People seek investments as they want to see their money grow over the years. In today’s economy, having a job or a business does not meet the ever-rising expenses. It has become necessary to have a passive income that generates returns on your savings. Diversifying your portfolio is the best way to generate good returns at moderate risks. Along with investing for the future, it is also important to secure the lives of your loved ones. This is where life insurance comes into the picture as it protects the financial health of your loved ones in case of your sudden demise. Money-back life insurance offers you the perfect blend of insurance and investment.
What is a money-back life insurance policy?
Money-back insurance is a type of life insurance, where, along with life cover, you also get money at regular intervals of time. The money-back feature offers you funds you can use for fulfilling your financial needs. You can simply buy life insurance with a money-back plan and pay regular premiums to start your policy. In case of an unfortunate event where you lose your life, the beneficiary will receive an amount from the insurance company. You, as a policyholder, will receive a sum of money regularly and, once, in total, after your policy matures. The frequency of the money paid back depends on the agreed-upon contract between you as a policyholder and the insurance company.
Why should you buy a money-back policy?
There are drawbacks and benefits to any life insurance you choose. Here are the reasons you should purchase a money-back life insurance-
Insurance coverage
The benefit of life insurance with a money-back feature is that you get both life insurance and investments in one product. This two-in-one benefit makes it quite an interesting purchase. When you make regular payments, you do not have to worry about your family’s financial security if something happens to you. Also, the money back part allows your money to grow and provides you with a regular source of income.
Liquidity
Liquidity of funds is essential for everyday expenses and emergencies. When you buy a money-back policy, you will receive money at regular intervals. The consistent cash flow helps in fulfilling the financial goals of your family in the long haul.
Survival benefits
When you buy life insurance with money-back, you choose a certain sum assured and pay premiums for it. You can use a life insurance premium calculator to know the premiums that you have to pay to get the desired sum assured. You get survival benefits in this type of life policy as a part of the agreed sum assured regularly.
Risk-free instrument
You need to track certain investments constantly, like mutual funds or stock markets. While certain investments are risk-free, you do not have to worry about them at all. A money-back life policy is a risk-free financial product. You will receive your funds without having to worry about anything.
Tax benefits
One of the biggest benefits of life insurance is tax savings. When you buy money-back life insurance, the premiums that you pay for it are all exempt from taxes. The tax exemption is provided under section 80C of the Income Tax Act. Also, the sum assured, and the death benefits are also exempt from any taxes.
When you decide to buy money-back life insurance, ensure that the sum assured is sufficient for you as well as your loved ones. Use a life insurance premium calculator to get an estimate of the sum assured and life cover after getting regular sums by the company. The financial product that you choose now affects your financial health in the long haul. Products like money-back life insurance policies are great picks because of their dual benefits. Since this policy is low risk, anyone with no risk appetite can invest in it. Also, the regular source of income received helps in meeting several planned and unplanned expenses.