🚂 Current Fix Deposit Rates 🌞 SBI - General Citizen 3% to 7.10% Senior Citizen - 3.60% to 7.60% 🌞 HDFC - General - 3.00% to 7.25% Senior Citizen - 3.50% to 7.75% 🌞 ICICI - General - 3% to 7.10% Senior Citizen - 3.50% to 7.60% 🌞 PNB - General - 3.50% to 7.25% Senior Citizen - 4% to 7.75% 🌞 Kotak Mahindra - General - 2.75% to 7.20% Senior Citizen - 3.25% to 7.70% 🌞 Axis - General - 3.50% to 7.10% Senior Citizen - 3.50% to 7.85% 🌞 Bank of Baroda - General - 3% to 7.25% Senior Citizen - 3.50% to 7.55% 🚂 Current Recurring Deposit Rates 🌞 SBI - General 4.40% to 5.50% Senior Citizen 4.90% to 6.20% 🌞 ICICI - General 3.50% to 5.50% Senior Citizen 4% to 6.30% 🌞 HDFC - General 4.40% to 5.50% Senior Citizen 4.90% to 6.25% 🌞 KOTAK - General 4.30% to 5.20% Senior Citizen 4.80% to 5.70% 🌞 AXIS - General 4.40% to 5.75% Senior Citizen 4.65% to 6.50% 🌞 IDBI - General 7% to 7.15% Senior Citizen 7.50% to 7.65% ☁️ National Pension Scheme - 9% to 12% pa ☁️ Employees Provident Fund - 8.15% pa ☁️ Public Provident Fund - 7.1% pa Money Back Policy

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Money Back Policy

 

What is money back policy ?

Money back policy comes into the category of life insurance policy offered by financial institutions.  It combines the insurance benefits coverage with repeated pay-outs of a percentage of the sum assured at regular intervals during period of policy term.  Since money back policies are offering combination of insurance coverage, periodic liquidity and savings accumulation, it is very popular.  An individual or investor always taking in mind while selection or investing or to setting up an investment goal.  The disadvantage of money back policy that it is not give the sufficient life coverage to the policy holder most probably those are looking high sum assured. Additionally, the maturity benefits are not meeting the financial requirement of policy holder.  In case death of policy holder the beneficiary or nominee will receive all the payouts that is sum assured plus bonuses, it is totally tax free under section 10D of the Income Tax Act.

Some of the key feature of the Money Back Policy

Maturity Benefit:

If the individual or policy holder survives the entire period of policy, he can receive the sum assured along with any accrued bonuses at the end of the policy term, in addition to periodic payouts like 5 year, 10 years and 15 years.

Insurance Coverage:

If the unfortunate demise of the policy holder during the policy term period, a money back policy provides death benefit to the nominee.

Periodic Payouts:

Money back policies are provides periodic payouts like the some percentage of the sum assured are paid to the policy holder after certain year and up to the maturity, it depends upon the terms and condition of the policy and what plan you choose.

Survival Benefits:

The survival benefits are usually paid out at specified intervals, such as every 5 or 10 years, depending on the terms of the policy.

Bonus Additions:

Bonuses are depending on the performance of the insurance company, it is a certain percentage of the annual result.

Example:

Mr. David has decided to invest in money back policy; he chooses the following money back plan and term to invest.

Policy Details:

Sum Assured: Rs. 10,00,000 (Rupees Ten Lakhs)

Policy Term: 20 years

Premium Payment Term: 15 years

Premium Payment: Annual

Benefits:

Survival Benefits: The policy offers periodic payouts of 20% of the sum assured at the end of every 5 years, starting from the end of the 5th policy year. So, the policyholder will receive Rs. 2,00,000 at the end of the 5th, 10th, and 15th policy years.

Death Benefit: In case of the unfortunate demise of the policyholder during the policy term, the nominee will receive the full sum assured of Rs. 10,00,000 as the death benefit, irrespective of the survival benefits already paid out.

Maturity Benefit: If the policyholder survives the entire policy term of 20 years, policy holder will receive the remaining sum assured of Rs. 10,00,000 along with any accrued bonuses or returns as a lump sum at the end of the policy term.

Bonus Additions: Depending on the performance of the insurance company and the type of policy, bonus additions may accrue over the policy term, enhancing the overall returns from the policy. For simplicity, let's assume a bonus of 3% of the sum assured is accrued annually.

Illustration:

At the end of 5th year: Rs. 2,00,000 (Survival Benefit)

At the end of 10th year: Rs. 2,00,000 (Survival Benefit)

At the end of 15th year: Rs. 2,00,000 (Survival Benefit)

At the end of 20th year (Maturity): Remaining Sum Assured + Accrued Bonuses

Total Payouts over 20 years:

Total Survival Benefits: Rs. 6,00,000

Maturity Benefit: Remaining Sum Assured + Accrued Bonuses

This is one of the simple example, actual money back policies may have several plans, different financial institutes offering different type of plans, terms, benefits etc., It is always necessary to review all the documents carefully before investing.

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