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Insurance Plan - Are Money-Back Policies Really Helpful

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HDFC Life Insurance Plan - Are Money-Back Policies Really Helpful
March 10, 2023

Innovation and customer-focus are the new buzz words of the insurance segment in India today and as such, there are several options that have risen to become quite favored amongst the customer-segments. These options come in the form of plans that offer lucrative benefits along with credible fund growth options for the overall stable returns over a period of time. One such category of plans is generally referred to as “money-back” plans.

Money-back plans are basically traditional insurance plans that offer coverage benefits like any other traditional insurance plans, together with regular pay-outs, that serve as additional components of the overall plan benefits. This feature is what makes the money-back plans quite different from the regular term plans.

A money back policy offers the unique feature of regular payouts in a pre-decided frequency over the entire term of the plan. In case of the policy subscriber’s demise during the term of the plan, her/his nominee(s) are entitled to the main coverage benefit (i.e. the sum assured), independent of the amount that has been already paid by the insurer as regular payouts. In simple words, money back policies provide the additional benefit of regular amount over a set period of time during the term of the plan, and also the complete payout of the main sum assured to the policy holder’s nominee(s) in the event of the subscriber’s demise during the term.

Although the money-back plans may seem to be overall beneficial in an extensive manner, because of the added features of additional pay-outs and bonuses, yet it must be kept in mind that the payable premiums are proportionally greater. The crux is that money-back plans serve as not just insurance-coverage instruments but also as vehicles for investment and fund-building. Therefore, the various pros and cons of money-back plans must be studied in detail before taking any conscious decision to invest in them. Further, the volume of additional payouts may put a financial constraint on the policy-holder’s pockets. The prime focus of a money-back plan is not only on the insurance coverage but also on the growth of the invested money.

 This can be seen as a medium of generating returns on investment that adds to the overall value of the fund –corpus. This is why, although the money-back plans are additionally beneficial, they are also quite expensive in comparison with the traditional plans like the standard term-insurance plans or standard life insurance plans. Therefore, any decision to invest in a money-back plan must be backed by a clear and precise financial investment plan that can serve as the basis of the entire investment in such plans.

HDFC Life presents HDFC Life Super Income plan – a non-linked money back plan that allows you to fulfill your financial dreams at all times and comes with guaranteed benefits.

Related Article:

ARN: ED/12/19/17049

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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