17.28 Lakhs as lumpsum at end of benefit payout period)46.55 lakhs by age 584
ABSLI Vision LifeIncome Plan - This policy is underwritten by Aditya Birla Sun Life Insurance Company Limited (ABSLI). This is a traditional participating endowment plan. (UIN: 109N079V06)
All terms & conditions are guaranteed throughout the policy term, except for the bonuses which would be declared at the end of each financial year. GST and any other applicable taxes will be added (extra) to your premium and levied as per extant tax laws. An extra premium may be charged as per our then existing underwriting guidelines for substandard lives, smokers or people having hazardous occupations etc.
ABSLI Guaranteed# Milestone Plan - This policy is underwritten by Aditya Birla Sun Life Insurance Company Limited (ABSLI). This is a non-participating traditional insurance plan. All terms & conditions are guaranteed throughout the policy term. GST and any other applicable taxes will be added (extra) to your premium and levied as per extant tax laws. An extra premium may be charged as per our then existing underwriting guidelines for sub-standard lives, smokers or people having hazardous occupations etc. The insurance cover for the life insured (including minors) will commence on the policy issue date (UIN: 109N106V11).
ABSLI Nishchit Aayush Plan -This is a non-linked non-participating individual savings life insurance plan. UIN No 109N137V06
ABSLI Assured Savings Plan - This policy is underwritten by Aditya Birla Sun Life Insurance Company Limited (ABSLI). This is a Non-Linked Non-Participating Individual Savings Life Insurance Plan. All terms & conditions are guaranteed throughout the policy term. UIN: 109N134V08.
ADV/4/24-25/14

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