With the increase in life expectancy and evolving retirement needs, pension plans have become an…
Devising sound financial planning strategies is prudent for future security. One of these strategies is adopting a money back policy. In this article, we dive into the numerous benefits this policy has to offer, how to apply, and determine the appropriate entry age and policy term.
What Is a Money Back Policy?
A money back policy is a unique type of life insurance policy that not only provides insurance coverage but also offers periodic returns throughout the policy term. This is the reason why it’s dubbed money-back. But what are the benefits of investing in a money back policy?
Benefits of a Money-Back Policy
- Assured Returns: One of the most attractive benefits of a money back policy is the guaranteed returns. These returns are often given as survival benefits at cumulative intervals during the policy term.
- Insurance Coverage: The policy provides life coverage for the insured, ensuring that their dependents are financially secure in the event of their untimely demise.
- Liquidity: The policy offers short-term liquidity options. These periods, usually linked to significant life events such as marriage or education, help manage your financial needs effectively.
- Tax Benefits: Policyholders can avail tax benefits under various sections of the Income Tax Act. It’s therefore a double benefit strategy- acquire a life cover and save tax!
Clearly, there are numerous benefits of a money back policy. So, what should one consider before obtaining a policy?
Determining Entry Age and Policy Term
The entry age for a money back policy typically ranges between 18 and 55 years. However, the policy term may differ based on the insurer, usually between 10 to 25 years. You might wonder, how does one apply for this policy?
How to Apply for a Money Back Policy
Applying for a money back policy is straightforward. One can apply online through the insurer’s website or visit their local branch. Essential documents needed include proof of age, identity, residence, and income.
In summary, a money-back policy offers both insurance coverage and financial benefits at set intervals. Not only does it guarantee returns, but it also provides tax benefits—a true win-win for anyone looking to secure their financial future.