I am 30 years old and want to buy a money back policy of Rs 10 lakh. What are the main features of these policies? How much premium will I have to pay?
Raghav Menon, Kochi
Money back policies are endowment plans that periodically return a certain percentage of the sum assured over the plan’s term. This percentage, the number of instalments paid to the policyholder and the intervening period between instalments depend on the term and the policy opted for.
A policyholder who outlives the term gets the remaining corpus with accrued additions like bonuses. If the insured dies during the term, his dependents get the full sum assured without any deductions of the survival benefit amounts already paid as money back components. Similarly, the bonus is also calculated on the full sum assured. The assured return benefit of money back policies makes their premium higher than those of other plans. If a 30-year-old takes a money back policy of Rs 10 lakh sum assured for a term of 15 years, the annual premium could be in the range of Rs 90,000 (based on certain conditions and estimations).
