Term plans offers only coverage and nothing is payable to the policyholder at the time of maturity. Endowment plans offers both coverage and savings, but the policyholder has to wait till the end of the term to get the benefit of this plan. Therefore a new type of plan was introduced by insurance companies known as Money Back Plan.
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A Money Back Policy periodically provides survival benefits; it means that you will be paid back certain percentage of Sum Assured at a fixed interval. The payment frequency varies from policy to policy. These types of policies cover the risk for the specified period. Premium of such policies are much higher as compared to term plan and endowment plan. Death Benefit In case the policyholder dies before the policy term, then the sum assured and the accumulated bonuses are paid to the nominee without any deduction or adjustment for the amount that may have been paid earlier by way of survival benefit.
Survival Benefits In case the policyholder survives then the following amounts are payable by the insurance company to the policyholder: After fixed interval 15-20% of the Sum Assured (Depends on term of the policy) At Maturity Sum Assured + Bonus Survival Benefits already paid.
Cash back plans Under this plan, certain percent of the sum assured is returned to the insured person periodically as survival benefit. On the expiry of the term, the balance amount is paid as maturity value. The life risk may be covered for the full sum assured during the term of the policy irrespective of the survival benefits paid.
