Money Back Insurance
Introduction
Cash back strategies, also known as cash back insurance plans, are a type of life insurance contract that combines life coverage with periodic payouts of a portion of the total sum assured at regular intervals during the policy term. These plans provide unique features where the policyholder receives survival benefits in installments while the life cover continues for the remainder of the policy term.
Here is a detailed outline of cash back strategies :
Key Elements of Cash Back Strategies
1. Survival Benefits:
Periodic payments of a percentage of the total sum assured at specified intervals during the policy term, typically every few years.
These payouts, termed as survival benefits, are received by the policyholder as long as they survive the predetermined durations.
2. Life Cover:
In addition to survival benefits, cash back policies provide life insurance coverage for the entire policy term.
Upon the insured's death during the policy term, the nominee receives the full sum assured, regardless of the survival benefits already paid.
3. Maturity Benefit:
If the policyholder survives till the end of the policy term, they are eligible to receive the remaining sum assured along with any accrued bonuses as the maturity benefit. This final payout is made irrespective of the survival benefits previously paid.
4. Liquidity and Income:
Cash back policies offer liquidity by providing periodic payouts, which can be useful for meeting financial obligations or funding specific expenses at different life stages.
5. Premium Payment Period:
Cash back policies usually have a limited premium payment term that is shorter than the policy duration.This allows the policyholder to complete premium payments within a few years while enjoying coverage for a longer period.
Benefits of Cash Back Strategies
1. Regular Cash Inflows:
Cash back policies ensure regular cash inflows at predefined intervals, offering financial support to meet various milestones such as children's education, marriage expenses, or other financial goals.
2. Risk Coverage:
These policies provide life cover throughout the policy term, offering financial security to the family in case of the insured's demise.
3. Savings and Investment:
Cash back policies offer a blend of insurance and savings/investment benefits, making them attractive for individuals seeking a combination of protection and periodic returns.
Considerations when Choosing a Cash Back Strategy
When selecting a cash back policy, consider factors such as the survival benefit payout structure, policy term, sum assured, premium amount, bonus rate, surrender value, and claim settlement history of the insurer.
In summary, cash back policies are suitable for individuals seeking life insurance coverage along with periodic liquidity to address financial needs at different life stages. They offer a balanced approach by combining insurance protection with guaranteed returns, making them a popular choice among individuals looking for a comprehensive financial solution.
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