Hi,
A lot of people have been complaining over the ages about the fact that money back policy is nothing but a policy wherein money is repaid at regular intervals and the returns are meagre.
One thing that needs to be understood is that insurance is supposed to be done for life cover 1st and then one should compute the returns if he or she chooses an Endowment or a Money Back Policy. Most of the people use the money back policy to pay future premiums which is the biggest mistake that one can make.
Money Back Policy is best suited for businessmen and professionals who will have a steady income in the future. The money that the insurance company pays you on account of survival benefit should be used to invest in an asset class which gives you a higher rate of return (eg Equity or Real Estate). If one is using the money back policy to pay the future premiums then his Internal Rate of return would be close to 5 or 6% which is not very high. But if the survival benefit is invested in an asset class which gives good returns, this is a great policy.
The following are some of the other advantages of opting for a money-back policy:-
1) Full sum assured is payable at death of the life assured within the term, without any deduction of earlier survival benefits.
2) Bonus is computed on the sum assured and for the entire term of the policy.
3) The only policy which takes care of your youth as well as middle and old age.
Hope this article is helpful....
Your Friend,
Vivek
A lot of people have been complaining over the ages about the fact that money back policy is nothing but a policy wherein money is repaid at regular intervals and the returns are meagre.
One thing that needs to be understood is that insurance is supposed to be done for life cover 1st and then one should compute the returns if he or she chooses an Endowment or a Money Back Policy. Most of the people use the money back policy to pay future premiums which is the biggest mistake that one can make.
Money Back Policy is best suited for businessmen and professionals who will have a steady income in the future. The money that the insurance company pays you on account of survival benefit should be used to invest in an asset class which gives you a higher rate of return (eg Equity or Real Estate). If one is using the money back policy to pay the future premiums then his Internal Rate of return would be close to 5 or 6% which is not very high. But if the survival benefit is invested in an asset class which gives good returns, this is a great policy.
The following are some of the other advantages of opting for a money-back policy:-
1) Full sum assured is payable at death of the life assured within the term, without any deduction of earlier survival benefits.
2) Bonus is computed on the sum assured and for the entire term of the policy.
3) The only policy which takes care of your youth as well as middle and old age.
Hope this article is helpful....
Your Friend,
Vivek
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