How To Make Money From Money Back Policies :

Money-back plans are endowment plans that periodically return a predefined percentage of the sum assured instead of waiting till the end of term. This feature of getting periodic returns before maturity makes it very popular with investors. But is Money Back Plans really profitable? Given below are some key points which one should consider to make a money back plan profitable.

Ø      Look for the premium paid vs sum insured amount. If your intention is to get a higher sum assured then going for a term plan or traditional endowment plan is a better option

Ø      If you want higher sum assured for the same premium in a money back plan then make your children the insured person, i.e. go for a children's money back plan

Ø      Look at it only as a forced saving tool like recurring deposits

Ø      It works in creating wealth only if you reinvest the money returned at regular intervals or use it for planned big amount expenditures.

Ø      For e.g. if you take a money back plan where say you pay for 5 years and then get the return for next five years then you can invest in the same product at the end 5 years and pay the premiums of the new policy with returns from the old policy. This way you are reinvesting the returns and increasing the same without worrying for tax.

Ø Have your future periodic financial needs defined ( i.e. at what time inn future you will
      need how much money ) and chose a money back plan accordingly which suits your
      needs.