Term Life Insurance Vs Money Back Life Insurance- Which One is better?

Well, both of these life insurance policies have their pros and cons. In this article, we will discuss the various points on the term life insurance plan and money back life insurance plan to help you opt for the right one.

Term Life Insurance Vs Money Back Life Insurance

What is Term Life Insurance?

A term plan is a type of life insurance policy that offers financial protection for a specific time period. This insurance policy ensures high sum assured at a very low premium. The insurance company pays the sum assured to the beneficiary in an event of the sudden demise of the policyholder during the policy tenure. In this manner, term life insurance ensures the financial stability and security of your loved ones in your absence. But please note that if in case the policyholder survives the policy tenure, no maturity benefit will be provided by the insurance company. That is why the term plan is known as a pure protection plan.

What is Money Back Life Insurance Plan?

The money back life insurance plan is a type of endowment plan that provides money back at regular intervals during the tenure of the policy. This money back is paid during the tenure of the policy and is a percentage (&) of the sum assured.

‘Money-back payouts are known as survival benefits’. The survival benefits are paid by the insurer during the policy tenure and on maturity; the remaining sum assured is provided along with accrued bonuses. In an event the policyholder dies before the maturity of this insurance plan, the full sum assured is provided to the beneficiary irrespective of the survival benefits already paid. This is what makes the money back life insurance plan unique from other life insurance plans.

Difference between Term Life Insurance Vs Money Back Life Insurance

Conclusion

Most of the financial advisors recommend that insurance and investment should be kept separately. Well, we will also recommend the same. You should first protect your family with an adequate term life insurance policy. And then you should compare different investment options such as money back life insurance plans, Mutual Funds, and ULIPs.

Hence, term insurance should be your first choice and it is ideal for those individuals who are looking to provide financial protection to their loved ones at a nominal premium cost. Whereas the money back life insurance plan is an ideal choice for those individuals who have already fulfilled their protection requirements and enough financially capable to save and invest for meeting their short-term financial goals through regular survival pay-outs.

Since every person’s needs are different thus it is important to opt for the plan what is suitable for you the most as well as the betterment of your dependents in your absence.