What Is Money Back Plan?

What Is Money Back Plan? In India, life insurance plans have gained immense popularity, and among these, the Money Back Plan stands out. It operates by offering periodic payouts to policyholders as death benefits, provided they survive the policy term. Money Back Plans combine insurance and investment components, making them a versatile financial product.

Money Back Plans are particularly attractive to investors seeking guaranteed returns, regular payouts, and insurance coverage. Unlike traditional life insurance policies that pay out only at maturity, Money Back Plans begin providing a “survival benefit” after a few years into the policy. This benefit continues until the policy matures.

The survival benefit is a payment made to the insured individual by the insurance company as a token of appreciation for staying alive throughout the policy term. However, in the unfortunate event of the insured’s demise, the nominee(s) receives the full maturity amount, irrespective of any survival benefits paid or bonuses accrued. In essence, Money Back Plans offer a steady income stream alongside a maturity benefit, distinguishing them from other life insurance policies.

Key Features of Money Back Plans

  1. Income Throughout the Policy Term: Money Back Plans ensure that policyholders receive periodic payouts, which can be used for various purposes such as debt repayment, down payments on properties, children’s education, or vacations. This feature sets Money Back Plans apart from other life insurance policies.

  2. Guaranteed Returns: Money Back Plans offer guaranteed returns, making them a secure investment option compared to market-linked plans. This stability, coupled with insurance coverage, appeals to risk-averse individuals.

  3. Death Benefits: In the event of the insured’s death during the policy term, the entire death benefit is paid to the nominee, even if the policy hasn’t matured.

  4. Maturity Benefits: Similar to traditional insurance policies, Money Back Plans provide a maturity amount or the assured sum at the policy’s maturity.

  5. Rider Benefits: Insurance providers offer add-on riders that policyholders can include in their Money Back Plans. These riders can cover specific medical conditions, accidents, or term riders. Some plans also allow policyholders to retain life insurance even after maturity.

  6. Tax Benefits: Like other insurance policies, Money Back Plans qualify for tax exemptions under the Income Tax Act.

  7. Insurance and Investment Components: Money Back Plans combine the advantages of insurance and investment, offering liquidity enhancements and benefits at maturity.

Key Features of a Money Back Policy

  • A bonus option is available in standard Money Back Plan.
  • The policy spans 20 years, but premiums need to be paid for only 15 years.
  • A survival benefit of 20% of the sum assured is paid if the policyholder survives at the end of the 5th, 10th, and 15th years, provided the policy remains in force.
  • The remaining 40% of the basic sum assured, along with any accrued bonus, is paid at the policy’s maturity or on the policyholder’s death.
  • In the unfortunate event of the policyholder’s demise before maturity, the nominee receives the entire sum assured, including any accrued bonus, as a death benefit.


Money Back Plans are an excellent choice for individuals seeking income, insurance coverage, and investment benefits with a lower risk component. Before investing in a Money Back Plan, it’s essential to thoroughly review all the features and carefully read the terms and conditions.

Money Back Plans have become integral to people’s financial planning in India due to their comprehensive benefits, including maturity benefits, death benefits, survival benefits, rider options, and bonuses.

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