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Term Life Plan vs Money Back Plan - Know Before Buying

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Term Life Plan vs Money Back Plan - Know Before Buying
March 19, 2023

Any kind of an insurance policy derives its truth from the fact of continuation and is futuristic in plan. A traditional term insurance plan is the one that lets the policyholder’s nominee(s) to receive a pre-decided and documented amount (i.e. sum assured) in the case of her/his death within the plan term.
What this essentially means is that the policy holder and the insurance provider both work out as grantors towards the amount to which the policy holder is entitled. Therefore, as per the regular definitions of the terms, a standard term insurance plan does not offer any maturity proceeds or any “renewal benefits”. It simply serves as a guarantee of financial protection for your loved ones in the event of any unforeseen circumstances. However, a traditional and a standard money back policy offers the unique feature of regular payouts in a pre-decided time period over the complete 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, which is the main sum assured and this amount is independent and beyond the amount that has been already paid by the insurer as regular payouts. In simple words, money back policies offer additional benefits in the due period of time as included in the conditions of the policy and as demanded by the pre-decided and documented limits of the plan.

The difference is that money-back plans are useful tools for monetary control and budgetary allocations since they provide more accruing advantages than traditional ones. This is where the due comparison comes in between a standard term plan and a money back plan. Once you compare the whole volume of premiums paid by the subscriber over the term of the plan, you may find that the premium rates are in fact, much expensive. This, in essence, means that the generated returns of the money back policies in comparison to the paid premiums tend to be less cost efficient. After all, when the comparison between the premium rates of money back policies and those of traditional term plans is made, the term plans emerge as much economical. Therefore, a thorough analysis of your specific requirements must be done before investing in money back policies.

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. For details, click on the mentioned link: https://www.hdfclife.com/savings-plans/super-income-plan.

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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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