Money Back plans provide life insurance cover for a specified time span. In a “Money Back” plan, the insured receives a fixed proportion of the Sum Assured at regular intervals which are tax-exempt. Along with this amount the balance keeps increasing to cater to his long term saving needs and the plan is covered till its maturity.
Once the term is complete, the insured/his nominee is entitled to a predefined portion of the Sum Assured, along with Accumulated Guaranteed Addition (G.A.) and estimated bonuses. In case of the death of the insured anytime during the course of the policy, the nominees/ beneficiaries receive the total Sum Assured plus participating profit (G.A. + bonuses) accrued until that point.
However, the premium amount of this plan is quite high as compared to other insurance plans. Also read Top Term insurance plans in India
Money back plans are ideal for those who are looking for a product that provides both – insurance cover and savings. You may also go in for this policy to utilise the tax-free sum of money receivable. You can then spend it or reinvest it in the plan.
Some plans offer the latter option also. Money back plans are one of the more popular life insurance plans in India. By paying extra, one can also avail of critical illness benefits and accident/disability benefits in the form of riders available with these plans.
Money back plans are designed to provide a stable cash flow to the person who invests in them. In case of the insurer outliving the policy term, he/she gets the remaining corpus with accrued options like bonus.
In the event of his/her death before the full term of the policy, his/her nominee or legal heirs get the total Sum Assured irrespective of the amount of Guaranteed Survival Benefits already received, plus accrued benefits.
Now that we know about Money back Plans, let’s go through a few of them in detail.
ICICI Prudential’s CashBak is a fixed term policy of 15 or 20 years, requiring you to pay premiums throughout the tenure of the plan. In return, the company gives you survival benefit payouts at regular intervals to provide you with liquidity (lump-sum amounts required during some milestone events like marriage, birth of child).
Full Sum Assured, alongside the guaranteed additions at the rate of 3.5% compounded every year for the initial 4 years and the vested bonuses, would be awarded to the insured person’s nominee on his death – irrespective of the survival benefits paid.
The following table shows the figures for a CashBak plan where the Sum Assured is Rs 1,00,000 for a policy term of 15 years.
Policy Term (in years)
|Rs. 9,327||Rs. 1,20,000||Rs. 76,656||Rs. 1,96,656||Rs 1,00,000||15|
Please note that the payouts start after the end of 3rd policy year. The payout table is given below for the sake of clarity.
|Policy Term||15 years|
|At end of year||Survival Payment as a % of basic Sum Assured|
|15 (Maturity)||50%, guaranteed additions,plus vested bonuses|
Survival Benefits – You will be entitled to survival benefits, as illustrated in the above table.
Death Benefits – If the Life Assured dies, his beneficiary will get the entire Sum Assured, as well as the guaranteed additions and the vested bonuses on top of the survival benefits paid, if any.
Maturity Benefits – When the policy matures, one receives 50% of the Sum Assured, alongside guaranteed additions and vested bonuses.
Critical Illness Rider – This rider (basically, an additional component that expands the benefits which are otherwise payable) provides protection against 9 specified critical illnesses such as Cancer, Major organ transplants, Complete renal failure, Stroke and Paralysis.
In the event of the insured contracting any of the listed threatening diseases, then he will be paid the entire Sum Assured under the rider and the plan along with all the riders (to the extent of the Rider Sum Assured) ceases to exist. However, the remainder of the base policy will remain in force till the end of the tenure. The concerned individual will have to keep paying premiums for the remainder of the policy.
Accident and Disability Benefit Rider – If the insured individual dies due to accident, then his nominee receives additional Sum Assured under the rider. And if you suffer from total and permanent disability arising from a mishap, then 10% of the Sum Assured is paid out every year for 10 years. Moreover, the insurer waives off premiums for the base policy up to the extent of rider cover.
Accident Benefit Rider – On death due to accident, the beneficiary gets additional Sum Assured under this rider.
Exclusion – If the Life Assured commits suicide within one year from the date of commencement of this plan, then the policy lapses and the premiums paid will be returned after deducting the expenses incurred by ICICI Pru for issuing the policy.
This policy offers life insurance cover, based on a chosen Sum Assured, during the entire Policy Term for a parent. The parent has the option of making premium contributions either yearly, half-yearly, quarterly or even monthly.
The plan commits to paying you 20% of the Sum Assured on completion of every 1/5th of the policy term. The policy also earns bonuses which are awarded on maturity of the policy.
In case of demise of the parent during the tenure of the policy:
· An amount equalling the Sum Assured is paid to the child.
· All future premiums payable are waived off and the policy continues unabated for the remainder of the term.
· The child will get all Recurring Benefits, i.e. 20% of the Sum Assured each, as and when they are due.
· When the policy term ends (i.e. the plan matures), 20% of the Sum Assured alongside the Bonuses earned are paid to the child.
The following table shows the figures for ING Vysya Creating Life Child Protection Money Back Plan where the Sum Assured is Rs 1, 00,000 for a policy term of 20 years. Unlike conventional life insurance plans, the premium paying terms are lesser than the policy term (in this case 15).
No of Terms
|Rs. 10,979||Rs. 1,00,000||Rs. 86,250||Rs. 1,86,250||Rs 1,00,000||15|
Death Benefit – If the Life Assured dies, then the company will pay an amount equivalent to the Sum Assured to his nominee, and all future Premiums payable will be waived off. What’s more, the policy continues for the entire Policy Term as scheduled.
Maturity Benefit – On the Policy Maturity Date, 20% of the Sum Assured, coupled with attached Bonuses, will be awarded.
