Child Money Back Plan: Combining Life Insurance with Periodic Payouts

Mumbai (Maharashtra) [India], August 14: A Money Back Policy is a type of life insurance that provides the dual benefit of both investment & protection. It allows you to receive returns at a regular interval of time during the tenure of the policy & provides a life coverage offering financial protection in the case of an unfortunate incident. This is a type of life Insurance that is designed for children as well, which helps parents secure the financial future of their child.

Under this plan, a certain amount or percentage of the sum assured is paid back to the policyholder at a regular interval. If the policyholder survives throughout the policy tenure, he/ she will get the remaining amount of the sum assured. &, if the policyholder dies during the policy tenure, the full amount of the sum assured is paid back to the nominee, irrespective of the fact that the survival benefits have already been paid.

How Does a Child's Money Back Plan Work?

Let us understand & the steps to know how a child's money-back plan works:

Step 1: Pay the premium on a regular basis towards the plan, i.e. monthly, quarterly, or annually.

Step 2: Part of this premium amount goes towards the investment plan, & the remaining goes towards life insurance.

Step 3: From the amount allocated towards insurance, a portion of the premium is paid back at some pre-determined specified intervals throughout the policy tenure.

Step 4: The remaining amount of premium is paid along with the accrued bonus, if any, at the end of the policy tenure.

Step 5: The bonuses linked to this plan are:

1. Revisionary Bonus: This bonus is declared by an insurance company on a periodic basis, depicting a share of profits that is paid to the eligible policyholders. This is a guaranteed payout, which is calculated as a certain percentage of the sum assured.

1. Terminal Bonus: This bonus is paid at the discretion of an insurance company as an additional bonus at the end of the policy tenure. There are multiple factors affecting the bonus, such as return on investment, financial performance, policyholder’s experience, etc. It is basically considered a reward for the trust & loyalty shown by the policyholder towards the insurance company throughout the policy tenure.

Step 6: Death benefits are paid to the beneficiaries in case of sudden demise anytime during the policy tenure, providing financial security to the family members.

Steps to Choose the Best Child Money Back Plan

Provided are the steps to choose the best child money-back plan:

Step 1: Ascertain the financial objectives of your child, i.e. their milestones that have to be achieved, in terms of education, marriage, or any other life event.

Step 2: Assess your financial budget to make a payment towards the premium amount to select the plan that best suits your budget.

Step 3: Next, consider the policy tenure which should best aligns with the milestone of your child.

Step 4: Consider the period, i.e. at which interval you desire to receive the payouts, i.e. quarterly, half-yearly, or annually.

Step 5: Assess the amount of sum assured that would be enough to cover the expected expenses to meet the child’s future financial requirements.

Step 6: Underst& the structure of both types of bonuses, i.e. revisionary & terminal bonuses, & compare the different plans available to choose one that offers the most attractive bonus.

Step 7: Choose the plans which offer customisation in selecting the tenure & premium payment options according to the specific requirements.

Step 8: Consider opting for additional riders, if any, which could be helpful, such as an accidental rider, a critical illness rider, to enhance the coverage of the plan at an added cost.

Step 9: Choose the most reputable & renowned insurance service provider with a sound financial history & reliability.

Step 10: Get quotes about a money-back plan for children from different insurance service providers to assess the comprehensive view.

Step 11: Also, it allows you to consult a financial advisor or insurance expert, who will offer customised suggestions depending on your future financial condition & budget.

Step 12: Review the plan to ensure that it will meet the requirements regularly & allows for making adjustments accordingly.

Steps to Buy a Money-Back Plan for a Child

Provided are the steps to buy a money-back plan for a child:

Step 1: Click the option “Money Back Plans” on the website of the provider company.

Step 2: Fill out the application form with all the details required.

Step 3: Click the tab “View Plans”.

Step 4: Input all the necessary details required, such as age, residential address, child’s age, annual income, etc.

Step 5: You can also customise the investment amount, policy tenure, & desired withdrawal time.

Step 6: Choose a plan from the list of available money-back policies that well aligns with your financial objectives.

Step 7: Proceed to make payment.

Benefits of Buying a Money Back Policy

Provided are the benefits of buying a money-back plan:

• Financial Security: It secures the financial future of your child.

• Periodic Payouts: It includes disbursal of regular payouts throughout the policy tenure, ensuring the child’s milestones are fulfilled.

• Maturity Benefits: It includes payment at the end of the policy tenure to meet expenses.

• Insurance Coverage: It offers financial security by offering life coverage in case of the policyholder’s death.

• Flexibility: It offers flexibility in making payments towards the premium amount that suits your objectives.

• Taxation Benefits: Get taxation benefits u/s 80C & 10(10D) of the Income Tax Act, 1961.

• Additional Bonus: It includes disbursal of additional bonuses as well, enhancing the quality of the plan.

• Disciplined Savings: It creates a sense of responsibility.

• Inflation protection: While releasing funds, it takes into consideration the inflation factor.

• Mental Peace: It offers mental relaxation to the parents, knowing they have secured funds in an investment plan.

Conclusion

A money-back plan is a useful tool that helps parents secure the financial future of their children. These plans offer financial stability by offering a lump sum payment along with the regular payouts, if the policyholder dies.

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