Ch. 5: Money back plan customization - Choose the different options

Your best friend just got married. You want to gift the couple something cool, and you feel couple-themed tees would be perfect. Since both of them are diehard 'Game of Thrones' fans, you customise the tees with the 'GoT' graphics. You also ensured the t-shirts are in their favourite colours and the right sizes.

In a somewhat similar manner, you can customise money-back plans according to your preferences. A variety of customising options are available for you to choose from, including premium payment options, payout options, etc.

Let's take a closer look.

The limited pay feature gives you the option to pay your premiums for a specified number of years. This period is always less than the policy term but you are covered for the entire policy duration. It’s a great choice if you think you won’t have the finances to pay the premiums in the latter part of your life. So, you can finish off paying the premiums and get the liability off your chest quicker, while ensuring that you enjoy the complete insurance coverage.

The shorter the payment interval, the higher the premium value.

Payment options differ for different products. They can range from 5 to 12 years or can even be fixed, such as 5 Pay, 10 Pay, etc. The preceding numbers correspond to the number of years you wish to pay premiums for.

For example:

30-year-old Mamta purchased a Limited Pay Money-Back plan with a cover amount of Rs 30 lakhs for a period of 25 years. By the time Mamta reaches 45, he wishes to pay off all the premiums. Therefore, she can pay off the premiums for the Money-back plan over the next 15 years by opting for the 15 Pay Limited Pay Money-back plan while being covered for the entire policy period.

A benefit payout period is the period wherein you receive the survival benefit, i.e., assured payouts. The benefit payout period is determined by the policy schedule. You can choose the best option for you. Depending on the plan, you may have the option to receive the payouts -

• after the premium payment period gets over, or
• a few years after the commencement of the policy term, or
• after the policy term ends

The benefit payout period can be as short as 5 or 6 years or as long as 25 or 30 years. It depends on the product you choose.

You have the liberty to choose the frequency of getting the payouts. You can choose to receive the benefit payouts monthly, quarterly, half-annually, annually etc. Plan your milestones and then fix the payout frequency accordingly.

For instance, if your spouse's college fee payment is supposed to be made annually, you can opt for the annual benefit payout option to cover the fee charges.

The premiums, based on your convenience, can be paid -

• Yearly
• Half-yearly
• Quarterly
• Monthly

The premiums will vary according to the frequency selected.

For instance, Manoj purchased a Money-Back plan for Rs 25 lakhs for a 20-year policy period. The premium options available include Rs 10,000 annually, Rs 2000 monthly, etc. Due to his debt obligations, Manoj decides to get a monthly plan that fits his budget instead of a yearly plan.

The deferred period refers to the period when the customer has already paid all the premiums for the policy, and the insurer has not begun giving payouts. The deferred period may vary depending on the product. It can be zero or more than that, say 2, 5, 10 years etc. If the deferred period is zero, you will start receiving the payouts as soon as you complete the premium payment term.

For example - Neeti and Sheela bought money-back policies in 2012. Their premium payment term has ended in 2022. Sheela’s policy has a zero-year deferred period, i.e., her payouts will start in 2022 as soon as she pays the last premium. On the other hand, Neeti’s policy has a 3-year deferred period, i.e., her payouts will start in 2025.

Survival benefit is a certain percentage of the sum assured or the premiums you pay. You can enhance the survival benefit by a certain percentage, say 5% etc., every year throughout the benefit payout period.

Note: The option of increasing the survival benefit is available only in some policies. Make sure you go through the policy wordings carefully.

Riders are optional add-ons that can be added to your existing policy at a certain extra cost. Riders are specifically designed to cover medical conditions like life-threatening illnesses, personal accidents, etc.

The various Riders available with money-back plans include - 

• Surgical Care Rider
• Waiver of Premium Rider
  Waiver of Premium due to Disability Rider
  Waiver of Premium due to Critical Illness Rider
• Critical Illness Benefit Rider
• Accidental Death Benefit Rider
• Accidental Disability Rider
• Hospital Care Rider

The following chapter talks about these riders in detail, so you can make the right choice.

Ensure you take sufficient time to tailor your policy to best fit your needs by customising it in terms of Premium Payment frequency, Payout frequency, Riders, etc. Read the policy wordings thoroughly as customising options may differ from insurer to insurer. Review every aspect of the policy to make the most of your money and effort.