In times where financial freedom is the top priority, people are continuously looking for investment opportunities. They want their money to be safe and easily accessible whenever needed. A money back policy is such an option that perfectly balances the two requirements. This policy is essentially life insurance with guaranteed survival benefits at periodic intervals, providing the policyholder with liquidity and security.
The Dual Advantage: Insurance with Periodic Payouts
A money back policy offers regular payouts throughout the policy term rather than waiting until the end of the term.
- Insurance Protection
The main idea of a money back policy is that it is still a life insurance plan. In the event of the policyholder’s demise, the family will receive the full sum assured, regardless of the number of returns made before this. In this way, the family members will be guaranteed peace of mind and financial support.
- Periodic Returns for Liquidity
The main difference between a money back policy and an endowment plan is that the former allows for regular cash inflows during the policy term. The scheduled payouts are like mini financial boosters for people who want to use them to meet any short-term needs.
Meeting Short-Term Liquidity Needs
Life is nothing but a combination of expected and unexpected expenses. A money-back policy is designed to ensure that the policyholders will be financially ready for both types of situations.
Key Ways It Supports Liquidity:
- Scheduled Cash Flow: Depending on the term of the policy, regular payouts are made every few years. Such a practice avoids the necessity of accessing funds from long-term investments that have to be redeemed prematurely.
- Goal-Based Planning: In fact, the policy is a clever way to match the payouts with the different stages of life, e.g. your children’s education, their weddings, big purchases, etc., hence making it a budgeting tool.
- Emergency Cushion: Payouts at regular intervals ensure that the cash is handy for medical or financial emergencies. The cash will come from the periodic dividends, a source which will not require that the savings be interrupted.
- Final Maturity Benefit: All the way till the end of the policy term, you still get a part of the sum assured and bonuses, which literally means that your long-term goals will not disappear.
Tax Benefits and Bonus Additions
Money back policies, besides providing liquidity and safety, are also an attractive source of wealth for the policyholders.
- Advantages to Consider:
Tax Deductions: The premiums you pay can give you the benefit of tax deductions under Section 80C of the Income Tax Act, thereby lowering your taxable income.
Tax-Free Returns: Generally, the performance and survival benefits in money back policies are exempt under Section 10 (10D) of the Income Tax Act, subject to the prescribed conditions.
- Bonus Accumulation:
Most of the policies have the provision for reversionary and terminal bonuses. Over a period of time, it will add to the total returns.
A Reliable Partner for Every Financial Stage
A money back policy is basically a great combination of safety, cash availability, and controlled savings. Such a policy responds to both the needs of sustained wealth growth and the need for money in a short period of time, thus making it possible for you to always get your money when it is most required.
Comments
