Money Back Policy

Money back policies keep families secure and help them reach their goals. Like life insurance, these policies support financial needs at different life stages, providing protection with periodic payouts and death benefits if needed.

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Highlights of Money Back Policy

Long-term savings and insurance
Guaranteed returns
Life cover
Fulfilment of financial goals
Tax-free returns, unlike FDs

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Money back Policy - Everything you Need to Know

What is Money Back Policy

It is a type of insurance plan where the insured gets a portion of the money regularly instead of a lump sum at the end. It helps build savings with liquidity and low risk, providing maturity benefits as survival payouts throughout the policy period.

How Does Money Back Policy Work

The policy functions as an investment, offering returns to the insured. If the policyholder passes away during the term, the nominee receives the maturity benefit.

Mr. Verma buys a money back policy.
Mr. Verma
It has a 20-year policy term It pays the same amount of survival benefits every 5 years
The sum assured is ₹10 lakhs

Key Features of Money Back Policy

Money back insurance plans combine guaranteed returns with life insurance coverage. They are safe and secure, ideal for those seeking both investment and insurance benefits. The key features of a money back policy include:

Guaranteed returns

These plans offer assured returns, making them a reliable choice compared to market-linked options.

Income during the lifetime of the plan OR Regular income

The insured individuals receive money at intervals to manage future expenses effectively.

Income on maturity OR Maturity benefits

At the end of the policy, a sum assured or maturity amount is paid, ensuring secure returns.

Income on the death of the policyholder OR Death benefit

In case of an untimely demise of the policyholder during the term, the nominee receives the life cover or death benefit.

Bonus amounts

Policyholders may receive reversionary and additional bonuses.

Add-on riders to increase cover

Additional riders can be included to enhance coverage as needed.

Benefits of Money Back Policy

A money back policy provides three keybenefits of maturity, survival and life coverage, making it a valuable investment and insurance instrument. The key advantages include:

Life cover

It acts as insurance to support the family’s financial needs in case of untimely demise of the insured.

Nominee’s sum assured

In case of sudden death of the insured during the policy term, the nominee receives the death benefit. If the insured outlives the money back policy, they get survival payments on maturity.


Guarantees regular intervals of money back, unaffected by market changes, making it a secure investment.

Short-term returns

The insured receives regular income within a short period of policy initiation.

Extra bonus

The policyholder receives bonus that is accrued annually and given at maturity for major expenses.

Tax deductions

The insured is eligible for tax deductions under Section 80C of the Income Tax, with tax-free sum assured.

Components of Money Back Policy

There are many components of money back insurance plan that a policyholder receives during and after the tenure of the policy. These include:

Survival benefits

Regular payouts received by the insured throughout the policy term. For example, in a 20-year policy, you may receive survival benefits every five years starting from the 5th year.

Death benefits

The nominee receives the sum assured and accrued bonus if the insured passes away during the policy.

Maturity benefits

Total amount paid to the insured at maturity, including sum assured, pending survival benefits, and bonus.


The insurer pays a bonus based on policy performance, including reversionary and terminal bonuses.

Riders in Money Back Policy

Many insurance providers offer optional add-on riders that policyholders can add to their existing money back policy for additional coverage.

Critical illness rider

It guards against various serious illnesses like cancer, stroke, heart attack, etc.

Accident/disability rider

It covers the costs that can arise due to an accident, causing the death or disability of the insured.

Premium waiver rider

It protects the policy from getting lapsed if the insured is unable to pay the premiums due to any reason.

Accelerated sum assured rider

The policyholder gets the sum assured if they are diagnosed with a critical disease.

Accidental death

The whole life term plan or a term plan may include an accidental death rider, which offers accidental death benefits.

Factors Affecting the Premium of Money Back Policy

Your money back policy premium depends on factors like your age, medical history, chosen riders, and policy term. These are some things to keep in mind:

Compare with Fixed Deposits


Fixed Deposits

Money Back Policy

Tax benefit on premium


Tax paid on return

As per tax slab
No tax

Maturity value

Guaranteed upfront
Guaranteed upfront

Life cover


Documents for Buying Money Back Policy

To buy a money back policy, you will typically need to provide the following documents:


Address proof: Driving license/bank statement or passbook with latest entries/passport/voter ID/Aadhaar card/ration card


Identity proof: Aadhaar card/voter ID/passport/PAN card


Age proof: PAN card/ Aadhaar card /passport/voter ID card/marriage certificate/ration card/birth certificate/driving license


Photo: Passport-size photographs of the individual


Income proof:

  1. For high sum assured cases, income proof is also needed.
  2. Salary slips of last 3 months/income tax returns/employer certificate/latest bank statement/latest form 16

Ask Anything as We Have Answers to Everything in Insurance

A money back insurance policy is a kind of traditional life insurance plan that offers returns in the form of regular payment at intervals to the insured. This policy comes with double benefits since it offers both investment and insurance. Also, under this policy, the insured gets a lump sum amount at the end of the policy. Further, if there is any unforeseen situation like death of the policy holder, the nominee gets the lump sum amount.

The main features of a money back insurance policy are as follows:

  • The policy offers guaranteed returns.
  • It offers insurance cover together with investment option.
  • It offers guaranteed returns on the maturity of the plan.
  • Under this plan, the sum assured is available at the end of the term.
  • The plan also ensures regular income through the policy lifetime.
  • Also, the policy allows beneficiaries of the plan to receive a lump sum amount in case of the sudden demise of the insured.

Yes, riders are available with a Money Back Policy. They are namely:

  • Critical Illness rider
  • Accident rider
  • Disability benefit rider
  • Hospital cash rider
  • Term rider
  • Waiver of premium rider
  • Accelerated sum assured rider

No, a money back policy doesn't pose much of a risk. Generally almost all kinds of investment products have some or the other risks involved. However, with a Money Back Policy, which is a kind of endowment plan, there is very low risk involved, while the returns are good.

Money back policies offer varied tax benefits which allows the policyholder to reduce tax liability. Under this policy, if the insured pays five times or more premium than the maturity amount he/she receives, then the amount gets exempted from tax.

Anyone can buy a money back policy. If you are interested in investing in a policy that poses low risk and offers insurance coverage, money back is the best policy for you. Hence, you can create wealth and cover life under a money back policy.

If someone misses paying their premium for the policy, they can pay the amount during Grace period. However, if the person misses the grace period and doesn't make the payment of the premium then the policy is likely to get lapsed. However, if the insured buys the rider called premium waiver, in that case the policy will be saved.

As such, there is no premium payment frequency of the Money Back plan. It can be on a quarterly, semi-annual or annual basis depending on the insurer.

Advantages of a money back insurance policy are:

  • It provides a triple benefit of maturity, survival and life coverage.
  • The policy offers regular payouts during the term of the plan.
  • It serves the dual purpose of insurance and investment.
  • The plan offers guaranteed returns.
  • It allows Tax benefits.
  • It is a low risk plan.
  • Several riders are available with this plan.