The distinguishing feature of a money back policy is that the insured person gets a specified sum as a pay-out on a regular basis till the time the policyholder survives. The pay-outs, called the ‘survival benefits’, are in a way rewards to the insured person for surviving during the tenure of the policy. If the person survives till the maturity of the policy, he/she gets the sum assured as well.
So, it’s a double benefit for the policyholder! However, in the unfortunate event of the death of the insured person during the tenure of the policy, the pay-outs stop and the maturity amount of the policy is paid to the nominees of the policyholder. The pay-out of survival benefits starts after a few years from the date of purchase of the money back plan and continues till the maturity of the policy or till the death of the policyholder.
As is obvious, the money back plan offers a regular income to the insured during the entire tenure of the policy, along with maturity benefits if the policyholder survives till the end of the policy. This is in contrast to the standard life insurance policies that provide maturity benefits only at the end of the policy term or on the death of the policyholder during the tenure of the policy.
The fact that money back policies offer guaranteed returns to the insured during the entire tenure of the policy makes them an attractive investment option that is also safe and secure. The insurance cover is an additional benefit that accrues to the policyholder, and in the event of the death of the insured person, the nominees get the maturity benefits.
Some of the popular money back policies are offered by insurance companies such as LIC, SBI Life, HDFC Life, Birla Sun Life, etc.
To sum up, money back policies are best for those looking for regular long term income along with life insurance cover.