Rider Benefits – One has the option of enhancing his life cover against several other risks for more protection, by selecting one or more riders. The four Riders available under this plan are outlined herewith:
· Term Benefit Rider
· Accidental Death Benefit Rider
· Accidental Death, Disability and Dismemberment Benefit Rider
· Waiver of Premium Benefit Rider
Exclusion – The benefits under this ING Vysya plan are not payable if the death of Life Assured occurs due to suicide, within 12 months from the date of commencement of risk or date of commencement of the policy.
The USP of the Kotak Money Back Plan is that it provides lump-sum cash amounts every five years. Apart from offering regular cash back and bonuses during the policy term, the policy gives a substantial life cover that automatically increases every year.
Why should you invest in this plan?
One should consider purchasing this plan if he is keen on receiving cash lump sums at regular intervals to plan for expenses like children’s education, purchase of an asset (house or car) or to meet any other unforeseen contingency.
The following table shows the figures for Kotak Money Back Plan where the sum insured is Rs 1,00,000 for a policy term of 20 years. Unlike typical life insurance plans, the premium paying terms are lesser than the policy term (in this case 15).
No of Terms
|Rs. 8,830||Rs. 1,20,000||Rs. 40,500||Rs. 1,60,500||Rs 1,00,000||15|
Bonus – The premiums paid by you, excluding charges, are deposited in the Accumulation Account and the bonuses declared are credited to this account at the end of each financial year. During the term of the policy, bonuses are earned on a compounding basis – thereby accumulating to create a significant corpus for you.
The following table illustrates the Survival Benefits as a percentage of the total Sum Assured amount.
|Survival Benefit||Payouts (percentage of Sum Assured)|
|5th year||10th year||15th year||20th year||25th year|
|15 Year Plan
|20 Year Plan
|25 Year Plan
* Bonus, if any, is payable over and above this guaranteed benefit
Increasing Death Benefit – The insurance cover automatically increases by 7% of Sum Assured every year, without you having to undergo any additional medical examination or having to pay additional premium.
Surrender Benefit – On completion of three policy years, the policy acquires a Guaranteed Surrender Value assuming all due premiums have been paid on time. The Guaranteed Surrender Value will be 30% of all premiums paid to date, deducted by the first year’s premium and extra premiums and rider premiums, if any.
The surrender value will also factor in the value of bonus interest.
Rider Benefits –
· Kotak Term/Preferred Term Benefit (KTB/KPTB): Provides additional protection/death benefit, which is over and above the Basic Sum Assured.
· Kotak Accidental Death Benefit (ADB): Lump sum benefit paid out on death due to accident.
· Kotak Permanent Disability Benefit (PDB): Installments paid on admission of a claim on becoming disabled.
· Kotak Critical Illness Benefit (CIB): A portion of Sum Assured (capped at 75%) is payable if the insured person file a claim on account of a critical illness.
· Kotak Life Guardian Benefit (LGB): Remaining premiums are paid by the insurer on your behalf, in case of your death.
· Kotak Accidental Disability Guardian Benefit (ADGB): Remaining premiums paid on your behalf in case of disability.
Exclusion – In case of the life insured committing suicide within one year of the date of issue of the policy, the plan lapses and no benefits shall be payable.
Aviva Money Back Plan is a non-linked profits endowment plan with Guaranteed Addition for the first 3 years. It is a participating policy, wherein the policy participates in the profits of the company from the 4th policy year. Moreover, the plan offers a Terminal Bonus, subject to the experience of the company.
This savings-cum-protection policy lets you accumulate savings and provides tax-exempt lump sum benefits during the course of the plan – not to mention that valuable life cover protection. Plus, one may go in for Accidental Death Benefit Rider and secure further risk cover for accidental death.
How does this plan work?
This policy can be purchased for 12, 15, 18, 21 years. The proposer has to pay premiums regularly throughout the policy term or till his death, if it occurs before policy maturity.
For the first 3 policy years, a simple Guaranteed Addition of Rs 40 per Rs 1000 Sum Assured accrues for each completed year. From the 4th policy year onwards, the plan participates for a Simple Revisionary Bonus, which is declared every year based on Aviva’s experience. The Simple Revisionary Bonus, once declared, remains attached to the policy benefits and will be awarded only at the time of death, surrender or maturity claim.
Death Benefit – In case of the insured person’s demise within the policy term, the full Sum Assured alongside the vested Simple Reversionary Bonuses will be paid to the nominee – irrespective of survival benefits already paid.
Survival Benefit – A percentage of Sum Assured depending on policy term is paid out at the end of pre defined years, assuming the policy is in force. The following table describes the survival benefits in detail.
|12 Year Term||Year 4 – 5%
Year 7 – 10%
Year 10 – 15%
Year 12 – 90% + GA + SRB
|15 Year Term||Year 5 – 10%
Year 8 – 15%
Year 11 – 20%
Year 15 – 75% + GA + SRB
|18 Year Term||Year 6 – 5%
Year 9 – 10%
Year 12 – 15%
Year 15 –20%
Year 18 – 70% + GA + SRB
|21 Year Term||Year 3 – 10%
Year 6 – 10%
Year 9 – 10%
Year 12 – 10%
Year 15 – 10%
Year 18 – 10%
Year 21 – 60% + GA + SRB
Rider Benefits – An option of Accidental Death Benefit Rider is provided under this plan.
Surrender Benefit – A Guaranteed Surrender value equalling 30% of the total amount of premium paid excluding the premiums for the first year and any additional premium paid for increased mortality risk minus the survival benefits already paid, is payable if you surrender your policy after paying premiums for 3 years.
Exclusion – Aviva won’t pay any benefit if the death of the life insured occurs due to actual or attempted suicide within one year from the commencement of the policy.